Accumulating 130 additional SKUs within the last five years to reach nearly 500 total SKUs, Beverage Industry Bottler of the Year Swire Coca-Cola USA was pressed to find a warehousing solution to accommodate this proliferation. The company originally considered expanding its Draper, Utah, headquarters and moving its production facility in West Valley City, Utah, there. Although Swire ultimately decided to keep production in West Valley City, it did move forward with a significant expansion to its Draper facility.
In 2011, the bottler added 312,000 square feet of warehouse space and another 33,000 square feet of office space to the Draper location, says Jeff Edwards, senior vice president of technology and supply chain.
“We’ve really substantially grown this facility to enable it to serve as a central distribution center for many of our other locations,” he explains. Now at 600,000 square feet, the LEED Silver-certified Draper facility acts as a central distribution center for the southern portion of Swire’s territories, including Utah, Wyoming, Nebraska and Colorado as well as parts of Idaho and Arizona, he notes.
To further enhance the plant’s capabilities, Swire is in the process of implementing an automated picking system that can pick orders by layer or individual case, Edwards says. It is expected to be up and running early this year, he says.
In 2010, Swire also expanded its second production facility in Fruitland, Idaho. By gaining 50,000 square feet, the facility transformed into a central distribution center for the company’s northern orbit, Edwards says. This covers the rest of Swire’s 11-state territory, including portions of Washington, Oregon, Nevada and Idaho.
In the past, product was distributed to Swire’s 26 sales centers directly from Swire’s two production centers in West Valley City and Fruitland, Edwards says. Now, most of the product produced goes directly to a distribution center for transport to the sales centers. For instance, the West Valley City plant has approximately 60,000 square feet of warehouse space — just enough to hold raw materials, such as ingredients and packaging materials, needed for production as well as a small amount of inventory. Orders for full pallets of a single SKU still can be transported directly from the West Valley City facility to one of Swire’s sales centers. However, the majority of the orders received are for mixed pallets. Therefore, most of West Valley City’s inventory is transported to the Draper or Fruitland distribution centers for transport to local sales centers, he explains.
“Once we went through this explosive SKU growth, we needed a different capability,” Edwards says. “We simply couldn’t store 500 SKUs in every one of our smaller warehouse facilities. Instead, in these two distribution centers, we can pick in smaller layer and case quantities to ship to the destination sales center.”
These large distribution centers also can be referred to as value-added facilities, says Paul Lukanowski, vice president and general manager.
“Gone are the days that every single day you need to keep weeks’ worth of inventory in your facility,” he says. “SKUs have certainly increased over the last half a dozen years or so, but we’re doing closer to just-in-time deliveries, and robust forecasting models are helping us get to the place where you don’t need to keep three or four weeks of inventory like you did just a few years ago.”
Depending on the size of the sales center, facilities could receive two to three loads of product a week or multiple loads a day, Edwards adds.
This summer, Swire also will add two new sales centers to its assets as part of The Coca-Cola Co.’s new beverage partnership model, which granted Swire new territories in Colorado. The bottler will take over an existing sales center in Colorado Springs, Colo., and a new building is under construction in Denver, he says. The new 257,000-square-foot facility is located 5 miles from Coca-Cola Refreshments’ (CCR) existing production facility. Both sales centers will continue to source product from CCR’s production facility in Denver. Both sales centers also will employ voice-picking technology to compile orders for distribution to retail outlets, Edwards says.
Swire’s Draper and Boise, Idaho, facilities also currently use voice-picking systems, he notes. Once the automated picking system is up and running in Draper, however, the company likely will redeploy the voice-picking technology from that facility to its Reno, Nev., or Fruitland, Idaho, facility, he says.
Although its West Valley City production facility hasn’t undergone significant changes in recent years, it retains a vital position in the Swire business. For example, with 100,000 square feet of production space, the facility exclusively produces all of the Dasani bottled water and 20-pack cans for Swire’s 11-state territory, whereas the Fruitland production facility produces energy drinks, such as Monster and Full Throttle, as well as 7.5-ounce cans and 32-pack cans for the entire system, Edwards says. Both plants also bottle a variety of other carbonated and non-carbonated offerings.
“We try to create a balance between the two facilities to maximize their strengths to produce for the whole system,” Edwards says.
Swire also gets about 20 percent of its inventory, including Powerade and Vitaminwater, from production facilities located around the country that are outside of its own company network, he notes.
In terms of manufacturing, the West Valley City plant comprises one can line and two PET lines — one for larger PET bottles and one for smaller PET bottles — with two labelers for each PET line. The can line runs at approximately 1,400 cans a minute, Edwards says. The PET line for larger bottles handles 2-liter bottles at 220 bottles a minute and 20-ounce bottles at 450 bottles a minute. The PET line for smaller bottles handles sizes between
12 ounces and 1 liter at speeds between 450 and 500 bottles a minute, he notes.
During slower volume periods of the year, Swire runs two 10-hour shifts four days a week on each line. During peak volume periods, though, it bumps up production to two 10-hour shifts five to six days a week, Edwards says.
For optimum efficiency, Swire keeps the timing of its production and distribution as close together as possible.
“We have really, I think, one of the tightest timeframes between production and supply,” he says. “We work in more of a ‘production push’ system where we resupply to required inventory levels in all of our warehouses. For example, we do production planning every Tuesday based upon current system inventories and historical sales. We then move forward with that production plan, and on Thursday of that same week, our distribution planners start their work using the same historical sales algorithms and current system inventories to ship product for the following week to all sales centers.”
The success of this strategy is championed by Swire’s emphasis on communication and teamwork.
“I’ve tried to make a distinction to say we’re a ‘production push’ kind of system,” Edwards says. “That’s the term we use. What it really means is we work closely with the sales teams to understand upcoming promotions that might move that volume needle up or down. The sales teams trust us to know that we’re going to produce and distribute based on our historical trends and adjust as promotions require. The key is communication.
“Our people just work really closely together, and they trust one another,” he continues. “I think that’s what makes Swire unique.”
In addition to bringing hundreds of products to consumers in the western United States, Swire Coca-Cola USA is dedicated to being as sustainable as possible. Below are some of the ways in which it aims to do so:
• Compressed natural gas powers forklifts in its Draper, Utah; West Valley City, Utah; and Fruitland, Idaho, facilities.
• More than a dozen of its service trucks run on a bi-fuel of compressed natural gas and gasoline.
• Approximately 100 of its sales vehicles are electric hybrids.
• It implements no-idle policies, speed governors on delivery truck engines and optimizes delivery routes to reduce CO2 emissions of its fleet.
• It uses plastic pallets and shells for delivering many of its products.
• It recycles paper, cardboard, plastic, metal and electronic equipment. Its internal recycling rates are in excess of 89 percent.
• In the last three years, it has reduced energy usage by 12 percent, eliminating 3,300 metric tons of greenhouse gas emissions annually.
• Upgrades to high-efficiency lighting systems have reduced the company’s annual electrical usage by as much as 35 percent.
• Water conservation measures, such as reusing water for non-sanitary purposes and investing in new technology, have helped decrease its per-unit water usage by more than 19 percent, saving 99 million gallons in the last three years.