Managing the Supply Chain Conundrum

Dr. Richard Obiso, owner of Whitebarrel Winery in Christiansburg, Virginia, said his business had very few issues concerning supply chain management before the onset of the COVID-19 pandemic in early 2020.

“Items like shipping and packaging materials, yeast, and wine production chemicals were all abundant and available,” Obiso said.”During COVID, we had little need for items because, in Virginia, we were crippled by tight restrictions and we decided to reduce our 2020 production and hold our 2019 vintage in tanks and barrels until the pandemic subsided.

“As everyone knows, the pandemic continues to rage on, and now supply chain issues are in crisis mode.”

It’s not a stretch to say supply-chain management has become synonymous with being problematic in many industries these days.

Whether you attribute it to the pandemic or believe the problem businesses face today to be rooted farther back, shortages are leading to bottlenecks and disruptions are causing problems in other parts of the supply chain. It’s becoming a snowball effect that’s leading to more shortages, new delays, and higher prices.

To cut costs, more manufacturing is taking place overseas and people have relied more on online shopping during the pandemic.

Christine Beaudette Tinelli is the Director of Client Development at MHW, a company that handles the back end for businesses that make beverage alcohol. She said supply chain management challenges won’t be going away anytime soon and said business owners should expect to endure problems throughout all of 2022.

“Delays are the biggest root of everything,” Tinelli said. “All these shortages really come from the fact that all the products are here, but not in the right place.”

The answer can be simplified to planning ahead and forecasting farther out, she said.

“Just expect delays in every aspect of the supply chain,” Tinelli said. “It’s going to take longer for transit. Labor shortages are going to affect how you can get juice.

“It’s going to take longer to make wine available. We’re not expecting this to go away in the short term, so you’re going to need to preorder.”

This has been the case for Lowell Jooste, who said transit time was delaying his wine’s arrival at his urban winery, LJ Crafted Wines.

“Our only issue has been that full barrel deliveries from Napa to San Diego are now every second week instead of every week,” Jooste said.

Ensuring your product continues making it to the shelves is important, Tinelli said, even though all companies are facing the same supply chain challenges.

“If you’re getting brand-loyal customers, they will find your brand and reorder it,” she said. “It’s going to be tough if you get the consumer hooked, and they go to look for it in the store and it’s not there.”

eCommerce can be a winery’s best friend, she said.

“You want the consumer to be able to get your wine,” Tinelli explained. “You can use third-party commerce clubs and direct-to-consumer wine options.”

Obiso said Whitebarrel is actively making moves to address the global supply chain crises. He said they’re planning ahead and double-checking their plans, they’re sourcing from multiple vendors from different areas of the country and world, and are planning far in advance to allow time for materials to arrive.

Tinelli said that’s the right idea. Diversity in sourcing is one of many tips she has for wine businesses that are looking to stay ahead of the supply chain monster.

Glass shortages are a big obstacle to tackle — especially with specialty sizes such as 187 mL and 375 mL bottles.

“Make sure you’re thinking through your glass needs for the year,” Tinelli said. “Maybe commit to more glass. Get locked in. It may be pricier, but it’s something to think about.”

Switching to screw caps and other synthetic closures can also be a solution, she said, given cork shortages.

“There are still a lot of wines that use cork,” Tinelli said. “In this particular supply chain, even less available than before. It can be hard to pivot away and change current SKUs, I get that. But with new ones coming out — new vintages — you can make tweaks unless you’re afraid it would compromise your brand.

“For day-to-day drinking at home, people like not using the wine opener and twisting off the cap, and you can still put great wine in those bottles. It’s something to think about.”

Tinelli said some of her customers are expanding their portfolio and offering more premium products to protect their price range and offset higher costs. It’s one tactic, she said, but it must be done with care.

“You need to look for other expenses and see where you can adjust,” Tinelli said. “You really don’t want to have to raise it too much. You want to stay competitive in your landscape.”

In addition to materials, you have to be prepared in case of problems with your equipment. Obiso said pursuing a spare parts program has been a worthwhile endeavor for Whitebarrel.

“During our 2021 harvest, our crusher-destemmer died,” Obiso said. “We had placed an emergency order at five different vendors, but only one vendor was able to fill the order. It was half the size that was needed but was all that was available.

“Fortunately, we keep spare parts for most of our equipment and we were able to repair the broken equipment in time to continue harvest. I highly recommend that if you do not have a spare parts program in your company, you should definitely take the time to invest in this.

“It may cost you upfront, but it will save you time and money in the long run. I also recommend doing it soon because some items take months to arrive.”

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