How does inventory management work in the wine industry?

Managing inventory can be complex and time-consuming, but, if you want to improve customer service, reduce lead times, and increase your cash flow, good inventory management is essential.   

A proper inventory management process allows wine, beer and spirits importers to have the right inventory quantity, in the right place and at the right moment. Larger businesses may have a dedicated inventory manager who is responsible for overseeing inbound products, their storage and outbound shipments from within your warehouse. Whatever your business size, proper planning is essential, which is only possible with efficient inventory management integrated into your supply chain.

Hillebrand Gori customer case study: Cynthia Hurley French Wines

Temperature-controlled transport and inventory management is essential for Cynthia Hurley French Wines’ bespoke import portfolio. Cynthia Hurley French Wines is a US wine importer based outside of Boston, Massachusetts, which for the past 25 years has curated a portfolio of French and Spanish wines and has expanded their distribution footprint to 19 states. Cynthia Hurley French Wines has been working with Hillebrand Gori for more than a decade.

We spoke with Craig Gandolf, National Sales Director, from Cynthia Hurley French Wines who has been working with Hillebrand Gori for over 25 years of his career in the wine industry.  

“Cynthia Hurley French Wines is a smaller sized wine importer. Our suppliers are family owned properties with an emphasis on organic or biodynamic techniques.”

With the dedication and care that has gone into producing biodynamic and organic wines, equal care and consideration during transport and warehousing is essential. Managing temperature for example is fundamental when dealing with these sensitive wines. Inventory management is key part of this process, helping our customers to navigate common supply chain fluctuations, such as order quantity, supplier availability, and lead time demands. 

Cynthia Hurley French Wines has found that LCL shipments help to effectively balance these demands. 

“The benefits of LCL (groupage) shipments is a shorter wait time to assemble a shipment, year-round temperature control containers, more flexibility in load sizes, and extras such as insurance are factored in.”

Craig also noted that while paperwork seems to be easier with LCL, you have to remember that this is still a shared container in the eyes of US customs. To avoid unexpected delays upon arrival, all shipments on board need to have their paperwork in order to ensure the container is off-loaded smoothly and the product can be delivered seamlessly.

What is inventory management in the wine industry?

If you are a wine producer, inventory management involves tracking everything used in the wine production process as well as the final product and availability of each vintage. If you are a wine importer it relates to the wine your business has bought and is intending to sell, being central to your inventory management the traceability and visibility over your inventory from the winery to your warehouses, and on to point of sale.

Although some wines can have a long shelf life when stored correctly, wine is still a perishable product it can also be expensive and requiring some special care when transported and stored, therefore the timings and quantities of shipments need to be well-judged.

Inventory management techniques 

For wine shippers working with complex supply chains, balancing levels of inventory is particularly complex.

Each inventory management strategy offers a way to manage your stock. Common inventory management strategies and techniques include: 

• Just-in-time management (JIT)Materials requirement planning (MRP)
• Economic order quantity (EOQ)  
• Days sales of inventory (DSI)

Each inventory management combination has its benefits and downsides, and each will be more appropriate for some businesses, supply chains and operations than others. Here’s a more detailed look at each technique 

Just-in-time

A just-in-time inventory management strategy aims for your warehouse to receive your products as close as possible to when you need them. For wine shippers, this means having product available at all times, by shipping wine immediately through your supply chain when is required. This strategy reduces waste, helping you maintain a lean inventory. 

Just in time inventory management has some drawbacks too. If demand unexpectedly increases, your business might not be able to get inventory to where it’s needed fast enough. In addition, delays in the supply chain can create a bottleneck and inventory shortages.

Days Sales of Inventory 

Days Sales of Inventory (DSI) helps to manage inventory by calculating the average number of days that a company takes to sell its inventory. It’s a way of assessing how long your current inventory will last, and therefore when new inventory will be needed.

Economic order quantity 

Economic order quantity (EOQ) calculates the ideal quantity of units you should order, allowing businesses to meet demand without over-ordering. This helps minimize inventory costs such as warehousing and order handling costs. As such, finding the economic order quantity for every wine you buy can help  importers improve their bottom line. The EOQ formula assumes that demand for your products is constant, so it is best suited to wine importers who have demand, order, and holding costs that don’t fluctuate over time.

Materials requirement planning (MRP) 

Material requirements planning is an inventory management system that focuses on the materials needed to manufacture a product.

Proper inventory management is easier with MyHillebrandGori 

Inventory management is a vital part of smooth operations for your business. Using myHillebrandGori, getting inventory management right has never been easier, with tools to keep you informed and help you manage every step of your supply chain. For a complete inventory management solution tailored for wine businesses, contact us for more information or get in touch for a quote.