Supply chain optimization is more than just reducing costs

Traditionally, importers of wine, beer and spirits have mainly focused on the efficiency of the supply chain when it comes to optimization. This often comes down to minimizing operating costs, for example by looking at the most cost-effective transport solution or maximizing the payload in a truck or container.

However, instability in the global shipping sector over the last couple of years has taught us that the focus on cost reduction is not enough. True supply chain optimization is a balancing act across multiple dimensions.

Let’s take a closer look.

The dimensions of supply chain optimization

To truly optimize your supply chain, defining objectives for each of these dimensions is key, as they are closely related to your company’s values and strategy:

• Efficiency, e.g. minimizing transport costs
• Inventory - working capital.
• Product availability
• Product quality
• Sustainability - carbon footprint
• Resilience & responsiveness

Quite often these dimensions seem to conflict with each other, e.g. if you focus on efficiency in transportation, this could lead to increased working capital or increased carbon footprint. So, a broader approach is needed to lead to actual benefits across the business.

The role of efficiency in supply chain optimization

Improving the efficiency of the supply chain often links to minimizing costs. Many importers prefer to buy full containers from a single supplier because this will often bring the lowest transport costs per case. At the same time however, it will increase inventory levels and with that it requires more working capital (cash investment).

There are also importers who buy smaller quantities more frequently from suppliers, using our LCL or groupage service to transport them. Whilst this does reduce inventory levels and working capital, it can increase transport costs.

Another example of trying to make the supply chain more efficient is in the loading of containers. Some importers choose to transport their alcoholic beverages loose loaded in a 20’container and avoid the shipping of heavy pallets. This way the maximum number of cases can be loaded in a container, which allows for the lowest transport costs per case. Though, the extra manual handling at loading and unloading is often overlooked. There are alternative solutions that provide the best of both worlds, e.g. slipsheets.

Optimizing the supply chain with inventory management and product availability

On-shelf availability of your wine, beer or spirits is essential for sales, but maintaining the right level of stock is equally crucial. Excessive inventory can tie up working capital and increase the risk of obsolescence. Effective supply chain optimization involves carefully balancing stock levels with associated costs and on-shelf availability.

If you missed our article on stock management, where we gave practical tips to help you manage inventory effectively, take a read here.

Maintaining product quality in the supply chain

Another critical area for optimization is maintaining the quality of the alcoholic beverage. As an importer must decide whether to maintain consistent temperature control throughout the supply chain, using reefers during transport or temperature-controlled warehouses. Alternatively, you may consider whether insulated warehouses and transport options, like the use of insulation liners, will suffice.

In a recent article by international wine vault the importance of proper storage, organization and the use of technology to maintain the quality and value of wine collections is highlighted. Read it here.

Reducing transport emissions within your supply chain

A relatively new dimension importers are considering now is sustainability, in relation to lowering transport related carbon emissions. At Hillebrand Gori, our GoGreen program is centred around two areas:

• Burn Less – Choosing carbon reduction levers to optimize the supply chains and reduce transport related emissions. This includes modal shifts and intermodal solutions, consolidation of shipments, load utilization and routing optimization.
• Burn Clean – Making a switch from fossil-fuels to more sustainable fuels.

The importance of resilience and responsiveness

During the Covid-19 crisis in 2020, we experienced a disruption in global supply chains like never before;

• Lockdowns and restrictions in shipping
• Port closures or slow port operations
• Demand going skyrocketing
• A shift from on-trade to off-trade, 
• Booming shipping and logistic costs
• Shortages of raw materials, e.g. glass and labels, etc.

Wine importers reacted to the crisis by bringing in extra stock, which caused a peak in demand for the producers. Then a few years later, this caused a drop in demand as importers began to destock.

These times highlighted the need for more resilient and responsive supply chains. In an article by S&P Global, it emphasizes the need for resilience in supply chains but also says that companies are struggling with the financial implications of investing in this resilience.

Supply Chain optimization begins with the design of the supply chain

Global supply chain management is complex and it is not only about reducing costs. There are many dimensions that need to be considered.

The challenges within your supply chain cannot be resolved by your company alone. It requires collaboration with your suppliers, customers and service providers. In the end, all parties in the supply chain have the same common objective and that is to bring wine, beer and spirits to the market in a cost-effective way, while maintaining their quality.

Supply chain optimization begins with the design of the supply chain and decisions surrounding it:

• Identify suppliers who share your values and understand your needs/goals
• Decide on the most efficient transport method, whether full loads, LCL/Groupage, or consolidations
• Select the appropriate mode of transport and routing, considering the number of transport related emissions
• Establish a back-up mode of transport and/or alternative routing
• Decide on the location for stock buffers, whether in the export or import country
• Identify the sources for raw materials and assess the possibility of supporting suppliers and maintaining raw material buffer stock
• Define the collaboration process between the importer, suppliers, customers and service providers
• Determine the information to be shared and the technology required

How can Hillebrand Gori help?

Our deep experience and expertise in supply chain management enable us to provide tailored solutions that meet the unique needs of each importer. We're positioned at the heart of the supply chain, which enables us to connect all the parties involved with the shipments we carry.  Collaboration between retailers, importers, distributors and producers at every stage, from planning to execution is key. That's why we have teams at origin and destination, plus our myHillebrandGori platform, to share information in real-time.  With a global network of offices and warehouses in key wine-producing and consuming regions, our knowledgeable team is well-equipped to support and optimize your supply chain, ensuring smooth and efficient operations.

Reviewed by Hillebrand Gori