Talking supply chain with Southern Wine & Spirits
When it comes to the supply chain, some companies just get it.
Southern Wine & Spirits, celebrating its 40th anniversary, is one of those companies.
Here’s what I mean. Doing what I do at Modern, I visit and talk to a lot of great companies. Manufacturers typically have a product focus. A company like Detroit Diesel, for instance, may have a great supply chain, but they’re known for the engines they produce. Most retailers understand the importance of the supply chain, but their focus is more often than not getting the right product on the shelf.
Then you get companies like Southern Wine. Yes, they carry some brands with passionate fans. But at the end of the day, wine and spirits is a commodity business. The company that can warehouse and deliver its products with the lowest logistics costs is going to win in the marketplace. For them, materials handling and transportation management is everything.
“Service is the competitive advantage we bring to the market,” says Bobby Burg, senior vice president of supply chain. “To compete, we have to find ways to handle more SKUs and more volume and do that at a lower price per case than before.”
Burg is a third generation beverage guy who joined a family-owned business in 1984. That company was bought out by Southern Wine in 1993. Since then, warehousing and distribution have become more and more prominent.
“In the 1980’s, you didn’t have Wal-Mart and you didn’t have grocery chains that want the same wines in 800 stores. That has changed how we get product to our customers,” says Burg. “There has also been consolidation in our market. There once were 1,200 wholesalers in our trade association. Today, five companies manage 90% of the volume for the country.”
Add SKU proliferation to that list of changes. “In the 1980’s, we had 3,000 SKUs in the warehouse,” says Burg. “Today, I have a warehouse with 30,000 SKUs. Our warehouses are much more complex to manage.”
How has Southern Wine managed those changes? “Automation is the key to making our workers more productive,” says Burg.
In Lakeland, Fla., for instance, Southern Wine is picking 100,000 bottles per night using voice technology that directs a diverse workforce in ten different languages. “It used to take four facilities to get that much throughput,” he says. Meanwhile, using conveyor and high-speed sortation systems, the company is processing as many as 10,000 cases per hour in a facility.
All of Southern Wine’s facilities are now paperless; the company has moved from floor storage with pallets stacked three high to rack storage that is five pallets high. Warehouse and labor management systems are also part of the mix. “We’re currently evaluating a new WMS package to take advantage of task interleaving,” Burg adds.
The next step? Southern Wine is in the middle of designing a new facility that will go live in California in the summer of 2010. “We plan to include a 100-foot tall automated storage and retrieval system,” says Burg. “While you see these in Europe, I think we will be the first to go that tall in the wine and spirits industry in the US. When we’re done, it’s going to be cutting edge for our industry.”
