The beverage industry is a dynamic and highly competitive sector where logistics efficiency, service quality, and distribution agility are critical to maintaining a competitive edge. In this context, the company in focus aims to implement a series of strategic initiatives targeting the optimization of its logistics operations, particularly in cross-docking warehouses and capillary distribution, to increase productivity, reduce operational costs, minimize losses, and ensure high levels of customer service. This case study examines the company’s key challenges, the approaches it plans to adopt, and the expected outcomes, highlighting the impact of operational transformation on efficiency, financial sustainability, and team development.

Continuous improvement as a pillar in the beverage industry

Headquartered in Portugal and operating in over 50 countries, the company featured in this case has a strong track record of innovation and excellence in the non-alcoholic beverage industry. Its core business involves developing, producing, distributing, and marketing beverages. The company manages a long value chain that begins with raw material processing, moves through beverage and food production, and extends to distribution, all the way to the final consumer.

Current state analysis and improvement opportunities

The current state assessment revealed several improvement opportunities across different areas of the company, with direct impact on process efficiency and quality of results.

A significant gap regarding delivery frequency was identified between estimated and actual delivery schedules. Specifically, the actual number of customers receiving one delivery per week was 31% lower than expected. In contrast, those receiving two deliveries per week were 393% higher, and those receiving three deliveries per week were 410% higher. This discrepancy indicated that by consolidating some orders, it would be possible to reduce duplicated deliveries by combining customer-day orders, resulting in potential financial benefits.

Regarding route efficiency, a study found that 54% of customers received their orders before the scheduled time window, and 23% received them after, leading to unnecessary waiting times and highlighting the need for route optimization.

Regarding the order profile, it was observed that, on average, orders do not fill an entire pallet and are often distributed across multiple pallets. This complicates the delivery process, requiring on-site product reorganization at the customer’s location.

Given this context, below are some of the key improvement opportunities identified:

Lack of optimization in customer orders

The company faces challenges in optimizing customer orders, as minimum order quantities are not met, there is no consolidation of orders from the same customer on the same day, and several customers are off-route with small order volumes.

Limitations in the transportation planning process

Challenges in delivery planning were identified, mainly due to limited automation, scheduling vehicles by weight instead of pallet count, and time windows that don’t accurately reflect real delivery conditions.

Lack of optimization in the distribution operation

The distribution operation faces several challenges: routes are not optimized, customer waiting times are high, payment collection processes lack standardization, orders are spread across multiple pallets, and driver roles are not clearly defined or standardized.

Limitations in warehouse operations

Picking systems are inefficient, especially for low-volume items, and warehouse operations lack standardized procedures, leading to operational inefficiencies.

Strategic misalignment

The commercial and logistics areas are not aligned, causing discrepancies. In addition, there is an uneven level of demand, and resource allocation is limited.

Limitations in team and performance management

Some performance indicators are overly complex, making them difficult to monitor. Moreover, there is no structured system for collecting challenges or improvement suggestions, which hinders the practice of continuous improvement within the organization.

Strategic initiatives for operational improvement

To address the previously identified challenges and achieve the expected benefits, ten initiatives are planned to optimize customer orders, transportation planning, distribution and warehouse operations, network and strategy alignment, as well as team management and performance.

Improving the order system

To develop a parameterized system that supports optimized distribution, system changes must be made to prevent orders that fall below minimum quantities, as well as off-route orders without valid justification. In addition, it is crucial to group the various customer orders into a single order.

Enhancing route planning

To carry out the routes according to the ideal sequence, time windows need to be validated and parameterized in the routing system, as well as a process for reviewing each customer’s order data.

Simplifying transportation planning processes

Automating transport registration and communication with the warehouse is essential to streamline and automate transportation planning while reducing internal processing time and enabling earlier warehouse preparation. Orders should also be grouped by specific characteristics to enhance efficiency, minimize idle time, and simplify the delivery process.

Minimizing customer unloading time

To enhance delivery efficiency and shorten unloading times, a tailored picking process should be implemented based on customer, order consolidation, and location. This means preparing pallets in the warehouse already sorted by customer and aligned with the route sequence. The goal is to ensure faster, easier deliveries with more accurate quantity confirmation. Additionally, fewer delivery resources and more deliveries per vehicle are encouraged.

Figure 1 – Current and future pallet preparation state

Eliminating/minimizing payment handling

To place payment solely in the hands of the customer, cash payments should be eliminated, and initially, only credit and ATM payments should be accepted, and ultimately, only credit payments. This will reduce the driver’s waiting time at the customer’s and eliminate trips back to the customer.

Driver standard work

To standardize the roles of drivers and assistants, a best practices manual must be developed for drivers, along with a unified process to be applied across all distribution centers.

Figure 2 – Productivity improvement and time reduction objectives

Optimizing picking productivity

Clear criteria must be established to select the most efficient picking methods and optimize picking routes, thereby improving picking operations. The goal is to ensure each pallet passes through each picking position only once and that customers are assigned to specific pallets.

Warehouse standard work

A best practices manual should be developed for warehouse operations to ensure pallet optimization, maximum stability, and accurate order verification. Additionally, implementing automated and weight-based verification systems will help reduce errors, product loss, and operational costs.

Figure 3 – Objectives of warehouse standard work

Evaluation of required delivery days

Delivery days must be optimized based on historical data to assess the potential for aligning resources with daily operational needs. This includes adjusting delivery routes and evaluating commercial impacts. Doing so will enable the reduction of travel distances and idle time costs.

Daily Kaizen

Daily performance indicators (KPIs) must be defined and monitored to support frontline teams across all operational levels. These should be reinforced through structured daily meetings.

Figure 4 – Daily Kaizen structure

Expected results

If implementation proceeds, expected gains include over €15,000 from consolidating customer orders; approximately €170,000 from scheduling off-route deliveries on the correct day and eliminating pickups without deliveries; around €290,000 from adjusting time windows; and an estimated €300,000 impact from a possible 33% reduction in delivery time. In addition to the financial effects mentioned above, the following intangible results are also expected:

• Improved customer satisfaction
• Increased productivity
• Establishment of a continuous improvement culture
• Reduced variability and fewer operational errors among teams
• Greater operational reliability and predictability

We are committed to respecting our clients’ confidentiality. While we have altered or omitted their names, the results are genuine.