Diageo Overhauls Supply Chain - InformationWeek

InformationWeek is part of the Informa Tech Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them.Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.


Diageo Overhauls Supply Chain

The beer and alcohol maker is using Manugistics' planning software to share real-time sales and replenishment data with distributors in its Guinness business unit.

Beer and alcohol manufacturer Diageo is overhauling its supply-chain operations within its Guinness business unit in the United States to share real-time sales and replenishment data with distributors. The global company, which also makes brands such as Johnnie Walker and Jose Cuervo, is implementing Manugistics Group Inc.'s supply-chain planning software to support its collaborative planning, forecasting, and replenishment processes. The project, which is set to be complete by the end of next year, coincides with an SAP implementation in North America.

The Manugistics software will help Diageo combine weekly data from sales, on-hand inventory, and distributors' receipts with promotional information to generate detailed forecasts that will be sent automatically to 120 distributors (which represent 80% of Guinness' business) via a Web application. "They'll see our numbers and compare them with their numbers," says Steve Costallos, director of supply-chain capabilities at Diageo. Then the collaboration process happens.

For example, preset policies will guide both Diageo and the distributor to resolve differences in forecasts. Once both agree on the forecast, the numbers are loaded into a replenishment system that establishes inventory levels and sales. Diageo hopes the distributors ultimately will become more comfortable with its forecasts. "There's an element of trust that has to be developed," Costallos says. "What we want them to do in the future is focus on value-added activities and to tell us what we don't know."

Diageo expects to save up to $1.1 million in inventory reduction during the next few years and reap some $600,000 in logistics benefits. It also expects to boost sales by 1%, or nearly $3.3 million. "Our salespeople currently spend as much as 20% of their time looking at inventory and generating orders," Costallos says. "We will eliminate the need to do that so they can focus on generating volume."

With more accurate forecasts, distributors will be able to cut their inventory levels. "We can share in the benefits," Costallos says. "With less money tied up in inventory, the distributors can take that money and remarket it in our brand in terms of promotions and other things."

We welcome your comments on this topic on our social media channels, or [contact us directly] with questions about the site.
Comment  | 
Print  | 
More Insights
The State of IT & Cybersecurity Operations 2020
The State of IT & Cybersecurity Operations 2020
Download this report from InformationWeek, in partnership with Dark Reading, to learn more about how today's IT operations teams work with cybersecurity operations, what technologies they are using, and how they communicate and share responsibility--or create risk by failing to do so. Get it now!
Gartner Forecast Sees 7.3% Shrinkage in IT Spending for 2020
Joao-Pierre S. Ruth, Senior Writer,  7/15/2020
10 Ways AI Is Transforming Enterprise Software
Cynthia Harvey, Freelance Journalist, InformationWeek,  7/13/2020
IT Career Paths You May Not Have Considered
Lisa Morgan, Freelance Writer,  6/30/2020
Register for InformationWeek Newsletters
Current Issue
Key to Cloud Success: The Right Management
This IT Trend highlights some of the steps IT teams can take to keep their cloud environments running in a safe, efficient manner.
White Papers
Twitter Feed
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.
Sponsored Video
Flash Poll