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Case Study - Bottles & Glass Packaging
 

Case Study - Bottles & Glass Packaging

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Recently, higher input costs (including corn and glass) have put increasing pressure on alcoholic beverage companies to manage highly efficient cost structures. The larger players are able to leverage ...

Recently, higher input costs (including corn and glass) have put increasing pressure on alcoholic beverage companies to manage highly efficient cost structures. The larger players are able to leverage scale in spreading fixed costs over a larger volume/revenue base. This dynamic makes it difficult and expensive for smaller players to compete effectively. Small cap alcoholic beverages tend to have tighter margins than their large cap counterparts so reductions to dry goods COGS is critical to maintaining competitiveness.

This case study illustrates the results of applying an innovative supply chain solution to create brand-building glass packaging that met very aggressive price points.

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    Case Study - Bottles & Glass Packaging Case Study - Bottles & Glass Packaging Presentation Transcript

    • Client Snapshot | Region: Americas Industry: Beverages Development of an BEVERAGES Efficient, Cost Effective Dry Goods Supply Chain Setting Challenge Solution „„ Recently, higher input costs (including corn and glass) have put increasing pressure on alcoholic beverage companies to manage highly efficient cost structures „„ Sertus was approached by a private equity fund with a controlling interest in a small cap spirits company looking to reduce COGS on its bottles and to eliminate the costs related to quality issues in its dry goods supply chain „„ Sertus evaluated the current bottle schematics and ongoing quality issues to recommended certain design improvements „„ The larger players are able to leverage scale in spreading fixed costs over a larger volume/revenue base. This dynamic makes it difficult and expensive for smaller players to compete effectively. „„ Small cap alcoholic beverages tend to have tighter margins than their large cap counterparts so reductions to dry goods COGS is critical to maintaining competitiveness. „„ Management was spending too much time on the procurement and QC resolution activities related to dry goods procurment, hours that could be spent on its core business – developing, selling and marketing spirits „„ The company uses intricate bottles that are inherently expensive to make due to fire on decals and low volume quantities „„ Sertus completed a full review and audit of several suppliers in China for each of the key components (bottle, capsule, cork, necker and security strip, color box and labels) „„ Contracts, NDAs, Supplier Agreements and a Roll-Out Plan put in place, bringing production on line within 60 days from engagement The Results A streamlined supply chain, reliable production schedule, transparent open-book pricing while reducing dry goods COGS by over 50% and returning valuable time to management for core activities.