Innovating for Efficiency: LCBO’s Culture of Continuous Improvement

When he took over the quality assurance lab at LCBO in 1997, it was half the size it is today. Staff members performed 180,000 tests a year on 9,000 samples in an unaccredited facility, with each one taking about three weeks to complete. Morale was low, and it was costing the provincial government agency $1.3 million a year to run.

Coming from the private sector where he had been instrumental in developing quality assurance (QA) systems for Ontario wineries, Soleas knew what suppliers and the public needed from that kind of service and saw an opportunity. He had an idea, surrounded himself with the “right” people, and over the next two years transformed LCBO’s lab into a world-class operation that generates more than $3 million in revenue every year.

Tests are turned around in three days (510,000 last year on 24,000 samples) and the facility is doubly certified to ISO9001 and ISO17025 standards. The ideas Soleas floated – simple in some ways, complex in others – were met with healthy skepticism, but he was given the chance to prove they made sense. That chance resulted in changes to the business model, dollars to the bottom line, improved service and the beginning of a culture shift where ideas could be cultivated.

“I’m not the smartest guy in the room, but I know how to bring the right people together and challenge them to come up with better ways of doing things,” Soleas says. “You have to think about making things better, more efficient and more effective, through the lens of your customers and your suppliers.”

With an M.Sc and Ph.D. from the University of Toronto in biochemistry, Soleas trained in oenology at U.C. Davis and spent 12 years in the Canadian wine industry leading R&D and quality assurance for a major winery. He also spent nine years as the chair of the technical and scientific committee of the Canadian Wine Institute.

Today, he’s responsible for the LCBO’s logistics, QA, information technology, store development and real estate, and resource protection divisions. The provincial agency has a store network of more than 640 locations and five distribution centers across Ontario, with annual sales of $5 billion. Not surprisingly, the corporate culture is one of continuous improvement and one where ideas – the roots of innovation – are embraced.

Distribution Center Mechanization

“Whenever I’ve approached George’s team with an idea, it’s always been well-received,” says Les Hanzlik, maintenance supervisor at LCBO’s Ottawa Distribution Center. “They ask questions, and there’s just the right amount of push-back. Then they see benefits, get behind the project and I have what I need to see it through. It’s a good feeling that makes me want to bring more ideas forward.”

For decades, the Ottawa facility, a three-story bomb shelter built in 1950, ran into practical and logistical problems. Too much in- and out-bound congestion through the same shipping doors, aging elevators and accidents hurt morale and productivity. The board also was preparing to consolidate additional products from a third-party facility about an hour away, which meant an increase in cases to handle.

Ottawa needed mechanization, and Hanzlik and the team had ideas on how to make that happen. “It was something that, for years, people said couldn’t be done,” he says. “We just poked away at that and demonstrated that it could be done.” Working with Soleas, they made the business case, brought in conveyors and made changes to work processes. The flow of ideas and the openness with which they were shared brought new life to innovation that improved both efficiency and safety.

Automating Durham

The LCBO’s logistics facility in Durham, Ontario, is massive. It’s more than 650,000 square feet, employs 300 staff members and moves more than 52 million cases a year. Since it was acquired in 1984, there have been constant upgrades and modifications to the systems – manual and automated – that receive product and push it out to stores.

Many of the ideas behind the modifications come from people who work there every day and see the opportunity to make the systems work better. De-stuffing containers and palletization of product have long been time-consuming and intensive tasks at Durham that required careful employee training on ergonomics and health and safety rules.

Four years ago, Director of Operations Bruce Pizzolato had an idea: an extendable platform that could lift an employee and a conveyor up and down, allowing for the safe sliding of cases from the inside of the container onto the conveyor. It would reduce the amount of bending, twisting and reaching an employee had to do when unloading a container.

Pizzolato drew a sketch, showed it to Soleas and LCBO President and CEO Bob Peter, and walked them through how the device would change the way employees worked. “I just put it out there, and I’m grateful they had the trust and faith in me,” Pizzolato says. “But I take that trust seriously. There’s got to be accountability – if it goes sour, it’s my mess to clean up. But that doesn’t stop me from dreaming, because I know I have their support.”

Today, the Destuff-It, as it’s called, can unload more than 425 cases per hour instead of 300 under the old system. It is a trademarked machine in use at LCBO logistics facilities and other companies in Canada and the United States.

With beer, wine and spirits being shipped in cases varying in size and shape, palletization at Durham had always been a challenge. Mixed pallets comprised of different cases could be unwieldy and time-consuming to set up, and picking and loading was physically taxing on employees.

In 2008, the team at Durham came up with an idea to automate the palletization process. It would increase productivity and reduce musculoskeletal injuries. It was a big idea that would lead to big changes and big savings. Unique algorithm software was integrated into the warehouse management system, a “first-of-a-kind” prototype was developed and tested, and in 2012, 16 of 28 manual palletization stations began automation. The $7.5 million investment in LCBO’s Auto-Palletizers will be repaid in less than two-and-a-half years, and will provide labor efficiencies, breakage reduction and product consolidation.

That kind of thinking makes Soleas proud. “In our business, if you’re not innovating, you’re stagnating,” he says. “If you want to deliver to the bottom line, you either have to generate more revenue or find operational efficiencies. These two things can only be done by having innovative ideas, and the stronger the team, the better the ideas.”

Heather MacGregor is with LCBO Corporate Communications in Toronto, Ontario. Background information for this article was provided by Andy Georgiades, also of LCBO Corporate Communications.