Since its beginnings in the early 1960s, Frucor has evolved from a small New Zealand juice business to a leading Australasian drinks company and the market leader in energy drinks in Australia and New Zealand. In recent years, IT has become an increasingly important enabler for Frucor to grow its operations, streamline its processes and simplify its manufacturing and logistics, enabling it to get product out the factory door faster.
The successful completion of two important and complex SAP projects at leading Australasian beverage manufacturer, Frucor, is a lesson in the value of a customer and its systems integrator forging a fruitful strategic partnership.
UXC Oxygen has become one of Frucor’s key external IT vendors. It has helped the leading drinks company become one of the smartest operators in the industry, thanks to a world class direct containerisation project and an ambitious warehouse management refit to replace manual processes with SAP technology — two of
the company’s biggest IT-enabled projects completed to date.
Made to order and out the door
When Frucor’s direct containerisation project went live in May 2014, it was the successful culmination of an IT project, physical site works and change management programme. It turned the old manufacturing philosophy of ‘make to stock’ on its head as Frucor endeavoured to improve efficiencies with a transformation to ‘make to order’.
The project simplified the business critical process of shipping product from New Zealand to Australia by eliminating container hand stacking and repacking. It was a change that sounded simple, but required major SAP system changes and a massive team effort from both sides of the Tasman. Adding to the risk, another major manufacturing change, Project Fusion, was due to ‘go live’ at the same time.
“It was very complex,” says Richard Raj, group IT solutions manager, Frucor. “As well as creating the new production line, we had to continue with the ‘make to stock’ process for our New Zealand supply of beverages. We had to redesign the way we fulfilled the orders and ensure we had the logistics streamlined to enable us to produce, pack and ship the goods in containers, in one seamless operation.”
Raj says while the concept was well understood, the depth of complexity in the transformation was enormous. It was a major shift in the way the factory worked, compounded by the inward goods and labelling changes that were occurring with project Fusion. There was a high degree of interdependency between the two projects.”
Direct containerisation has removed eight steps from the old ‘make to stocks process and the payback has been quick to materialise, says Raj.
“What was a two-week operation has come down to a few hours and we can now get product to market a lot faster. Before we had team members taking product from warehouses, then manually stacking it onto Australian pallets and into Australian containers. Now Australian product ispalletised on the line and packed directly into containers.”
Raj says a number of factory innovations introduced with direct containerisation, including automated palletising, have minimised health and safety risks and saved money thanks to a significant reduction in damaged goods.
Frucor now has complete visibility over all export stock, and inventory accuracy is outstanding. At the Australian end, loading and unloading of stock has improved dramatically.
“All they have to do is unload, scan and put away — there is no assembly needed.”
For Raj, one of the most satisfying aspects of the direct containerisation project has been the overwhelmingly
positive response from the Frucor Leadership Team.
Success breeds success
As Frucor’s business grows, Raj says it is important the systems and processes are in place to ensure projects happen to plan. “We can no longer simply will changes or projects into existence, we need the systems, management and external support in place to execute these types of projects.”
Raj says demand from the business for IT transformation is growing. “We are expanding our IT service footprint across the entire business and as a result we are getting better synergies between suppliers.”
He says internal customers are much more informed about what they want from IT. “IT is expected to lead business change and to achieve that you need to have a partner with product and business domain expertise to ensure the technology investment pays off. UXC Oxygen has supplied us with that and is now a key part of
supporting our core SAP environment.”
During 2014 Frucor’s IT department tackled more projects than ever before, bringing most of them in on-time and on-budget.
Says Raj: “We have doubled the number of projects we have undertaken over the last few years and we are now receiving more funding because each of them has had a good business result.”
Better control of inward goods
Project Fusion was born out of a desire for Frucor to have a better way of operating. The name reflected a fusion of SAP and factory automation, and the project involved the commissioning of new factory equipment as well as a system implementation. Phase 1 replaced legacy applications with SAP to provide accurate, near real-time information on factory activity.
A key component of Phase 1 was the introduction of raw materials handling to track the receipt and consumption of raw materials against factory orders. It included the introduction of the ‘NKr application.
Raj says the PIKI device allows Frucor to record and monitor inventory movements and other items as they happen, rather than later.
“With PIM, store men use wireless touch screen Windows 8 tablets mounted on forklifts to record where
materials are allocated in the factory.”
The system uses a graphical interface to SAP which was custom developed by UXC Oxygen and Frucor and
replaces SAP’s complex menus and screens.
Before Fusion, Frucor had only two SAP stock locations – on-site and off-site. “People often had to manually check where stock was and on a large site that was very difficult and time-consuming,” says Raj.
They now use PIKI to move material in and out of them on SAP as they are actually moving it and to issue stock to factory work orders. We now have all the goods recorded on the system and can track their whereabouts.”
A key part of Project Fusion was the introduction by UXC Oxygen of handling unit labelling, which linked factory orders to finished goods at the time pallets are produced to streamline finished goods management.
“This improved the tracking and traceability of goods and ensured they had one identifier in SAP on
both sides of the Tasman.”
Another improvement was in the production control system (PCS), says Raj. Frucor replaced its legacy paper-based PCS system with a modern business intelligence system. The PCS automatically gathers data from production as it happens so production team leaders can track performance against targets.
“Thanks to the new system, managers get up to the minute feedback and insight into how downtime occurs,” Raj says.
Raj says the effective fruition of the two projects has seen UXC Oxygen move from the position of IT supplier to strategic partner.
“The relationship has matured as the two projects materialised,” says Raj. “UXC Oxygen has an in-depth knowledge of our business and the way we operate, which means I don’t have to second guess too much. I know they are putting the best options on the table and I know they back us 100 per cent.”