{"id":25560,"date":"2017-11-15T20:17:04","date_gmt":"2017-11-16T01:17:04","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/digitization-load-the-beer\/"},"modified":"2017-11-15T20:17:04","modified_gmt":"2017-11-16T01:17:04","slug":"digitization-load-the-beer","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/digitization-load-the-beer\/","title":{"rendered":"Digitization: Load The Beer"},"content":{"rendered":"

At AB InBev, digitalization is a critical megatrend for supply chain. Like all business organizations, cost effectiveness is always an underlying goal, and digitalization is one way to not only be cost effective but also stay competitive in the marketplace. One application of digitalization at AB InBev is in the warehouses at the breweries. The current operation of a warehouse includes employees driving fork trucks who are dedicated to one of three jobs. The first job is pulling pallets of beer from the production line with a fork truck and placing these pallets into inventory on the floor of the warehouse. The second job is called floor loading, where fork trucks move the pallets from the floor and load them into a trailer to be distributed to a wholesaler. Because AB InBev uses forecast planning to produce beer and does not want the customer to be short on product, extra pallets of beer are made and thus stored in inventory. However, this process causes extra pallet handling, more labor to move pallets, and reduces cost effectiveness. The supply chain department strives for direct loading, which is the third job in the warehouse. Direct loading is when an employee pulls pallets of beer from the production line and loads these pallets directly onto a trailer. Direct loading eliminates double handling of pallets and is more cost effective than floor loading. For the first job of placing pallets on the floor and the third job of direct loading, employees are dedicated to one production line per employee. For the second job of floor loading, employees are dedicated to one trailer per employee. Once that trailer is fully loaded, the employee is dedicated to the next trailer. Because of this dedicated setup for all three jobs, the employee travels on the fork truck one way with pallets on the forks and then returns via the same route with no pallets on the forks. Therefore, the fork trucks are only 50% efficient. Because of this poor efficiency, AB InBev turns towards digitalization by developing a new warehouse system to solve this problem.[1]<\/a><\/p>\n

 <\/p>\n

A short-term solution designed in-house, a new warehouse system called Interleaving was developed by a small project team with limited resources. The objective of Interleaving is to increase the efficiency of the fork trucks by reducing the travel time with no pallets on the forks. To achieve this objective, Interleaving decomposes each of the three jobs mentioned above into tasks. Interleaving sees the whole warehouse operation, including the location of every production line, pallet, trailer, and fork truck. The new system creates tasks based on the location of the fork truck and nearest pallet to be moved. Instead of being dedicated to one job, the employees are now told to complete the tasks assigned to them, so the fork trucks are traveling to the nearest pallet versus the long route of the previously dedicated job. Once Interleaving is developed, the small project team travels to different breweries for implementation.[2]<\/a><\/p>\n

 <\/p>\n

The first brewery is in Jacksonville, Florida, and Interleaving proves to be a great success. The second brewery is in Cartersville, Georgia, where the new warehouse system is unsuccessful by causing a bottleneck in the warehouse. Trying to determine the root cause for the Cartersville plant, the project team recognizes a few differences between the breweries. Jacksonville produces the same number of pallets each week with fewer SKUs and is 52% direct loading[3]<\/a>. On the contrary, Cartersville has significantly more SKUs with a varying number of pallets produced each week. This complexity leads to a 34% direct loading rate[4]<\/a>. Cartersville no longer uses Interleaving until the new system becomes more robust, but the project team does not have enough people, time, or resources to make the improvements necessary.[5]<\/a><\/p>\n

 <\/p>\n

From a medium-term outlook, AB InBev is concerned about the ROI of this digitalization compared to the CAPEX needed to be successful.[6]<\/a> However, AB InBev should dedicate more resources to this project team and develop Interleaving to be applied throughout all breweries. While Interleaving might need to be specifically designed for each brewery, advancing this digitalization should be a priority instead of accepting the status quo. This new system has great potential to increase efficiency without having the economic impact or employee engagement of significantly reducing jobs. Additionally, if Interleaving is successful, less intervention is needed from managers. Then, managers can focus more on process improvement instead of dealing with day-to-day activities.<\/p>\n

 <\/p>\n

While Interleaving is being trialed, quality control has become more of an issue. Since employees are no longer dedicated to a specific job, they mindlessly follow the Interleaving tasks and are not always aware of their surroundings.[7]<\/a> How do you prevent an employee from loading the wrong trailer? How do you prevent loading a pallet of 24-pack Budweiser versus 18-pack Budweiser?<\/p>\n

 <\/p>\n

(798 words)<\/p>\n

[1]<\/a> Phone interview with AB InBev employee Sarah Schilling, November 13, 2017.<\/p>\n

[2]<\/a> Phone interview with AB InBev Supply Chain Manager David Huskisson, November 13, 2017.<\/p>\n

[3]<\/a> Company documents.<\/p>\n

[4]<\/a> Company documents.<\/p>\n

[5]<\/a> Phone interview with AB InBev Supply Chain Manager David Huskisson, November 13, 2017.<\/p>\n

[6]<\/a> Phone interview with AB InBev Supply Chain Manager David Huskisson, November 13, 2017.<\/p>\n

[7]<\/a> Phone interview with AB InBev Quality Control Manager Christine Davenport, November 13, 2017.<\/p>\n","protected":false},"excerpt":{"rendered":"

Why move without beer when you can move with beer?<\/p>\n","protected":false},"author":9592,"featured_media":25561,"comment_status":"open","ping_status":"closed","template":"","categories":[62,1298,64,2123,3853,17],"class_list":["post-25560","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-ab-inbev","category-alcohol","category-beer","category-digitalization","category-digitization-of-supply-chain","category-supply-chain","hck-taxonomy-organization-ab-inbev","hck-taxonomy-industry-food-and-beverage","hck-taxonomy-country-united-states"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/rc-tom-challenge-2017\/","yoast_head":"\nDigitization: Load The Beer - Technology and Operations Management<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/digitization-load-the-beer\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Digitization: Load The Beer - 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