Wine and spirit manufacturers can find value in using technology to tackle pressing challenges head-on.
By Matthew Riesenbach
For food and beverage manufacturers, supply chain disruption is a familiar foe — and the wine and spirits industries are no exception. Recently, manufacturers have had to deal with glass bottle shortages, cork and aluminum top difficulties and logistical nightmares. Labor shortages haven’t made anything easier. A staggering 45% of all businesses in the global wine sector are facing labor shortages, according to studies conducted by Geisenheim University. This issue is especially pronounced in vineyard seasonal work, with 63% of seasonal areas and 55% of wineries reporting significant staffing challenges. The past few years have been ripe with supply chain tests for winemakers.
Beyond the harsh reality of supply chain turbulence and staffing difficulties lies another challenge: climate change. Globally, extreme wildfires are becoming more and more common. An analysis of satellite data reveals that the frequency of extreme fires globally has more than doubled in the last 20 years. This alarming trend is primarily driven by a surge in extreme fires in regions like Canada, Russia and the western United States. In states such as California, which produces approximately 81% of all wine in the United States, wildfires continue to wreak havoc.
Climate change is also impacting viticulture beyond wildfires. Warmer temperatures lead to earlier bud breaks, flowering and harvests, disrupting traditional growing cycles and affecting grape quality. Droughts can also limit irrigation options, which compromises grape health and may result in lower-quality vines. One thing is certain: extreme weather events and changing climate conditions are affecting yields and quality across the board. The unpredictable behavior of wildfires and the complexity of climate change present significant challenges in finding a foolproof solution. Nonetheless, winemakers are exploring various strategies to mitigate future impacts, including advanced technology, improved land management practices and even integrating controlled fires into their prevention efforts.
Uncorking technology
Wine and spirit manufacturers can find value in using technology to tackle these pressing challenges head-on. By leveraging cloud solutions, manufacturers improve their supply chains, combat labor shortages and manage visibility amid climate change and wildfires. Implementing wine- and spirit-specific Enterprise Resource Planning (ERP) systems can streamline operations, enhance inventory management and integrate nuanced business processes for better efficiency. Direct Store Delivery (DSD) solutions can reduce delivery times and ensure fresher products reach the market more quickly. E-commerce functionality expands market reach, enables direct consumer interactions and provides valuable data insights into customer preferences and buying patterns.
Together, these technologies help manufacturers maintain resilience, adapt to changing environmental conditions and stay competitive in challenging times. Each technology’s functionality can help manufacturers in unique ways, working together to best mitigate harmful effects brought by ongoing turbulence.
Enterprise Resource Planning
ERP systems can significantly lessen the ill-effects of supply chain disruptions by integrating and automating business processes. For instance, an ERP system provides real-time visibility into inventory levels across all warehouses, automatically generating reorder alerts when stocks are low and suggesting optimal suppliers based on performance and price. This integration also streamlines procurement processes. When inventory reaches a predefined threshold, the system automatically generates and sends purchase orders to suppliers, reducing manual effort and errors.
ERP systems help optimize production schedules by aligning them with current inventory data, adjusting for any supplier delays, and reallocating resources to avoid downtime. They also enhance supplier relationships by maintaining comprehensive performance metrics, aiding in better negotiation and improved reliability. Additionally, ERP systems refine demand forecasting by analyzing historical data and market trends, enabling more accurate predictions and preventing both overstocking and stockouts. This comprehensive approach ensures a smoother supply chain operation, in contrast to a manual system where inventory management, procurement and production scheduling are handled separately and prone to inefficiencies and errors.
Direct Store Delivery
Direct Store Delivery (DSD) solutions can effectively address challenges posed by climate change by giving manufacturers greater control over the distribution process. For example, by reducing dependence on intermediary storage and distribution centers, DSD lets manufacturers implement faster and more efficient delivery routes by using their own trucks and drivers.
Beyond environmental value, by managing delivery schedules directly, DSD can help manufacturers respond more swiftly to weather-related disruptions, such as severe storms or fires, and adjust routes or reschedule deliveries to maintain a continuous supply to retailers. This model not only supports a more resilient supply chain but also aligns with sustainability goals by cutting down on unnecessary transportation and waste.
E-commerce
E-commerce functionality can help manufacturers cope with labor shortages by automating numerous aspects of the sales and order fulfillment process. Online platforms can handle customer orders, process payments and coordinate logistics with minimal human intervention. This automation lets labor resources be redirected towards other critical tasks, such as product innovation or quality control.
Crucially, e-commerce systems provide advanced analytics and customer insights, which help manufacturers understand consumer behavior more deeply. This data enables better optimization of inventory levels and production schedules. For instance, if analytics reveal a rising demand for a particular product, manufacturers can adjust their production plans and inventory management to meet this demand more effectively. This digital approach not only expands market reach but also enhances operational efficiency by streamlining processes and making better use of available labor.
Combining functionality for success
By leveraging each of these types of technology, or a solution that integrates capabilities of each, wine and spirits manufacturers can be confident in the resilience of their business, even amid evolving difficulties. By prioritizing visibility, flexibility and advanced insights, the wealth of knowledge can make for better informed decision making. Manufacturers need not fear the current state of challenges and instead can raise a glass to growth through enhanced technology enablement.
Matthew Riesenbach
Matthew Riesenbach is the product management director at ECI Software Solutions, a global provider of cloud-based business management software and services. He has been with ECI Software Solutions and its Deacom ERP Software for Batch and Process Manufacturers for nearly 10 years. Deacom ERP Software can serve wine and spirits producers and manage the unique needs within a centralized enterprise resource planning system.
