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Accolade Wines increases margins with streamlined supply chain

Published:  09 July, 2013

Accolade Wines has announced it has reduced its annual inventory by 17% and increased margins by £300,000 through working with an end-to-end supply chain consultancy that has helped streamline its supply-chain processes.


The company that produces brands such as Hardys, Echo Falls, Kumala and Banrock Station said margins have been increased through improving finished goods availability, plus strategic sourcing has made £2 million in indirect purchasing savings and £4 million in direct purchasing savings.


To achieve the required profitability levels, Accolade said it had the challenge of growing into new markets (Asia Pacific, China and North America) while also reducing its costs of goods right across the supply chain, from grape purchasing, wine blending, transport, packaging and material spend.


With premium wine becoming scarcer across the world it revealed allocation of scarce wine between established core markets and higher-margin new markets provided another challenge to contend with, to ensure that global margins are maximised.


Crispin Mair, co-founder and director from consultancy Crimson & Co, said: "Consumer demands in FMCG mean that companies have to continually refresh their portfolios and maintain high levels of product availability in a heavily promotions-driven market. In Accolade's case, they have to match a very reactive 'front end' of their supply chain to a 'back end' that is restricted to one crop per year. This requires meticulous planning and risk assessments to avoid either excesses or shortages in wine supply, while deciding how scarce bulk wine is best utilised and lowering costs through global sourcing."


Tim Hobbs, Accolade's global head of planning, said: "Crimson & Co designed the new operating model from demand management to viticulture planning and wine blending to customer fulfilment. These were shared across the whole business and feedback incorporated to ensure buy-in from all the key people, and hence speed up implementation further down the line."


As well as looking to the future ways of working, local planning teams have implemented a number of quick wins identified during the diagnostic, 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.