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Analyze the Operations Management at New Belgium Brewing Company and how it has led to its Growth

Latest posts by Jonathan Kush (see all)

    Founded in 1991 by Jeff Lebesch and his wife Kim Jordan, New Belgian Brewing was initiated as a tiny basement operation in the couple’s home located in Fort Collins utilizing a small capital funding. NBB quickly developed a mini customer base in Fort Collins and later Colorado. Sooner, the company outgrew the couple’s basement and shifted into an old railroad depot before it settled into its present custom building in 1995. The firm used word of mouth as its advertising strategy which was effective till 2005. One liquor vendor who owned a store in Telluride is allegedly said to have given people gas money if they stopped and picked New Belgium product on their way through Ft. Collins before the wide distribution of New Belgium beer in Colorado. Although NBB has not diverged from its original principles, the approaches and staff members of the brewery have become more official and professional. The company has been hiring production managers and also continuously enlisting professionals from outside the craft-brewing community while being vigilant not to stifle staff involvement in the reshaping of the manufacturing practices and identification of projects that bring in the highest returns.  
    This essay is going to critically analyze the operations management at New Belgium Brewing Company and how it has led to its growth. Operations management is the process of planning, organizing, directing, and controlling the resources and activities that produce goods and services for customers. It involves decisions about the design, quality, capacity, efficiency, sustainability, and innovation of the operations. New Belgium Brewing Company is a craft brewery based in Fort Collins, Colorado, that produces high-quality beers with environmental and social responsibility. This essay will examine how the operations management at New Belgium Brewing Company has contributed to its competitive advantage, customer satisfaction, and social impact.

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    Analyze the Operations Management at New Belgium Brewing Company and how it has led to its Growth Case Study


    Key Learning Outcomes

    By the end of the case, students should be able to:

    • Understand the concept of Operations Management and how it is applied to various organizations to boost organizational development
    • Understand how Operations Management activities such as quality management, capacity management, or inventory and supply chain management, are applicable to New Belgium Brewing Company in achieving its set goals and objectives.
    • Learn how to apply the various practices of Operations Management such as quality management, capacity management to real-life companies.

     

    1.0 INTRODUCTION


    New Belgium Brewing Company is a craft brewery based in Fort Collins, Colorado. Founded in 1991, it is one of the largest independent breweries in the United States, producing over a million barrels of beer annually. The company is known for its innovative and environmentally friendly practices, such as using wind power, recycling, and employee ownership. New Belgium Brewing offers a variety of beers, including its flagship amber ale Fat Tire, as well as seasonal and specialty brews. The brewery also operates a second location in Asheville, North Carolina, and distributes its products to all 50 states and several international markets. The company has a strong sense of purpose and values, which are reflected in its employee ownership, environmental sustainability, and social responsibility initiatives.

    However, being a successful craft brewer also poses many challenges for the operations management of the company. As the demand for its products grows, the company needs to ensure that it can produce enough beer to meet customer expectations, while maintaining high quality standards and low costs. The company also needs to balance innovation and efficiency in its product development and manufacturing processes, as well as manage its supply chain and distribution network effectively.

    In this report, we will critically analyze how New Belgium Brewing Company has addressed these challenges and how its operations management has contributed to its growth and competitive advantage.

    Production Capacity and Efficiency
    One of the main challenges that New Belgium Brewing Company faced was to increase its production capacity and efficiency, especially in its bottling lines. According to Joe Herrick, packaging systems manager at New Belgium Brewing, the company's existing lines were capable of producing 294,000 cases a week, but in reality were only producing 150,000 cases each week. This was due to various factors, such as unscheduled downtimes, package changes, maintenance activities, and a lack of real-time information on performance indicators.
    To address this issue, the company implemented a Manufacturing Execution System software solution from AVEVA, which integrated with its existing Wonder ware automation software. 

    This software system enabled the company to monitor and measure key performance indicators, such as Overall Equipment Effectiveness, downtime, run time efficiency, and production volume. The software also provided real-time data and alerts on equipment status, bottlenecks, and quality issues. The software helped the company to identify and eliminate waste, improve scheduling and planning, optimize maintenance activities, and increase visibility and transparency across the production process.

    As a result of implementing the Manufacturing Execution System software solution, the company achieved significant improvements in its production capacity and efficiency. The company increased its OEE from 45% to 65% in just over two years, decreased downtime by more than 50%, increased run time efficiency by 25% – 30%, and achieved record production weeks producing 190,000 to 200,000 cases consistently. The company also extended its packaging area capacity to about 1.3 million barrels each year and delayed capital investments by making better use of its existing assets. These improvements enabled the company to meet customer demands and support its growth strategy.

    Product Innovation and Diversification
    Another challenge that New Belgium Brewing Company faced was to innovate and diversify its product portfolio while maintaining quality and consistency. As a craft brewer, the company needed to cater to the changing tastes and preferences of its customers, who were always looking for new and exciting beers. The company also needed to differentiate itself from other competitors in the market by offering unique and distinctive products.

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