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Brown-Forman Corporation The Impact of SAP on Global Operations

Brown-Forman Corporation The Impact of SAP on Global Operations Amanda Landrum Brian Danos Matt Wollner Celyn Maggioni Molly Jaworski. Outline Brown-Forman Overview

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Brown-Forman Corporation The Impact of SAP on Global Operations

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  1. Brown-Forman Corporation The Impact of SAP on Global Operations Amanda Landrum Brian Danos Matt Wollner Celyn Maggioni Molly Jaworski

  2. Outline • Brown-Forman Overview • Whiskey Making Process Overview • Supply Chain Overview • Impact of SAP • Company • Forecasting • Purchasing

  3. In our project we, will be focusing specifically on the division - Brown-Forman Beverages World Wide & the impact SAP has had on it. • Through Brown-Forman Beverages Worldwide, Brown-Forman produces and markets many of the most well-known and best-loved wines and spirits in the world. They include Jack Daniel’s, Canadian Mist, Southern Comfort, Early Times, Korbel champagnes, Fetzer wines, and Bolla wines. • BFBW is Brown-Forman’s largest division.

  4. Brown-Forman Worldwide Production Facilities Collingwood, Ont, Canada Dublin, IRL Greenfield, CA Guerneville, CAHopland, CAWindsor, CA Louisville,KY Versailles,KY Lynchburg,TN Frederiksted, St.Croix, U.S. Virgin Islands Chagny, France Livorno, Italy Verona, Italy      St. Leonards, Australia

  5. Whiskey is • Made from Grain • Distilled less than 190 proof (95% by • volume) • Usually aged in oak barrels • Usually aged for at least 3 years

  6. The Process of Whiskey Making • Milling • Mashing • Cooking • Fermentation • Distillations • Aging • Bottling

  7. Stave Mills Consumers Supply Chain Physical Profile: Spirits Supply Chain Physical Profile Spirits Model Dist Inventory Cooperage Distilleries Barrel Warehouses Bottling Plants BF Warehouses Distributors Retailers Other Vendors (e.g. caps, labels, flavorings, glass, boxes) Other Vendors (e.g. utilities, grain corn) Agency Partners • 3 mills two owned in Kentucky, one in Ohio) • 4 Distilleries -(Jack Daniel’s, Early Times, Canadian Mist, L&G) • 2 Processing facilities (Clintock, Mt. Eagle) • 83 storage facilities (JD-68, CM-8, ET-7) • 1.964M sq/ft of storage space • Cost of warehousing • JD-$3.91, CM-$8.68, ET-$5.92 (bl/yr) • 4 Bottling Plants and one bottling line owned at Clintock • LPO volume was 6.1 9L cs in F’ 99 (not including Pinnacle) • JD volume was 6.1 9L cs in F’99 • 7 facilities (JD, LPO, Pinnacle, 3 export, 2 import, 19 Bailment) • Inventory days in F’99 9L cs: JD - 18, LPO - 25 • Approx. 800 ship-to points worldwide • In the U.S. - 32 open states, 18 control states • On & off premise retailers • BGC is located in Louisville, KY with a daily capacity of 2000 bl • approximately 95% of production @ BGC is used internally

  8. So, how does Brown-Forman forecast demand plan production? • Two Separate systems used • Demand planning for liquid • Supply chain planning for bottling and distribution

  9. Demand planning for liquids • Proprietary systems develop by Brown-Forman • Used to plan barrel and whiskey production • Used to manage long-term grape contracts and vineyard plantings • Production schedules updated semi-annual

  10. Supply chain planning • Implemented SAP ERP system - May 1999 • Y2K solutions for 17 legacy systems • Update to 4.6 release - July 2001 • Strategic decision standardize on SAP software solutions - December 2000 • Currently implementing APO module of SAP for supply chain planning

  11. SAP’s Impact on Brown-Forman • Knowledge to make decisions • Quick Access to information • Inventory levels • Financial impact • Facilitate communication throughout Brown-Forman

  12. SAP’s Impact - Purchasing • EXAMPLE – Glass Procurement Process • Complex Supplier Network • Lack of Consistency • Purchased in small amounts from • multiple vendors

  13. Owens Rexam Allied Glass Irish Glass ST Gobain AVIR VOA BSN Tuaca Bolla Primalco M. Picard 6 bottling location Glenmorangie Clintok Glass Supply Relationships Millions (000,000) 40.0 Bottles 16.6 Bottles 1.0 Bottles 43.8 Bottles 16.0 Bottles 7.8 Bottles Total 125 Million Bottles

  14. ST Gobain France Vetrerie Italiane Tuaca Bolla M.Picard Wines M. Picard 6 bottling location M.Picard Spirits ST Gobain Negotiation of Contract 26 Million Bottles Brown-Forman Beverages Saint-Gobain Group

  15. ST Gobain Negotiation of Contract 26 Million Bottles • Three year agreement • Just in time delivery • Quality & Delivery SLA established • Cost reduction of 5% to 8% Brown-Forman Beverages Saint-Gobain Group

  16. Karhulan lasi United Glass Primalco Glenmorangie Owens Brockway Supply Relationships Owens Brockway Group 34 Million Bottles

  17. SAP’s Impact of Forecasting Advanced Planner and Optimizer (APO) currently being Implemented After SAP -Allows BFBW to forecast at a much product-territory lower level. Jack Daniels Black Level, 750ML in Georgia Before SAP -High Level Forecasting Jack Daniels 750ML in North America IMPORTANT BECAUSE OF REGUALTIONS

  18. Cost Savings from SAP Systems • Distribution & Transportation $4.5 million • Supply Chain & Demand Planning $5.5 million • Purchasing - Direct Material $17.0 million • Purchasing - Indirect Material $14.0 million • Customer Relation & Promotions $11.0 million • Manufacturing $8.0 million

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