Case study: Britvic
Maximising resilience in the world of soft drink production: the Britvic continuity programme.
By Andy Cuerel, Senior Consultant & Risk Management Specialist, Razor.
Modern FMCG companies are complicated beasts. They often rely on complex supply chains to maximise efficiencies, high-tech IT systems to manage order processing and stock movement and highly automated production plant to minimise labour costs.
Britvic, the UKs No.2 soft drinks producer is no exception. The company boasts 17 interconnected sites across the UK, Ireland and France: comprising production, distribution and administrative facilities. From an operational perspective alone, maintaining business continuity is a significant undertaking, this before one even considers the wider gambit of financial, personnel and reputational risk which all organizations are susceptible to.
Britvic has long since employed formal risk management and contingency planning measures but like many expanding companies, a lack of uniformity can develop over time. This is particularly prevalent for organizations that have grown rapidly through acquisition: in Britvic’s case, Robinsons and C&C’s soft drinks division, amongst others.
Another significant milestone was Britvic’s floatation on the UK Stock Exchange in December 2005. For the crisis managers amongst us, the advent of public ownership brings with it a new key stakeholder whose needs and expectations must be managed carefully through good times and bad – the financial shareholder. Most importantly of all is the need to maintain reputation with consumers and retail/wholesale customers, both in terms of producing a safe, quality product and maintaining the required supply of that product.
In 2006 Britvic decided to comprehensively review its risk and crisis management systems. For the latter activity, they chose Razor, a College Hill company, to work with them, a relationship which has continued since.
So what are the key incidents or crisis situations likely to affect a company like Britvic? What had they been susceptible to in the past? Product recall situations are a prime candidate for any food and beverage manufacturer whether driven by quality issues, packaging defect or other forms of contamination. Physical incidents such as fires, power outages or systems failures are another. A further key area for a FMCG provider is supply chain discontinuity whether through supplier failure, embargos or transport disruption.
Britvic has been victim to most if not all of these issues across the course of its history, not, one should add, as a consequence of poor incident avoidance measures, but based on the risk manager’s version of Murphy’s Law. “Anything that can go wrong, will do so eventually given enough time”. [Actual examples include fires at the Widford (Essex) production facility and another at the National Distribution Centre in Lutterworth started by a defective fork lift truck).
Other examples have included a small number of Cherry Tango cans failing under pressure, traced quickly to a minor yeast cell contamination on the production line and a passion fruit crop failure in South America, temporarily impacting the corresponding J2O range.]
A survey of the company’s senior management team was undertaken as the starting point: and this proved revealing. Issues arising included a lack of uniform understanding around terms e.g. ‘crisis’, ‘issue’, ‘incident’ and a variance in opinion over how such matters were managed, learnt from and avoided going forward. Further issues were uncovered around jurisdiction – who is in charge and for what circumstances?
From this initial assessment, Razor worked together with Britvic to significantly revamp the existing strategic crisis management procedures. The first element to hit the cutting room floor was the term ‘crisis’, replaced throughout with ‘incident’ as far more accurate nomenclature for situations which whilst serious, were not likely to threaten the fabric of the business if managed correctly. Other functional changes included a more schematic driven and user-friendly procedure divided into three distinct sections based on Britvic’s risk profile: product recall/withdrawal; site/environmental incidents and ‘business incidents,’ the latter providing best practice guidance for non-specific circumstances, the supply chain issue referenced above being an example. A pocket guide version was also produced, so team members could keep the core information with them at all times.
What of the team? The old crisis management team morphed successfully into the new Incident Management Team, now recognised throughout the business as the ‘IMT’. Significantly however, there was more than merely a change of name. New roles were configured in conjunction with escalation protocols, which freed Britvic’s Executive Committee (ExCo) from being involved in less serious incidents, a common challenge in many organizations where board members (understandably) want to have involvement in situations affecting their domain.
Once launched in the summer of 2007, this was immediately followed by a training simulation exercise in order to induct all those concerned and to provide a robust test of the new document and supporting processes. [The subject included a re-visit of the Cherry Tango can issue, effectively doubling up as a ‘live’ review of this previous incident.]
The exercise as expected went well and with relatively minor revisions, the new processes were adopted into the mainstream business.
So, job done? No, of course not. The above proved an excellent starting point, but Britvic is a company of 3000 employees, the majority of whom naturally were not directly engaged with the new process.
Enter the local manager training sessions, known more colloquially as the ‘Britvic Roadshow’! These comprised a series of sessions whose objectives were to increase awareness of the new process across the business, but crucially as well, to ensure that emerging incidents were recognised as such and escalated to the IMT where necessary. Case studies and mini exercises were used to reinforce set criteria as to when such incidents should remain under local control and when they should not. The outcomes of this were highly beneficial to the wider programme allowing the IMT to engage strategically with incidents and maximising the ‘golden hour’, the oft borrowed first aid analogy which allows senior management teams to intervene and support business sections in difficult circumstances.
The programme would not have been complete however without more detailed local business continuity planning. This has been applied both to the production and distribution estate (nine sites in total) and, currently work in progress, the supporting administrative functions. “Everything starts and finishes with Finance” has been an oft quoted phrase, reflecting the way in which everything has to be paid for or sold at some point in its lifecycle - A simple but pertinent truth for any business!
The key part of this element has been to ensure that local procedures are aligned both in terms of functionality and ‘feel’ with the central IMT and this again has proved successful. Considerable effort has also been expended in joining up individual contingency plans across business units. This has involved the examination of workflows across departmental borders, in order that assumptions are uniform in terms of resources and alternative working practices.
To explain by example, Britvic uses sophisticated software in order to track the manufacture and distribution of product against customer requirements. It is used extensively across many business sections and it is vital therefore that any manual workaround processes developed to support its short term demise are seamless. In simple language, if ‘Accounts Payable’ require hand written requisitions in order to workaround a defunct IT system, then ‘Procurement’s’ local contingency plan needs to reflect this requirement as well. An obvious statement but too often cross-border considerations are not made, particularly in companies whose risk management is driven by ‘tick box’ governance rather than practical considerations – and there are plenty of them!
The above activities naturally are also complimented by incident avoidance measures, some of which have been triggered by previous issues. Supply chain resilience, for example, has come under scrutiny after a key supplier nearly went bankrupt. This failure nearly resulted in the inability to supply some customers with a core mixer ingredient. Extensive work has subsequently been undertaken by procurement teams, to identify, where possible, more than one supply option for critical ingredients, infrastructure and services, in order to mitigate the likelihood of similar situations occurring.
Parallel activities have also been undertaken in order to better understand redeployment capacity across the production estate should a unit become inoperative, this also accompanied by the identification of additional co-packers as a further resource in such scenarios.
So, the systems and processes appear sound as do the theories underpinning them, but what about in practice?
Since the inception of the IMT as it now functions, there have been a total of nine formal invocations. Of these, three have been retained by the IMT and strategically managed in line with procedures. The other six have been monitored at senior level but control has been retained at the incident epicentre – this seemingly mundane statistic is important as it indicates that Britvic colleagues have seen fit to contact the IMT on the basis of ‘if in doubt’ even if control has been retained locally – this is a key indicator that a system has become ‘the way we work’ rather than an add on.
The range of incidents managed at IMT level across the last four years has encompassed a broad cross-section of events including: a factory fire in Ireland; an incorrect packaging design issued to the leisure trade and some technical production line issues in the Rugby factory. Less seriously, but still providing a very good test of complaints monitoring and internal communications, were two incidences of consumers reporting a rather strong taste when consuming a Britvic Robinsons cordial – a recall or withdrawal looked a possibility, until it transpired that said consumers had not appreciated the need to ‘dilute before tasting’...
All of these situations, whilst challenging at the time have been mitigated successfully and aided by the management structures in place. Jurisdictions and internal lines of communication have been adhered to, supporting resources are understood and utilised and the IMT meetings have been chaired and attended by colleagues skilled in the disciplines required of them, more specifically the ability to act calmly, rationally and ethically in pursuit of the needs of the business and its key stakeholders. Britvic’s very strong position in terms of market share, profitability throughout the recession and share value have been aided in no small part by this rigorous approach to continuity and reputation management.
No business can avoid all incidents, no business can foresee all eventualities. As Britvic has proved, however, you can alter the odds dramatically in your favour in pursuit of the resilient organization.
Contact Razor at www.collegehill.com
Contact Andy Cuerel at +44 1869 353 806
•Date: 19th April 2011 • Region: UK/World •Type: Article •Topic: BC plan development