Portuguese wines are increasingly appreciated,
but the formula for success is not simple
by Antonio Costa, Senior Partner, Kaizen Institute Western Europe
Since 2010 Portuguese wine exports have risen by 11% in volume and 31% in value. In recent years we have witnessed several recognitions of Portuguese wines in the most varied markets and even Forbes’ list of the best wines of 2019 highlighted a Porto and two red wines among the ten best wines in the world. In other words, Portugal is the 11th largest wine producer in the world and the eighth largest exporter. All of this, of course, are reasons to be proud and one should be satisfied with the performance achieved, but variables tend to increase with complexity.
Portuguese wine is sold below the world average price and its production is less than half of the world average production per hectare. Most of the wine exported is in bulk and dependence on large distribution chains is a reality. In turn, marketing teams are constantly making changes to labels and bottles to try to reach consumers in a more personalised way. Lack of viticultural land limits growth, adding pressure to farmers to plant more profitable fruits to enable them to get a higher value from harvests.
These external signals demand improvement, however, internal issues indicate that improvement opportunities abound: lack of manpower, aging staff, high loss of availability during change-overs or process setup (change of product type or complete line changes), line startup, overtime and service-level failures during peak periods. In short, it is an industry characterised by high levels of finished goods, large batch production, with low efficiency and productivity. Furthermore, new product development is overlong and frequent key performance metrics and indicators (such as OEE, or even productivity) are often unavailable or not monitored.
In Continuous Improvement we often say you cannot improve what you do not measure. So, these external market signals and internal organisational cues have been a good starting point for our KAIZEN™ experts. In this sense the hidden costs and the low levels of service in the logistics and production systems initiated small, incremental changes. After a careful analysis of the value chain, using KAIZEN™ methods and mapping tools, it was possible to identify and measure the vast majority of the above-mentioned signals and challenge internal teams to design improvement solutions, some even disruptive, to face the future with optimism.
Several benefits of applying KAIZEN™ can be highlighted like improved productivity of 50% in vineyards and manual operations, reduced setup times well above 30%, minimised overtime. Reducing stock levels and export Lead Times between 30% and 60%, and the reduction in annual operating costs by significant amounts, add to the mounting evidence of increased efficiencies. Quoting management guru, Peter Drucker, “Culture eats strategy for breakfast”, it appears that these improvement movements are unstoppable and this is the path that is being followed by Portuguese wine producers like Aveleda, Adega Mayor, Adega de Borba, Madeira Wine, Nieeport, Quinta do Valado, Sogrape, Symington, among others.
KAIZEN™ is also formula of sucess in the wine industry.
First published in Forbes