The wine Supply Chain and 3PL/4PL: By Chuck Intrieri & Jesús Galindo de la Torre April, 2015
Supply Chain management is one of the main disciplines of any economic sector from manufacturing to distribution to retail. Its scope ranges from the supplier to the arrival to the consumer. The life cycle of the product is an important consideration as it moves along the supply chain.
Some supply chain challenges are: lack of communication, insufficient collaboration, poor IT system integration, inadequate metrics, limited service level agreement, late deliveries, risk management, security, hacking, potential cyberattacks, errors in packaging and dunnage, limited productivity of resources, lack of synchronization, inadequate product flow, insufficient support of the SSII work processes, and repetitive operational problems. These problems must be solved to go beyond the customers’ expectations. The partners in the Supply Chain must brainstorm as a genuine team, to solve these, and other root cause problems.
Let’s review a unique Supply Chain: *the Wine Supply Chain:
The supply chain of wine has always been considered to be one of the most complex:
The first stage, grape production, consists of the agricultural operations, such as pruning, tillage pest control activities, harvest etc. Transport that occurs within the field operations for workers and products is taken into account in this phase. Finally, equipment maintenance is an issue, which should not be overlooked.
The second stage, wine production, includes operations such as stemming and crushing, the fermentation and storage. In wine production the grape is transformed into wine, by first becoming “must” and then, through the fermentation process, it becomes wine. Processes included in the “clarification” of wine comprising racking, fining, filtration, and refrigeration are also an important part of this stage in order to purify the wine output. Finally, wine is stored in order to be aged.
Storage takes place in this phase where wine is stored in order to be aged.
In the third stage, the packaging processes, such as bottle filling, corking, capsuling, labelling, box filling and placement on pallets, can be taken into consideration.
The fourth phase, distribution, is transport related and can be referred to at a local, regional, national or international level of the company.
A Third Party Logistics (3PL) provider and the Supply Chain: 3PL warehouses, fulfills, and distributes wine to the ultimate customer, sometimes called “white glove, last mile.”
A Fourth Party Logistics (4PL) provider and the Supply Chain; manages the entire supply chain from the Supplier to the ultimate customer. A 4PL constantly improves the Supply Chain for their customers. The 4PL keeps abreast of the sate-of-the art of the Supply Chains. If a new IT product is developed, like the Internet of Things (IoT), Internet of Everything (IoE) or Trading Partner Interface (TPI), it is studied/simulated by the 4PL and introduced to the customer for approval to be part of the customer’s Supply Chain.
When working with a 3PL or 4PL, always implement a collaborative, win-win Service Level Agreement (SLA) with agreed upon Key Performance Indicators (KPIs). Include the need for Continuous Improvement and implementation of Lean initiatives: 5S, Kaizen, Kanban and Six Sigma…
The consumer phase is a significant stage in the wine’s life cycle. This is due to the fact that storage takes place here and may have a rather noteworthy impact
The last stage, end of life, includes the procedures for treatment of the bottles and waste of packaging (cardboard boxes, corks etc.). This phase can also have great impacts on the environment depending on the chosen method of waste management
Finally, it has to be highlighted that transport is a process, which can occur elsewhere in the life cycle, either between any two subsequent life-cycle stages or within a given stage, depending on the site-specific means of processing and the level of supply-chain integration.
“Logistics operations can generate between 10 % and 40 % of the cost of the product, and more than 50% of that cost is made up of activities that do not add value. Lean Logistics ensures agile logistics processes reducing the variation” ICL – Foundation.
Why extended Lean in the Supply Chain?
Lean was developed by Toyota to produce more flexible and agile processes through the elimination of practices which generate waste. Six Sigma is a system of continuous improvement that seeks to eliminate the variability in any process, through a very powerful statistical tools it can be summarized in the following way: “Lean is speed and Six Sigma is quality.’
Companies which are not prepared to be agile and excellent, will not be able to compete in a globalized and challenging world.
Reference on the wine Supply Chain: Proceedings of the 5th Australian Conference on LCA in Melbourne, Australia.