November 21, 2023
Coca-Cola Bottlers Japan Inc. operates a sales territory that encompasses Tokyo, Osaka, Kyoto, and 35 prefectures, managing a diverse portfolio of over 600 products. This makes us the largest Coca-Cola bottling company in Asia and one of the most significant on a global scale. Leading their supply chain effective June 1 2023, is Andrew Ferrett, our newly appointed Chief Supply Chain Officer and the head of the SCM department. With 30 years of experience in the beverage industry, Andrew brings his expertise and passion for supply chain management, emphasizing business process reforms and digital innovation. In this interview, he shares with us the current challenges, strategies to overcome them, and his appreciation for the team he works with.
Press conference for Chief Supply Chain Officer appointment.
Andrew's career predominantly developed in his native South Africa, where he initially pursued a degree in chemical engineering at university. He gained expertise in plant design process improvement and plant development before transitioning to the beverage industry. From there, he became involved in the world of supply chain management, culminating in his role as a Supply Chain Executive for Coca-Cola Beverage South Africa before joining us in 2020.
"Many people would consider the supply chain to be a dry and possibly even boring subject. However, I wake up excited every day. I find the challenges it presents, the learning opportunities it offers, and the engagement with people to make and deliver great products truly energizing. "
At Coca-Cola Bottlers Japan Inc, we aim to consistently be the choice of our customers by providing '100% quality and service at the lowest possible cost.' Furthermore, we are recognized as a model within the global Coca-Cola system, which demands an even higher standard from us. The SCM department continually strives to enhance its capabilities through manufacturing processes and logistics.
We have 17 manufacturing bases nationwide. In 2021, a 'Mega DC' (inventory-based distribution center) incorporating the latest automation technology began operations in Saitama, followed by another in Akashi (Hyogo Prefecture) in 2022. In April 2023, a new production line, designed to increase the manufacturing capacity of high-demand small PET bottle products, was launched at the Ebina plant. We are also actively investing in the latest digital technologies.
"Mega DCs are fully automated large storage and distribution centers that enhance our picking accuracy and the efficiency of our logistics operations. We encourage our front-line staff to engage in improvement activities. Over the past five years, we've amassed a database of nearly 250,000 improvements that have been implemented. This is something we're truly proud of."
Using cutting-edge digital technology, we have established a common framework for combining data on demand, production numbers, and inventory numbers. The data usage is aimed at achieving a more productive supply chain at the lowest cost by shortening transportation distances and optimizing the network.
To improve the accuracy of demand forecasting and support faster decision making, we have developed an initiative called S&OI (Sales and Operations Integration). Collaboration between departments with multiple roles, such as supply chain, commercial, finance and procurement, has also helped to promote stable supply and cost reductions.
Andrew reflects, "We saw the benefits during the summer of 2022, particularly during the heat wave from late June to July, and the new processes ensured that 2023 was our best summer yet."
Currently, we are collaborating with the Commercial team who are leading a project to deploy demand forecasting tools that will significantly improve forecast accuracy using AI, enabling further supply chain improvements.
Adapting to changes in the societal environment is a significant challenge for the supply chain, one of which is the 'The 2024 issue'. With the expiration of the grace period for the limit on overtime work regulations related to work style reform in March 2024, there are concerns about the impact on truck drivers across the entire industry. In addition, efficient logistics are demanded to reduce greenhouse gas emissions.
"The key to our strategy is increasing manufacturing flexibility, which enables agile, efficient logistics. We monitor and manage the distance and time for each shipment. We're constantly considering how to reduce this time. In 2022, we reduced the transportation distance by 25% compared to the previous year. We aim to further reduce this distance in 2023. Another point of focus is the rate of local production for local consumption, and we've been successfully achieving our targets in this area as well."
We are also participating in an AI-based verification experiment to determine the level of outer cardboard damage, which is being undertaken jointly by five companies, including beverage manufacturers and convenience store chains. If the outer cardboard packaging for beverages and other products is damaged, delivery may not be possible regardless of the condition of the contents, resulting in product returns and disposal. This initiative involves capturing images of the outer cardboard with a smartphone or tablet and using AI to determine whether the cardboard is good or bad.
"It originally stemmed from exploring ways to reduce food waste in the industry. By having a standard measure, we can operate within that standard, and I believe it adds value. Every case we distribute that doesn't meet an acceptable level requires us to bring it back, which increases transportation costs. So, there are multiple benefits from that technology."
To ensure new equipment and tools function properly, it's crucial to develop the talents of those who handle them. At our SCM division, we cultivate a culture of improvement and have introduced the 'OE (Operational Excellence) color belt system' project, aimed at both operational efficiency and skill development. Employees are classified into four levels: 'Black Belt', 'Green Belt', 'Orange Belt', and 'Yellow Belt', and improvement activities are carried out according to these tiers.
"Take energy reduction as an example. We have a black belt project led by one of our senior manufacturing managers. This project then breaks down into green belt projects at each factory. It's then further broken down to specific manufacturing lines or utilities. We use this structure to spread knowledge and to capture insights. This way, if one factory discovers a new opportunity, our system ensures this knowledge is transferred to another factory. This promotes shared learning and skill-building across our teams."
In the nearly three years since Andrew joined the company, major changes have been made in supply chain areas such as manufacturing and logistics.
"Those interested in working with technology might aspire to work for a well-known car manufacturer, for example. However, the manufacturing and logistics technology we use, and our use of digital technology is very sophisticated. We really need to better communicate CCBJI’s leading edge capabilities to potential employees."
At the time of his appointment as Chief Supply Chain Officer, Andrew delivered an African poem, "The Lion and the Gazelle," in his greeting to the company newspaper published by the SCM Division. A gazelle must run faster than a lion to survive, and a lion will starve to death if it cannot run faster than a gazelle. This is a message that encourages everyone to take up the challenge.
Andrew's own challenge at the Company is to further optimize the supply chain. He says that one of the challenges is to motivate members of the team to continue the transformation to achieve this goal.
"While driving change can be challenging, since some people find it threatening, as leaders, our role is to make change exciting. Those who embrace and seek opportunities in change bring value. One of our challenges is shifting the mindset that views change as a threat, emphasizing that our leaders are change agents. That's a significant challenge for us. "
Andrew, who joined us in 2020, has worked with our employees to improve our supply chain even as the world was disrupted by the covid-19 pandemic. He left the following final message for the members of the team who have overcome hardships.
"We’ve come through the challenges of the Coronavirus stronger than before, including in the supply chain. We have good momentum now, and our challenge is to keep and even increase that pace. Our work environment is positive, and everyone should build on that. Especially for leaders, who need to show enthusiasm and create hope for the future. By doing so, we’ll engage our teams, leading to even better results and performance for the SCM team."