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Project Reports on Supply Chain

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  The
 Beverage
 Supply Chain
             » INSIDE
            Supply Chain Considerations . . . 2
            ERP Overview. . . . . . . . . . . . . . . . . 6
            Supply Chain Partners . . . . . . . . . 8
            Mobile Solutions . . . . . . . . . . . . . 15
            What Retailers Want . . . . . . . . . . 18
            Warehouse 101: Racking . . . . . . 20
            Supply Chain Resources . . . . . . 22
                  SC CONSIDERATIONS

                  Taking Initiative
                  It seems every beverage operation is looking for supply chain
                  efficiency, but what are the factors you should consider before investing
                  in new supply chain initiatives? By William Atkinson



                 U
                             p until 10 or 15 years ago, the term “supply       Nate Rosier, director, supply chain practice, for
                             chain” did not even exist. Back then, pur-      supply chain consulting firm CIBER Inc.
                             chasing was purchasing, warehousing was         (Greenwood Village, CO, USA) specializes in supply
                             warehousing, transportation was transporta-     chain initiatives for the beverage industry. “A lot of
                   tion and each function operated in relative isolation     beverage distributors have inventory management
                   from one other.                                           challenges,” he points out. “For example, a lot of our
                      Today, most companies are looking for ways to          clients import products from around the world or
                   integrate these and additional functions into a           buy from smaller suppliers that still don’t even
                   holistic supply chain strategy. “Supply chain execu-      place bar codes on their products or send advance
                   tion involves how well things move through the            shipment notifications.” In addition, Rosier says
                   supply chain—the operations that occur from the           that a lot of beverage distributors are still behind
                   raw materials delivered to a manufacturer, then to        the curve when it comes to the implementation and
                   the distributor, and finally to the customer,”            usage of supply chain technology.
                   explains Chad Collins, director of product strategy
                   for HighJump Software (a 3M Company), in Eden             Getting Started
                   Prairie, MN, USA. HighJump provides supply chain          The first step in creating and/or improving your
                                                software that has a num-     supply chain is to identify your goals. Overall goals
                                                ber of applications          of supply chain management processes for distribu-
                                                specifically for the bev-    tors generally focus on efficient and accurate
                                                erage industry.              receiving, inventory accuracy, effective slotting,
                                                   While more and more       flexible replenishment, multiple picking options,
                                                companies are seeking        increased warehouse productivity, reduced returns
                                                ways to coordinate and       and flexible exception handling.
                                                streamline their supply         “When looking at supply chain investment, it is
                                                chains, the overall task     important to determine what your goals are, then
                                                can be daunting.             develop an effective roadmap for investing in your
                                                Companies face myriad        supply chain,” states Cal Petty, director of supply
                                                challenges, including        chain practice for CIBER, who specializes in appli-
                                                increasing transporta-       cations and implementation.
                                                tion costs, growing             Advanced planning cannot be overemphasized.
                                                retailer influence, tight-   There is a story of a supermarket chain that imple-
                                                ening requirements for       mented an expensive routing and scheduling soft-
                                                fast order fulfillment,      ware package in its eight distribution centers. Then,
                                                SKU proliferation, physi-    a year later, it began to question just how many dis-
                                                cal labor constraints and    tribution centers it needed in the first place.
                                                the demand for consis-          Next, decide whether your supply chain improve-
                                                tently “perfect orders.”     ment project is one you can handle on your own, or
                                                Indeed, these very chal-     whether you need a consultant. It’s a trade-off
                                                lenges are what make         between cost and internal resources. While consult-
                                                supply chain manage-         ants can be expensive, your organization may not
                                                ment so important to         have the internal expertise necessary to handle the
                                                embrace.                     project on its own. And even if you do, you may

2_BEVERAGE WORLD_SEPTEMBER 2006                                                                                  BEVERAGEWORLD.COM
                    not be able to pull these people away
                                                               Calm After the Storm
                    from their regular jobs. If you do opt     CIBER, Inc. offers specific warehousing solutions for distributors in
                    to hire a consultant, find one who         the wine and beer space. “We have teamed up with HighJump for
                    has specific experience in the bever-      this because they have a broad base of warehouse and transporta-
                    age industry.                              tion capabilities,” explains Cal Petty, director, supply chain practice
                      Whether or not you hire a consult-       for the Greenwood Village, CO, USA-based company.
                                                                  One satisfied customer is Major Brands Premium Beverage
                    ant, it is important to create an inter-   Distributors, one of Missouri’s highest volume distributors of wine
                    nal steering committee to oversee          and spirits. With 4,500 SKUs, Major Brands is managing more than
                    the project, plus a design team to         260,000 cases of inventory, with its shipping department handling
                    actually implement the project.            up to 15,000 cases and 20,000 individual bottles per day.
                                                                  CIBER conducted a Logistics Improvement Analysis (LIA), then
                                                               looked at ways to improve the operations. The results showed that
                    The Initial Assessment                                                                the distributor’s significant
                    Once you know your goals, it is                                                       growth outpaced the capabil-
                    important to determine what your                                                      ity of its manual inventory
                    current situation is and what steps                                                   management system.
                    can be taken to make the necessary                                                       CIBER recommended a
                                                                                                          warehouse management sys-
                    improvements. One tool that can                                                       tem (WMS) that would track
                    help is CIBER’s Logistics                                                             inventory from receipt to
                    Improvement Analysis (LIA). LIA                                                       shipment, while offering flex-
                    analyzes your complete distribution                                                   ible architecture to accom-
                    operations, including warehouse sys-       »                                          modate future growth. A
                                                                 A NEW WMS helped Major Brands reduce     number of layout changes,
                    tems and transportation systems            labor costs, increase picking accuracy and material handling conveyor
                    (both inbound and outbound). It            boost customer satisfaction.
                                                                                                          and sortation changes, and a
                    determines how your supply chain           voice-picking solution also were recommended.
                    processes are performing, including           The changes resulted in labor savings and other operational effi-
                    shipping and receiving, slotting and       ciencies for the distributor. Returns volume was cut by more than
                                                               80 percent, put-away labor by 22 percent and receiving accuracy
                    storage, order picking and replenish-      increased by 90 percent. “We now have the infrastructure neces-
                    ment, work measurement and inven-          sary to keep pace with the high-volume replenishments driven by
                    tory management.                           our continued growth,” reports Patrick Quinn, vice president of
                       “The Logistic Improvement               administration for Major Brands. “We are losing our ‘fire drill’
                    Analysis helps the company identify        mentality and seeing more sound and calm production.”—W.A.
                    where it can make improvements in
                    its supply chain to achieve best practice perform-        planning (ERP) and others.
                    ance,” explains Rosier. “We compare the company’s           One popular technology is HighJump’s Supply
                    operations to best practice metrics that we have          Chain Advantage, a suite of products that deals
                    gathered for this and other industries. We then           with supply chain execution, all the way from raw
                    show the company the best path to take to achieve         materials to the end customer. The technology
                    best practice performance.” This could involve            helps to improve fulfillment efficiencies, meet cus-
                    things such as changing the way products are slot-        tomer-specific requirements, optimize
                    ted in the warehouse, changing the layout of the          loading/unloading processes and achieve supply
                    warehouse, making material handling changes or            chain visibility by showing users where various
                    introducing equipment and/or technology tools.            shipments are in the supply chain.
                    “We then explain what type of investment might be           Two of the most popular features within the
                    required for the recommended options,” he adds.           Supply Chain Advantage suite are Transportation
                       While technology is often part of the solution,        Advantage and Warehouse Advantage.
                    this isn’t always the case. “We don’t always start out    Transportation Advantage helps handle the build-
                    with technology,” explains Rosier. “We have a num-        ing of loads for delivery to get products to cus-
                    ber of technology partners, and we recommend one          tomers. “Transportation Advantage looks at the
                    or more of them when it makes sense.” These can           number of stops a truck might have to make when
                    include material handling, voice picking, warehouse       delivering a particular route and optimizes these by
                    management systems (WMS), enterprise resource             creating a least-cost model for creating the route,”

BEVERAGEWORLD.COM                                                                                       SEPTEMBER 2006_BEVERAGE WORLD_3
                   explains HighJump’s Collins. “It also facilitates the     addition to longer-term paybacks.
                   communication of the transportation requirement              “Supply chain execution systems can range from
                   to your transportation providers, helps you procure       $50,000 to over $1 million, based on the number of
                   the transportation, tracks the shipments once you         modules purchased and the scale of deployment,”
                   ship the product, captures proof of delivery infor-       points out HighJump’s Collins. “Most companies
                   mation and manages finances when the transporta-          treat enterprise software purchases as a capital
                   tion provider bills you.”                                 investment and finance that investment in a man-
                      Warehouse Advantage is useful to everyone in           ner that is appropriate for their business.”
                   the industry, especially those that deliver directly to      According to CIBER’s Rosier, clients tend to deal
                   stores. “Here, the challenge is how to prepare the        with supply chain project finances in one of three
                   goods to be placed on the trucks at the warehouse         ways. “Most companies we work with are making
                   in a ‘direct store delivery model,’” notes Collins.       improvements to their supply chains because they
                   “That is, you need to stage them for the drivers who      are growing,” he explains. “Since they are growing,
                   will be going through the front door of a grocery         they usually have cash, so they often use this, espe-
                   store and maybe even doing some merchandising.”           cially if it is a smaller investment.”
                   Warehouse Advantage is a WMS that controls all of            The second most common method is to capitalize
                   the operations related to receiving inbound inven-        the project and work with their regular bank.
                   tory and managing inventory at a very detailed            “This is the most common arrangement when a
                   location level, including lot tracking, stock rotation    large investment is involved,” he continues. A third
                   based on expiration dates, etc. and preparing goods       option may be to arrange a lease deal with the
                   for shipment to end customer.                             vendor so that you can allocate the costs over a
                                                                             period of years.
                   Financing Supply Chain Projects                              HighJump’s Collins offers an additional recom-
                   Before investing in a supply chain project, it is         mendation related to financing: “When purchasing
                   important to conduct an analysis to determine costs       software, look at total cost of ownership over a peri-
                   and anticipated cost savings. One way to keep             od of time, such as five years, rather than just the
                   everyone in management satisfied is to look for a         initial price,” he suggests.
                   system that can provide some quick paybacks in               For example, if distribution requirements
                                                                             change, how much will it cost to change the soft-
                                                                             ware? Requirements may change as a result of the
                                                                             product mix changing, business expanding or
                                                                             taking on new channels of business. As such, you
                                                                             need software that is flexible enough to meet
                                                                             future requirements.
                                                                                Another issue to take into account when
                                                                             considering financing options is to decide how big
                                                                             a bite you want to take at one time on your supply
                                                                             chain improvement initiative. That is, while it is
                                                                             conceivably possible to design or redesign your
                                                                             supply chain from “soup to nuts” at one time, doing
                                                                             so is rarely recommended, except as part of a
                                                                             greenfield endeavor.
                                                                                According to Rosier, supply chain improvements
                                                                             are often best tackled in stages where the efficien-
                                                                             cies created by the first steps are incorporated into
                                                                             later steps, ensuring that the sum will be greater
                                                                             than its parts. “There is only a certain amount of
                                                                             change that you can successfully manage at one
                                                                             time,” advises Petty. You want to make sure that one
                                                                             phase is working and achieving the results it
                                                                             should, before moving to the next level. BW

4_BEVERAGE WORLD_SEPTEMBER 2006                                                                                  BEVERAGEWORLD.COM
                                                                                             Sponsor Profile

ORBIS Corporation
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packaging expertise to the world’s top bottlers and their suppliers for over 20 years.
ORBIS understands the supply chain from raw material to retail and all points in
between: preforms, blowmolding, WIP, filling, distribution and merchandising
applications.
   “We’ve been in this business long enough that we know the ebbs and flows of the
beverage industry so we can plan production accordingly,” says Kevin Geason, Vice
President Domestic Beverage Sales for ORBIS. As part of Menasha Corporation,
ORBIS is celebrating over 150 years of providing high-quality, innovative packaging
products. “We work collaboratively with leading companies to move their product
faster, safer and more cost effectively, driving supply chain optimization.”
   The right pallet, top frame and divider sheet solution can reduce packaging costs
and waste, reduce product damage and risk of contamination, optimize automated
systems and reduce labor. ORBIS maintains long-term relationships with their cus-
tomer base in the Americas, Europe and Asia, with proven results with companies
such as Coca-Cola, Ball, Silgan, Gallo, Rexam, PlastiPak, Crown, O-I and St. Gobain.
   Since ready-to-drink and health-driven products in today’s rapidly changing market
                                                              are often packaged in           "We can provide cost
                                                              unique PET bottles, they        justifications for converting
                                                              need unique solutions.
                                                              Along with standardized         to plastic reusable packaging.
                                                              pallets, top frames, divider
                                                              sheets/layer pads and bulk      Our Engineering Services
                                                              containers, ORBIS offers
                                                              custom product develop-
                                                                                              Group visits a potential
                                                              ment.                           customer and assesses their
                                                                One of the latest stan-
                                                              dard products launched by       material handling and
                                                              ORBIS is the GP4048
                                                              BulkPak for preform PET         logistics. Typically the goal
                                                              bottles and blowmolding         is a return on investment in
                                                              applications. This durable,
collapsible bin is available in 8 heights, including 50” for improved shipping efficien-      6-18 months."
cy, and stacks securely for storage of preforms (up to 4 high). Its superior cube effi-
ciency accommodates a wider variety of product sizes, shapes and weights, and                         - KEVIN GEASON, VICE PRESIDENT
                                                                                                                 DOMESTIC BEVERAGE
allows more parts to be handled, stored and shipped...with fewer containers and in
                                                                                                                    SALES FOR ORBIS
fewer trips. The base is contoured with a plastic runner that is designed for use with
automated equipment.
   In collaboration with Precision Thermoplastic Components (PTC), ORBIS now offers
a fully enclosed top frame that provides the strength, hygiene and durability needed
in today’s beverage systems. The all-plastic, automation friendly top frame is avail-
able in four different styles, custom or standard sizes and accommodates a wide vari-
ety of identification options.
   “We can provide cost justifications for converting to plastic reusable packaging,”
says Geason. “Our Engineering Services Group visits a potential customer and assess-
es their material handling and logistics. Typically the goal is a return on investment in
6-18 months.”
   Companies can avoid an upfront investment in plastic reusable packaging by using the
services of CORBI Plastics, which provides cleaning, pooling and logistics, pallet man-
agement and repair services. ORBIS created CORBI in early 2005 in a joint venture with
CartonPlast, which has over 20 years experience in the beverage industry in Europe.
   “Some companies simply send us their products to be cleaned,” says Geason. “For
                                                                                               Contact:
others, CORBI manages their fleet of packaging so they don’t have to worry about get-           Kevin Geason, Vice President
ting it to 50 different shipping points. We’re in a collaborative effort with our cus-          Domestic Beverage Sales
tomers, so they can concentrate on their core business.”                                        (262) 560-5026
   ORBIS is the only plastic packaging company that can offer one-stop shopping,                (262) 560-7509 fax
including recycling. Product Manager Marc Brandt agrees. “We’re not just going to sell          kevin.geason@orbiscorporation.com
you a product, we’re going to make sure you get the right product for your application.”        www.orbiscorporation.com

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                  ERP OVERVIEW

                  Investing in Integration
                  An enterprise resource planning system can transform your business, but
                  watch out for the pitfalls. By Hank Behar



                 I
                       n April 1972, SAP, currently the world’s                                       tribution, transportation, logis-
                       largest supplier of enterprise resource         ERP (ENTERPRISE                tics, compliance and the man-
                       planning (ERP) systems, was launched            RESOURCE PLANNING):            agement of finances, property,
                                                                       Business software that
                       in Mannheim, Germany by five ex-IBM                                            quality, projects, products,
                                                                       integrates, manages
                   systems analysts, which made up its total                                          assets, maintenance, produc-
                                                                       and tracks operational
                   work force.                                         activities across a com-
                                                                                                      tion, orders, inventory and
                      Today, SAP has almost 38,000 employ-             pany, including finances,      warehousing.
                   ees, with more than 100,000 installations           customer relations,
                   in 120 of the world’s 193 countries. ERP, in        human resources,               How ERP does it
                   other words, is here to stay. The question is       supply chain planning          In the not-so-good old days—
                   not whether or not an enterprise should             and manufacturing. ERP         pre-ERP—a customer order
                   invest in an ERP system, but how far to go          systems are designed to        traveled through a company on
                   with it.                                            manage and standard-           a paper highway, stopping off
                      “ERP takes in a lot more these days than         ize operations to reduce       at each department to enter
                                                                       business costs and
                   it used to,” says Ray Wang, principal ana-                                         data into the department’s com-
                                                                       increase efficiencies.
                   lyst at Forrester Research (Cambridge, MA,                                         puter system—a process that
                                                USA), an inde-                                        lent itself to keying errors, lost
                                                pendent technology              papers and inbox-to-inbox delays, as pointed out in
                                                research company that           CIO Magazine’s report, “The ABCs of ERP” (January
                                                helps companies choose          10, 2006).
                                                ERP vendors and under-            With ERP, however, all those stand-alone comput-
                                                stand the ERP universe.         er systems are marshaled together into a single,
                                                “At one time, a compa-          unified software program that takes over each
                                                ny’s ERP system would           department’s functions.
                                                focus on just a few func-         Each function still retains its own discreet
                                                tions such as Supply            software system, but ERP links them together so
                                                Chain Management or             that when a customer order is entered into the
                                                Financial Management            system, its path toward fulfillment is directed and
                                                or Human Resources,             tracked so that its status can be determined at any
                                                but today ERP encom-            given point.
                                                passes every aspect of            For enterprises that already have an ERP system
                                                an enterprise. It’s diffi-      in place, the question is whether to upgrade it to
                                                cult to imagine how a           cover more functions. Vicki Griffith, marketing
                                                company can stay com-           director of Lawson Software (Minneapolis, MN,
                                                petitive without an ERP         USA), which serves many food and beverage enter-
                                                system in place.”               prises, notes that one objective in expanding an
                                                   Some of the core func- existing ERP system would be to integrate a ware-
                                                tions that are now              house system to a company’s logistics system in
                                                included in ERP systems order to improve the visibility of inventory,
                                                are human resources,            whether it’s on a truck, in a warehouse or at the
                                                sales force automation,         supplier. The result would be a reduction in inven-
                                                field service/market sup- tory requirements, maximizing the company’s
                                                port, procurement, dis-         working capital, which an open system like Lawson

6_BEVERAGE WORLD_SEPTEMBER 2006                                                                                       BEVERAGEWORLD.COM
                    M3 is designed to do.
                      In the case of enterprises that have no ERP
                    system, Glenn Irwin, solutions manager in con-
                    sumer products at SAP (Atlanta, GA, USA), advises
                    them to identify their core needs and seek out the
                    vendors that specialize in those functions. A soft
                    drink bottler, for example, might focus on its
                    DSD operation as an area to explore for greater
                    efficiency, or a beer distributor might pinpoint
                    inventory control and truck maintenance as two
                    functions that need updating. The next step
                    would then be to put together an RFP or RFI, asking
                    what support is offered to meet the company’s
                    needs, and whom the vendor recommends as
                    implementation partners.
                      For small or medium-size businesses seeking
                    cost-effective programs, Oracle Corporation
                    (Redwood Shores, CA, USA), the world’s leading
                    supplier of software for information management,        Caveat Emptor
                    offers JD Edwards EnterpriseOne Rapid Start, a          As even the staunchest proponents of ERP would
                    package of pre-configured software, hardware and        testify, ERP’s many benefits are not easily achieved.
                    services featuring “accelerated implementation” that    Data Blueprint, a research and development center
                    delivers a deployed, live solution in as little as 14   affiliated with Virginia Commonwealth University
                    weeks, trimming consulting and configuration costs      (Richmond, VA, USA), offers these cautionary sta-
                    by as much as two-thirds. Lenley Hensarling, vice       tistics gleaned from its research paper, “ERP
                    president and general manager of JD Edwards             Considerations.” Published in the fall of 2002, the
                    EnterpriseOne, notes that JD Edwards                    stats, if anything, have become more negative in
                    EnterpriseOne is the first enterprise ERP solution      the interim, says Peter Aiken, its author and found-
                    with “specific functionality” for the food and bever-   ing director of the center.
                    age industry integrated across core ERP business           • Only 10 percent of ERP implementations succeed
                    activities using a common database. Its newest          with full functionality within the forecast period.
                    release, version 8.12, debuted in April.                   • Cost overruns average 178 percent.
                      “We’ve been working in the beverage industry for         • Schedule overruns average 230 percent.
                    15 years,” says Hensarling, “and have developed a          • Implementation functionality averages 41
                    level of expertise that enables us to offer modules     percent of what was desired.
                    that meet business needs for blend management,             • 40 percent of the projects in a Conference Board
                    grower pricing, payments and contract manage-           Survey failed to achieve their business case within
                    ment, order management, order fulfillment, distri-      one year of going live.
                    bution, customer management and production                 Most “failures” associated with ERP are due to
                    across the entire supply chain.”                        unrealistic expectations and procedural errors. It’s
                      Randy Johnston, vice president of K2 Enterprises      more productive, for example, to change the busi-
                    (Hammond, LA, USA), which conducts seminars             ness to fit the system, rather than tinker with the
                    and conferences on technology, advises prospective      system to fit the way a company does business.
                    ERP users to look at both product fit and quality of       But when all the roadblocks have been cleared
                    support from the local vendor. And, he cautions,        and an ERP system has been installed, then, as pro-
                    “don’t skimp on training,” since a new system           fessed in “The ABCs of ERP” (CIO Magazine,
                    might work quite differently from the old and you       January 10, 2006): “With luck, the order process
                    won’t get projected results without proper training.    moves like a bolt of lightning through the organiza-
                    One tip is to videotape sessions teaching about the     tion, and customers get their orders faster and with
                    systems and use software tools like Camtasia to         fewer errors than before…That, at least, is the
                    record step-by-step instructions on the software.       dream of ERP.” BW

BEVERAGEWORLD.COM                                                                                 SEPTEMBER 2006_BEVERAGE WORLD_7
                   ASSET MANAGEMENT

                  Supply Chain Partners
                  Finding the right partner to help manage assets can reduce operating costs
                  and headaches. By William Atkinson



                  W
                                   ith raw materials shortages and cart-     storage needs, the keg collection time lag ties up
                                   ing and disposal costs rising, manag-     the funds the distributor has laid out in keg
                                   ing assets such as kegs, pallets and      deposits and requires brewers to float more kegs
                                   shipping containers can be as expen-      than necessary.
                   sive as it is space- and time-consuming. These rela-         While some of these smaller suppliers run their
                   tively small links in the beverage supply chain are       own keg return program in an effort to alleviate
                   costing beverage manufacturers and distributors           the problem, others utilize “common keg” programs,
                   plenty in terms of labor, space and financial costs.      like Kegspediter, a keg return program created by
                   But teaming up with the right third-party logistics       Satellite Logistics Group (Houston, TX, USA) in
                   provider can help take them out of the red.               1990 to address logistics issues in the beverage
                                                                             supply chain.
                   Calling All Kegs                                             The typical customer of the Kegspediter program
                   With steel prices continuing skyward, empty               is a brewery or a beer importer. “We collect kegs
                   kegs are disappearing from restaurants, bars and          from the distributors and return them to the brew-
                   distributor lots and being sold for as much as $50        eries so they can be filled again,” explains Kevin
                   each. While large brewers may be able to sustain          Brady, president of Satellite Logistics Group. But
                   such losses, smaller brewers with small keg inven-        the program benefits all parties: it reduces the need
                   tories occasionally may be required to halt produc-       to find additional space for keg storage; reduces the
                   tion or purchase new kegs in order to meet season-        risk of keg theft; allows brewers to use existing keg
                   al demand due to losses of existing kegs and dis-         inventory more efficiently and helps distributors
                                            tributors risk losing their      get their deposits back a lot more quickly.
                                            keg deposits.                       “The overall benefits to everyone are that, with
                                               There are other costs         the strong inventory management system we have
                                            associated with inefficient      and the fact that distributors end up being able to
                                            keg management systems,          return their kegs more quickly, it cuts down on keg
                                            as Scott Trotter, warehouse      thefts, damage and other losses,” adds Brady.
                                            manager for Crescent Crown          The Kegspediter program recently was enhanced
                                            Distributing (Phoenix, AZ,       to include features related to forecasting, on-line
                                            USA), points out. The com-       services, e-mail count requests, wholesaler count
                                            pany distributes Miller,         confirmation, new deposit notification methods
                                            Coors, Pabst and other           and a new invoicing format. For example, distribu-
                                            beers. “With our large sup-      tors can update keg quantities instantly on a secure
                                            pliers, we return kegs to        website. As a result, they can set customized sea-
                                            them once we get truck-          sonal peaks, such as Spring Break in Fort
                                            load quantities; there’s no      Lauderdale, ski season in Colorado or St. Patrick’s
                                            problem because it doesn’t       Day in Boston. Brewers also can set regional, sea-
                                            take long,” he states. “But it   sonal and marketing initiatives by specific brands,
                                            can take a year to end up        based on their own needs and the needs of their
                                            with a truckload on some         distributor networks. “We improved the system last
                                            brands, so we end up hav-        year in order to provide better on-line visibility to
                                            ing to store these kegs for      customers, so they can see where the kegs are and
                                            a long time.” In addition to     so they can issue credits to the distributors,”
                                            adding to the distributor’s      explains Brady.

8_BEVERAGE WORLD_SEPTEMBER 2006                                                                                  BEVERAGEWORLD.COM
THERE IS A REASON WHY
6 OF THE TOP 7
GLASS BOTTLE
MANUFACTURERS
WORK WITH

ORBIS.
                                               *




ORBIS helps manufacturers move their product quickly, safely and
          ®



hygienically with plastic pallets/top frames and CORBI divider sheets.
                                                    TM



And now, pooling and cleaning is available, through CORBI Plastics, to
                                                         TM



maximize your investment. Why ORBIS ? Finding opportunities for you to
                                     ®



reduce costs with reusable packaging is our mission. Want to know more?
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1.800.230.8136             www.orbiscorporation.com
                                                                          We’ll handle it.
*Source: D&B 2006
                   Pallets Progress                                            lion reusable pallets and containers to serve the
                   When it comes to managing pallets, there are a              needs of more than 300,000 customers in 42 coun-
                   number of options to consider beyond the                    tries. In the US, the program involves about 75 mil-
                   expensive option of paying to maintain and, ulti-           lion standard pallets.
                   mately, have wood pallets hauled off. Consider the             CHEP issues ready-to-use pallets and containers
                   three options employed by Crescent Crown                    from its service centers to manufacturers (including
                   Distributing, which uses a combination of methods           bottlers and brewers), which load their goods and
                   in order to manage its needs and those of its many          ship their products through the supply chain. At
                   suppliers.                                                  the end of the supply chain, the retailer or distribu-
                      First, the distributor is involved in a pallet           tor off-loads the goods and returns the pallets to the
                   deposit program, where it pays deposits on the pal-         nearest CHEP service center. “When we get them
                   lets from the suppliers, then returns them to get the       back, we inspect them and repair any damage, then
                   deposits back. But, since the distributor’s supply of       issue them to another manufacturer,” explains Per
                   Coors doesn’t arrive on pallets, Crescent Crown has         Ohstrom, director of marketing for the company.
                   to supply its own. “We were purchasing standard             “Most customers return pallets to us in full truck-
                   grocery pallets for years, but these became inefficient,”   loads, because it is more expensive to return them
                   says Trotter. “Now, we purchase recyclable plastic          in less than truckload quantities.” One benefit is
                   pallets, which we own, and it has worked out well.”         that companies no longer need to purchase pallets
                      In other cases, the distributor ends up with one-        and repair damaged ones.
                   way wood pallets that are used in the shipment of              One satisfied user is Aurora Organic Dairy
                   import beers. “The problem is that we are getting           (Boulder, CO, USA), the nation’s leading producer
                   more of these one-way pallets, and they are difficult       of private label organic milk and butter. Aurora is
                   to dispose of,” says Trotter. “This is especially true      shipping its products to retailers via CHEP pallets,
                   as we sell more imported beer.” The pallets are             which then are entered into the pooling program.
                   expensive to take to the dump, and they end up tak-         While Aurora found the cost factor to be attractive,
                   ing up a lot of space around the facility.                  it also liked the environmental benefits—having
                      Issues like these can be alleviated by participa-        customers be able to recycle pallets instead of dis-
                   tion in a pallet pooling program like those managed         carding them. “We are already seeing improve-
                   by CHEP and ORBIS.                                          ments in ordering and reporting with the CHEP
                      CHEP (Orlando, FL, USA) manufactures wood                pooling program, and expect to see decreased
                   pallets for use around the world. The company also          costs,” reports Clay Powell, plant superintendent.
                   offers a pallet and container pooling system that              ORBIS Corporation (Oconomowoc, WI, USA)
                   allows the use of the company’s standard (48- x 40-         manufactures plastic pallets and shipping contain-
                   inch) pallets and containers by multiple customers or       ers that can be returned and reused via a pooling,
                   users. CHEP currently provides more than 265 mil-           cleaning and logistics program, which ORBIS
                                                                               arranges to have handled by CORBI Plastics
                                                                               (DeForest, WI, USA). The program is focused on
                                                                               shipments between container suppliers and manu-
                                                                               facturers. “The program starts with the can and
                                                                               glass manufacturers, which ship their products to
                                                                               customers who fill the cans and bottles with soft
                                                                               drinks or beer,” explains Jack Graham, president of
                                                                               CORBI. Customers include Anheuser-Busch and
                                                                               Coca-Cola. “We collect the pallets from the brew-
                                                                               eries and bottlers, clean and inspect them, then
                                                                               redistribute them to the can and glass manufactur-
                                                                               ers,” explains Roy Hasenfratz, director of pooling.
                                                                               The end result is a streamlined material handling
                                                                               system that allows both manufacturers and contain-
                                                                               er suppliers to focus their financial, physical and
                                                                               labor resources elsewhere, which is what effective
                                                                               supply chain management is all about. BW

10_BEVERAGE WORLD_SEPTEMBER 2006                                                                                    BEVERAGEWORLD.COM
                              presents




OPER ATIONS




               November 13-15, 2006
                          THE PHOENICIAN
                         Phoenix, Arizona


              What is BevOps/Beverage Fleet Summit?
              • Education on pressing beverage supply
WAREHOUSING     chain issues
              • Hands-on discovery of the latest in beverage
                facility and fleet operations
              • Networking among beverage professionals
                and suppliers




               www.beverageworld.com/conference
   FLEET
                                                   The premier event for beverage operations,
                                                   warehousing and fleet management

     EDUCATION Agenda at a Glance

     Monday Nov. 13th                                              11:00am-11:30am Concurrent Educational Sessions #4:

     9:00am-5:00pm Registration open                               WAREHOUSING: The Art & Science of Warehouse
                                                                   Design, Part 1
     12:30pm Golf Tournament
                                                                   FLEET: Driver Recruitment and Training
     12:30pm Bondurant School of High Performance Driving –        OPERATIONS: Leverage Your Assets: From Delivery
     limited availability                                          Vehicles to Excess Capacity, Discover Untapped Value
                                                                   in Your Operation
     7:00pm Welcome Reception and Dinner at Jokake Inn
                                                                   11:30am-Noon Concurrent Educational Sessions #5:
     Tuesday Nov. 14th                                             WAREHOUSING: The Art & Science of Warehouse
                                                                   Design, Part 2
     7:00am-5:00pm Registration open
                                                                   FLEET: Beverage Fleet Specifications 101: How to
     7:30am-8:30am Continental Breakfast/Exhibits open             Evaluate Your Fleet Needs and Spec Your Vehicles
     8:30am-9:15am Concurrent Educational Sessions #1:             OPERATIONS: Optimizing Beverage Production to
                                                                   Meet Changing Demand
     WAREHOUSING: Racking, Picking & Loading Innovations
     FLEET: Fuel Economy: Minimize Your Exposure to Fuel Pricing   12:15pm-1:15pm Lunch at the West Fountain
     OPERATIONS: Integrating Packaging & Product                   1:15pm-5:15pm Ride & Drive on The Phoenician’s grounds
     Innovation across the Supply Chain
                                                                   1:15pm-5:15pm ‘Take a Break’ Beverage Tent –
     9:15am-10:00am Concurrent Educational Sessions #2:            An oasis at the Ride & Drive
     WAREHOUSING: Warehouse Management Systems for                 1:15pm-5:15pm Beverage Warehouse Tour at Crescent
     Today’s Beverage Distributor                                  Crown Arizona
     FLEET: Engines: 2007 and 2010 Considerations
                                                                   6:30pm-7:30pm Cocktail Reception – Exhibits Open
     OPERATIONS: Beverage Production Innovations
                                                                   7:30pm-9:30pm Beverage World Banquet and Awards
     10:00am-10:30am Beverage Break/Exhibits open
                                                                   Ceremony – Featuring Wholesaler, Fleet, Plant and Bottler
     10:30am-11:00am Concurrent Educational Sessions #3:           of the Year Awards and Lifetime Achievement Awards
     WAREHOUSING: Measuring and Improving Warehouse
     Efficiency                                                    Wednesday Nov. 15th
     FLEET: Staying Connected: Using Telematics and On-
                                                                   8:30am-11:00am Keynoter Breakfast- End BevOps/
     Board Communication Systems to Optimize Deliveries
                                                                   Beverage Fleet Summit on a high note with breakfast
     OPERATIONS: DSD Evolution: New Approaches to Beverage
                                                                   while listening to well-known industry speakers
     Fleet Configuration, Route Planning and Sales Methods
                                                                   11:00am Conference Close




Sponsored by
                  www.beverageworld.com/conference

HANDS-ON DISCOVERY:

Ride & Drive                                                Facility Tour: Crescent Crown Arizona
                        As beverage distribution methods                            Keeping up with booming
                        evolve, so do your beverage fleet                           volume growth has required
                        requirements. The Beverage Fleet                            Crescent Crown Arizona, a
                        Summit Ride & Drive is designed                             division of one of the largest
                        to give you a chance to see and                             beer wholesalers in the US, to
                        experience the latest in beve-                              employ the latest in warehouse
                        rage fleet technology from the                              management systems and best
truck industry’s leading OEMs. Get a true sense of how      practices. The wholesaler moves more than 14 million
well these trucks handle on the road and how well           cases of Coors, Corona, Miller and dozens of other
engine, component, lift gate and body innovations meet      brands each year. Join us as we take an exclusive
your unique needs by getting behind the wheel and           tour of this state-of-the-art facility and see its
“kicking the tires” of vehicles speced for the beverage     innovative receiving, racking, picking and loading
delivery marketplace.                                       procedures at work.




NETWORKING OPPORTUNITIES:

Welcome Reception & Dinner                                  Beverage World Banquet & Awards Ceremony
Kick off the conference with Wild West themed               Featuring Wholesaler, Fleet, Plant and Bottler of the Year
reception and dinner at the Jokake Inn.                     Awards and Lifetime Achievement Awards.



Golf Tournament                                             Bondurant Racing Event
                      Grab your clubs as we kick off                              Bob Bondurant’s School of High
                      Monday afternoon with a golf                                Performance Driving is the largest
                      tournament on the lush.                                     purpose-built facility of its kind in
                                                                                  North America. Attendees will
                      Try to win a            truck
                                                                                  have the unique pleasure of
                      with a hole in one as you
                                                                                  racing cars at top speeds on
                      network with your peers.
                                                                                  Monday afternoon.
REGISTRATION
3   EASY WAYS TO REGISTER!
                                                                 The Phoenician
1   Online: www.beverageworld.com/conference                     The Phoenician is nestled at the base of CamelBack
2   Call: Kate Grantham 312.456.8816                             Mountain in the heart of the Sonaran Desert. Offering
3   Fax: 312.240.0808 Attn. Kate Grantham
                                                                 accommodations of uncommon beauty and style, the
Attendee Package includes: Facility tour at Crescent Crown       Phoenician has an enticing array of amenities, recreation
Arizona, Ride & Drive, all educational sessions, Welcome         and pleasures. Indulge in a game of golf on the manicured
Reception, Awards Reception and Dinner and all meals.            greens and lush fairways of the 27-hole championship
REGISTRATION FEES
                                                                 course or unwind at the Tennis Garden or spa. The
                                                                 Phoenician is located just 9 miles from the Phoenix Sky
J Beverage bottlers, distributors & franchise companies -        Harbor International Airport.
     $595
J 3 for 2 Special - $1,190 (This special package allows you to
     bring 3 people from your company for the price of 2!)
J Non Sponsoring Suppliers - $1,195
J Golf Tournament - $100
J Bondurant Racing School (limited space) - $100
J Guest Registration - $129 (Bring a guest to Monday’s
Opening Reception and Tuesday’s Awards Banquet)
Total:
Indicate method of payment:
Amex J       MasterCard J      Visa J
Card #:
Expires:
Signature:
Name on card (print):
                                                                 BevOps/Beverage Fleet Summit attendees receive a special
Zip code associated with                                         $179 per night rate, an extremely gracious room rate for this
credit card billing address:                                     five-star resort.
If paying by check, please make it out to Beverage World.
                                                                 To reserve your room & $179 rate, call 800.888.8234,
Send with completed registration form to:
                                                                 ask for Reservations and mention Beverage World
Beverage World                                                   or reserve your room online at
Attn: Kate Grantham                                              www.starwoodmeeting.com/Book/bek13a
303 E. Wacker Drive, Suite 350
Chicago, IL 60601                                                Group rate available until Oct. 13, 2006 but guestrooms are
                                                                 limited so make your reservations early!
Attendee Information: Please print clearly or attach your
business card.                                                   For more information on the Phoenician,
All information must be completed to process registration.       go to www.thephoenician.com

Name

Title

Company
                                                                 Sponsorship Opportunities
Address
                                                                 Sponsorships are still available.
City
                                                                 If interested in sponsoring
State/Province                          Zip
                                                                 BevOps/Beverage Fleet Summit,
Country
                                                                 please contact Kevin Francella
Phone                               Fax                          at 646.708.7327 or
Email                                                            kfrancella@beverageworld.com.
How many trucks do you operate? (if applicable)
                    MOBILE SOLUTIONS

                    Keeping in Touch
                    Durability and functionality are the keys to effective mobile transportation
                    solutions. By Amy Zuckerman and Andrea Foote



                    W
                                   hen it comes to optimizing your sup-       the task more difficult than ever before. While it
                                   ply chain, perhaps the most important      might be tempting to opt for using inexpensive
                                   factor is communication. Investing in      consumer technologies—like standard-issue cell
                                   mobile technologies that allow the home    phones or PDAs—to keep your home office con-
                    office, drivers and sales representatives to engage       nected to workers in the field, you have to consider
                    in a seamless exchange of information is the first        your needs and the total cost of ownership of the
                    step. Mobile communication solutions allow distrib-       hardware, network and software you spec. With
                    utors to achieve real-time reporting, maximize cus-       that in mind, the rugged handhelds that have
                    tomer service and capture market data in a way            become standard issue in the beverage distribution
                    that informal information exchange cannot match.          business seem to be the best option going forward.
                    But without the right tools, mobile solutions can be         Symbol Technologies (Holtsville, NY, USA) cites
                    as ineffective as a string between two tin cans.          the example of a Cataula, GA man who wrote to tell
                                                                              them he witnessed one of their SPT1800 handhelds
                    The Device                                                get run over twice after falling out of a beverage
                    When your average 13-year-old carries a single,           route truck. After retrieving it he wrote: “…despite
                    compact device that enables him to send and               the abuse I saw the unit receive, it worked perfectly
                    receive text messages, access the internet, download      and I was able to retrieve the owner information
                    audio files, take and transmit photos and, oh yeah,       and return the unit.” Try that with your flip phone.
                    make phone calls, can it really be so difficult to find      Jeff Sibio, director of transportation and logistics
                    an affordable, effective mobile communications            for Mechanicsburg, PA, USA-based Intermec, says
                    solution for your salesmen and drivers?                   they test their handhelds to exceed military stan-
                      Oddly enough, the proliferation of mobile com-          dards, which requires drop testing the device 26
                    munication options available today may be making          times to various surfaces at specified heights. To
                                                                              meet Intermec’s standards, the device can not break,
                                                                              which he says surpasses military test requirements.
                                                                                 Sibio also points out that consumer devices don’t
                                                                              have sufficient seal against moisture or dust and
                                                                              just can’t stand up in an industrial setting. Plus, the
                                                                              average turn cycle on consumer electronics is about
                                                                              three months, so you can’t replace them exactly if
                                                                              they break, whereas Intermec guarantees from five
                                                                              to eight years with tech support if needed.
                                                                                 Gerald McNerney, senior director for transporta-
                                                                              tion, distribution and logistics solutions for Symbol
                                                                              Technologies, agrees that customers want hardware
                                                                              “that will last for the life of the purchase, which is
                                                                              five to seven years. We’ve had customers who have
                                                                              used our devices for 16 years.” As for consumer
                                                                              electronics, “those products move so quickly they
                                                                              become out of date. We work with the component
                                                                              manufacturer to give you the latest capabilities
                                                                              while building the device on a platform that allows
                                                                              changes to be downloaded so you can carry on five

BEVERAGEWORLD.COM                                                                                   SEPTEMBER 2006_BEVERAGE WORLD_15
                   years down the line.” They also guarantee service     The System
                   for “fives years after the purchase.”                 Beyond finding the right hardware for your
                      The good news is that, like cells and PDAs,        distribution needs, finding a software system that
                   ruggedized handhelds are packing more functional-     supports the information needs of your sales force
                   ity in an ever-shrinking package. Today’s handhelds   and your retail customers is key to maximizing
                   scan documents, capture customers’ signatures, take   your supply chain efforts.
                   photographs and synchronize with onboard com-            Atlanta, GA, USA-based O4 Corporation
                   puters to relay engine information wirelessly to      specializes in mobile solutions aimed at putting
                   your terminal. They also can contain personal man-    information and decision-making tools into the
                   agement capabilities like scheduling, an address      hands of field teams and capturing actionable
                   book and calendar. Some devices also offer local      market data. The following are two examples of
                   and remote security features so the device can be     O4’s solutions.
                   turned off remotely. Plus, newer devices now have        When Bacardi Lion was formed by the merger of
                   embedded global positioning systems for tracking      Bacardi-Martini’s Quality Brands International and
                   the driver and assets, to name just some of the       Lion Nathan’s ready-to-drink business, Indio, the
                   functions being loaded on devices that are shrink-    distributor was looking to gain a competitive edge
                   ing to pocket size in some cases.                     by improving the depth and quality of the informa-
                      But a major question that remains for some         tion captured by its sales force in the field.
                   experts and operations managers is whether the           The distributor turned to O4 Corporation, which
                   price of the device—which roughly ranges from         deployed a fully automated mobile sales solution
                   $1,000 to $3,000 per unit depending on the func-      on HP iPAQ handhelds. At the beginning of each
                   tions added—is worth it when smart phones and         call cycle, reps sync with the O4 Management Suite
                   PDAs can be bought for hundreds of dollars each.      and download their appointments. During sales
                      Just about a year ago, Brian McLaughlin, vice      calls the devices can be used to access customer
                   president for marketing at PeopleNet, a major net-    information, including historical sales data, promo-
                   work provider for mobile devices based in Chaska,     tions and call objectives and reps can update cus-
                   MN, USA, says the lowest price point for handhelds    tomer information and record notes. Throughout
                   was about $1,500 “and there weren’t enough appli-     the day, reps synchronize their devices by connect-
                   cations to justify the cost. But the price has come   ing to the office via a Cisco virtual private network
                   down considerably. I see the magic number for a       (VPN) using any internet connection and they also
                   handheld as less than $1,000, which is emerging.      can access their e-mail and calendar in real-time.
                   Now this field is becoming interesting.”              The system not only gives field reps more informa-
                                                                         tion when and where they need it, it also provides a
                                                                         real-time window on their business.
                                                                            Suntory, one of Japan’s leading beverage manu-
                                                                         facturers, turned to O4 for a different mobile solu-
                                                                         tion. The company sells a wide range of products in
                                                                         Australia through a sales network that takes orders
                                                                         which are passed on to relevant distributors for
                                                                         delivery. This model made it difficult for Suntory to
                                                                         maintain a detailed profile of the competitive envi-
                                                                         ronment in the marketplace.
                                                                            The company opted to implement O4’s Manage-
                                                                         ment Suite for internal office-based functions
                                                                         including call planning, promotion management
                                                                         and reporting and O4 Corporation Mobile Solution
                                                                         for its field reps. Using wireless notebook comput-
                                                                         ers, sales reps can now capture market data and
                                                                         relay it to the home office for automated analysis.
                                                                         Integration of the two systems enables both man-
                                                                         agers and field reps to have a more comprehensive,
                                                                         real-time picture of the market dynamics. BW

16_BEVERAGE WORLD_SEPTEMBER 2006                                                                             BEVERAGEWORLD.COM
                   RETAIL INSIGHTS

                  Local Motion
                  Retailers discuss the ultimate measure of supply chain efficiency—store-level
                  service and execution. By Deborah Garbato



                  A
                             C-store manager in northern Indiana            Dasani. The downside is very demanding in that
                             points to some innovative ways she has         the CMA also includes promotions.”
                             used bottles of a certain flavored cola—          Poitras would like to stock only Nestlé’s Poland
                             door stop and newspaper weight among           Spring and private label water. These warehoused
                   them. Even though her clientele dislikes this soda,      waters generate 50-point margins. Dasani and
                   her beverage supplier continues to bring it.             Aquafina, both DSD waters, are in the 20s. “Coke
                      This manager’s complaints—along with those of         and Pepsi treat water like a carbonated soft drink in
                   other retailers, particularly C-store operators—-        that it comes off the same truck. The CMAs force
                   seem to fall on deaf ears. While retailers praise dis-   you to work on less than acceptable margins.”
                   tributors for more timely deliveries and some better        Nice N’ Easy Grocery Shoppes, which operates 79
                   technologies, they are most critical of distributors     C-stores out of Canosta, NY, USA, has solved the
                   that do not tailor product mixes to individual stores    dilemma by not contracting with Pepsi. Buyer Jared
                   or force them to carry certain products.                 Sturtevant says Pepsi wanted to dictate how much
                      “We all have the same problems with the supply        space beverages would occupy.
                   chains and CMAs [contract maintenance agree-                “We wouldn’t give them 60 or 80 percent of
                   ments],” says Mike Poitras, category manager at          our space. We gave space to other beverage compa-
                   Wilson Farms Neighborhood Markets, a 200-loca-           nies,” he says. “CSD people are out to obtain more
                   tion C-store chain based in Williamsville, NY, USA.      space, not maximize our profits. They are not
                   “They are not unique to Wilson Farms. Pepsi’s and        really category managers. Their idea is to have
                   Coke’s CMAs force you to carry Aquafina and              controlled coolers.”
                                                                               Retailers are not sure whether the problem of
                                                                            “pushing” products originates with the manufactur-
                                                                            er or distributor or if it stems from poor communi-
                                                                            cation. When retailers ask questions, they are often
                                                                            run in circles by both sides. “Is it an issue of people
                                                                            not doing their jobs or are they not receiving the
                                                                            right message?” says Henry Bays, general manager
                                                                            of Tonawanda, NY, USA-based Noco Energy Corp.,
                                                                            which runs 31 C-stores in western New York.
                                                                            “Often, they say they didn’t get the message. Others
                                                                            say they gave them the message.”
                                                                               Bays blames the introduction of too many soft
                                                                            drinks and a decline in carbonated beverage sales.
                                                                            Manufacturers, he believes, need to unload bever-
                                                                            ages. “They add line extensions every day. If it’s not
                                                                            cherry lemon, it’s lime or raspberry. There’s many
                                                                            different energy drinks, teas, waters, stuff like that.
                                                                            It’s hard to keep up and it’s becoming blurred. They
                                                                            get a lot of growth from new products, but they
                                                                            don’t have an exit strategy. And they do know what
                                                                            sells and what doesn’t.”
                                                                               If this is so, the distributor may be an innocent
                                                                            bystander. “The salesman is stuck in the middle,”

18_BEVERAGE WORLD_SEPTEMBER 2006                                                                                 BEVERAGEWORLD.COM
                    says Judy Weber, manager of K&D
                                                               The Supermarket Sector
                    Marathon in Hammond, IN, USA.                Distributors in the US and Canada have begun paying special
                    “His boss says, `You must get new          attention to small and medium supermarkets. But it took the
                    products in.’ The Pepsi salesman           monopolizing force of Wal-Mart’s food empire to budge them.
                    comes two, three times a week and            Over the past decade, Wal-Mart’s Supercenters have put many
                    knows my clientele. But his hands          regional supermarkets out of business. Recently, Wal-Mart threat-
                                                               ened to put distributors out of business when it said it was consid-
                    are bound.”                                ering not using them.
                       The nature of the C-store industry        “The surviving independent supermarkets have become more
                    also could be an issue. Unlike mass,       important to distributors,” says Barry Loy, retail operations manag-
                    drug and some supermarket chains,          er for Natchez Markets, which operates seven supermarkets in
                    the channel is made up largely of          Mississippi and Louisiana. “We’ve actually been able to get some
                                                               programs. It’s been very good.”
                    small and medium players running             Changes began three years ago. With help from Nestlé, Coke, Pepsi
                    small stores. Other channels operate       and others, he says his beer, water and soft dink businesses have
                    1,000-plus stores and benefit from         been flourishing. “Nestlé came with advertising and merchandising
                    size and economies of scale.               programs and has been instrumental in helping us grow the category.”
                       “Bud, Pepsi and Coke reps service         Coke also has played a role. Six months before introducing energy
                                                               drinks, Coke made a presentation to management involving videos,
                    the mass market first,” says Randy         tastings and other information. “Not all companies did this,” says
                    Roush, category manager at                 Loy. “It helped a lot and made store managers push the product.”
                    Maverick Country Store, a 175-loca-          Changes have not only affected independents. At Food Basics,
                    tion C-store chain based in Salt Lake      which operates 110 stores in Canada’s Ontario province, Tom
                    City, UT, USA. “This leaves us with        White, director of category sales management, also has seen
                                                               improvements.
                    what trickles down. Customers see            “There’s better turnaround time on orders, communication is
                    stuff on TV and we get hammered            very good with reps and we now have discussions around which fla-
                    over why we don’t have it and when         vors to carry in ethnically diverse Ontario. They now recognize the
                    we’re going to get it.”                    market is still very competitive. If they don’t do everything it takes
                                                               to satisfy us, we will find other options.” — D.G.
                    A Mixed Bag in Service
                    Not all retailers say manufacturers or distributors       field rep follows up. Weekend deliveries have had a
                    are pushing products. In fact, quality of service         tremendous effect on our promotional business.”
                    varies tremendously. Some distributors work hard to          Sometimes, a distributor’s efficiency efforts gen-
                    meet stores’ individual needs. Others do push prod-       erate headaches. Big Values used to deal with a
                    uct and/or drop off goods and call it a day.              Minneapolis-based Coke salesperson. Today, Weaver
                       “Some let you know every time something changes,”      calls somebody in Chicago. “Communication, in
                    says Gary Weaver, buyer for Fridley, MN, USA-             some cases, is getting further away from me.”
                    based Big Values, a 20-store dollar chain. “Others           While more and more distributors have moved to
                    deliver what they have to and that’s all they are         pre-sell, Scott Porter, category manager at Raleigh,
                    responsible for.”                                         NC, USA-based Kerr Drug, a 100-plus store chain,
                       Service levels can vary from the store to the cor-     believes this can complicate matters. “The pre-sales-
                    porate level, particularly when it comes to informa-      person writes the order and leaves. Sometime there-
                    tion about promotions. “At store level, there is a lot    after, the driver brings the order. Stores feel they
                    more communication,” says Weaver. “From corpo-            had better communication with one contact.” The
                    rate, I call and ask to see promotions, but people        solution is old-fashioned communication.
                    don’t follow through well. They want to increase             Looking ahead, some retailers believe the
                    sales and I’d like to do more corporate promotions.”      entire beverage distribution system may change.
                       Food Basics, part of Metro Group’s A&P Canada,         The impetus may involve more than retailer pres-
                    had been serviced by one or two distribution loca-        sure as rising fuel costs prompt distributors to re-
                    tions; now, it is supplied by multiple facilities. Tom    examine DSD efficiencies. “There are a lot of
                    White, director of category sales management for          issues,” concedes Wilson Farms’ Poitras. “Eventually,
                    the 110-store supermarket chain, says turnaround          with the cost of fuel, DSD may go away. We have to
                    has improved dramatically. Companies also began           figure out, as retailers, how to drive supply chain
                    delivering on weekends. “An order arrives and a           costs out.” BW

BEVERAGEWORLD.COM                                                                                    SEPTEMBER 2006_BEVERAGE WORLD_19
                     WAREHOUSE 101

                   Racking Systems
                    Choosing the right racking system is the first step in warehouse efficiency.



                    S
                                   electing warehouse storage rack systems            According to Keck, it is also advisable for ware-
                                   involves specific expertise, appropriate        house operators to purchase from suppliers that
                                   system choices and ensuring the facility        comply with essential safety and structural standards
                                   is ready—all of which affect capital expen-     set forth by the Rack Manufacturers Institute (RMI).
                         ditures, overhead and the efficient response to              Choosing the right storage rack system involves a
                         distribution needs.                                       solution process, and that begins with considering
                            Whether setting up or replacing storage rack sys-      the flow of merchandise. That will dictate your den-
                         tems, warehouse operators are often confronted            sity requirements—how ‘tightly’ that merchandise
                         with a dazzling number of choices. That can be            should be stored. From that determination cascades
                         troublesome, since the selections they make will          a series of specifications: the material and style of
                         dramatically affect the “throughput” and, hence, the      racks, pick systems, ancillary material handling, etc.
                         profitability of the operation. At the same time,            Warehouses with high-density storage solutions
                                                        when specing a new or      usually have large or even complete turnover of
                                                        replacement system,        inventories during specific intervals or seasons.
                                                        many distributors are      Merchandise can be stored in large bays with few
                                                        offered limited choices    access aisles to maximize floor space.
                                                        because a rack manu-          Conversely, lower-density warehousing is appro-
                                                        facturer or dealer spe-    priate for parts or retail distribution centers where
                                                        cializes only in certain   custom orders are picked continuously to fulfill Just
                                                        types of racks, a sce-     In Time (JIT) requirements. “We have bulk ship-
                                                        nario that is often even   ments coming in one set of dock doors and cus-
                                                        more problematic. The      tomized packages going out another set of dock
                                                        key is being aware of      doors,” says Keck. “Rack-supported pick modules for
                                                        all options and how        re-packaging are located in the center of the DC.”
                                                        they will work with           The most popular type of rack is selective rack, so
»
  THE RIGHT RACKS can offer the benefit of reduced      your warehouse needs.      called because it allows easy selection, normally by
capital expenditures, lowered overhead and increased       “Because warehouse      service (truck) aisles. Selective rack does not make
order accuracy.
                                                        storage and material       the most complete use of floor space due to the
                         handling have a pivotal impact on a business, man-        aisles required, but may be the ideal solution for
                         ufacturers and distributors often turn to storage         many companies.
                         rack specialists,” says Arlin Keck, corporate engi-          A drive-in rack, on the other hand, increases den-
                         neer at Steel King, a leading manufacturer of pallet      sity and is often utilized where group pallet selec-
                         rack systems based in Stevens Point, WI, USA.             tion is more likely than individual pallet selection.
                         “They rely on material handling consultants, deal-        With drive-in racks, loading and unloading within a
                         ers or rack manufacturers like us to ensure that          bay must be done from the same aisle. A similar
                         their warehouse systems fit their needs.”                 system called the drive-through rack permits load-
                            Matching business needs with the appropriate           ing and unloading from both ends of a bay.
                         rack system is critical and entails asking the right         “Because no two warehouses are identical in
                         questions as well as providing flexibility in solu-       every respect, it is important to consider and solve
                         tions that can accommodate variables such as capi-        structural requirements,” Keck says. “That may
                         tal resources, anticipated growth and variable prod-      include issues to do with building obstructions,
                         uct lines. That flexibility requires doing business       office and door locations, seismic (earthquake) con-
                         with a supplier who can offer a variety of rack sys-      ditions, the floor slab and so on. It could be that a
                         tem designs, structural materials, accesories and, in     variety of the pallet rack systems of varying densi-
                         some cases, customized equipment.                         ties provide the best solution.” BW

20_BEVERAGE WORLD_SEPTEMBER 2006                                                                                       BEVERAGEWORLD.COM
                                                                                              Sponsor Profile

Technology: A Tool, Not a Strategy
   Today’s ultra competitive beverage marketplace, coupled with a severe carrier
capacity shortage and costly fuel charges, has many producers searching for ways to
increase efficiencies anywhere they can to gain a competitive edge.
   At a recent supply chain management conference, Kevin Brady, president of
Satellite Logistics Group of companies, a world leader in integrated logistics solu-
tions, identified ways that companies can separate themselves from competitors by
leveraging supply chains through technology.
   “Success is achieved when you combine trusted logistics resources, market knowl-
edge, accurate production forecast, and an effective supply chain design with technol-
ogy, and orchestrate these elements seamlessly,” Brady explained.
   Tangible results are realized when the integrated logistics provider (ILP) and the
customer collaborate and allow technology to automate standard information.
Important production, forecasting, marketing and distribution data is incorporated
                                                                    into a working supply
                                                                    chain model.
                                                                       “Collaborative
                                                                    planning allows sup-       "Collaborative planning allows
                                                                    ply chains to operate      supply chains to operate effi-
                                                                    efficiently and pro-
                                                                    actively, which results    ciently and pro-actively, which
                                                                    in better transporta-
                                                                    tion rates. We use this
                                                                                               results in better transportation
                                                                    model at Satellite         rates. We use this model at
                                                                    Logistics Group, where
                                                                    we consolidate volume      Satellite Logistics Group,
                                                                    to leverage our rela-      where we consolidate volume
                                                                    tionships with a vari-
                                                                    ety of trusted vendors     to leverage our relationships
because even the slightest improvement in efficiency is significant to the bottom
line,” said Brady.                                                                             with a variety of trusted ven-
   Knowing that having product in place at the right time is vital to clients’ profitabili-    dors because even the slightest
ty, Satellite Logistics Group provides integrated solutions to manage all facets of
transportation, distribution, warehousing, reverse logistics systems or timely material        improvement in efficiency is
recovery processes.
   Consistently providing cutting-edge solutions, Satellite Logistics Group recently
                                                                                               significant to the bottom line."
introduced the Online Visibility Tool, which is the first tool to provide real-time                       - KEVIN BRADY, PRESIDENT OF
visibility of a warehouse management system (WMS), a transportation management                             SATELLITE LOGISTICS GROUP
system (TMS), and an import/export documentation system (IDS) in a single
cohesive application. This enhanced supply chain communication system enables a
concentration of management processes, simplifies distribution monitoring, and
improves overall efficiency.
   Satellite Logistics Group is known for its innovative use of technology. It developed
a unique reverse logistics management system to improve international and domestic
brewers’ empty keg return cycle. Trademarked the Kegspediter® System, it revolution-
ized the industry by reducing capital expenditures and increasing operating efficiency.
   The Kegspediter® System was recently updated to accommodate increased collab-
oration between clients and Satellite Logistics Group. “Direct customer input enables
the technology to forecast demand based on current corporate objectives and market-
ing initiatives rather than referencing previous years’ performance, giving clients a           Contact:
significant advantage over their competitors,” said Brady.                                       Ray Loyal
   Technology continues to evolve business best practices and has changed the logis-             Director of Sales
tics industry. Gone are the days when the only assets a logistics specialist needed              (281) 902-5500
were a reliable truck fleet and warehouse space. To become ultra competitive, Brady              (800) 485-4470
advised supply chain specialists to shift their perception of technology from a busi-            info@slg.com
ness strategy to a business tool.                                                                www.slg.com
                   Supply Chain Resource Center
                  Looking to improve your supply chain efficiencies?

ATTEND:                               Tel: 303/220-0100
                                      www.ciber.com/ces/
                                                                       O4 Corporation
                                                                       Atlanta, GA, USA
                                      supplychain
                                                                       Tel: 404/995-7042
  BevOps and the Beverage Fleet                                        www.O4corporation.com
                                      CIO Magazine
  Summit 2006 at the Phoenician
                                      Framingham, MA, USA
  Hotel & Resort in Phoenix, AZ,
                                      Tel: 508/872-0080              Oracle Corporation
  USA, November 13 to 15, 2006.
                                      www.cio.com                    Redwood Shores, CA, USA
  www.beverageworld.com/
                                                                     Tel: 650/506-7000
  conference
                                      Data Blueprint                 www.oracle.com/applications/
                                      Richmond, VA, USA              supply-chain-management
                                      Tel: 804/521-4056
RESEARCH:                             www.datablueprint.com
The Association for Operations                                         ORBIS
Management (APICS), www.apics.org     Forrester Research               Oconomowoc, WI, USA
                                      Cambridge, MA, USA               Tel: 262/560-5449
Institute for Supply Chain            Tel: 617/613-5905                www.orbiscorporation.com
Management (ISM), www.ism.ws          www.forrester.com

MIT Center for Transportation &       HighJump (A 3M Company)        PeopleNet
Logistics, www.ctl.mit.edu            Eden Prairie, MN, USA          Chaska, MN, USA
                                      Tel: 800/328-3271              Tel: 888/346-3486
Procurement and Supply Chain          www.highjump                   www.peoplenetonline.com
Benchmarking Association (PASBA),     software.com
www.pasba.com                                                        SAP America
                                      Intermec                       Newtown Square, PA, USA
The Council of Supply Chain           Everett, WA, USA               Tel: 888/727-1993
Management Professionals (formerly    Tel: 425/348-2600              www.sap.com
Council of Logistics Management),     www.intermec.com
www.cscmp.org
                                      JD Edwards Enterprise One        Satellite Logistics
The Supply-Chain Operations           Redwood Shores, CA, USA          Houston, TX, USA
Reference (SCOR) model is             Tel: 650/506-7000                Tel: 281/902-5500
available for free download from      www.oracle.com/applications/     www.slg.com
the Supply-Chain Council Inc.,        jdedwards-enterprise-one
www.supply-chain.org.
                                      K2 Enterprises                 Steel King
Supply Chain Management Research      Hammond, LA, USA               Steel King Industries, Inc.
Center (SCMRC) at the University of   Tel: 985/542-9390              Tel: 800/826-0203
Arkansas, www.scmr.uark.edu           www.k2e.com                    www.steelking.com

                                      Lawson Software                Symbol Technologies
CONSULT:                              St. Paul, MN, USA              Holtsville, NY, USA
CIBER, Inc.                           Tel: 651/767-7000              Tel: 631/738-2400
Greenwood Village, CO, USA            www.lawson.com                 www.symbol.com

22_BEVERAGE WORLD_SEPTEMBER 2006                                                             BEVERAGEWORLD.COM
                                                                                             Sponsor Profile

O4 Corporation
   O4 Corporation is a leading provider of mobile/wireless field sales and
merchandising solutions for the beverage industry around the world. More than
simply transferring data from one unit to another, O4 gives you intelligent business
solutions to grow revenue, reduce costs, and deliver exceptional customer service.
   One company benefiting from O4 Solutions is Bacardi Lion, a Sydney,
Australia-based joint venture. They not only cut the cost of gathering information,
they boosted productivity by eliminating 40 hours per month that each of their reps
spent on paperwork.
   “It’s an effective two-way communications tool,” says Suzie MacDermott, Sales and
Marketing Planning Manager for Bacardi Lion. “When management can understand
what’s going on out in the field, they can use that information to make effective deci-
                                              sions in terms of resource allocation.”
                                                        O4 Corporation has customers
                                                     on virtually every continent and
                                                     offers global solutions for multina-
                                                     tional corporations. A recent project
                                                     was rolled out to more than 1,000        “The last 100 feet are the
                                                     users in six countries and in three
                                                     languages including Chinese.             most important in the supply
                                                        “Our key differentiators are our
                                                     solution’s flexibility and ability to
                                                                                              chain. O4 Solutions help
                                                     connect the head office to the field     companies achieve their
                                                     in real time,” said Harris Fogel,
                                                     President of North America for O4        in-store goals and targets by
                                                     Corporation. “Management can
                                                     understand what’s happening at the
                                                                                              ensuring compliance with
                                                     customer level so they can react         planned objectives and
                                                     very quickly.”
                                                        O4’s applications improve             programs.”
                                                     business processes in the field and
                                                                                                          - HARRIS FOGEL, PRESIDENT
                                                      the way that field operations are                       OF NORTH AMERICA FOR
                                                      managed from the office, strength-                            O4 CORPORATION
                                                      ening the bottom-line and increas-
                                                      ing competitive market advantage.
                                                        “The last 100 feet are the most
                                                      important in the supply chain,”
                                                    says Fogel. “O4 Solutions help
                                                 companies achieve their in-store
                                               goals and targets by ensuring compliance
with planned objectives and programs.”
   Companies can get the right mix of brands on shelves, the right percentage of
space dedicated to their brands, the right compliance with promotions standards and
agreements, and the right physical placement of the product. Management gets up-
to-date reports on distribution, pricing, discounts, and out-of-stocks. Field managers
can drill down into accurate history in order to improve field force productivity.
   You get a competitive market advantage through O4’s reporting and analysis
capabilities, including surveys, in-store execution and business intelligence. O4
recently joined the TDLinx Enabled Program, integrating TDLinx’s Location Information
Management™ (LIM) content into the O4 Solution. TDLinx is the premier source of
retail and on-premise channel information, with profiles of over 600,000 outlets               Contact:
across America.                                                                                 Harris Fogel, President of
   “The integration significantly increases the effectiveness of retail call planning and
                                                                                                North America
execution, and will drive increases in sales due to more targeted promotions and
sales campaigns,                                                                                (404) 995-7042
                                                                                                (404) 995-7001 fax
                                                                                                hfogel@o4corporation.com
                                                                                                www.o4corporation.com

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