- Executive Summary
One Lone Wolf Brewery, a small player brewing company with 30 employees located in Alberta owned by Dennis Reinhardt who is a “lover of all things beer” person selling the premium bear in Western Canada Region, the company is growing in past two and a half years from bankruptcy.
The company has been facing product shortage issue that negatively affecting its sales, poor logistic & transportation management as well as security breach concern from AGLC for the occasional missing products between production and delivery.
There are number of alternatives identified at a corporate strategy level including keeping current business model, optimizing product variety, subcontracting certain jobs, creating more long-term relationship suppliers and opening independent business retail liquor stores.
Based on the decision criteria the selected recommendation is to focus on optimizing product variety by mainly concentrating on two craft beer lines. Because those brewery’s beer lines won the gold awards are very competitive in the market, it will consolidate its finances of the company even for future expand.
The implementation of selected recommendation is to enact some strategic and feasible plans for the two craft beer lines. And it is believed that the implementation will work for the company.
- Issues Identification:
Lack of business structure;
- No strategy;
- Poor production planning;
- No business acumen; they are pre-occupied with making the product and not managing it;
- Lacks focus on the core business;
- Lack of good forecasting;
- Lack of understanding of his own supply chain;
- No Teamwork
- Inventory management systems issues
- Operating Environment
| | |
Discussion of Internal Environment | Strengths - Gold awards
- Passionate Leader who knows his product and what he is good at
- Solid knowledge of brewery process
- Professional, dedicated personnel
- Recognized he needs help- hired a dedicated resource to manage supply chain activities
- Creative
| Weakness - Constantly changing product offering (beer lines)
- Underdeveloped procurement structure
- Leadership
- Focus on beer-making vs. distribution
- No specific strategy for the company
- Lack of knowledge (financial and business processes, inventory tracking, IT/IS)
- Covers minimal territory in industry and it’s a BIG geography
- Complicated production structure
- Not full-filling demand; shortages and stopped production lines
- Transportation costs
- Internal Security issues (Employee theft and dishonesty?)
- Sole sourcing of RM
- High cost of goods sold
- Slow turnover
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Discussion of External Environment | Opportunity - Distribution and packaging processes
- Rebuilding bankrupt company
- Expanding niche environment
- Brand recognition
- Niche artisan product
- Growing national operations
- Strong recipe product
- Capital investments- owns warehouse and distribution system
- Transparent relationships with suppliers
| Threats - Small market player (small market share)
- Extended supply chain with dependencies
- Competitors (other breweries)
- External Security Issues (poor security system)
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- Root Cause Analysis: (Five “Whys” Technique)
- Lack of Business Structure
- Internal Processes were not set up and communicated to employees
- Failure of financial part of the business- lack of experienced employees in financial segment
- Poor inventory tracking- no software, reports, or procedures
- No transparency between departments
- Lack of necessary reporting system that will trigger an alert right away
- Poor Production Planning
- Frequent changes to production lines
- Ad Hoc procurement process- short term relationships with suppliers
- Mix of raw materials
- Procurement process non existent
- No single point accountability for Purchasing
- Inventory Management Issue
- Warehouse is un organized
- Poor in-house delivery system
- Non existent product tracking system
- Empty pipeline issue – slow turnover (return) of multi-use packaging
- Lack of internal security- missing product
- Lack of Good Forecast
- Poor communications between sales team and customers
- Production is not aligned with supply/demand
- Forecast does not exist
- No feedback from customers in respect of short term and long term needs
- No single point accountability for forecasting
- Alternatives and Options
Decision Criteria:
1 Market Share
2 Ease of implementation
3 Financial Feasibility
4 Environmental impact
Alternative | Pros | Cons |
Business As Usual- Stay the course | - No disruption to workforce
- Little effort required at adjusting
| - A bit deflating to Brittny and risk of losing her
- Risk that the business will go bankrupt again
|
Scale back the supply chain and outsource- Transportation and Labelling- Focus on Core Necessities- Brewing Beer | - Solid savings on fleet maintenance
- Reduce number of employees responsible for logistics
- Reduce security issue risk
- Time consuming – will give an opportunity to concentrate on sales to expand existing market and customer satisfaction
- Getting out of labelling business, transportation business allows resources to focus on beer production
- Solid outsourcing contracts will guarantee quality and timeliness- and anable better inventory and supply controls
- Selling assets will provide Lone Wolf with capital which can be used to purchase more management expertise as a bridge
- Fleet maintenance- reduce employees
- Reduce security risk of Fleet
- Time consumption- concentrate on sales to expand existing market and customer satisfaction
| - Can Lone Wolf sell the assets at the right price?
- Are there any existing contracts in place which will be breached if Lone Wolf exits certain segments unilaterally?
- Does the business case financially support outsourcing as opposed to doing it themselves?
- Loosing direct control on deliveries
- Losing direct control on deliveries
- Risk of outsourcer failing (ie. Driver availability deficit). -Shortage of drivers can cause a significant impact on daily deliveries
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Scale back the brand- focus on production of one or two craft beer lines | - Easier to forecast which makes supply chain easier to manage
- Simplifies purchasing and can bulk order, thus leveraging Lone Wolf’s purchasing power
- Can eliminate variables in the provisioning of multiple lines of beer
- Resources for marketing and communications can be applied in a more concentrated way.
- Will allow to eliminate frequent changes in production
- Will allow to create long stable relationships with suppliers
- Reduce a huge variety of raw materials
- Reduce spending
| - In a niche market, like craft beer brewing, it may be risky to put ‘all your eggs in one basket’
- This will reduce the scope of his market, and he better get the recipe ‘right’ in order to capture as much of the market share as possible
- In a competitive market with large players like AB Inby and Molson Coors ready to ‘pounce’, offering one single product could entice them to buy him out.
- Threats of losing some customers and market share
- Utilization of unsold product – could be potential financial impact
|
Create Strategic relationships with suppliers- Including Long Term Contracts | - Stabilize Prices, discounts, by volumes
- Easier collaboration of forecasting
- Create VMI Account with Suppliers – do not need to spend money on inventory
- Need to spend resources managing resources
- Negotiate firm pricing that you can plan around
| - Risks of long term suppliers- they go out of business, change ownership,
- No redundancy with back up suppliers because now you only have one
|
Giving up their independent retail liquor license | - Cheaper- no costs
- Cost of ownership goes down
- All the cost savings associated with requirements of the Regularity body
| - No longer have control of their asset
- Expensive
|
Product geographic diversification (Eastern) | - Increase sales
- Drive brand awareness
- Increase market share
| - Increase various cost
- AGCO regulation
- Financial risk
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