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15 July 2013 | Andrew Allen
Accolade Wines has reduced its annual inventory by 17 per cent and increased cash flow by streamlining its supply chain processes.
The company said its plan - designed and put in place by supply chain consultancy Crimson & Co - had also produced a reduction in write-offs – such as products that can’t be sold – and inventory financing worth £2 million a year.
“Strategic sourcing has seen vast benefits, too, with £2 million worth of indirect purchasing savings and £4 million worth of direct purchasing savings,” said Accolade. The company, which owns brands such as Hardys, Echo Falls and Kumala, sought to expand into new markets in Asia Pacific, China and North America.
It was also looking to reduce costs of goods across the supply chain, from grape purchasing, wine blending, transport, packaging, and material spend while maximising margin. Crispin Mair, co-founder and director at Crimson & Co, said wine companies had to maintain high levels of product availability in a market driven by promotions.
“This requires meticulous planning and risk assessment to avoid either excesses or shortages in wine supply, while deciding how scarce bulk wine is best utilised and lowering costs through global sourcing,” he said. Crimson & Co was hired to analyse the supply chain, identify underlying issues, work out how they could be solved and evaluate the business case for doing so.
The consultancy implemented a plan to achieve total visibility of supply and demand throughout the supply chain, allowing better service with less stock. This included a major ERP upgrade programme.
“Quick wins were identified, such as unlinking bottling production orders from purchase orders for bulk wine, sharing wine between packing lines and planning production based on the bulk wine rather than finished goods,” Accolade said.