Burn Stewart Distillers | Success Story | Epicor
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Burn Stewart Distillers

Company Facts

  • Locations: East Kilbride, Airdrie, Deanston, Tobermory and Bunnahabhain, United Kingdom
  • Industry: Whisky Production
  • Number of Locations: 5

"Tropos gives us a fundamental business planning tool. It also enables us to identify gaps in our supply chain and to talk about them intelligently to key colleagues at operational planning meetings."
Tom Gorrie, Head of Systems and Logistics | Burn Stewart Distillers PLC

 

The "wee dram" has gone high-tech with an up-and-coming Scotch whisky producer adopting state-of-the-art software to manage bulk inventory and blending in the first phase of transition to a full enterprise resource planning (ERP) system.

In the whisky industry it's a relatively straightfor ward traditional production process from barley to bottle with the art of the master blender playing a key role. But in the modern business environment, increasingly sophisticated tools are needed to extract the best yields from "liquid" and other assets.

Burn Stewart Distillers Ltd is phasing in Epicor Tropos ERP suite and Coda Financials to its Scottish operations, initially gaining a unique over view of its inventory and a tool for maximising blend efficiency.

Standard MRP Technology Handles Spirits Industry

Tom Gorrie, head of systems and logistics at Burn Stewart, says: "The main reason I chose Tropos is that it has standard process technology which can handle both the liquid and the cased processes in our business. Our finished product is either the bottle or case of whisky with a bill of material, its equivalent in liquid is a unit of spirit. But whereas cased or bottled product is a fixed quantity the quantity of bulk spirit sold varies at the point of despatch-it just happens to be what's in the cask, the vat or the tanker. The fact that Tropos could handle both fixed and variable elements by using standard transactions i.e. that a 'pallet' could be a cask, a tanker or a vat seemed to me to be a good solution. Nobody else had come up with that solution. I believed it could work, and it has."

"Whisky is a unique industry. Very few companies have got their bulk and cased systems on the same software-that's the key to our solution."

Burn Stewart was formed in 1988 following a management buy-in. The vision was to create a fully integrated Scotch whisky company and to build a portfolio of international brands. The company was listed on the London Stock Exchange from 1991 and, in December 2002, it became a subsidiary of Trinidad-based conglomerate, CL Financial Limited.

Burn Stewart Distillers sells seven million litres of cased and bulk whisky a year-worth around £40 million-It has three distilleries: Deanston (Perthshire), Tobermory (Mull) and Bunnahabhain (Islay). It has a blending plant and warehouse at Airdrie, while its head office and bottling plant are at East Kilbride.

The company produces four single malt whiskies-Deanston, Tobermory, Bunnahabhain and Ledaig-and various blends for the UK and export markets. The blends are marketed under Burn Stewart's Scottish Leader and Black Bottle labels as well as those of the major supermarkets and other distributors. The company also produces small amounts of whisky-based cream liquers and white spirits such as gin and vodka. Its key international markets are served through its branch sales offices in Taipei, Cape Town and Atlanta.

Real-Time Information On Market Needs

Whisky production involves fermentation, distillation, maturation, blending and bottling. Tropos comes into play at Burn Stewart after distillation, when the new spirit is casked in oak for the minimum of the three years necessary for it to earn the name of whisky. Burn Stewart has an inventory of maturing spirit worth about £42 million-and a further investment in the former sherry and bourbon casks that contain it.

As whisky matures, its value increases as a result of ageing and because of the costs incurred in storing it-casks and warehouse space. The government recognises that long-term storage is a cost unique to the whisky business, so distilleries are allowed to accrue storage, rent and transport costs against each parcel of whisky so reducing the impact of these costs on profit until they are sold. Over time the quantity reduces as a small portion of the whisky evaporates through the wood of the cask. The value, however, continues to be calculated on the original volume casked.

Tropos tracks whisky stored in individual "parcels"-a number of consecutively numbered casks containing spirit of the same make, bond year and filling location. It records the changing value of each parcel and manages the casks to ensure an average "wood cost".

Customers & Excise Reports Automated

Tropos provides another key area of support, in the compilation of monthly Customs & Excise reports, which reflect each stage of production. Previously, these reports involved considerable effort to compile and check. Tropos effectively automates C&E reporting, saving time and ensuring accuracy.

Tom Gorrie says: "This is very important because C&E could close down an operation if they were not satisfied that the movement of spirit was strictly controlled. Basically what C&E want to see is an analysis of movements, because a whole lot of things can happen to a single vat of whisky. It's not really sophisticated but making sure there's a good audit trail is very important. You have to be able to prove where everything has gone and that the stock at the end of the month is 100% correct."

Bulk Supply Management Gains Firmer Control of Variables

Once matured to the desired age, single malts are filtered (to remove fatty acids) and bottled-if they are sold at cask strength they may be up to about 58% alcohol; generally they are "reduced" by diluting with water to 40% alcohol.

Blends are produced by combining up to 20 different malts of varying age, strength and origin-for example, Highland, Lowland or the islands. The blender's primary challenge is to achieve a consistent output by manipulating blends according to the available malts. The second challenge is to achieve the blend at the lowest possible cost-especially for the extremely price-sensitive supermarket sector.

"We now have a single system which shows where the demand is coming from and how we can supply it. The system tells us what we need to produce and then checks the recipes and inventory before telling us where to find the bulk whisky we need to meet a blend order."
Tom Gorrie, Head of Systems and Logistics

One of the lesser-known facts about whisky production is that blends may incorporate malts from a number of different sources. The whisky industry has a thriving trade in bulk spirit and a process of "reciprocals and exchanges" which enables blenders to supplement their own distilleries' output with whiskies from other producers-and to balance the cost equation as closely as possible.

As a result, Burn Stewart's warehouses contain maturing spirit that it will use for its own blends, as well as casks with content that is either pre-sold or for sale to other blenders. Similarly, some of the malts that Burn Stewart needs for blending are maturing at other distilleries and warehouses around Scotland. This means that the process of stock management and control in the whisky industry is particularly complex.

Previously, Burn Stewart relied on systems developed in-house to manage its inventory and blends. It now uses bespoke Tropos functionality developed by Epicor in collaboration with Burn Stewart. This provides total visibility of the entire inventory and costs, giving Burn Stewart a more structured business model and Bulk management much firmer control of all variables.

Whisky Workbench Provides Information on Bulk Stocks

The master blender defines a recipe for each blend (a standard bill of materials but using percentages of single whiskies or vatted whiskies). The Tropos Whisky Workbench provides all the information on the bulk stocks available and, significantly, the standard cost of the blend. So, if the actual cost is a bit high, the blender is able to try various alternatives to lower the cost without compromising quality.

Tropos calculates the changing cost elements in real time. Cost variances reflecting the blender's decisions are posted to the integrated Coda Financials, giving management a clear and current view of their spirit costs.

Once the blender is satisfied with the quality and economics of the computersimulated blend, Tropos raises all the necessary transfer orders to call the stock from storage at distilleries or warehouses and transport it to the blending site.

The Whisky Workbench manages the entire process of reduction, filtration, mixing and tinting (the only legal additive in whisky is caramel colouring) through to the bulk finished product. Tropos tracks the spirit in "bulk litres" (the physical volume) and in litres of alcohol-because of varying strengths.

Tropos and the Whisky Workbench not only handle the blend recipes, but also the bulk finished product as it is shipped out to Burn Stewart's own bottling plant or to other bottlers.

Single System is a Key Differentiator

A key differentiator is that Tropos is the only system to provide an end-to-end solution from distillery to case-goods going out to the customer. The Whisky Workbench is unique as is the fully integrated C&E trace and reporting. Epicor has added new Tropos functionality to support the storage of parcels, the accrual of costs and wood inventory management.

Tom Gorrie says: "We now have a single system which shows where the demand is coming from and how we can supply it. The system tells us what we need to produce and then checks the recipes and inventory before telling us where to find the bulk whisky we need to meet a blend order."

"The operational people in the bottling hall are working very closely with the bulk manager and the people in the warehouses-and they can all see in the same system whatever they need to be doing, whether it is 'dumping' casks into a blend or producing quantities of liquid to be bottled or shipped out in a tanker."

The first phase of the transition went live in July 2003, with bulk sales and purchases, inventory management and financial modules. Production planning modules followed, to ensure optimal bulk supply planning. Cased goods operations were implemented in August 2004 to facilitate sales forecasting production scheduling and to control procurement of dry goods (such as bottles, labels, closures and packaging), sales and distribution of case goods.

"Whisky is a unique industry. Very few companies have got their bulk and cased systems on the same software-that's the key to our solution."
Tom Gorrie, Head of Systems and Logistics

Tropos is a Fundamental Business Planning Tool

Tom Gorrie says: "Because the system allows us to monitor the cost of a blend from a very early stage, we can make more informed decisions. For example, there may be a cost advantage if we buy in a particular whisky, rather than drawing from our own inventory. But this may be offset by the cash advantage of using our whisky.

He says: "Tropos gives us a fundamental business planning tool. It also enables us to identify gaps in our supply chain and to talk about them intelligently to key colleagues at operational planning meetings. These are important changes for us, coming about because we have a system where most people can understand or alert you to dangers that are likely to occur."

"If the critical plan is already in the system in a coherent way, then you have very serious whisky cash planning already in place. We have a quality of information that would be extremely difficult to produce from a standing start without the integrated system that Tropos provides."

About Epicor

Epicor Software Corporation is a global leader delivering business software solutions to the manufacturing, distribution, retail, and service industries. With more than 40 years of experience, Epicor has more than 20,000 customers in over 150 countries. Epicor solutions enable companies to drive increased efficiency and improve profitability. With a history of innovation, industry expertise, and passion for excellence, Epicor inspires customers to build lasting competitive advantage. Epicor provides the single point of accountability that local, regional, and global businesses demand. For more information, visit www.epicor.com.

Success Highlights:

Challenges

  • Provide a single integrated system to replace spreadsheets for management, costing, procurement, production planning and inventory control
  • Capable of handling bulk spirit and cased goods

Solution

  • Epicor Tropos ERP
  • Tropos Whisky Workbench

Benefits

  • End-to-end inventory management
  • Accural of costs
  • Better "wood cost" management
  • Customs & Excise Reporting
  • Total visibility of costs and blending processes
  • Optimisation of bottling lines; production efficiency