Neural 2013 7 th March 2013. Alastair Currie Whisky Operations Strategy Manager

Neural 20137th March 2013

Alastair CurrieWhisky Operations Strategy Manager

1. WHO ARE EDRINGTON?

2. UNDERSTANDING THE BUSINESS CHALLENGE

3. DEFINING OPERATIONAL REQUIREMENTS

4. BUILDING TM1 SOLUTIONS

5. LOOKING FORWARD

Agenda

Agenda

WHO ARE EDRINGTON?

Scotland’s LeadingInternational Premium

Spirits Company

Who Are Edrington?

Who Are Edrington? – Our Brands

Who Are Edrington? – Global Footprint

• Established 1860

• Brands sold in over 100 countries

• c. 10 million cases worldwide in 2012

• Turnover £687 million

• Headquarters – Glasgow

• Employs 790 people in Scotland; 1,180 people in Dominican Republic (Brugal); 300 in distribution (Taiwan, South Korea, China, SE Asia, Sweden, Norway, Finland, Denmark and USA)

Who Are Edrington? – Company Profile

• The largest independent grant-making trust in Scotland.

• Charitable trust founded in 1961 – over £110m donated since its inception

• Funded by dividend income from Edrington

• Supports wide variety of charitable causes – circa £16m last year

Who Are Edrington? – Our Ethos

• IntegrityWe have built a reputation for integrity in our business dealings, and we passionately believe that integrity delivers results.

• IndependenceWe are proud to be privately owned and to keep our home in Scotland. Our tradition of independent thinking informs our business decisions.

• InvolvementActively encourage staff to get involved and share in the success of the company; The Robertson Trust extends that involvement to communities in an unprecedented way.

• InnovationA world-class supply chain and distribution network;seeking new and better ways to work.

Agenda

UNDERSTANDING THE BUSINESS CHALLENGE

Understanding the Business Challenge

Edrington

The 1887 Company

Macallan Distillers

Highland Distillers

Wm Grant & Sons

Suntory Edrington Distillers

A complex company structure – and ownership of stock…….

….. 200 million litres of Whisky held across 4 entities

Brugal

Brugal & Co

Row & Company

Intermarché

Understanding the Business Challenge

200 Million litres of whisky50 individual Malts & Grains

64 different stock years

4 Malt Distilleries1 Grain Distillery

Blending & Bottling PlantStock at 80+ Warehouse sites

1 Million filled casksTwo Cooperage sites

Supply chain ex Spain & USA

Understanding the Business Challenge

ORKNEYHighland Park Distillery

SPEYSIDEMacallan DistilleryGlenrothes DistilleryGlenrothes CooperageParkmore Warehouses

PERTHSHIREGlenturret Distillery

WEST LOTHIANNorth British DistilleryMuirhall WarehousesClyde Cooperage

GLASGOWGreat Western Road(Blending & Bottling)

Buchley Warehouses

Non-Edrington Sites

Understanding the Business Challenge

200 Million litres of whisky50 individual Malts & Grains

64 different stock years

4 Malt Distilleries1 Grain Distillery

Blending & Bottling PlantStock at 80+ Warehouse sites

Over 100 Bottled productsAge range from 3-50 Years old

6 Million cases per annum

1 Million filled casksTwo Cooperage sites

Supply chain ex Spain & USA

WhiskyOperations

Planning

STRATEGIC PLANNING

OPERATIONAL PLANNING

Agenda

DEFINING OPERATIONAL REQUIREMENTS

Defining Operational Requirements – Business Benefits

EXISTING SYSTEMS: • Between 10 & 30 years old• Obsolete technology – mixed platforms• Difficult to support going forward• Not aligned with current IT strategy• Slow, manually intensive processes• No links between functional steps

• Easily integrated into IT strategy• Supportable, single platform• Powerful toolsets for data analysis• Process flows between modules• Speed of processing – scenario planning• Accurate prediction of costs

PROPOSED TM1 SOLUTION:

• Limited financial analysis

Defining Operational Requirements – A Modular Approach

STOCK ASSESSMENTStrategic Planning

BLEND ALLOCATIONSupply Planning

LOAD PLANOperational Movements

• FORECASTS• STOCK vs DEMAND• DISTILLATION PLAN• BLENDING PLAN• STOCK UTILISATION• WHISKY COSTS• SCENARIO PLANNING• CASKS• WAREHOUSING• FREIGHT

• TANKER PLAN• BLEND RECIPE• WHISKY QUALITY• CASK TYPE• STOCK AGE• STOCK LOCATION• MONTHLY PLAN• SCENARIO PLANNING

• STOCK LOCATION• OPTIMAL LOADS• MONTHLY PLAN• SCENARIO PLANNING

Defining Operational Requirements

STOCK ASSESSMENTStrategic Planning

• FORECASTS• STOCK vs DEMAND• DISTILLATION PLAN• BLENDING PLAN• STOCK UTILISATION• WHISKY COSTS• SCENARIO PLANNING• CASKS• WAREHOUSING• FREIGHT

• SAMPLING PLAN• CASK SELECTIONS• QUALITY PARAMETERS• WHISKY COSTS

STOCK ASSESSMENTMacallan Stock Management

Agenda

BUILDING TM1 SOLUTIONSStock Assessment

Building TM1 Solutions – Stock Assessment

STOCK ASSESSMENT

Sales Forecasts Stock Extract Product Recipes

Strategic Planning Module

Blend Planning Module

FinancePlanning

Blend RecipesYears 2-n

Balance Sheet Roll Forward

Surplus/Deficit

New Fillings

Product CostsBlend Plan

Building TM1 Solutions – Stock Assessment

STOCK ASSESSMENTStrategic Planning

• FORECASTS Data feed from SQL file Direct data or import Month-level demand split Version management

Building TM1 Solutions – Stock Assessment

STOCK ASSESSMENTStrategic Planning

• STOCK vs DEMAND Data feed from SQL file Demand from Forecast Stock from core ERP system Surplus or Deficit

Building TM1 Solutions – Stock Assessment

STOCK ASSESSMENTStrategic Planning

• DISTILLATION PLAN Forecasted volume by

product Requirements by month Malt & Grain Cost of Distillation

Building TM1 Solutions – Stock Assessment

STOCK ASSESSMENTStrategic Planning

• DISTILLATION PLAN Forecasted volume by

product Requirements by month Malt & Grain Cost of Distillation

Building TM1 Solutions – Stock Assessment

STOCK ASSESSMENTStrategic Planning

• DISTILLATION PLAN Forecasted volume by product Requirements by month Malt & Grain Cost of Distillation – annual uplift

Building TM1 Solutions – Stock Assessment

STOCK ASSESSMENTBlend Planning

• BLENDING PLAN Monthly demand Operational plan Input to Blend Allocation Input to Macallan Planning Supply continuity Stock level management

Building TM1 Solutions – Stock Assessment

Building TM1 Solutions – Stock Assessment

Building TM1 Solutions – Stock Assessment

STOCK ASSESSMENTBlend Planning

• STOCK UTILISATION Optimised use of ages/makes Blend Recipe creation 2-n Cask type management Alternative stock owners Annual transition controls Detailed product costing

Building TM1 Solutions – Stock Assessment

STOCK ASSESSMENTFinance Planning

• STOCK UTILISATION• WHISKY COSTS

Optimised use of ages/makes Cask type management Alternative stock owners Annual transition controls Detailed product costing

Building TM1 Solutions – Stock Assessment

STOCK ASSESSMENTFinance Planning

• BALANCE SHEET ROLL FORWARD Opening stock volume/value Additions to stock – new/mature Deductions from stock - blending By Group Company Inter group transfers Inter-company margin Annual cost uplift

Distillery Group Make Year Opening Opening Cost Uplift Opening Opening

LOA Value LOA Value LOA Value LOA Value Value LOA Value

NBRI-DG 2008 1,310,191 £1,839,766 125,000 £175,525 £71,111 1,185,191 £1,735,353

2009 662,622 £767,580 50,000 £44,446 208,000 £240,947 £24,277 404,622 £506,465

2010 1,115,119 £1,070,895 957,000 £919,047 £9,487 158,119 £161,336

2011 1,347,184 £1,197,542 £80,831 1,347,184 £1,278,373

2012 2,400,275 £1,964,221 £144,016 2,400,275 £2,108,238

2013 525,000 £451,500 525,000 £451,500

Grain

CV

2013/14

Blend Planning Module Version 1

2013/14

Additions to Stock Depletions from Stock Transfers to Blend

2014/15

Blend Planning Module Version

Blend Year

Owner

Distillery Group View

V1

Building TM1 Solutions – Stock Assessment

Distillery Group Make Year Opening Opening Cost Uplift Opening Opening

LOA Value LOA Value LOA Value LOA Value Value LOA Value

NBRI-DG 2008 1,310,191 £1,839,766 125,000 £175,525 £71,111 1,185,191 £1,735,353

2009 662,622 £767,580 50,000 £44,446 208,000 £240,947 £24,277 404,622 £506,465

2010 1,115,119 £1,070,895 957,000 £919,047 £9,487 158,119 £161,336

2011 1,347,184 £1,197,542 £80,831 1,347,184 £1,278,373

2012 2,400,275 £1,964,221 £144,016 2,400,275 £2,108,238

2013 525,000 £451,500 525,000 £451,500

Grain

CV

2013/14

Blend Planning Module Version 1

2013/14

Additions to Stock Depletions from Stock Transfers to Blend

2014/15

Blend Planning Module Version

Blend Year

Owner

Distillery Group View

V1

Agenda

BUILDING TM1 SOLUTIONSBlend Allocation

Building TM1 Solutions – Blend Allocation

Product Recipes and Annual Blend

Plan ex Stock Assessment

Product Orders from core ERP

Stock Extract from core ERP

Tanker Plan(Multi-blends)

Blend Planning

Casks allocated to open orders

Tanker Locations

Non Tanker Locations

Demand vs Stock

Live ERP system updated

Location Control

Cask Type Control

Building TM1 Solutions – Blend Allocation

BLEND PLANNINGTanker Plan

• OPTIMAL USE OF BULK TANKERS Famous Grouse & Cutty Sark only 4 Million cases p.a. (65% of total) Stock location Location type (tanker/non-tanker) Product recipe Cask type (sherry/non-sherry) Maximise number of tankers Monthly repeatability Labour/space utilisation

Building TM1 Solutions – Blend Allocation

BLEND PLANNINGTanker Plan

• OPTIMAL USE OF BULK TANKERS Famous Grouse & Cutty Sark only 4 Million cases p.a. (65% of total) Stock location Location type (tanker/non-tanker) Product recipe Cask type (sherry/non-sherry) Maximise number of tankers Monthly repeatability Labour/space utilisation

Building TM1 Solutions – Blend Allocation

BLEND PLANNINGBlend Allocation

• DEMAND vs AVAILABLE STOCK High level review Total stock available vs recipe Primary owner & alternatives Recognises month level demand Identifies any potential recipe

issues before automated processing of cask allocations

Building TM1 Solutions – Blend Allocation

BLEND PLANNINGBlend Allocation

• LOCATION CONTROL Preferred location order for

allocation of stock By recipe element & owner Automated mechanism ordered

by most or least stock at location Manual user-defined order

Building TM1 Solutions – Blend Allocation

BLEND PLANNINGBlend Allocation

• CASK TYPE CONTROL Stock Assessment recipe targets Sherry cask type – US/Spanish Oak Ex-Bourbon Other wood types

Building TM1 Solutions – Blend Allocation

BLEND PLANNINGBlend Allocation

• AUTOMATIC ALLOCATIONS Stock Assessment recipe targets Cask type targets Order ID – by product Stock storage location & type Age of youngest spirit (AYS) Required delivery date Final allocations and check

Building TM1 Solutions – Blend Allocation

BLEND PLANNINGBlend Allocation

• AUTOMATIC ALLOCATIONS Stock Assessment recipe targets Cask type targets Order ID – by product Stock storage location & type Age of youngest spirit (AYS) Required delivery date Final allocations and check

Building TM1 Solutions – Blend Allocation

BLEND PLANNINGBlend Allocation

• AUTOMATIC ALLOCATIONS Stock Assessment recipe targets Cask type targets Order ID – by product Stock storage location & type Age of youngest spirit (AYS) Required delivery date Final allocations and check

Building TM1 Solutions – Blend Allocation

Building TM1 Solutions – Blend Allocation

BLEND PLANNINGBlend Allocation

• AUTOMATIC ALLOCATIONS Stock Assessment recipe target Cask type targets Order ID – by product Stock storage location & type Age of youngest spirit (AYS) Required delivery date Final allocations and check

Building TM1 Solutions – Blend Allocation

Building TM1 Solutions – Blend Allocation

BLEND PLANNINGBlend Allocation

• AUTOMATIC ALLOCATIONS Stock Assessment recipe target Cask type targets Order ID – by product Stock storage location & type Age of youngest spirit (AYS) Required delivery date Final allocations and check

Building TM1 Solutions – Blend Allocation

BLEND PLANNINGBlend Allocation

• AUTOMATIC ALLOCATIONS Stock Assessment recipe target Cask type targets Order ID – by product Stock storage location & type Age of youngest spirit (AYS) Required delivery date Final allocations and check

Building TM1 Solutions – Blend Allocation

Building TM1 Solutions – Blend Allocation

BLEND PLANNINGBlend Allocation

• MANUAL ALLOCATIONS Entire cask details file Override automated selections Add casks to improve target % Used principally for allocation

of small-volume high-value products with specific cask selections (eg Highland Park 18)

Building TM1 Solutions – Blend Allocation

Agenda

BUILDING TM1 SOLUTIONSLoad Plan

Building TM1 Solutions – Load Plan

Casks allocated to production orders ex Blend Allocation

Removal documentation generated by

core ERP system

Data Views

Load Plan

Casks allocated to Optimised Loads

Live ERP system updatedLoad Plan Controls

Load Plan Diary

Building TM1 Solutions – Load Plan

LOAD PLANData Views

• DATA VIEWS Ex Blend Allocation data Total casks from/to locations Marshalling loads (satellite

warehouses to hub) Casks at target destination Casks by production order

Building TM1 Solutions – Load Plan

LOAD PLANData Views

• DATA VIEWS Ex Blend Allocation data Total casks from/to locations Marshalling loads (satellite

warehouses to hub) Casks at target destination Casks by production order

Building TM1 Solutions – Load Plan

LOAD PLANData Views

• DATA VIEWS Ex Blend Allocation data Total casks from/to locations Marshalling loads (satellite

warehouses to hub) Casks at target destination Casks by production order

Building TM1 Solutions – Load Plan

LOAD PLANLoad Plan Controls

• LOAD PLAN CONTROLS Locations Transit times Load sizes Number of pickups Processing order

Building TM1 Solutions – Load Plan

LOAD PLANLoad Plan Controls

• LOAD PLAN CONTROLS Locations Transit times Load sizes Number of pickups Processing order

Building TM1 Solutions – Load Plan

LOAD PLANLoad Plan Controls

• LOAD PLAN CONTROLS Locations Transit times Load sizes Number of pickups Processing order

Building TM1 Solutions – Load Plan

LOAD PLAN

• LOAD PLAN PROCESSING Tanker & Cask Loads by

product/order Marshalling Loads By date By region From/To details Number of casks/type Load Plan Diary

Building TM1 Solutions – Load Plan

LOAD PLAN

• LOAD PLAN PROCESSING Tanker & Cask Loads Marshalling Loads By date By region From/To details Number of casks/type Load Plan Diary

Building TM1 Solutions – Load Plan

Building TM1 Solutions – Load Plan

LOAD PLAN

• LOAD PLAN PROCESSING Tanker & Cask Loads Marshalling Loads By date By region From/To details Number of casks/type Load Plan Diary

Building TM1 Solutions – Load Plan

Building TM1 Solutions – Load Plan

LOAD PLAN

• LOAD PLAN PROCESSING Tanker & Cask Loads Marshalling Loads By date By region From/To details Number of casks/type Load Plan Diary

Building TM1 Solutions – Delivering Business Benefits

STOCK ASSESSMENTStrategic Planning

BLEND ALLOCATIONSupply Planning

LOAD PLANOperational Movements

• INTEGRATED SOLUTIONS – ONE PLATFORM• FASTER, SMARTER DATA PROCESSING & ANALYSIS• REDUCED MANUAL INPUT & SPREADSHEET MANIPULATION• PRODUCTIVITY - LESS TIME SPENT BATTERING KEYBOARDS• IMPROVED ACCURACY & CONSISTENCY OF RESULTS• OPPORTUNITIES FOR SCENARIO PLANNING• POTENTIAL TO EXPAND INTO OTHER AREAS OF OUR BUSINESS

But apart from all that, what have ever done for us????

Building TM1 Solutions – Commercial Budget Planning

COMMERCIAL PLANNINGGroup Data Consolidation

COMMERCIAL BUDGETING PROCESS;

• 5 Year Forecast• Customer/Product & Brand based• 80+ active customers• 400+ customer/product combinations• Data uploaded into SAP

THE PROBLEM;

• Managed via multiple complex spreadsheets• Unreliable and time consuming• Accuracy compromised• Inconsistent communication to business• Expanding Commercial team• Geographical remoteness

Building TM1 Solutions – Commercial Budget Planning

COMMERCIAL PLANNINGGroup Data Consolidation

• WEB BASED DATA INPUT Access from anywhere with

reasonable broadband speed Volumes, Pricing and A&P

spend entered by customer Product data Summary

Building TM1 Solutions – Commercial Budget Planning

COMMERCIAL PLANNINGGroup Data Consolidation

• IMPROVED DATA VISIBILITY 5-Year summary generated Comparison to previous budget

and forecast data sets Rapid generation of summaries Improved data analysis rather

than data integrity checking

Building TM1 Solutions – Commercial Budget Planning

COMMERCIAL PLANNINGGroup Data Consolidation BUSINESS BENEFITS

• DATA INTEGRITY• REAL-TIME DATA CAPTURE & REPORTING• OPPORTUNITY FOR PROACTIVE ERROR-TRAPPING• MORE ACCURATE FINAL BUDGET• ADDING VALUE NOT JUST CHECKING DATA INPUTS

Agenda

LOOKING FORWARDTM1 and Edrington

Looking Forward – TM1 and Edrington

STOCK ASSESSMENTStrategic Planning

BLEND ALLOCATIONSupply Planning

LOAD PLANOperational Movements

STOCK ASSESSMENTCask, Warehouse & Freight Planning

STOCK ASSESSMENTMacallan Stock Management

COMMERCIAL PLANNINGGroup Data Consolidation

Forecast Data

BRUGAL RUM ??Stock Assessment & Supply Planning

Questions?

Neural 20137th March 2013