Supply Chain Management Basics: Wine & Spirits Storage and Logistics

The wine & spirits storage and logistics industry has gone through a variety of changes in an effort to be more responsive to changing customer expectations. Each level/tier of the supply chain has been affected in its own unique way due to their unique SCM purpose. The three main tiers of the wine & spirits supply chain include: Tier 1 – wineries, breweries, distilleries (those performing transformative functions); Tier 2 – wholesale distributors; and Tier 3 – retailers (liquor stores, grocers, restaurants). The tier that has seen the most change in recent years is Tier 2. Here, third party logistics operations have begun to provide a variety of services such as storage, handling and value-add services. These activities are being outsourced to 3PL partners due to their strategic positioning and ability to perform these tasks more efficiently and cost effectively than their Tier 1 counterparts. 3PLs and distributors are also helping wine & spirits businesses adjust to growing SKU proliferation. Consumers are demanding more options than ever which makes the storage and fulfillment of product more complex than ever. Top tier 2 SCM operators are implementing advanced technologies such as automated storage and retrieval systems (AS/RS) to simplify inventory handling. They are also utilizing robust forecasting technologies to help manufacturers set production schedules. Forecasting tools have given these businesses the ability to track key market attributes and market churn in an effort to refine their product mix. Having this ability helps the tier 1 manufacturers and distillers to reduce on-hand inventory and associated costs. While these changes mainly impacted tier 2 businesses, increasing governmental regulations impacted wine & spirits operations across the board. Shipments being imported into the US must be pre-registered before crossing any borders, complicating the day to day operations of wine & spirits shippers. Many have chosen to become members of specialized trade organizations to receive membership benefits after completing regular site visits and evaluations. This helps to get inventory to consumers faster. The distribution networks through which product is delivered has also evolved significantly. Networks are being consolidated to just a few large facilities where crossdocking can be performed. These facilities are able to become more specialized and offer savings that can be passed on to consumers. The high complexity of these distribution networks are now being managed by robust warehouse management technologies in an effort to move away from slow, laborious paper-based processes. To learn more about how the wine & spirits supply chain has adapted to these changes and many more contact Datex today at marketing@datexcorp.com or 800.933.2839 ext 243.