Case Study: Global Inventory Project for Constellation Europe Ltd
Company Background
Constellation Europe Ltd is one of the largest premium drinks companies in Europe with net sales of £447m and 1064 employees and is responsible for the sales, marketing and supply of its wines, cider and drinks brands.
The wine business is comprised of the UK’s largest wholesale drinks business, Matthew Clark; production and distribution, as well as being the importer and sales organisation for Constellation Wine Australia, Constellation Wine New Zealand, and Constellation Wine US.
Brands in the portfolio include Kumala, Hardys, Banrock Station, Stowells, Nobilo, Ravenswood, Simi, Woodbridge by Robert Mondavi, and Robert Mondavi wines, Blackthorn and Gaymer’s Olde English cider and drinks brands including Babycham and Stone’s Ginger Wine.
The Project
The goal of the Global Inventory Project is to significantly improve Constellation’s return on invested capital through better inventory control and management. The project is in two phases, inventory rationalisation and ongoing product lifecycle management process and the implementation of more rigorous demand, supply and sales and operations planning.
My role as the finance lead and number two to the project manager, for phase one, stock keeping unit (SKU) rationalisation, consisted of creating a robust ongoing process to embed into the everyday routine of the staff. To do this, I had to involve myself at every level of the organisation which included a trip to the Bristol Winery with a tour of the production lines and visiting the National Distribution Centre, the largest in Europe and able to contain approx 24 million bottles of wine, to understand the full extent of the situation.
A new National Distribution Centre is currently under construction and is three times the size of the current site at 35 acres and is large enough to hold 18 jumbo jets, this site will also incorporate the new state of the art packaging facility currently based in Bristol.
Targets Achieved
Identification of possible delist products by defining the delist criteria and the hurdle rates based on a number of factors profitability of products, portfolio classification and metrics / KPI’s.
Analyse the outcomes by working with consumer marketing, customer marketing, sales and other operating companies i.e. Constellation Wine Australia, this involved working across time zones in virtual teams to gain inter-company agreement, resolving any issues and publishing the agreed list.
Gaining approval from senior management by developing a formalised process including creating relevant forms and changing behaviours and gaining buy in from across the business.
Working with the corporate supply chain team and the project team to Develop the Rationalisation Strategy and then to implement it.
Develop and complete the financial templates with corporate, in order to gain corporate approval for the rationalisation of the target list showing mitigation strategy for FY09 budget.
Develop and complete the monthly reporting to monitor the progress of the inventory and SKU reduction. Targets set reduce complexity by 40% and reduce inventory by 15% achieved complexity reduction of 52% and inventory reduction of 15%.
Compile update presentations for the project management office steering group, finance team, corporate supply chain. Develop and conduct a training workshop for the financial analysts so ongoing processes will become part of everyday life.
Working with IT to develop an intranet site to communicate "use up" and obsolete SKUs incorporating monthly reporting.
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