Andy Cullen and his planning and export team at Guinness thought the iconic Irish beer brewer's customer service numbers looked pretty good: 99-100 percent month after month, according to their figures. But when Cullen and his team sat down with their U.S. customer back in 2003, they learned that the customer was looking at an entirely different set of metrics, and by those numbers Guinness was barely breaking 50 percent service levels.
It wasn't just that the two parties were looking at different numbers, Cullen says now. "The problem was that the way I thought the supply chain was working was actually not the way that it was working." In fact, supply disruptions causing the breakdown in service were going undetected at Guinness. In response, Cullen not only realigned the key metric that his team tracked but also went looking for a technology solution that would allow Guinness to become proactive in how it diagnoses and addresses the hiccups in its supply chain.
The beer brewer is a division of Diageo, the $19.2 billion global company that was formed in 1997 with the merger of Guinness and GrandMet. Diageo is headquartered in London, but Guinness continues operations in the heart of Dublin at its landmark St. James's Gate Brewery, acquired under a famously far-sighted 9,000-year lease secured by company founder Arthur Guinness in 1759.
With approximately 10 million pints of Guinness consumed on the planet each day, job one for the company's supply chain function is to ensure availability of the beer for its many devotees around the globe. So after learning that Guinness' U.S. customer—actually a sister division, Diageo North America—was rating their service levels at around 50 percent, far below Guinness' own estimate of virtually 100 percent, Cullen and his team returned to Dublin determined to increase their service levels.
The proximate cause of the disparity between Guinness' figures and those of its customer was quickly evident, says Cullen. "We had a very simplistic view of the supply chain, which was that if it left our facility on time, then surely it turned up in the States on time. But the supply chain between here and the States is reasonably complicated, and it turns out that there's a fair amount of things that can go wrong."
As Cullen learned, the complexity introduced by the multiple steps in the beer's journey to the U.S. market—with numerous handoffs between different responsible parties —was compounded by the inherently unpredictable nature of ocean transport: Certain shipping lines performed better than others, the price of oil affected how fast the vessels moved across the Atlantic, weather could help or hinder vessel movement, and even the time of year caused variability in crossing times.
In addition, things could simply go wrong: a container might not get down to the quay in time to meet the feeder vessel sailing; the feeder vessel could be delayed or canceled due to bad weather, or arrive at the deep sea port in time but not get in and offloaded in time to meet the deep sea vessel; or the deep sea vessel might be running late itself or do a "port skip," missing a port to get back on schedule, so that the beer literally missed the boat.
Switching from Guinness' "on time in full on dispatch" metric to "on time in full on arrival" ("OTIF on arrival") to match the customers' figures was an easy fix, but the greater challenge for the planning and export team was identifying a solution that would let the brewer accurately track the new metric as well as manage its inventory all the way across the Atlantic. Diageo uses SAP globally for ERP and Guinness also uses Manugistics (acquired this year by Scottsdale, AZ-based JDA Software Group) for supply and demand planning. But Cullen says that he was looking for "something a little bit different, a little bit leading-edge" to help the company solve this particular problem.