- Overview of the Company
Anheuser-Busch, InBev is a Brazilian-Belgian beverage and brewing corporation headquartered in Leuven, Belgium. The company has main offices in New York City, London, St. Louis, Mexico City, Sao Paolo, Johannesburg, Buenos Aires, Toronto, and San Salvador. In 2016, the company acquired SABMiller to widen its operations. The company started out as a merger between three international brewing firms, which included Anheuser-Busch, AmBev, and Interbrew from the United States, Brazil, and Belgium, respectively. As a result of the SABMiller merger, the company sells close to 500 beer brands in fifty countries from which AB InBev commanded 200 brands.
InBev is estimated to command a global market share of 28 percent (Amienyo & Azapagic, 2016). Further, the company’s brand portfolio includes soft drinks and beer, such as Corona, Budweiser, Stella Artois, Beck’s, Leffe, and Hoegaarden. InBev plans to launch a new alcoholic product into the market to attract back consumers who have moved away from products, such as Budweiser and Bud Light. AB InBev prides itself with having brought people and cultures together through the experience of sharing beer. Further, the company is better the lives of people in different placed through the dedication of producing the best beer with the best ingredients in a commitment aimed at benefiting all its stakeholders. This paper seeks to analyze the facility layout of AB InBev regarding how to address the production of the alcoholic drink.
- Production Needs:
- Need to estimate the process cycle time for the new product introduction and compare against estimated takt time.
The process cycle time for the for the introduction of the new product would start with getting the raw materials ready, for example, water, hops, and malted barley. The ordered raw materials are received and inspected from which they go into the manufacturing process involving mashing, fermenting, conditioning, filtering, and packing to form the finished product. The production of the new alcoholic beverage usually costs a lot of man hours (Melinkov, Asprey, Levy & Buonocore, 2014).
The production process will involve a continuous one-piece flow concept through takttime. As such, trying to adjust the system’s cycle times to follow takttime will to an improvement of the whole process. Ali and Deif (2014) note that the improvement will thus be shown by the overall service level, the quality, and taste of the alcoholic beverage, as well as the work in progress efficiency.
- Need to determine process bottlenecks that may adversely affect cycle time of the new product introduction.
The process bottlenecks that may negatively affect cycle time of the new product introduction include the breakdown and replacement of machinery (Stadtler, 2015). However, other bottlenecks could be termed as capacity issues. However, growth in demand leads to the application of the average capacity strategy, lag, and lead, which call for strategies regarding the timing of capacity expansion.
Growth in demand necessitates capacity in production. As such, aggressive strategies can be applied to get customers from capacity-constrained competitors to respond to unexpected demand surges as well as provide better service levels during demand peaks. The company can also use average capacity when it overlaps with the average expected demand to cater for periods when demand is not met (Vrellas & Tsiotras, 2015).
- Need to explain how principles of lean management could be applied to the introduction of the new product to account for adverse effects on cycle time.
The principle of lean management could be applied to the introduction of the new alcoholic beverage to reduce waste thus accounting for the negative effects on cycle time. Lean management ensures an elimination of waste as well as improving the overall make during production. As such, AB InBev would ensure steady production of the product, reliable equipment, flexible resources, high quality, quick setups, reliable suppliers, and well maintenance of these elements (Stadtler, 2015).
Therefore, lean management would involve reducing machine setup time with TQM influence. Such allows for value delivery to the consumer in addition to organizing production as a continuous flow. The process also involves perfecting the product and creating a reliable flow the information distribution and decision-making (Fullerton, Kennedy & Widener, 2014). Further, the company would seek perfection to meet consumer requirements with no inventory stock.
Aziz and Hafez (2013) assert that lean production differentiates designs from mass production through technique and objectives thus optimizing the production system’s performance against a perfection standard to meet consumer tastes and preferences. AB InBev would use lean management to ensure that the new product is not over-produced and with continuous work, it will meet the consumers’ demand.
- Prepare a recommendation for an appropriate strategy aligned with principles of lean management that the company could implement to improve cycle time of the new product introduction.
One strategy aligned with principles of lean management that AB InBev could implement to improve cycle time of the new alcoholic beverage introduction is continuous improvements. With the strategy in place, some obstacles might arise requiring new ideas to fuel the lean process thus eradicating non-value added activities (Fleischmann, Meyr & Wagner, 2015).
- Need to assess the labor, equipment, and material needs of the company that would be required to support the new product introduction.
The labor needs for the production of the new alcoholic beverage would involve inventory management, demand planning, running equipment and machinery, selecting of appropriate raw materials. Further, labor will include manual sorting of improperly packaged drinks, rejected bottles, and transporting the finished product using forklifts. These raw materials include water, hops, and barley with the finished product being packaged in bottles, which the company will source from other plants. The equipment will entail mixing, fermenting, and packing equipment that helps in the process to arrive at the quality finished product.
- Need to propose a labor, equipment, and materials plan to support the new product introduction that could be implemented by the company.
One might propose a labor, equipment, and material plan involving a cellular layout to ensure that labor is used more efficiently and effectively (Wisner, Tan & Leong, 2014). As such, production in an assembly line format seems to be the most efficient to support new product introduction for AB InBev.
- Need to explain how the proposed labor, equipment, and materials plan will support the new product introduction.
The company’s proposed labor, equipment, and materials plan will support the alcoholic beverage introduction by creating a workflow to have the beverage produced (Chang, 2016). All raw materials would flow in the same direction to eliminate wait time. However, the production of the beverage is uniform depending on the packaging size; each area can produce units continuously. Therefore, such layout will assist with volume changes or takttime, which means the plant can add or reduce the number of workers from various areas to avoid wasted time.
III. Risk and Financial Impact:
- Need to Identify potential risks to the company associated with the new product introduction.
Launching the new alcoholic beverage will be susceptible to potential risks, which the production management team must address before rolling out the product into the target market. These risks include increasing costs due to processing work in large batches. Alcoholic beverages are usually processed in large batches since it is faster, cost-effective, and produces economies of scale. However, reducing the batch sizes would be crucial for lean manufacturing. Therefore, AB InBev should maintain perspective and use smaller batches to enable cost-effective modifications and quicker feedbacks since the work-in-process in product development would be almost invisible. As such, the company would strike a balance between holding costs and transaction costs to avoid the risk of increasing costs.
Another risk involves losing opportunities by dwelling on a single development plan. Projects are inherently different and require a personalized planning and design process. Therefore, AB InBev should not believe that their development plan is the most effective as such would lead to developing a tunnel vision towards the alcoholic beverage development that does match the changing consumer needs. As such, the management would have to come up with unique designs and competitive features to make the beverage more attractive than competition (Chang, 2016).
Further, AB InBev would have to deal with the risk of major delays and economic costs as the management moves to ensure high utilization of resources to improve performance. This risk is escalated by the notion that fully employed product development resources leads to faster product innovation and launch. Additionally, a project’s efficiency, speed, and output decline as the managers’ capacity is stretched which calls for a capacity buffer in the processes thus eliminating and tackling queues and issues created.
The AB InBev’s product launch might face the risk of starting the product development task too soon or zero tolerance of failure of the project. The management might rush to embrace a new product development task, which might lead to a dilution of resources as other product development projects resume slowing down the progress of the project launched during the idle time.
- Need to develop a risk mitigation plan to address the previously identified risks associated with the introduction of the new product.
To address the risks associated with the introduction of the new alcoholic beverage, AB InBev would establish a reasonable timetable to avert the risk of starting the product development task too soon. Such would control the pace or rate of implementing the project launch. It would also be crucial to ensure that everyone in the company is aware of the AB InBev’s objectives as well as their priorities. Therefore, the management would gather sufficient information through market research in addition to focusing on getting data on pricing and customer demand. The management would also ensure that they keep abreast of what is going on with the company’s customers, suppliers, and competitors.
Regarding the risk of major delays and increasing economic costs, the company would have to agree on an overall budget for the project to ensure that it stays within the limits. Budget preparation should involve the core team responsible for developing the product. Further, it would be worthwhile to use strategies that reduce production costs for the new product, for example, simplifying the manufacturing process, getting cheaper raw material suppliers, and cutting down a few phases in the production process (Chang, 2016).
To overcome the technical hurdles and operations risks, the company would have to choose the right individuals to be in the product development team. Such people must possess all the relevant skills and knowledge, especially on the technical aspects of developing the product. The product launch team must have clear objectives that meet any glitches and a timetable should be drawn up for the whole project. To ensure that the new product meets what the customers need, AB InBev would have to conduct periodic market research to minimize this risk as well as assess customer reaction to the product regarding its taste, appeal, and other physical features. The best way to manage the risks is by being proactive, which involves identifying what the risks are, and taking action before they fully affect the whole project unfavorably.
- Need to explain how our proposed risk mitigation plan will account for and address the previously identified risks.
A critical component of a risk mitigation plan involves developing alternative courses of action as well as workarounds with a recommended course of action for each critical risk. The risk mitigation plan would entail working with tested methods and techniques to shun, decrease, and control the risk occurrence probability and coming up with a contingency plan. The risk mitigation plans would be utilized once risks have been monitored and found to exceed the established thresholds to return the impacted effort to an acceptable risk level. The management would then use the contingency plan once the risk cannot be mitigated (Chang, 2016).
Therefore, the risk mitigation plan will involve alternatives such as risk avoidance, which involves changing or lowering requirements while still meeting the company and consumer needs. It would also include risk control using the active steps to minimize the above risks. The management would come up with risk transfer strategies to reallocate production requirements thus lower the risks involved. The company would also engage in risk monitoring by watching and periodically reevaluating the risk for changes to the assigned risk parameters. The company would not engage in risk acceptance. The management would give adequate consideration to new brewing technology demonstrations as part of risk mitigation planning. As such the work products would entail documented handling options for each identified risk, risk mitigation plans, contingency plans, and a list of the individuals who would track and address each risk.
- Management Strategies:
- Need to describe the key aspects and characteristics of the team that we would build to support introduction of the new product.
The success of the product launch would depend on the team that would be tasked with the whole process. A poor product launch could mean unsatisfied customers, fewer sales, and negative Return on Investment. A perfect product launch, on the other hand, could mean more sales, more happy customers and a better bottom line. Training will be an important aspect of the team tasked with the product launch. As such, the management will focus on training the public relations, sales, support, customer service, and marketing teams on the product to inform conversations and written communications.
The team will consist of top management support who would make the decision as to what to support and what not to support in terms of budget and resources. However, the design team can develop the political savvy to call upon the management to support the introduction of the new product. The team will thus emphasize on gaining managerial support to benefit from leadership and communication. The team should also seek to bring together diverse people from all across AB InBev to improve creativity and success (Chang, 2016).
Another characteristic expected from the team involves professionalism and leadership to ensure that each member bears complete responsibility for their own actions. The team will be market oriented to help the company discover and meet the desires and needs of the target consumers through the product mix. The individuals should also be tech-savvy to create the best product mix suitable for the market. They should thus take responsibility for the new product development strategies and influence these strategies with their user research to guide the strategy to fit the needs of their users.
- Need to select the stakeholder from the company that we would include on a cross-functional team to support the introduction of the new product.
The stakeholders to include on a cross-functional team include the members of the Executive Committee of the product launch initiative which select a leader for each team and allocates appropriate resources for the education and training of the leader (Slater, Mohr & Sengupta, 2014). Each cross-functional leader should be an executive with the title of Senior Vice President or Vice President in charge of a function. The Executive Committee will use the recommendations of the team leader to select members for the initial cross-functional teams. Therefore, the team size will be kept to a minimum of about five individuals.
All the team members will be trained in appropriate theory and practice, and will be executives with the rank of director or above. Further, the individuals will not all have to come from beer division to allow for a diversity of opinion and knowledge. Therefore, the team facilitator will be the executive in charge of a function, for example, sales or human resources. However, the support staff for the cross-functional team will come from the facilitator’s department to vest the facilitator with the authority to make things happen for the cross-functional team.
Other stakeholders of the project launch and management process will include top managers, new hires, supervisors, and the other employees of the human resources department with the director of the human resources department chairing the team. Stakeholders will also come from new product planning, strategic planning, market access, managed markets, business development, finance, as well as sales, marketing, and commercialization.
- Need to explain how our proposed team is cross-functional and how that assists them in supporting the introduction of the new product.
AB InBev will seek to come up with a team that can identify gaps in the market as well as markets in the gap. Such will involve forming a cross-functional team to support the introduction of the new alcoholic beverage. The cross-functional team will be the right mechanism to rapidly respond to changing market needs in the beer industry. The cross-functional team will bring together different specialists who will jointly and simultaneously make product launch design and manufacturing decisions. As such, the team will engage a concurrent, informed, consensus decision-making model to reduce the delays of knowledge transfer involved in sequential activities performed by different people or groups (Slater et al., 2014).
The management will support the team to enhance efficiency, heightened confidence, increased flexibility, self-regulation, synergistic output, and motivation to ensure successful product launch and development. The team will be tasked with resolving conflicts across functional areas, making decisions, as well as coordinating the product development process of the alcoholic beverage. However, the cross-functional team will be used to ensure that decision-making is decentralized through the use of lateral decision processes, thereby hastening the decision-making process and increasing the chance of buy-in and cooperation from all departments.
The cross-functional team will engage the decision-making and action-producing process to speed up the overall cycle time by reducing rework, reducing sequential knowledge transfer activities, increasing knowledge at lower levels of the organization, as well as improving the flow of communication. Such will be useful to align AB InBev’s operating-level decisions with corporate strategy and objectives.
Therefore, the team will be poached from all functions who, at one time or another, are involved in the design, engineering, implementation or manufacturing, as well as marketing of the product. This team will be made up of a small group of key players from each affected functional area who have been carefully chosen for complementary skills and who are committed to a common goal and are mutually accountable for the team’s success (Slater et al., 2014).
- We need to develop a strategy we would use to manage the cross-functional team tasked with supporting the introduction of the new product.
The management will use strategies, such as joint goal-setting and communication to manage the cross-functional team during the product launch. The team leader will be tasked with ensuring that each team member knows and agrees to deliver on what they are assigned to do. However, before the team can embark on an overall goal setting session, the leader will ensure that each team member understands what their skill sets are, how they are placed time-wise and what is the best role that will suit them.
The leader will also assign clear responsibilities to each individual along with the timelines for delivery. It would be crucial to make sure the members of team are aware and on board with who is responsible for what in an explicit manner. Such will help to avert conflict that might arise over goals and team roles.
The leader will have to communicate efficiently with the other members of the cross-functional team telling them what they need to do and by when as well as maintaining top of mind recall and total commitment through regular reminders about pending tasks. They will also ensure that task completion is updated by sharing tips to individual team members about their respective tasks. The leader will thus make communication between team members a priority in addition to encouraging easy flow of ideas between team members with the right tools.
- Need to explain how we could apply principles of total quality management (TQM) in managing the product introduction.
Total Quality Management, involves a management approach to ensure long-term success through customer satisfaction. TQM takes into account all the members of an organization who take part in improving processes, products, services, as well as the culture in which they work. As such, it involves a method by which the management and employees becomes involved in the continuous improvement of the production. TQM uses strategy, data, and effective communications to integrate the quality discipline into the culture and activities of the organization (Mahmood, Zubair & Salam, 2015).
The management will apply the eight principles of total quality management to manage the product introduction. These principles include; customer-focus, total employee involvement. Process centered management, integrated system, strategic and systematic approach, continual improvement, fact-based decision-making, and communications.
Continuous improvement will involve the plan-do-study-act, PDSA cycle which will describe the activities AB InBev needs to perform by incorporating continuous improvement in its operation. As such, this will be a never-ending process involving planning whereby managers will evaluate the current process and make plans based on any problems detected. It will thus follow a documentation of all current procedures, collecting data, and identifying problems.
The information harvested in the process will be studied and used to develop a plan for improvement and specific measures to evaluate performance. The next step in the cycle will entail implementing the plan whereby managers document all changes made and collect data for evaluation before studying the data collected in the previous phase. The data will be evaluated to ascertain whether the plan will achieving the goals established in the planning phase. The last step will involve taking action depending on the basis of the results of the first three phases.
Such will entail communicating the results to other members in the company and then implementing the new procedure if successful. The cycle will then begin again with planning. Such will then give way to employee involvement as the company seeks to improve performance. In TQM, the employees will be empowered to make decisions relative to quality in the production process since they form a vital element of the effort to achieve high quality (Mahmood et al., 2015).
- Need to describe how we could utilize the total quality management (TQM) approach for fulfilling customer expectations associated with the new product.
Customer expectations involve the anticipated circumstances of a purchase. They entail all the steps of the buying process including the practical benefits, the interactions with the company, and the effects of the purchase and experience, and the emotions. As a result, customers rate a company’s performance by its ability to meet their expectations. Therefore, TQM will be used for continuous improvement of the customers’ expectations. This will be used to gauge how customers are comparing the new product in respect with other company brands, such as Budweiser.
TQM will be mainly concerned with continuous improvement in all work, from high level strategic as well as specifications quality. Further, the management will look at process of planning and decision-making in order to avoid mistakes and defects. Such will lead to a continuous improvement of processes, technology, capabilities, people, and machine capabilities.
Applying the principles of TQM to fulfill customer expectations associated with the new product will help the company to increase revenues and market quota obtained through flexibility and a quick answer related to the market opportunities. It will also increase effectiveness concerning the use of the organization resources to increase clients’ satisfaction. The move will also lead to an improvement of customers’ loyalty degree as the company expects repetitive business transactions. It will also be crucial in measuring consumer satisfaction in addition to acting according to the obtained results.
- Need to explain how each department in the company would approach assessing customer expectations of the product.
Each department in AB InBev would approach the assessment of customer expectations regarding the new alcoholic beverage by gaining insights from customer metrics. Such will involve keeping the customer active to engage in repeat purchases over a particular stretch of time. Therefore, the company will look at the metrics that describe customer satisfaction, retention, and loyalty to check whether the new product meets the customers’ needs and expectations. These metrics involve gathering numbers and thus will speak volumes. The company will seek to measure customer satisfaction through customer satisfaction score, net promoter score, customer effort score, things gone wrong score, and the social media monitoring with tracking tools.
The management will also try to gain insights from the social community. The company will rely on data from social media sites, such as Facebook and Twitter which talk about the new alcoholic beverage. Social media offers consumers the freedom to speak out and if they do not like a product they will it to other people, which can serve to improve the product features and quality before being taken back to the market. Facebook, Reddit, and Twitter would offer rather obvious platforms to track the customer expectations on the new product.
Other social media metrics include Google alerts, notifies one when their brand appears in a prominent position. The management will also look for mentions, which is a powerful freemium tool that provides a heads up once a company’s brand is mentioned on the web. This metric is crucial for social media tracking. Further, feature request management systems, such as Receptive to help in drawing the right conclusions.
Customer expectations will also be assessed through categorized feedback whereby the management will look at the whole group of customers for feedback. This will help identify patterns as well as make assumptions regarding the likelihood that the customers will behave in a certain way. Such feedback will provide a concrete idea about where to start in direct contact with the ‘average’ customer. This will be possible through customer feedback surveys, usability tests, comment boxes, social listening, exploratory customer interviews, on-site activity, and email and customer contact forms.