Tag: Anheuser-Busch

OM in the News: Using Machine Learning to Keep the Beer Flowing

Anheuser-Busch uses this sensor to pick up ultrasonic sounds coming off conveyor belt and motors.

The world’s largest beer maker is using low-cost sensors and machine learning to predict when motors at a Colorado brewery might malfunction, reports The Wall Street Journal (Jan. 24, 2019).  The Anheuser-Busch plant was the first among the company’s 350 beer facilities to test whether wireless sensors that can detect ultrasonic sounds—beyond the grasp of the human ear—can be analyzed to predict when machines need maintenance. “You can start hearing days in advance that something will go wrong, and you’ll know within hours when it’ll fail. It’s really, for us, very practical,” said the VP.

The installation at the brewery cost just $20,000. Since the system was deployed, it has predicted pending equipment failures and prevented unscheduled production-line halts, and more than $200,000 in product loss. (The Colorado plant employs 580 people and ships 225 truckloads of Budweiser, Bud Light and other beer brands each day).

Sensors have been used for predictive maintenance in the past, but they were unable to transmit information in real time. Advances in processing data at the edge of the network, referred to as edge computing, enable companies to collect and analyze real-time sensor data from machines. Machine learning refers to the subset of AI that allows computers to act “intelligently” without being explicitly programmed. Algorithms can increase the accuracy of predictions based on large amounts of historical and real-time sensor data.

Organizations that own wind turbines or jet engines are expected to save about $1 trillion a year as a result of predictive maintenance techniques. Sound-based predictive maintenance is becoming more important for companies, as there has been a wave of retirements among workers who were tasked with listening to machines to identify potential breakdowns. The price of internet-of-things sensors is expected to fall to 26 cents on average by 2024, from 46 cents in 2018.

Classroom discussion questions:

  1. What is predictive maintenance?
  2. How does this differ from “breakdown maintenance?”

OM in the News: The “Leaning” of Anheuser-Busch

“There has never been a beer company like AB InBev,” writes Businessweek (Oct. 29-Nov.3, 2012). It was created in 2008 when InBev, the Belgium-based owner of Beck’s and Stella Artois, swallowed Anheuser-Busch(AB), the maker of Budweiser, in a $52 billion hostile takeover. Today, AB InBev is the dominant beer company in the U.S., with 48% of the market. It also controls 69% in Brazil, is the 2nd-largest brewer in Russia and the 3rd-largest in China. The company owns more than 200 different beers around the world.

In a case study in lean management (Ch.16), after taking over Anheuser, AB InBev slashed costs at the combined company by $1.1 billion in a single year. A former AB InBev executive was quoted as saying: “the company saved about $55 million a year substituting cheaper hops in Budweiser and other U.S. beers.”   AB InBev also saved money on other materials. It used smaller labels and thinner glass for its bottles. It tried weaker cardboard for its 12-packs and cases. The old Anheuser-Busch insisted on using whole grains of rice in its beer. AB InBev was fine with the broken kind.

AB InBev CEO Carlos Brito was likewise tough when it came to the perks to which Anheuser employees had grown accustomed. He cut the number of BlackBerrys in half. Execs who once traveled in corporate jets now flew commercial. He removed the interior walls at 1 Busch Place in St. Louis and turned the office into an open-plan space. “We always say the leaner the business, the more money we will have at the end of the year to share,” said Brito. “I don’t have a company car. I don’t care. I don’t need the company to give me beer. I can buy my own beer.” He also laid off 1,400 people, about 6% of the U.S. workforce.

Profits are up, but AB InBev is having trouble selling beer. The company’s shipments in the U.S. have declined 8%  from 2008 to 2011,  and last year Coors Light surpassed Budweiser to become America’s No. 2 beer.

Discussion questions:

1. What are the OM implications of AB InBev’s cuts?

2. What are the main attributes of lean companies discussed in Chapter 16?

3. How do beer drinkers feel about the changes?