One Lone Wolf - Beer of Distinction

ONE LONE WOLF – BEER OF DISTINCTION

EXECUTIVE SUMMARY

One Lone Wolf Brewery is owned by Dennis Reinhardt who rescued the 12 years owned company from bankruptcy just 2 and a half years ago. His company has 30 employees producing premium beer in one manufacturing plant, selling its beer mostly in Alberta and very recently in BC and Saskatchewan. The company produce 15000 hectoliters of beer per year and brewed 6 types of year round beers and 5 to 7 seasonal or limited run beers per year.

In the light of decent running business, One Lone Wolf Brewery has been facing serious issues in many of the business areas. One of the major problem faced by One Lone Wolf was its supply chain management practices, which has led to other issues related Inventory , Stocking , Re- ordering , Production Plan , Waste Management , Inadequate supply of quality raw materials, inability to maintain the quality and taste of beer produced, Packing and distribution of right products to the customers .

The Company has recently hired a Brittany Chomiak, the new supply chain coordinator who has suggested the alternatives, recommendations and implementations plan which is deeply tied in to each other. Ensuring constant monitoring and control will help One Lone Wolf come out strong from financial strain it has faced.

ISSUE IDENTIFICATION

Tactical Issue

1. Packing: - The choice of packaging directly effects the shelf life of beer. This issue needs to be addressed to maintain the quality of beer.
2. Promotion / Advertisement: - Lack of promotion and advertisement about the seasonal (premium) craft beer has effected its sales.
3.  Supplier: - This is a very critical issue to improve production, cost, and quality, lead time and avoid delay to fulfill customer orders.
4. Warehouse: - Lack of an organized warehouse has led to serious issues in inventory management, shipping, product tracking and security.
5. Recycling and Waste Management: - Less priority given for the use of recycled bottles and no proper tracking of kegs for recycling and refilling.

Lack of attention towards water wastage during the brewing process.

Strategic Issues

1. Management Decision making: - This is a very important issue as it affects the working of the business operations.
2. AGLC Compliance: - Mandatory compliance continually ignored.
3. Forecasting and Planning: - No proper forecasting of demand of current market, simultaneously inadequate planning for supply of raw material.
4.  Competitors: - Surviving and growth in mature market is needs to be taken into consideration.  Continuously keep watch on competitor’s behavior and market trend.  
5. Financial Remodeling: - Preparation of cash flow statement, budgeting, Comparative analysis need to done for a clear financial vision.

ROOT CAUSE ALALYSIS

         Strategic Perspective:

SWOT Analysis:-

Strengths:-

1. Existing customer base from last 12 years.
2. 2 of the brewery’s line had won gold awards in recent national craft brewing competition.
3. Strong selling and growing, 6 types of year round beers contribute to 75% of company revenue.
4.  AGLC licenses to operate own warehouse and distribution system.

Weakness:-

1. Unorganized Warehouse management system - unorganized in house delivery system and warehouse management system, lack of product tracking.
2. Failure to deliver customer order on time, which had affected sales negatively.
3. Unsold stock of specialty seasonal beer lines.
4. Inadequate raw material planning, which has led to rush order for material, increase in transportation cost and sudden changes in production cycle.
5. Improper production planning, frequent changes for making different types of beers.
6. Keg recycling and refilling – used kegs were not returned on regular basis which caused non availability of kegs for refilling and delays in delivery of beers to bars and restaurants.
7.  Lack of involvement by Dennis Reinhardt (Owner) in critical management decision.
8. Quality of craft beer

Opportunities:-

1. Change in market trend for Premium craft beer. – Change in customer buying trend, customer taste Scope of creating interesting beer lines to catch attention of beer drinkers.
2. Dennis can create unique craft beer, has he is an artist for making creative craft beer.
3. Inability for large breweries to entry in small scale of production of craft beer, inability to duplicate the craft brewed flavor.
4. Inhouse retail store can be stared in Alberta as per AGLC.

Threat:

1. 70% Increase in micro-brewery with change
2.  Highly regulated and alcohol related tax
3. Very unpredictable of success craft beer.
4. Capital intensive.
5. Environmental Issue
6. Variation in sales of beer.

Qualitative Analysis:-

1. Packing: - The current usage of amber color bottles have not been able to sustain the usual one lone wolf beers shelf life. Cans protect the beer most effectively from lights but dark color bottles are considered acceptable as well.
2. Promotion / Advertisement: - One lone wolf needs a proper advertising and promotion campaign. Initially company needs to advertise the existing year round beer line on social media, radio and move on commercial advertisement later. One lone wolf should promote its seasonal premium craft beers at beer festival, local restaurant, liquor stores and invite beer lovers for beer tasting event at his brewery.
3.  Supplier: - Major dependency on single supplier for raw material (malted barley) in drought affected areas has led to inadequate supply of barely. Multiple Independent farmers suppling hops affects the type of beers been brewed and sudden shift in production plan.    
4. Warehouse and Supply Chain: - Unorganized warehouse has raised concern over inventory management, improper beer storage,  wrong combination of product has been shipped ,

Regular tracking of in-house fleet for proper delivery of product and alternative to opt for contractual transportation during peak season.                                                 

1. Recycling and waste management: - Current usage of 75% new bottles and 25% recycled bottle, this combination can be shifted to 50% new bottles and 50% of recycled bottles which will reduce the company’s contractual obligation. Less priority given for the use of recycled bottles and no proper tracking of kegs for recycling and refilling.

Lack of attention towards water wastage during the brewing process. 90% of water required for beer brewing that result in excess of water waste.

1.  Management Decision making: - Dennis Reinhardt needs to create a balance between his creative beer making and running his beer company. He needs to realize the importance of his involvement in management decision making related to Supply chain , Information Technology implementation , Financial Decision making.
2.  AGLC Compliance: - The major problem at this stage is to address the increasing number of security breaches, product going missing between production and delivery. Resolving this issue has become imperative as company AGLC licenses is at stake.
3.  Forecasting and Planning: - Dennis’s practice of relying on his instinct , guesses , and spread sheet calculation to predict demand not meeting expectation of increased revenue. There is an urgent need for collecting data related to trends from previous years, existing customer, and future expectation.
4. Competitors: - Beer brewing is a much mature market and one lone wolf faces competition from large beer brewer and increasing number of micro brewers. That is why it is very critical for the company to keep a Continuous watch on competitor’s product, behavior and market strategy.
5. Financial Restructuring – Business environment is very unpredictable, variation in sales pattern, technological changes, changing customer preference has increases the need for financial restructuring.

Quantitative Analysis:-

1. Revenue Breakdown: - On an average raw material purchased - 40% of revenue, Labour 9% of revenue and Alcohol related tax takes 30% of revenue.
2. Industry Packaging Trend: - Canned Beer are the most popular method of packaging – 47%, whereas bottles constitute to 43%, for bulk packaging in reusable kegs for bars and restaurant – 10%.
3. One Lone wolf packaging: - The Company sold most of its beer in 341ml amber glass bottles and further packed in boxes of 6 or 12 which comes to 2 liters to 4 liters of beers per boxes. Seasonal beer sold in 500 ml single bottle, at peak season combination pack were sold consisting of brewery’s standard beer lines along with summer or winter specialty beer and were sold in 6 or 12 pack boxes.
4. One lone wolf use combination of new (75%) and recycle (25%) bottles.
5. The company have 30 employees operating in 1 manufacturing plant and currently produce approximately 15000 hectoliters of beers per year. It produce 6 type of year – round beer lines and 5 to 7 seasonal or limited – run beer per year.

ALTERNATIVES AND/OR OPTIONS

1. Focus on supply chain strategy: - One lone wolf should concentrate on building a strong supply chain strategy for a smooth flow of product.

Pros: Company has taken steps by hiring a full time supply chain coordinator now. The company should slowly build a team to assist the supply chain coordinator which will ensure division of work and faster implementation of decision taken.