Case Studies

Brown-Forman Uncorks Distribution Efficiencies

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Brown-Forman Beverages Worldwide is one of the largest American-owned companies in the wine and spirits business. It produces and markets brands known around the world, including Jack Daniel’s, Canadian Mist, Southern Comfort, Early Times, Korbel champagnes, and Fetzer and Bolla wines.

Challenge

After problems with technology vendors that failed or merged, in either case leaving them without sufficient support, the company decided to abandon a “best of breed” approach to technology solutions in favor of one that focused on interoperable systems, preferably supplied by a select group of vendors, explained Brown-Forman enterprise solutions consultant Chris Ford.

In 1989, the company had implemented a warehouse management system (WMS) from Logisticon. Unfortunately, Logisticon filed for bankruptcy the same year, leaving Brown-Forman to support the system on its own – and unable to upgrade it or take advantage of new technology developments. Although Brown-Forman launched an effort to replace the Logisticon system in 1996, that effort was suspended in favor of an enterprise resource planning (ERP) project.

Brown-Forman selected SAP 3.1H as its ERP package and implemented it in May 1999. At the time, the company considered using SAP to manage its warehouse, but decided against it, at least for the time being. “We evaluated the functionality of the WM module and found it lacking some necessary core functions,” Ford explained. “But SAP was strongly investing in warehouse management systems and we believed it would develop the required functionality. So we interfaced it (SAP 3.1H) to our legacy WMS.”

The company’s main concern with 3.1H was its lack of native RF, necessitating middleware to interface it with radio frequency (RF) hardware. Brown-Forman considered that option, which Ford says would have likely added a million dollars to the cost of the upgrade project, simply too expensive.

There were definite drawbacks, however. The external WMS did not allow Brown-Forman to take full advantage of SAP’s capabilities. For example, customer service representatives could not see the current status of orders that had been passed to the WMS system.

When the company upgraded its ERP system to SAP 4.6C in May 2001, Brown-Forman decided the new version’s WM module had the warehouse management capabilities the company needed and should replace its legacy WMS.

Brown-Forman executives evaluated SAP carefully before committing to the WM module. The company brought in Michael Godshall, president of Pennsylvania-based Catalyst Consulting, for a day at Brown-Forman’s Louisville, Kentucky facility to evaluate how SAP could meet the company’s requirements. After a day of evaluation and discussions, he and they agreed SAP had the required functionality. Brown-Forman hired Catalyst Consulting to oversee implementation of the upgrade and the customization it would require. The project began in July 2001 and was completed in January 2002.

Solution

The warehousing automation solution that was provided by Catalyst Consulting’s Logistics Center of Expertise is an integrated piece of the R/3 system, Godshall explained. In this case, Catalyst Consulting’s role as systems integrator involved SAP Logistics expertise, R/3 wireless transactions and wireless infrastructure, he added. “The transactions that we delivered were a combination of SAP’s own 4.6 mobile data entry transactions, Catalyst’s library of transactions and custom transactions the company developed specifically for Brown-Forman. With our assistance, Brown-Forman was able to recognize the power of SAP’s WMS solution as an integrated part of their IT and logistics solution.”

On the hardware side, Brown-Forman upgraded their infrastructure and RF devices. The company had been using Intermec bar code printers in its warehouse for several years and was pleased with the service and support it had received during that time. In addition, Brown-Forman executives were impressed with Intermec’s access point technology. Since selecting a vendor that provided the latest technology and allowed for growth was a critical part of Brown-Forman’s technology strategy, the company decided to evaluate Intermec’s product lines. Ultimately, Brown-Forman selected Intermec’s MobileLAN® product line, which met all of the company’s requirements and, with dual radio slot technology, also provided for future expansion. The company now has 17 Intermec® 2455 vehicle-mounted devices and two Intermec® 2425 handheld devices in use in its warehouse, along with several Intermec® 3400 printers.

Brown-Forman had two hurdles to overcome in the implementation phase, Ford explained. The first was automating the process to stage material for specific shipments within SAP.

The issue was this: since each state has specific labeling requirements for alcoholic beverages and since these products sell very differently in different regions of the country, most pallets shipped from Brown-Forman are not made up of a single product. “We might have a truckload that has 40 different line items on it,” Ford explained. To do that kind of picking while a truck is parked in your dock takes a long time (and likely generates penalties), so we had a process in our legacy system where the partial portions were picked a day or two in advance, then set aside to await the truck. They were staged for the specific truck and assigned a unique bar code. Some might have 20 (different) items on one pallet, but they were all tied to one bar code. So when it’s time to load the truck, all the operator loading it has to do is scan one bar code.” Clearly, this functionality was critical in the new system. The second hurdle was the barcode labels the company needed to produce. Since SAP was not generating Brown-Forman’s barcode labels, Ford explained, most sites generate the label using custom code built in a custom transaction. “We did not want to do this, we wanted to use SAP’s standard print function to output the label. Again, it was about three weeks for two of us to research, design, and implement the label printing piece (but we are using SAP’s standard output method).”

Outcome

“We are approaching our third month using the new system, so we have not measured payback yet,” Ford said. “The implementation was more of a defensive strategy we believed necessary to continue using processes created to increase efficiencies many years before. We are realizing benefits in that many processes that had been manual are now totally automated. We realized about a 20% increase in throughput during the second month and our shipping errors dropped from about 3.0% to about 0.3%. Our space utilization increased about 50% and we are controlling stock rotation. The transactions and screen displays are so simple that training is no longer a big issue and we are enabling more people to do several different jobs where before everyone was a specialist in just one area,” he explained.

With SAP, Brown-Forman has replaced 20 disparate but linked systems. Instead, the company now uses a single common database. As a result, the company has just five or six IS staffers supporting its 400 users, who are scattered in locations around the country and the world, at any given time. That kind of efficiency, said Ford, is why “if we can do it on SAP, that is our primary choice.”