Managing Bailment Inventory A Boat Load Of Money

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Managing Bailment Inventory(A Boat Load Of
Money!)

• NABCA Administrators ConferencePhiladelphia, PA
• Friday, October 26th, 2007

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Outcome(When This Presentation Is Over)

• Demonstrated the importance of Managing Bailment
  Inventories
• Show new NABCA tools for Managing Bailment
  Inventories
• Call To Action!

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Format

• 60m Total Session
• 15m Teeing Up The Issue
• 15m Integrating NABCA Data
• 15m Managing Bailment Thru SAM
• 05m Recap and Call To Action
• 10m Audience Questions

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Panelists

• NABCA Amy Grollman
• Sazerac Company Paul Maier

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Panelists

• Sazerac Company Paul MaierPaul Maier is the
  MIS Director of Sazerac Company, Inc., which is
  located in Franklin County, Kentucky with
  additional responsibilities in New Orleans,
  Louisiana.Maier started in the beverage alcohol
  industry in 1983 at the Frankfort, Kentucky
  Ancient Age facility at the age of 20. He
  started out working with the President and
  Controller to develop hardware and software
  systems needed to run the operations. In 1988,
  he became the DP Manager and handled all IT
  Systems and supervised all company data entry and
  processing activity.
• He then became MIS Director in 2001 as his
  current role. Maier holds an Associates Degree
  in Data Processing from the University of
  Louisville Speed School, a BS in Computer Science
  from Kentucky State University and has an IT
  Business Manager Certification from Belmont
  University. He and his wife Johnna have 3
  daughters, McKenna, Marysa, and Miranda, and live
  in Simpsonville, Kentucky.

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Panelists

• NABCA Amy GrollmanAmy is the IS Manager for
  NABCA, and she has been with NABCA for over 12
  years.During that time, Amy has worked directly
  with Supplier and Control State members to
  streamline the flow of data.Amy has a BA from
  Dickinson College and MS in MIS from University
  of Maryland.When Amy is not working, she loves
  spending time with her three daughters!

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So! What Is The Big Deal?
45 Days Inventory 296.0 Million (FET 125.0
Million)
40 Million Cases Per Year
COGS 2.4 Billion
All Bailment Inventories Are Federal Excise Tax
Paid
Interest Expense Alone 21.0 Million
And That's Before The Cost Of The Warehouses!
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So! What Is The Big Deal?
40 Million Cases Per Year
COGS 2.4 Billion
All Bailment Inventories Are Federal Excise Tax
Paid
45 Days Inventory 296.0 Million (FET 125.0
Million)
Interest Expense Alone 21.0 Million
And That's Before The Cost Of The Warehouses!
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So! What Is The Big Deal?

• At any time 5.0 million cases are in storage
• In 27 different warehouses
• At least 7 states have built new warehouses
• At a cost of 70.0 million
• Space is tight everywhere
• More will build in the future

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So! What Is The Big Deal?

• 1.0 OOS results in 48.0 million in lost sales
• 1 day of extra inventory is 100,000 cases
• Could take at least 21,000 sq feet of space
  (enough space for 1,333 listings)
• 1 day of inventory is worth 7.0 million in WC
• 1 day of inventory costs 500,000 in interest

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So! What Is The Big Deal?

• What about management time?
• 16,066 SKUs to be managed
• 19 states
• 413 vendors
• 27 warehouses
• How many people involved in the process?
• How many labor hours are spent managing the
  process?

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So! What Is The Big Deal?(Conclusions)

• It is a boat load of money
• Complicated logistical challenge
• Capital spending implications of getting it wrong
  are big!
• Poor bailment inventory management affects
  consumer choice (listed SKUs)
• Managing problems takes a lot of time

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Is There A Problem?

• Er, Yes!

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Example Mississippi

• Example MS has great information!
• Problem peculiar to MS Unlikely!
• 8 weeks inventory on hand
• 96,000 surplus cases
• 21,000 square feet of space
• 10 of available space
• Yet, a 2.67 OOS rate

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Example Mississippi

• 143 vendors (herding cats)
• 3,452 SKUs
• Large company with 22 weeks on hand
• Out of stocks, lack of availability, and less
  listed items the restaurant association starts
  talking about the need to privatize

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What Causes The Problem?
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Problem Cause?

• Murphys law?
• Mercury in retrograde?
• Supplier neglect?
• Broker neglect?
• Control state neglect?
• Unpredictable sales?
• Poor forecasting?
• Communication / Disconnected / Invisible

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What To Do About It?

• Technology Based Solution

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Two Solutions

• Make the bailment inventories part of your own
  inventory management system
• Use SAM I AM to manage bailment inventories more
  effectively

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Bringing It In House

• From the Control States to NABCA
• From NABCA to Sazerac
• What happens inside Sazerac

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From the Control States to NABCA
ID
Control State Inventory Data
MI
NABCA Inventory Data Warehouse
MT
NABCA System
Format data to common layout
PA
File Transfer (FTP)
WV
MS
NH
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NABCA Data feed from West Virginia
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NABCA Data feed from Mississippi
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NABCA Data feed from Pennsylvania
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NABCA Formatted Inventory data in Data Warehouse
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NABCA
Automated File Transfer
Warehouse File
Inventory Product File
Inventory Transaction File
Product Exception Report
Sazerac AS400
Format Trans File cross ref our item codes
Cognos Cube
Build Cognos data linking in our depletions
Create Category tables
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RPG Language Polls The NABCA Computer To Get Data
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When We Get The File It Looks Like..
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RPG Language Formats Data For Use In COGNOS
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NABCA Bailment Inventory Data Viewed Through Our
Own System
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Right There With Our Other Inventories
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Cognos view showing last 5 days of Inventory
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Cognos view showing Estimated Days on Hand
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What Is Next For Us?

• Add additional States
• Perfect the matching of the codes between the
  states and our SKU
• A plug for GTIN!
• Improve the look and feel of the reports
• Set Min / Max levels
• Set up an alert system on low / highs

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Using SAM-I-AM

• Case Study NABCA

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Time to Reorder?
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Adhoc Reporting
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Recap And Call To Action
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Recap

• It is a big, important topic
• Lots of money involved
• Lots of headaches
• Affects listings / consumer choice
• Affects customer service
• The implications of getting it wrong could be as
  large as to raise the privatization question
• There are solutions

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Benefits

• Reduction in working capital and financing costs
• Reduce pressures on warehouse space
• Increased listings and consumer choice?
• Improved relationships
• Less headaches
• One less reason to privatize!

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Call To Action - Suppliers

• Commit to excellent management of bailment
  inventories
• Integrate use of NABCA data into the management
  of your bailment inventories
• Start utilizing SAM I AM to improve management of
  bailment inventories

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Call To Action Control States

• Provide scorecards on industry performance
• Provide bailment inventory information to NABCA

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Thank You!

• Audience Questions