Essay About Product Shortage Issue And Current Business Model

One Lone Wolf Brewery
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 TeamworkInventory management systems issuesOperating Environment Discussion of Internal Environment StrengthsGold awardsPassionate Leader who knows his product and what he is good atSolid knowledge of brewery processProfessional, dedicated personnelRecognized he needs help- hired a dedicated resource to manage supply chain activitiesCreativeWeaknessConstantly changing product offering (beer lines)Underdeveloped procurement structureLeadership Focus on beer-making vs. distributionNo specific strategy for the companyLack of knowledge (financial and business processes, inventory tracking, IT/IS)Covers minimal territory in industry and it’s a BIG geographyComplicated production structureNot full-filling demand; shortages and stopped production linesTransportation costsInternal Security issues (Employee theft and dishonesty?) Sole sourcing of RMHigh cost of goods soldSlow turnover Discussion of External EnvironmentOpportunityDistribution and packaging processesRebuilding bankrupt companyExpanding niche environmentBrand recognitionNiche artisan product Growing national operationsStrong recipe product Capital investments- owns warehouse and distribution systemTransparent relationships with suppliersThreatsSmall market player (small market share)Extended supply chain with dependenciesCompetitors (other breweries)External Security Issues (poor security system)Root Cause Analysis: (Five “Whys” Technique)Lack of Business StructureInternal Processes were not set up and communicated to employeesFailure of financial part of the business- lack of experienced employees in financial segmentPoor inventory tracking- no software, reports, or proceduresNo transparency between departmentsLack of necessary reporting system that will trigger an alert right awayPoor Production Planning Frequent changes to production linesAd Hoc procurement process- short term relationships with suppliersMix of raw materialsProcurement process non existentNo single point accountability for Purchasing Inventory Management IssueWarehouse is un organizedPoor in-house delivery systemNon existent product tracking systemEmpty pipeline issue – slow turnover (return) of multi-use packagingLack of internal security- missing product Lack of Good ForecastPoor communications between sales team and customersProduction is not aligned with supply/demandForecast does not existNo feedback from customers in respect of short term and long term needsNo single point accountability for forecasting Alternatives and Options Decision Criteria:1 Market Share2 Ease of implementation3 Financial Feasibility 4 Environmental impactAlternative Pros ConsBusiness As Usual- Stay the course No disruption to workforceLittle effort required at adjustingA bit deflating to Brittny and risk of losing herRisk 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 maintenanceReduce number of employees responsible for logisticsReduce security issue riskTime consuming – will give an opportunity to concentrate on sales  to expand existing market and customer satisfactionGetting out of labelling business, transportation business allows resources to focus on beer productionSolid outsourcing contracts will guarantee quality and timeliness- and anable better inventory and supply controlsSelling assets will provide Lone Wolf with capital which can be used to purchase more management expertise as a bridgeFleet maintenance- reduce employees Reduce security risk of FleetTime 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 deliveriesLosing direct control on deliveriesRisk of outsourcer failing (ie. Driver availability deficit). -Shortage of drivers can cause a significant impact on daily deliveriesScale back the brand- focus on production of one or two craft beer lines  Easier to forecast which makes supply chain easier to manageSimplifies purchasing and can bulk order, thus  leveraging Lone Wolf’s purchasing powerCan eliminate variables in the provisioning of multiple lines of beerResources 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 suppliersReduce a huge variety of raw materialsReduce spendingIn 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 possibleIn 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 shareUtilization of unsold product – could be potential financial impactCreate Strategic relationships with suppliers- Including Long Term Contracts  Stabilize Prices, discounts, by volumesEasier collaboration of forecasting Create VMI Account with Suppliers – do not need to spend money on inventory Need to spend resources managing resourcesNegotiate firm pricing that you can plan aroundRisks 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 downAll the cost savings associated with requirements of the Regularity body No longer have control of their assetExpensive Product geographic diversification (Eastern)Increase salesDrive brand awarenessIncrease market shareIncrease various costAGCO regulationFinancial risk