CP LEADERS: DRIVING VALUE VIA

COLLABORATIVE DEMAND AND SUPPLY PLANNING

CASE STUDY:

How One Spirits Producer Reduced Finished Goods Inventory

By 40%, Forecast Error by 33%, Materials Inventory by 20%

–– While Maintaining 99%-Plus Customer Service Levels

It was the founders of Brown-Forman Corporation who gave America its first bottled bourbon –– Old Forester Kentucky Straight Bourbon Whisky.

Today the $2.4-billion firm, founded in 1870 in Louisville, is not only one of the largest American-owned spirits and wine companies, but is also among the world’s top 10 spirits companies. Today, Brown-Forman imports wines from all over the world and offers a portfolio of over 35 brands –– including Jack Daniel’s, Southern Comfort, Finlandia Vodka, and Fetzer and Bolla wines.

How did the company become an international force? By the mid-Nineties, Brown-Forman was one of the largest American-owned spirits and wine companies. But its domestic size did little to ensure access to global markets. So to gain an international foothold, in 2000 Brown-Forman formed a joint venture with Altia Corporation for worldwide distribution of Finlandia Vodka.

By 2004, the partnership had acquired full ownership of the brand. To maximize the

opportunity, Brown-Forman put a global sales and operations planning process in place by leveraging the SAP^® Advanced Planning & Optimization (SAP APO) component of the SAP Supply Chain Management (SAP SCM) application.

Result: By 2005, forecast error had been slashed by over one-third.

In 2006, Brown-Forman purchased French firm Chambord Liqueur; in 2007, it acquired Mexican tequila producer Casa Herradura. Because Casa Herradura was running SAP software, Brown-Forman could exchange master data with its Mexican acquisition quite literally overnight.

Brown-Forman also looked to distribution partnerships, where growth can be faster but where visibility into inventory levels and demand is critical. With SAP SCM, “Brown-Forman increased the number of combined item/locations offered in some regions while maintaining 12 inventory turns per year and 99-percent-plus service levels, (meeting our) long-term inventory targets within a

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