Kirk and Denise from WesMar

I never buy a case of wine when I go wine tasting.  I’ll buy maybe 6 bottles, but never a case.  I just don’t make that kind of coin.  However, a couple weeks ago, I simply had to do it.

My family and I followed some friends of ours up to Russian River.  Our first stop was WesMar.  I’ve never been to WesMar, but I had some of their amazing Pinot before.  So, this was going to be a treat.  We’ve been up to the Russian River before visiting different wineries, but we never made over to WesMar.  As we drove up, my friend took a left-hand turn into an industrial park.  I was a little curious about this, expecting something more typical of a winery.  I thought maybe my friend was making a pit-stop to run some errand (“what the hell is he doing, I want to taste some wine!”, I thought to myself).

Building 6

As we parked next to a creamery, we all got out of our cars and I asked, “Is this the winery?”  “Yes” was the answer…umm OK.  My wife and I looked at each other a little confused.  So, we got our things and walked over to this warehouse.  And there it was, WesMar’s winery.  Filled with people and a very large dog (Zoey) that was as sweet as can be.

We sampled some of the current releases, mingled with some of the guests and then we had a chance to talk to Kirk and Denise, the husband and wife team that run the whole operation.  What an amazing couple of people.  Very kind and genuine.  They made time to talk to us about various topics and not just wine.  It was such a refreshing feeling.  It felt like home in this beautifully industrial setting.  There was such a good vibe there.

I took a look at the prices and I felt compelled to buy my first case of wine at a wine tasting event.  The combination of the kindness and generosity of Kirk and Denise along with the price of the wine (their Pinots rival any in the Russian River and the price point is affordable; the most expensive bottle is $40).  So, for me it was a no-brainer.  However, I had to ask the boss, my wife.  She gave me the green light and it was done.

What we were tasting...notice their dog, Zoey, in the background?

Since that trip, I’ve told this story to several friends and colleagues.  Every time I tell the story, I end it with, “I really wanted to support what they are doing.  They’ve got a good thing going.”

So, cheers to Kirk and Denise.  Keep making great wine and keep making your events special.

William Selyem Vineyard 2010

In Napa, it’s been a very strange spring, summer and fall this year.  We got a late start to summer and the summer really wasn’t much of a summer except for a very short period of time where it got pretty hot.  Now the rain we’ve gotten over the last week isn’t too strange for this time of the year, but it just kinda sucked.  Although, this put a crimp in my mood over the last few months, I was still able to go to work, tend to my family and do some coding and…well, do as I normally do.

But, I’m being selfish.  I mean, what about our grape growers?  According to a recent article from the Press Democrat, it’s been the worst harvest ever.  Some vineyards won’t yield one grape due to the horrendous weather.  This is their livelihood; this is how they put food on the table.  Sure, some of them have insurance to help, but not all.  As the article mentions, layer on top of this the down-turn in economy which has impacted what price-point the wine consumer is going after and you have a big, purple mess on your hands.

So, what will happen over the course of the next few years when wineries start releasing the 2010 vintage?  This is where we’ll see the true craft of winemakers come through.  How do you still make something true to the brand and pleasing to the consumer when you’re challenged with a crop that is low in yield and the quality maybe harder to find?  This may make or break some winemakers.  Time will tell.

This is the kind of thing that makes this industry so intriguing.  Challenges like the weather and economy are just that…challenges.  The people of the wine industry are survivors and they make miracles happen.  As a wine consumer, these are things that make me really appreciate a nice glass of wine.  So, many talented and seasoned people are involved in this product.  Maybe this is why I’m so into wine.  It’s not just how it tastes or the various characteristics it brings to the tongue.  It’s also not just about the feeling I have when I share a great bottle of wine with my wife.  It’s even more than that.  I can’t put my finger on it, but I think writing this article has helped me discover yet another layer of my mysterious passion for wine and the wine industry.

Good luck to all the grape growers, wineries and everyone involved with turning Harvest 2010 into an amazing vintage!

[pic info: I took this on 10/29/10 at the William Selyem property to pick up my allocation.  It was a rainy day and it was kind of cool to take this picture with the droplets coming of the grape...it was fitting for this article too!]

Dehlinger Winery - Fall, 2009

Yes, I’ve fallen victim to the common issue with blogs…not updating it for a friggin’ long time.  I guess it’s just one of those things where you need to balance all that’s going on in life with wanting to publish a blog entry.  Oh well, I will attempt to keep this more up to date.

So, hmmm…what to put in my first blog entry in over six months?  Well, how about me telling you about some changes to vinoEZ.  I’ve switched gears on this site.  I’m just going to focus on mixing it up and have vinoEZ.com be a place where I can freestyle a bit to talk about wine, technology and supply chain.  Those three things are what I’m most passionate about (besides my family, of course).  The fact that I am making a career out of that mix bag is amazing.  I love it!!

I will still do interviews…those are a lot of work, but fun.  I will do more short burst blog posts and continue to use my photos (oh yeah… I love photography too!) as images on my posts.

So, thanks for stopping by.  Apologies on the delay of new info on this site…that will now change.

BTW: do you like the pic in this article?  It was taken last fall (2009) at Dehlinger.  An amazing family winery that produces some amazing Pinot.  You should check them out (http://www.dehlingerwinery.com/).

Take care,

Shawn

napavalleytweetup

Over the last month or so, I just started taking Twitter a little more seriously and started following a bunch of tweeps in the wine business to see what I would find.  For the most part, I was watching the water flow from the river bank and every once in awhile I’d throw a tweet out there to see what I could catch.  Sometimes I got a bite and there was a 280 character conversation and then silence.  Other times, the fish would just swim on by leaving my ancient 30 second-old tweet in the wake.

I stayed the course and kept following, then being followed, a tweet here… a tweet there.  It was fun and frustrating at the same time.  Then one day I threw a question out there and got a few answers.  I ended up landing a big fish.  It was very exciting…someone was actually interacting with me.  I didn’t feel so alienated.  Plus, they were giving me good information.  In fact, it was my connection with this fellow tweeter (or twitter-er…um, not sure yet on that one) that landed me at the #napavalleytweetup.  It was @hellovino that gave me the info on the Tweetup.

For months I’ve been seeing Twitter handles scroll down my screen.  Although you know there are real people behind the words and goofy avatar pics, the human in you doesn’t quite get it.  Now, with this Tweetup, I go from the virtual Twitter-verse that I’m familiar with to a room full of strangers that have their Twitter handles written on their name badges.  Because I’ve read their tweets and responded to a few, do I know these people?  Bizarre, but very interesting (just like Twitter first is).

Well getting over that strange reconciliation within, I sat down and listened.  The Tweetup ended up being very informative and a lot of fun.  The first part was a panel discussion facilitated by Gabriel Carrejo (@GabrielCarrejo) featuring:

• Michael Brito (@Britopian)- VP, Edelman Digial Media
• Jennifer Leggio (@mediaphyter) – Director, Strategic Comm. at Fortinet and Social Media Blogger at ZDNet.com
• Paul Mabray (@pmabray) – Chief Strategy Officer, Vintank

Now, in all honesty, I had to leave a little early to attend to some other personal obligations, so, I only saw the first hour of the panel discussion.  However, what I did see, helped me get my head around how social media can work and not work for any company in any industry not just the wine industry.  It validated some things I was mulling over prior to the Tweetup and opened my eyes to some other thought provoking stuff.  After I left the panel discussion at the Napa Valley Marriott (they have a Twitter handle too!…. @napamarriott) my mind was racing on new and fun ideas for vinoEZ.

After doing what I needed to do on the personal front, I came back and attended the evening event at the beautiful Robert Mondavi winery (you guessed it, they have a Twitter handle too: @RMondavi_Winery).  I’ve been in Napa for about 5 years now and I’ve never been there…ridiculous.  I was amazed by the setup they had.  I need to go back there during the day to really appreciate the art and architecture of that place.

Anyway, my main mission for the evening was to put a face to the @hellovino Twitter handle.  Secondarily, it was to try some great wine and food (wait, maybe I have that backwards….sorry @hellovino).  After grabbing a glass of the Fume Blanc and wandering around, I finally found Rick from @hellovino.  We had a great chat and he introduced me to his wife and some of his other friends, colleagues and fellow tweeters.  I also ran into an old colleague that I hadn’t seen for a couple years (what’s up @helenjane!).  We caught up on life and who’s doing what now in the biz.  It was great!  I think I even witnessed the Crazy Bear (@crazybearwine – frickin’ hilarious).

I really got a lot out of this Tweetup.  Made some great connections on a business level, but more importantly, on a personal level.  I would have never met these people or reconnected with others if I hadn’t thrown out that line.  Wow…am I glad I did.  If you haven’t tried Twitter yet, do so.  It’s easy to get on and it’s free.  Start following people and interacting.  You’ll be happy you did.  If you have any questions about it, let me know.  Either I can help or I can point you in the right direction.

Thanks again to @GabrielCarrejo, @Britopian, @mediaphyter, @pmabray, @RMondavi_Winery and @napamarriott.

Also, a shout out to: @hellovino, @helenjane, @joelhopland, @paraduxxwine, @BaldacciWinery and @crazybearwine.

Let’s make wine a little EZ’er!

Shawn (@vinoEZ)

shawn@vinoEZ.com

Gary Archer Amongst the "Silver" at Gary Farrell

property of the Gary Farrell Winery.  If you haven’t been up there to sample some of their award winning Pinot Noirs and gaze at the spectacular views, you need to stop reading this article and find a way to get up there….but please come back to this article and read the goodness.

Fresh from his visit to the Unified Symposium, Gary was very open to any question I threw his way.  Admittedly, I’m still new at this interviewing thing and Gary was patient with me and my different questions.  We had a long conversation (thanks Gary for your time and patience!!) and covered a lot of ground.  We talked about the challenges of operating Gary Farrell to sustainable farming…something Gary is extremely passionate about.  It was really cool to sit back and have him educate me on why sustainable farming was the right thing to do.

Gary has an interesting perspective on the wine business.  Yes, he’s working for one of the most regarded Russian River wineries, but he also owns a 50 acre vineyard, Archer Family Vineyards.  He’s got a real intimate feel for the wine supply chain.

As I sit here and listen to our conversation that I recorded two things come to mind:

1)    I got schooled by Gary.  He gave me so much great insight and information…I was really fortunate to have the interview.

2)    I’m struggling with how to put all the good stuff into one good article.  I think the best way to do this is cut it up in pieces.  That way you the reader can eat it in internet-ready-digestable-chunks and me the writer/blogger can get something out to on my site and Gary the subject of the article, gets more exposure…it’s a win-win-win!

So, this will be the first of a few articles based on this interview.  Enjoy.

In the Beginning…

Let’s start this off with how Gary got into the wine game.  Gary has a finance degree from the University of Oregon.  He’s done housing development and investments in small businesses.  After coming back to the Napa area, he wanted to get into the wine business.  He took 50 acres of land that his father once owned, went to school to learn how to farm and started putting a plan together.  Gary had met someone in the wine business and asked him review his plan and give him his opinion.

He looked at the numbers and he said, “yeah that makes sense”.  I told him, “I’d love to be in the wine business, but I don’t know much about it.”   I don’t know anything about wine other than what I learned in those classes I took.  He said, “You know….a widget is a widget.  And I’m consulting for a bunch of small wineries and I need someone who has some business disciplines.”  And that’s how I got involved.

Gary continues on with walking me through the common path that people take when getting into the wine business and how he and his partner were helping these wineries.  Essentially, people start in the wine industry from the core passion of wine.  Their little wine business begins to grow and evolve into something they’re not quite prepared for.  Gary talks about various plateaus that you take while you’re growing.  It’s not a smooth linear glide.  For instance, Gary illustrates one fork in the road for a growing winery: do I take on a distributor or not”.

A distributor comes along and says, “God I’d love to have your wine.  Can you make more?  Let’s distribute it.”  And then they ramp up to 20,000 cases.  Use all there cash and get lost at the distributor because they’re small.  And they call us in because they have no cash and we’d put the whole business plan together for them.  Because they’re not really business guys, they’re passionate about wine.  And there are a lot of stories like that.  People just don’t understand simple cost accounting.  They just think, “50 cents for the label, 50 cents for the capsule, $3 for the wine, a buck for the bottle.  I figure my cost is $5 in that bottle.”  Well, it’s not.  There’s a lot of indirect costs.  But they get lost in all that.  So, we’d put in accounting systems [to help] and that’s how I learned the wine business.

This is interesting as it is somewhat in parallel with what I’m trying to do with vinoEZ.  Gary used his background in finance and being a businessman to assist wineries in giving them the rigor they needed to keep growing.  I want to use my background in supply chain planning to help wineries and suppliers with reducing costs and increasing customer service by implementing simple and easy supply chain tools.

Do the Right Thing

During the interview, Gary spoke a lot about doing what’s right for the wine.  As much as you want to reduce the cost of goods, you want to make sure you don’t cut too deep.  This is where his passion for the wine comes in to keep things in balance.  He gives me a great example of this by talking about the most critical part of the wine package: the bottle.

Small wineries come from passion…and love of wine.  That could cloud things.  Then you have the accountants that have to look at things as a business.  There’s always a constant battle to balance passion and business and going too far in either direction can wreck a brand.

To give me an example, Gary reached for a bottle of Gary Farrell Russian River Selection Pinot Noir from his book case and puts it on his desk right in front of me.  My mouth was salivating at this time…I know it was 10:30 in the morning, but, man that Pinot is good!…I digress.

This bottle right here…it’s a very heavy bottle, it’s very expensive and it’s not very green but that’s what our target customers gravitate towards right now.  We could save money both in manufacturing and shipping but we have to be careful about matching our wine quality to our packaging and eventually to the people who drink it.  Sure we can save a buck or two, but how would our customers perceive the cheaper package material.  But there’s a movement to get a lighter bottle.  Every time I talk to a wine club person, every time I talk to a retail guy they say, “Do not change your bottle.”  Because it has a perception of quality – wrong, right or indifferent.  So, I push back on making any bottle changes because I don’t think the Gary Farrell wine drinker is ready for those changes.

What happens in an industry like this, is that people sit around and they think they know what the customer needs instead of finding out what the customer wants.  That happens a lot in the wine business.

I agree with Gary on this.  If you go too far one way over another, you will fail.  For instance, if your main goal is to increase profit by cutting various costs, you will run the risk of compromising the quality of the wine.  Now, quality has a couple sides to it:

1)    the perception of the quality of the wine in the bottle

2)    the wine itself.

View from Just Outside the Tasting Room at Gary Farrell

The perception of the quality of wine comes from the packaging.  If you cut costs too much on the label, glass, cork, closure, etc. you may turn off some consumers.  This is a difficult thing…price point plays into this as well.  A low cost package for a $5 bottle wine may be just fine, but once you move up the price-point ladder, you better be careful on where you cut your costs.  Is heavy glass just some really expensive package that eats into your margin?  Ummm…no.  Our senses pick up a lot of information and how all that information is aggregated in our brain plays into our decisions.  For whatever reason, when I pick up a heavy bottle of wine with thick walls, nice tin closure and a nicely made label, I’m thinking there’s probably some good wine in there.  Not sure if this is something that the wine companies have trained me to believe or what, but it is what it is.

The other aspect of quality is in the wine itself.  If you cut costs on your winemaking processes to shave a few bucks here and there, then you may compromise the quality of the wine.

An important and sometimes often forgotten reality in the wine industry is that any decisions you make with your wine or package takes months or years (depending on the release of the wine) to know if it was the right decision.  This reality is often overlooked by the newbies that come into the business.

It’s a high-risk game.  With all the competition that is out there, if you make the wrong decision, your brand is impacted significantly and it will take years to reverse things.  If you’re really interested in lowering your costs and making an impact to the bottom line now, without risking your brand, then you need to take a look at your supply chain.  No, I’m not saying you need to make radical changes, you just need to install some simple planning processes and planning tools.  The investment is low and the payback is high.  This is the essence of vinoEZ and this is where I can help.  Read through my article “Why is Planning Important” to get a little more insight into planning practices.

Well, I’ll stop here for now.  As I mentioned earlier, I will be publishing a few articles from this interview with Gary Archer.  Stay tuned for follow-ups where Gary talks about sustainable farming, how Gary Farrell is weathering the poor economy and more.

Also, leave a comment below to give me some feedback.

Let’s make wine a little EZ’er!

shawn@vinoEZ.com

Rich Bouwer - General Manager, California Glass

I sat down a couple weeks ago with Rich Bouwer, General Manager for California Glass, to talk about his take on the wine supply chain.  We covered topics ranging from the impact the economy is having on the wine business to collaborating with others in the wine supply chain.  It was great to catch up with Rich.  Rich hired me into the wine business, so, it’s fitting that he’s doing the first vinoEZ interview.  I had a good time with the interview and I hope you enjoy what we discussed.

A Little Bit about Rich and His Career

Rich’s professional career started in the spring of 1985 in Investment Banking at Morgan Stanley.  After just over three years at MS, he took a right turn into the wine industry and worked for Gallo for ten years.  When I asked why such a big swing in industries, Rich said,

Frankly I wanted a product I loved and enjoyed.  Investment banking is an intellectually challenging business, but it’s a bit ethereal.  I wanted a physical, tangible product that was meaningful to me.  So, I was looking at breweries, wineries and sporting goods.  [laughing] You know, being an immature 20-something year old…

As a Director at Gallo, Rich accomplished many things, including putting supply chain planning on the Gallo map.  Rich moved from Modesto to Napa to work for Beringer Blass (Foster’s).  From leading the supply chain group at Foster’s, Rich went to round out his wine business chops by taking on the role of VP, Winery Operations.  After 7 years at Foster’s, Rich took a slight turn and moved up the wine supply chain into the glass business where he is now the General Manager for California Glass.  Rich has been at California Glass for about 3 years.  He really seems to enjoy where he is at and continues to learn more and more about the ever evolving wine industry.

The Current Economy and it’s Impact on the Wine Supply Chain

At the beginning of the interview I took Rich through my vision with vinoEZ.  A company that is focused on providing supply chain processes and tools that are geared and specialized to the wine industry (e.g. small to large wine companies, suppliers, distributors, etc.).  Rich shared his perspective on my vinoEZ vision in the context of the current economy and the impact that this is having specifically on the wine industry.

I think you have to start with context of how bad the wine industry is.  If you look at Gomberg for total California wine for the first six months –  the total wine shipments are up 1%.  Gallo, Foster’s, Sutter Home, Bronco and the Wine Group. are each up a million cases or more.  If you take out those five wineries, everybody else in the industry is off 30%.

I asked if it had to do with the lower price point wines that the “big guys” have in their portfolio (along with the higher price point wines).

Well, that’s right.  Many consumers don’t have a job.  Their homes are worth a lot less and their not buying $40 wines.  Those consumers are buying good value wines.  So, if you’re not at the <$10 price points, if you’re at forty bucks, nobody’s buying.  Your volume might be 35%…40%.  Your sales are off, your bottling volume is off, and many wineries face enormous financial pressure.  You see in the papers the number of wineries that have actually filed for bankruptcy.  You see it if you’re a supplier and how many folks are struggling to pay their debts. So, the wineries are facing some really brutal decisions:  Do you just declare a loss? Do you have to let long term knowledgable employees  go? Do you have to cut your grape supply short?  Do you source less expensive grapes?  What can you do to run your operation more efficiently?  How can you reduce packaging cost?  To your point about supply chain [in the wine business]…this is the time where people that really didn’t really pay a lot of attention to operations…have to do so now.

Very interesting perspective and it was great to hear that what I’m building in vinoEZ is something that people can start to leverage today to help them with the current strains of a poor economy.  Don’t get me wrong though, you can’t just “turn on” proper supply chain processes and tools; you need to invest time, money and people.  In the “bad times”, proper supply chain planning helps to “ride it out” with operating lean and in the “good times” it helps to provide better margins and returns to the business.  Again, like making wine, it takes time and resources to get it right; you can’t just turn on a faucet.

Supply Chain Thinking in the Wine Industry

Is the concept of supply chain in the wine industry a new concept?: No.  In fact, the concept of supply chain in our daily lives isn’t a new concept either.  Think about the steps you took the last time you stocked your refrigerator.  You had an idea of what you needed over the next week or so (demand plan), looked what you already had in the fridge (current supply) and jotted down your grocery list (supply plan).  You went to the store, purchased the products (execution of supply plan) and drove back home and filled the fridge.  We don’t think of this in terms of “supply chain”.  Similarly, most wine companies don’t either.  You need to move goods from one place to another to satisfy some sort of demand.  That’s usually as far as it goes.

The typical issue within a wine company is that the supply chain function isn’t a specific role or department in the organization.  It’s not a focus.  Supply chain activities happen because they have to, but you lose out on a lot of operational efficiencies/savings (refer to “Why is Planning Important?” for more on the benefits of supply chain planning), if you don’t step back and properly organize yourself around this idea.

During our conversation, Rich shares his perspective on this matter.

When you look at most wineries [...] traditionally, you’ll start with one or two executives.  The founder is usually the winemaker or maybe a marketing/sales person.  The next person they hire is a finance person.  That’s usually the core of the executives.  So, you have a winemaking group.  That includes viticulture and operations…the financial group.  Then you have sales and marketing.  And that’s how wineries are usually organized – into functional hierarchies.  That’s been the tradition.  Other activities are afterthoughts.

As you know, there are PhD’s and graduate degrees in all sorts of things associated with supply chain.  Whether it’s forecasting or packaging.

There are a lot of different aspects in the supply chain area that traditionally have not been a focus for the wineries.  The bigger wineries, nowadays, have some sophisticated people in those areas.  They’re probably using current software for sales forecasting.  But for the smaller wineries, it’s still largely an afterthought.   The economic times, however, are forcing the small wineries to be more efficient.

The distributors are reducing their inventory, the retailers are leaning out their inventory.  And that’s going to bite both ways; it hurts the winery sales now, but it will also force them to have to respond faster.  Because when sales turn around, the retailers and distributors will run out of inventory right away.  Wineries will need to replace the channel inventory or they will need to make up for that by being smarter.  But, you have to invest in the capability and the information to be able to react smarter.  We don’t see a lot of wineries that have made that investment in the information infrastructure.

Where is California Glass in the Wine Supply Chain?

California Glass serves as a distributor of glass.  They provide a voice for the smaller volume wineries back to the large glass producers and they provide a consolidated demand from many wineries to the larger glass producers.  They understand both sides very well and can help bridge the gap and let the glass producers focus on what they do best and let the wineries focus on what they do best.

Rich describes where California Glass fits into the wine supply chain:

Most wineries might have a purchasing person or they might ask their enologist or their lab manager to handle the buying of the packaging goods.  A company like California Glass is really there to [help these wineries].  We have technical experts who inspect glass and look at bottle dimensions and ensure fit for purpose.  We have the scale to purchase economically and make sure the winery is getting a fair price.  Most of the major glass factories like Saint-Gobain or Owens are hesitant to take on too many small customers.  A winery might use a distributor to avoid having to call on 8,000 stores and restaurants.  They’re not going to try to take on the delivery challenges and the billing and collecting challenges of calling all those restaurants and retailers.  Well, that’s what the glass plants are using us for as well.  Because, in addition to providing expertise to our customers and being the distribution, wholesale middle-man, they’re looking for us to take on the A/R risk.

We give them (winery) the scale, we give them the ability to buy pricing and make sure they’re getting quality stuff.  If they have an issue, we can get the manufacturer’s attention.

Beyond the PO – Providing Visibility Across the Supply Chain

I asked Rich if there were any customers that California Glass works with that provides a plan or an outlook of their demand beyond the purchase order (PO).  There are some out there that do, but a majority do not.

Rich talked a bit about a particular customer that is very sophisticated with this type of sharing.

They plan well out into next year.  They give us detailed schedules and visibility into their own inventory.  We are pretty integrated [with them]…and we’re transparent back to the glass company.  So, for someone like that (winery) it works really well.  And they leverage that sharing of information into having virtually no supply surprises.

Let’s pause here for a second.  This is important.  Planning your supply chain with other links in the wine supply chain is highly desirable.  Just as planning internally gives you insight into what may happen and affords you the ability to be proactive to take action, this extension of planning extends your visibility.  Just as Rich is saying “…no supply surprises.”  If you can minimize the disruption in your supply chain, the less hedging has to be done and less investment in inventory of either materials or finished goods.

Although this kind of sharing provides significant business benefit, you need to make sure your house is in order first.  In other words, you need to first focus internally with supply chain planning processes and tools.  Implementing these processes and tools takes time to get it right along with the output.

California Glass has worked on their internal supply chain planning and they use “tried and true” technologies to share supply chain data to their suppliers.

We’re doing forecasts and PO’s.  We’re highly integrated back and forth from our ERP system through to the supplier’s scheduling and planning environment.  Everyday there’s EDI transactions going back and forth on forecast, PO’s, plant production dates, inventory levels.  We have full visibility to our system about what the inventory is at our warehouse but also what the inventory is at the glass houses and what the glass manufacturing schedules are.  So we can do inventory projections that include both warehouse, the supplier’s warehouse, and planned production.

Rich shared a specific example around how collaboration eliminated the waste of glass for one of their customers.

We had a call from a top ten customer the other day basically saying, “We’re going to cut our bottling of chardonnay off and sell off 20% of our vintage as bulk wine.”  That was a tough decision due to the general economic time.  We needed to make sure that they weren’t going to get bitten with a delivery of glass that was no longer needed.

Their willingness to share that information made sure we didn’t end up with a problem when ‘we executed to your PO.’  If they kept their bulk wine plans close the chest, they would have had a lot more glass than they needed.

Planning/Forecasting in the Wine Business: it’s about Precision

We spoke some on the “boom and bust” of the wine business – the cycle that occurs every seven years or so.  While discussing the how the wine industry reacts to the peaks and troughs of this cycle, we discussed that in the wine industry, supply does not turn on a dime.  How you navigate in this cycle and the decisions you make to take advantage of the “highs” and mitigate the risks during the “lows” is the interesting challenge of being in the wine business.  It was a great discussion and one of the items Rich touched on resonated with me… and still does:

I used to sit down with supply chain software vendors, with the people who ran the same software for high-tech companies.  The high-tech people used to talk enviously about the long time horizons at wineries where you have months to react to what you are going to do with your merlot supply, what are you going to do with your sauvignon blanc supply.  The high tech people have to make snap decisions every week about chips, memory and hard disks.  But the precision required is the killer in the wine industry.  High tech does not need a great degree of precision.  If they’re off by 15%, well they’re going to move through that technology cycle and sell all those chips off anyway and in two months they will be on to the next generation anyway.  They quickly leave their mistakes behind.  In wine, you are talking about planning grape supply 7 years out with the planting and the pruning and wine aging.  You must be within a couple percent.  Because if you’re short, you got nothing to sell and you can’t take advantage of the expansion opportunities the market offers.  If you’re long, your inventory is backed up and your delaying your release dates and your selling off your bulk wine and losing money.

When planning in the wine supply chain, it’s about precision.  This is a great point.

I had a blast talking supply chain with Rich.  I love this stuff and it’s good to have this discussion with people that are passionate about supply chain.  Seems that Rich is successfully applying his knowledge and experience in the wine supply chain at California Glass.  I’ll be keeping in touch to see how things progress.

I hope you liked the article.  Let me know your thoughts in the comments section.  Also, if you have any requests for others that you’d like me to interview, send me an email (click here).

Let’s make wine a little EZ’er!

shawn@vinoEZ.com

When you plan, you avoid pitfalls and are better able to spend your time and other resources on things that make a difference.  This could be for business, family, health or whatever we have within our lives.  The more you plan for the future the better today will be.

In any planning, there’s a need for maintenance of that plan.  It’s not good enough to create the plan.  The first plan you create will be out of date in no time.  The benefit you get from the plan is continually reviewing the plan.  As things change around you, you must modify the plan accordingly.  Also, the more you study the plan, the more learn about what you are planning.  This is something that seems to be overlooked in the planning process, but it’s actually one of the most important by-products of planning.

Like all businesses, the wine business requires planning.  As we know, there is a lot of planning being done today.  Whether it be planning the crew in the vineyard for harvest, planning what will be planted this year for future yield or estimating the number of customers walking through the tasting room door.  All of this, and more, occur every day today in the wine industry.  So, we already know how important planning is.

The one area of planning that seems to be less common is planning the supply chain.  It’s not that it isn’t done; it’s just not done adequately.  When you plan the supply chain you start from the demand plan and all other plans are a function of this demand plan.  There’s no point in estimating what you’re going to produce if you’re not certain on what you’re going to sell.

Actually, the common practice seems to be that a demand plan is done once a year…the annual budget.  The problem is that things change so much in the marketplace that reviewing the demand plan once a year is not enough.  Some organizations review the plan quarterly this too is not enough.  Not reviewing your plan frequently enough does not provide the right visibility.  What would happen if you looked at the road ahead every five minutes while driving?  Do you think you could safely get to your destination?  Ummmm…no.

There are two other issues in planning the demand: a) too many plans for the same thing and b) not enough collaboration.  How many times have you been looking at one set of numbers only to find out it was out of date or it was someone else’s version that no one else is operating on?  At a minimum this is a waste of time…or worse case, lose your business.  You need to get to one set of numbers that represents the plan.  What helps get you there is collaborating on that one number.  Who do you think knows more about what’s going on in the market…the guy selling the wine or the guy in the home office?  Who do you think knows more about the over-arching vision of the business…the guy selling the wine or the guy in the home office?  Both of these people have good information that needs to be brought into the one-number plan.  One has a perspective of the short-term and the other has a perspective of the long-term.  Both of these perspectives are valuable to the plan.

So to wrap this up, here’s a short-list to a successful planning process:

• Create a plan
• Maintain the plan
• Use one set of numbers
• Collaborate on the plan
• Rinse and repeat (review the plan often; monthly at a minimum)

There are other things that can be done to significantly improve building a sound planning process.  I will write about those a little later.

Let’s make wine a little EZ’er!

shawn@vinoEZ.com

With all of this social networking and “web 2.0” infiltrating our lives, it’s got me thinking how this will play out in the world of wine.  Obviously there’s a lot of people and companies going down this path.  New Facebook pages popping up and more tweets to follow.  This was a significant topic at the latest WITS session in Napa.  I think it’s obvious how this can help the “front of the house”, but how will the “back of the house” (thanks to Bruce Herman for the “front/back of the house” analogy!) be impacted this latest internet phenomenon?

If you’re not up with what the likes of Twitter or Facebook are, you should at the very least take a look at what Wikipedia has to say about them: Twitter, Facebook.

These are the most popular social networking websites out there.  They’re not just websites, they’re also on people’s phones and other mobile devices.  Essentially, if someone wants to, they could chronicle their whole day where ever they are.  But, who cares?…A lot of people do.  It’s a bit of voyeurism and socializing all in one.  I have to admit, I’m hooked.  I’m following Dave Navarro (guitarist for my favorite band: Jane’s Addiction) along with some of my friends.  It has definitely made the world smaller and it has also linked up people from your past (for better or worse).  At the end of the day, you just feel a little more connected with others.  And the more connections you have the faster information is shared.  This last statement is key.

But what does this all mean for the wine business?  Well, the “front of the house” has a lot of obvious uses for this technology.  With Facebook, you can join winery pages/communities and get updates from the winery on what’s going on, specials, latest releases, etc.  There have even been Twitter wine tastings cropping up all over the net.

To me, these are just additional communication tools that can be used to market your product.  But, these could also be used to assist in effectively communicating in the “back of the house”.  For instance, what if you have surplus wine that you wanted to sell.  Today, you have various methods to accomplish this, add in Twitter.  What if your company’s Twitter account tweets: “Bulk zinfandel x,xxx gallons avail for $yyy per gal #bulkwine”?  Simple and to the point.  People in the market for bulk would search for ‘bulkwine’ and they’d find your tweet.  Now, this isn’t the only way to put your wine on the market…again, it’s another way to communicate and get your product (or service) out there.

Think of other ways that you communicate outside your organization where you want attention from others.  Anything that you’re putting in a magazine, newspaper, a website, etc. should also be put out on Twitter or Facebook.  These won’t replace the magazine or the newspaper.  These simply supplement those other mediums and could parlay into tapping an additional community that you would have completely missed.

Sure, these may be a fad now and may fade away…but in the internet age, something similar will evolve from these types of social networks.  It’s better to engage in this type of communication now and evolve with the technology.

I’d be interested in hearing your feedback on this topic.  Do you use Twitter or Facebook today?  Do you use it for business or for personal?  What is your take on this new way of communicating?

Check out vinoEZ at:

twitter.com/vinoEZ

It’s about the wine.

I’ve been working in supply chain management and planning as a consultant and full-time employee in one way or another for just under twenty years.  I’ve been with large companies across many consumer packaged good segments:  Starbucks, Scott’s (lawn care), Johnsonville (sausages), Estée Lauder, Dreyer’s Ice Cream…just to name a few.  Plus, I’ve even done some work with high tech companies and grocery chains.  Each of those companies had a product to sell.  Each had very similar problems…“How do I plan my supply chain?”, “How can I take cost out of the system?”, etc.  Dealing with these large companies, it’s easy to lose sight of the products behind the numbers.  Especially if you’re not that into the products themselves.  Don’t get me wrong, I love ice cream and I love coffee, they’re just not something I’m passionate about.

And then things changed…

About five years ago, I started working with Foster’s to help with their supply chain.  As a company, they had the same types of challenges that the other companies I worked at did.  A lot of inventory, poor forecasting, poor utilization of assets, etc.  The thing that was different was the thing that impacted me professionally and personally.  It was, of course, the wine.

At first, I just started chipping away at the usual business problems and by working with the great people there, we really made some great strides in supply chain improvements.  As time progressed there, I started getting exposed to the operations of winemaking, the selling of wine and the viticulture.  I even got my hands dirty one Saturday during harvest.  While being exposed to the wine at work and then trying wines at home and at restaurants, the passion surfaced.

I’m continually amazed and inspired by wine.  With every experience I have, I think a lot about the craftsmanship of the winemaker.  ”What did they go through when deciding how that particular vintage was going to be blended?”, “How did this wine get to my glass?”,  ”What are all the steps in the supply chain that were taken to get to this point while protecting the quality of the wine?” …that’s when I get excited about this industry.  And, that’s why I started vinoEZ.  I want to apply my experience and skills to an industry that produces something I’m passionate about.

So, as my family and I finished up our lunch (by the way, I had the special…salmon…amazing!), I made a mental note of the experience and realized why this particular event in my life affected me so much.  So much so, that I’m writing this blog…it was about the wine.  And it will always be about the wine….and I should not lose sight of that as vinoEZ starts to grow.

vinoEZ is about bringing very practical business models that have worked for many years in other industries to the wine industry.  Some wine businesses do utilize some of these models, but there are quite a few that do not.  The good thing is that those that are not leveraging core supply chain planning processes, are leaving a lot of money on the table.  It is my goal to educate and help implement these processes and supporting tools.  That is essentially what vinoEZ is.

As with anything else, vinoEZ.com will be evolving over time.  This blog will continually be updated with my thoughts and opinions regarding many topics related to the wine business along with supply chain topics.  Feel free to voice your opinion by leaving any comments (below each blog entry).

Thanks for stopping by!

Shawn