Beverage Industry’s Bottler
of the Year, Swire Coca-Cola USA, Draper, Utah, operates on one resounding
foundation: organization. Swire’s headquarters, largest warehouse,
largest sales center and vending services are located in Draper. The
bottler’s largest bottling plant is a little less than 20 miles away
in West Valley City, Utah, just outside of Salt Lake City. The Coca-Cola
Co.’s fourth-largest bottler operates a second production facility in
Fruitland, Idaho. Between the two facilities, Swire distributes to 27 sales
centers that cover portions of 11 western states.
Successfully handling volume in addition to an
ever-growing number of SKUs, Swire’s bottling facilities produce 38
million cases a year. The bottling centers plan their production schedules
around sales centers’ needs, and ship products directly to the
centers. The production centers operate using a forced distribution
resource planning system to determine what products each sales center is
using and their required inventory levels, says Kurt Fiedler, vice
president of manufacturing.
“We schedule off of the resource plan to come up
with our product schedule,” he says. “We determine for each
sales center what level of product they are going to receive. We try to
maintain consistent inventories throughout the system.”
The Draper warehouse is the largest sales center to
which the West Valley City (WVC) production center ships. The
165,000-square-foot WVC facility holds two PET lines and one can line. With
115 employees, the facility runs two 10-hour shifts, five days a week, and
produced just more than 26 million cases in 2007. From Coca-Cola and Dr
Pepper sparkling products to Dasani and Nestea, the WVC production center
sustains five to six variety changes a day to produce 60,000 cases daily.
The facility houses two syrup rooms that contain 16
tanks, which range in size from 1,000 gallons to 5,000 gallons, and are
adjoined to a water treatment room. The three filling lines begin in the
next attached room. Each bottling line features a blending system. One of
the PET bottle lines fills 12-ounce, 20-ounce and half-liter bottles at
speeds up to 580 bottles per minute. For larger sizes, the second PET line
fills 20-ounce, 1-liter and 2-liter bottles, and runs at speeds up to 220
bottles a minute for 2-liter bottles. After the bottles are filled and
capped, the lines then split to run two labelers on each line.
The WVC production center’s 12-ounce can line
fills at 1,400 cans per minute. After the cans are filled, lids are placed
Cans are packaged on a paperboard wrap machine that
normally runs at 130 packages per minute, but can pack up to 160 per
minute. A spiral conveyor takes the packages up to a palletizer, with each
bottling line running its own palletizer. The products are palletized,
shrink-wrapped and then moved to the warehouse in full pallets.
Swire recently added a packaging machine to the WVC
production center that will place a 12-pack paperboard carton around PET
bottles. And at the end of last year, Swire installed another packaging
machine to shrinkwrap trays of PET bottles.
Swire’s Fruitland production center provides an
additional can line and PET line, and produced 12.5 million cases in 2007.
The Fruitland facility bottles the majority of the energy drinks Swire
sells, thanks to its 16-ounce can filling capability. The production center
also recently added a packaging machine capable of producing four-packs.
Additionally, Swire added a tray shrinkwrapper, which
is the same machine that was inserted on the PET line at the WVC production
center. In Fruitland, the shrinkwrapper is linked to the can line.
Swire usually spends about $1.3 million annually on
production machine upgrades, Fielder says. “We’re usually
upgrading things like coders, fillers and support equipment on our labeling
machines,” he says.
The good news is that product demand is booming, which
will mean some production changes for the company since the WVC production
center is nearing capacity. “We are actually looking at a project
that would move this facility to our Draper location,” Fiedler says.
“We’re hoping that this will take place in 2010. We would have
to greatly expand our existing Draper facility to accommodate this
Because of the production crunch, the WVC production
center currently shifts some of its volume during the winter to Fruitland
to prepare for the upcoming busy season. “We start building some of
our inventories the first part of March,” Fiedler says.
The WVC production center’s warehouse is 100,000
square feet. On any given day, with materials coming in and trucks going
out, the WVC location can see 75 to 100 trucks in outside carriers.
Products do not stay long at the bottling facilities though, Fiedler says.
“Products usually move out within three days,” he says.
GETTING THE PRODUCT OUT
USA’s Draper sales center, part of its Utah division, sells
approximately 13 million cases a year. The team that handles the sales and
marketing of products in Draper’s territory is housed inside
Swire’s headquarters that has the Draper warehouse attached. The
180,000-square-foot Draper warehouse distributes within a three-hour radius
around its location, including Salt Lake City.
The majority of Draper’s inventory goes directly
to customers in its sales territory, but occasional shipments are made to
other sales centers to fill gaps in supply. Additionally, if the WVC
production center experiences an over supply of products, these cases are
moved to Draper.
The products for Swire’s customer deliveries are
picked at night, says Chad Saddler, Draper warehouse manager. When drivers
arrive for their routes in the morning, loads are ready to go. Large
tractor/trailers with bulk loads for stores like Wal-Mart are the earliest
to leave the warehouse and start at 2 a.m. The Draper warehouse handles 13
regular bulk routes, including all reloads (additional products going to
the customer) that occur regularly. Bulk reloads are stacked on the
warehouse floor between the dock doors ready for the trucks to return and
be loaded again. When sales volume is high, a bulk driver can run five or
six loads in a day. Typically, a bulk driver averages two or three loads
The remaining 55 “side-load” route drivers
leave the warehouse between 6:30 a.m. and 7:30 a.m. The driver supervisor
maps out the distribution routes by area. To maintain route efficiencies,
two drivers typically are never in the same area. If a route is too big for
one driver to handle, Swire will break out a route, which means assigning a
utility driver to a route for a day.
The warehouse is essentially a 24-hour-a-day
operation, with 56 employees that cover the day and night shifts. Product
is organized by package size, and each package is assigned to a specific
area in the warehouse. Loaders pick orders at night by using electric
walker/rider pallet jacks. A centralized picking area brings efficiency to
this work and keeps the loaders from traveling the entire warehouse. When
the picking area needs to be resupplied, warehouse employees bring full
pallets from the warehouse back stock area.
The Draper warehouse drive-through features large
doors with assigned lanes for the various types of delivery trucks as they
are checked out and depart each day. On the other side of the drive-through
is a receiving area for any product returns.
The drive-through also accommodates trucks when they
return to the warehouse to be checked in after deliveries are complete.
Bulk drivers usually are finished between 10 a.m. and 2 p.m., depending on
daily volume. Route drivers arrive back between 3 p.m. and 6 p.m. The
check-in procedure is the same for bulk and route drivers, and includes an
accounting of shells, pallets and any returned product from the customer
outlets. Bulk and route drivers use hand-held computers for inventory
control, delivery invoicing and route accounting. This tool helps to keep
discrepancies to a minimum.
When the check-in process is complete, the trucks are
unloaded and moved to a different area to be staged for the next
day’s delivery loads. When the night crew arrives, employees know
where each truck is located and what product needs to be loaded on it.
Managing its stock
The improvements the Draper warehouse has made in the
past couple of years have revolved around taking on the additional SKUs
Swire is selling. With Swire growing rapidly, more racking was added to
handle the demand for storage locations.
“We’re getting close to breaking at the
seams,” Saddler says. “Right now, we’re trying to solve
space issues by adding more racking. Down the road, something is going to
have to be done, but as of right now racking is the solution.”
Improvements to all Swire warehouses are a work in
progress. “We are looking at different racking systems,” says
Jack Pelo, Swire Coca-Cola USA’s president and chief executive
officer. “We are looking at the possibility of adding more
automation, especially in our larger warehouses. We are also experimenting
with different delivery systems, including the use of smaller pallets for
convenience stores that are no longer delivered using side-load
Swire’s entire delivery fleet consists of 400
trucks, and distribution in its sizable 11-state territory is a real
balancing act, Saddler says. Because the production centers schedule
product runs around sales centers’ needs, the sales centers might
have to wait if a particular product isn’t due to be produced for a
while. The Draper warehouse bridges the gap in these situations by sharing
Additionally, because most sales centers cover large
geographic areas, Swire operates a number of overnight routes. Drivers
cover a lot of miles and many of those miles are void of customers. In the
most extreme cases drivers will travel two or three hours before making
their first customer delivery.
Swire Coca-Cola USA is an
independent bottler and takes that opportunity to handle its own vending
equipment needs. Swire operates approximately 15,000 vending machines in
In Draper, adjacent to its corporate headquarters,
Swire operates a full spectrum vending remanufacturing center. Swire
refurbishes vending and fountain machines in order to extend the life of
its capital assets and occasionally give the equipment an updated look and
feel. The center also serves as a central storage and shipping point for
all cold drink equipment for outlying sales centers.
Each sales center has a local vending capability to
support its market, says Wes Bowling, Swire’s corporate equipment
operations manager. The sales center houses equipment inventory for its
immediate needs and manages its cold drink customer accounts from there.
Swire uses a 10-year straight-line depreciation on its
vending machines, Bowling says. “Every piece of equipment can be
expected to be remanufactured within six years, so that adds another three
years to the depreciation life of the equipment,” he explains.
Equipment is discarded only when it is beyond repair.
“As a refurbish center, we don’t need to get rid of as much
equipment as other independents,” Bowling says.
Swire operates a streamlined vending machine
refurbishing process, which pulls the machine apart and puts it back
together. The facility runs with 27 employees working 10 hour days, four
days a week.
“Our people can rewire an entire machine from
scratch and that’s a huge benefit to us,” Bowling says.
The refurbishment center features a refrigeration
repair area since all coolers and vending machines have refrigeration
decks. The center also has a full body and paint shop where employees
repair machine exteriors. Swire uses water-based primer and paints that can
cure within 30 minutes.
With graphics placed, repairs completed and the
equipment completely washed, the machine moves to quality control and
endures a complete quality inspection. The checks include tests to make
sure the decks are cooling, the lights and buttons all work and that the
sales center’s repair request was met.
“Our whole philosophy is that by the time it
comes out of here it’s like new,” Bowling says.
Swire has an annual budget of $3 million for new cold
drink equipment to help balance the inventory of new and old machines.
“We budget for new equipment because we have a continual improvement
process and sometimes it is not feasible to remanufacture again,”
Bowling says. “In those cases, we’ll go ahead and replace the
As an independent bottler, Swire also has the
opportunity to distribute other beverages besides Coca-Cola products. In
certain vending machines, Swire places both Coca-Cola and non-Coca-Cola
products. For example, a machine could hold Dasani water, Monster Energy
drinks and Dr Pepper products.
“We actually develop our own graphics on our own
equipment that enables us to have additional equipment out in the
market,” Bowling says.
In 2007, Swire embarked on a large initiative with the
addition of Glacéau’s Vitaminwater brands to its portfolio.
Swire purchased around 700 pieces of equipment to support its launch of
Vitaminwater. The new Vitaminwater vending machines are distributed to the
sales centers based on the size of the territory and projected sales.
In addition to new equipment to support Swire’s
new SKUs, Swire is in the process of testing cashless vending machines.
With about 150 machines in the marketplace, Swire is testing credit card
readers and wireless communication. The machines will have the ability to
accept bank credit cards and also feature monitors where the company can
display commercials and video advertisements.
“In five to 10 years, we’re going to be
required to do that,” Bowling says.
For the test market, Swire selected 150 of its
highest-paying accounts, because the solution is not for every machine,
Bowling says. “It’s truly an 80/20 rule,” he says.
For a number of years, Swire already has operated
pre-paid card systems on vending machines at a number of universities and
other large accounts in its territory.
I want to hear from you. Tell me how we can improve.
Beverage Industry’s December issue highlights five beverages brands that are “shooting for the moon” in terms of innovation. Also in this issue, we spotlight the premiumization of the private-label beverage market, the latest trends impacting the use of tea ingredients in beverages, the growth of beverage sales in the eCommerce platform, and much more!