Dr Pepper Snapple Group has 24 production plants in the United States and Mexico, and more than 200 distribution centers. Unique to the Texas-based soft drink company, however, is its hybrid system of distribution. Approximately 40 percent of its distribution is through its company-owned DSD system, 40 percent is through third-party distributors, 10 percent is warehouse direct and 10 percent is foodservice.
The company’s Northlake, Ill., facility is part of its company-owned operations, and is transitioning to become one of its five hub-and-spoke supply chain sites. That will enable the company to not only produce products, but also deliver them quicker to the customer.
The hub-and-spoke supply chain gives the company manufacturing capabilities in the five major regions of the United States, while improving customer service and driving down transportation costs, the company says. In addition, distribution will be replenished through multiple modes of transportation, such as railroad or truck, and orders fulfilled closer to DPS’s customers.
“[The hub-and-spoke model] will bring new products in the Northlake platform and enable us to manufacture products that we sell in our region instead of taking specific products from the Northeast and shipping to the rest of the country,” says Dan Graham, plant manager at DPS’s Northlake, Ill., facility. “The goal is to have five hubs, or manufacturing hub sites, and Northlake is going to be one of these sites.“
The Northlake facility of the Dr Pepper Snapple Group lies on 24 acres, or just shy of 1 million square feet. The facility distributes to Chicago and its surrounding areas with a daily fleet of 140 to 150 trucks.
The facility employs 1,250 people, with 750 on site â€” the remainder report to Northlake, but primarily work in the field, Graham says.
The history of the Northlake facility stems from a culmination of five Chicago-based legacy bottlers. The Joyce Bottling Co., RC Cola Bottling Co., Canfields Beverages, the Westing House Group and All American Bottling Co. joined forces and formed Select Beverages, which was then purchased by Dr Pepper Snapple Group. The Northlake facility serves Chicago primarily, but will distribute throughout the entire Midwest with the hub-and-spoke model, says Joe Rowland, senior vice president and business unit general manager for DPS’s central and Southeast regions.
Size-wise, Northlake is the largest facility in the Dr Pepper Snapple Group manufacturing footprint, Graham says. In terms of volume, it ranks second after the Irving, Texas, facility.
Aside from transitioning into one of the major production and distribution hubs for Dr Pepper Snapple Group, the Northlake facility holds its own by manufacturing more than 450 SKUs. The facility also receives 187 SKUs from other DPS plants or manufacturing sites, such as some Snapple items, Mott’s products, IBC and Stewart’s, which are products the facility does not currently produce. The ability to produce more products is one of the future plans for the Northlake facility, Graham says.
Some of the products the facility produces include Dr Pepper, Snapple, 7UP, A&W, Sunkist, RC, Squirt, Schweppes, Diet Rite and Big Red. RC, 7UP and Dr Pepper are particularly popular in the Chicago area, Rowland says.
Northlake has its own water treatment system as well as syrup and batching systems, Graham says. The 35 batch tanks hold 500, 1,000 and 1,500 gallons of syrup and mixes.
The facility runs nine manufacturing lines, which include four plastic bottle lines, four can lines and a hot-fill glass line. The lines produce carbonated soft drinks, water and Snapple teas in PET, cans and glass packages. The plant also includes a bag-in-box line, used for fountain drinks at foodservice locations.
The facility runs eight depalletizers, which take the empty bottles and cans into an isolated filler room. Each can and bottle is rinsed before heading to the filling line. With sustainability top of mind these days, the facility plans to replace the water rinsers with air rinsing equipment, Graham says. The facility is able to produce multiple sizes of products. Carbonated soft drinks are filled into 12-ounce, half-liter, 20-ounce, 1-liter and 2-liter PET bottles; 10-ounce Plastishield glass bottles; and 12-ounce cans. Snapple teas are filled in 16-ounce and 17.5-ounce glass bottles. And the bag-in-box line produces 3- and 5-gallon boxes of syrup.
Some of the lines have unique capabilities and can run a range of products. For example, Line 1 produces cold-fill 10-ounce glass as well as 20-ounce plastic bottles. The Snapple line produces multi-sized hot-fill products.
A quality assurance program is used to check many internal specifications on the products. The company also works with external auditors, such as the American Institute of Bakers, who perform independent audits to determine if programs and related activities achieve planned expectations, the company says. An AIB audit was completed in April with an excellent review, Graham says.
The Northlake facility produces about 220,000 cases daily, with an average of 1 million cases per week. For 2009, roughly 47 to 48 million cases will be produced, Graham says.
At the end of the production day, Snapple, Sunkist, Dr Pepper and other products leave the facility’s warehouse, which houses around 2.4 million cases. The company provides product to four other operations, but the Northlake warehouse serves as the main holding place for products in the area. The warehouse has 25 docks where product is loaded for local DSD delivery and full-truck distribution.
DPS operates on a business model that includes company-owned direct-store-delivery distribution, as well as third-party distributors. The Northlake facility serves its own DSD operation, and manufactures a certain amount of product for third parties.
Approximately 40 percent of Dr Pepper Snapple Group’s volume is distributed through its company-owned bottling and distribution network. The remainder is driven through its third-party/licensed bottlers and distributors, including those in both the Coca-Cola and Pepsi bottling systems, as well as independent bottlers, brokers and distributors, the company says.
“As an example, we service out of this facility three independent bottlers in the Wisconsin area who have perpetuity agreements for geographic areas for specific brands,” Rowland says. “There are all kinds of different relationships. Sometimes they pick [products] up, other times we ship through internal shipping.”
Graham adds: “The majority of the product leaves out of here on our trucks. The direct-to-store routes are all on our trucks. We have a distribution team, Splash Transportation, and they will take our product to other regions. And we do have private label customers that will pick up their own products.”
Serving its unique distribution system, bringing new technologies to the facility and satisfying the customer also are most important to Dr Pepper Snapple Group, the company says.
“We have the ultimate goal of providing better service to the customer, because that will translate to sales,” Rowland says.