Seven Seas is the UK’s marketleading manufacturer of vitamins, minerals and supplements (VMS). Part of the German Merck AG Group which turns over €7bn a year, Seven Seas manufactures, markets and distributes from Hull, East Yorkshire. Mark Young explores how the company has made great strides in efficiency through a number of continuous improvement activities
With its own on-site oil refinery, Seven Seas makes a range of cod liver oil products, pro-biotics, multi-vitamins and herbal remedies, along with a range of supplements aimed at children under its Haliborange brand.
At the beginning of 2008, Seven Seas’ finance and operations director Chris Chambers embarked upon a radical overhaul of the firm’s production processes to allow it to comply with the modern obligations of a fast-moving consumer goods organisation (FMCG).
Had he not, the firm would probably not be in the secure situation it can be found in today. “With everything that’s going on at the moment with the economy – how we’re getting killed with regards to sterling versus the dollar and the rise in costs of raw materials – it’s been very timely that we’ve started to see our operations becoming significantly more efficient,” said Chambers. “It has allowed us to offset these kind of external macro issues that the business faces.
“If we hadn’t of embarked on this journey at the start of the year we would have had some serious problems with regards to the bottom line at this stage.”
Chambers said the changes have, in fact, lowered the firm’s material costs and this has been key in preventing it from joining the list of the manufacturers that have had to reduce headcount.
Not quite a year on, the firm’s OEE – overall equipment effectiveness – has rocketed from 46 to 70%; an improvement Chambers felt was ambitious when he set an eighteen-month period for it as he first began his role.
So how has this been achieved?
According to Chambers, the two main factors a company must consider are its branding and its people. But, in reality, what that equates to is quality and efficiency. “Historically, the focus for this firm has been ‘how do we build the brand?’ from a consumer mindset. The processes that have been adopted over the years have been very solid and robust. But have they been efficient in an FMCG environment? The answer to that is ‘no’.
“The Tescos, Boots and Asdas of this world are in that environment and that’s what they look for. So, simply put, that’s what we need to supply.”
Efficiency can no longer be contravened by quality. But the same is true vice versa. “The key thing is that when somebody buys a Seven Seas brand they are buying it because of the quality in raw materials and production that we’ve used. So our top prerogative was to make sure during the changes that have been taking place that the quality has not been compromised in any way and that there are no issues with any of our products. No dilution in the process or quality, just flexibility.”
So to address efficiency, Chambers first had to address the company culture.
The main initiative that has helped to achieve this is the implementation of an internal continuous improvement team, made up of staff from the shop floor who have been chosen to champion the cause. Seven Seas pulled in Lauras International, a consultancy firm offering rapid improvement solutions for manufacturing firms. Lauras set up a number of primary initiatives and held three-week training programmes where Seven Seas staff learned about things like energy efficiency, bottle-necking, downtime reduction, mistake-proofing and defect eradication. These sessions were to enable the internal staff to continue the improvement journey from the inside after Lauras vacated the site. The continuous improvement team was chosen from those who fared best in training and were most empathetic to the ideals. The importance of having in-house-led implementations, says Chambers, is that workers are more responsive to ideals that are touted by their peers – people who are on the same wavelength, have common objectives and are not afforded a superior status within the institution. It bridges the gap between management and the shop floor and reduces hostility towards change.
An example of the actual continuous improvement initiatives implemented is on the Cod Liver Oil filling line. Using a bottleneck analysis technique, a team determined the slowest processes on the line and investigated the possibility of increasing speed through cycle time reduction methods. The benefits of this included: doubling throughput, sustained performance in customer service at 100% and an increase in OEE of 35%.
The main profit however, claims Chambers, was not the actual direct efficiency improvements themselves, but the unlocking of people’s ideas and skills from the demonstration that the initiatives they had been working on could actually make a significant change. “The difference a second can make…”.
Chambers heard one of his team remark when the results were communicated to the team. “The idea of saving a second is slightly underwhelming until it is put in the context of a 10-second cycle. But that’s a 10% improvement in line output which is clearly a massive enhancement.”
Also on the agenda was absenteeism. At over 11%, Seven Seas’ sick rates were well above the average for both manufacturers and businesses in general, which is usually around four to seven per cent. Since the beginning of 2008 and the start of Chambers’ reign, that figure has been slashed by over half.
Having completed a full review of occupational health and safety, including full staff retraining and a lean approach to vigilance to prevent long-term sick leave through injury, Chambers used the continuous improvement programme to challenge his people’s mindsets. It hasn’t been “a case of wooden stick,” he says. “It’s about making people feeling better about the business and feeling more positive about their own roles within it.
“Certainly making people feel part of a team, constantly working with the initiatives and with regular communication about how we’re getting on has given people a refreshed emphasis on getting in and the staff feel they are coming into the workplace for a reason now. We are all involved and we all feel a sense of responsibility.”
Another of the most effective initiatives that has been implemented is just-in-time deliveries. The firm used to receive shipped oil twice annually and would store it until it was needed. This approach was costing a lot of money in working capital for buying vast quantities in advance, the physical storage it required and the man hours in logistics required to deal with the stock. “All we needed to ensure was regularity of supply and consistency in our manufacturing process to turn the oil around in a comfortable timescale,” said Chambers. “That has radically reduced the level of stockholding and cut the costs of working capital immensely.”
Twenty-five per cent of the company’s products are currently shipped abroad; though this is a figure that’s set to increase over the next few years. This is initially due to the benefits of exporting while sterling is weak but mainly because Seven Seas, as its name suggests, is currently something of a big fish in a small pond – it has worldwide aspirations. That’s not to say its supply chain couldn’t already be described as global – some of its main markets include Oman, Saudi Arabia and Nigeria; and all of its oil is sourced from the Nordic region.
Yet not all of Seven Seas’ foreign activity has a commercial angle. The company is set to send 250,000 Vitamin A, C and D tablets to Goa, India, where they will be distributed to undernourished children. Chambers organised the move after hearing of the shortage of supplements available through Walking Tall, a UK charity based in India. He touted the firm’s cost saving exercises as the enabler of the move.
“It is great that due to our improved efficiencies on our operations side, we can invest in charitable causes such as Walking Tall,” said Chambers. “In the UK we take for granted that our diets will allow us to have the right level of beneficial vitamins we need. It is crazy in this day and age that many children in India have vitamin deficiency-linked illnesses like rickets when it is so easy to rectify.”
Overall, Seven Seas has realised that while business, especially these days, is not always plain sailing, there are only two real options when the ship turns over — you can sink or swim. When you swim, you make small progress forward but when you sink, you die. As long as you’re going in the right direction, keep swimming — you’ll get to solid ground eventually.