Managing Bailment Inventory (A Boat Load Of Money!)

1. Managing Bailment Inventory(A Boat Load Of Money!) NABCA Administrators ConferencePhiladelphia, PA Friday, October 26th, 2007

2. Outcome(When This Presentation Is Over) • Demonstrated the importance of Managing Bailment Inventories • Show new NABCA tools for Managing Bailment Inventories • Call To Action!

3. 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

4. Panelists • NABCA – Amy Grollman • Sazerac Company – Paul Maier

5. 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.

6. 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!

7. 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!

8. 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!

9. 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

10. 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

11. 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?

12. 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

13. Is There A Problem? Er, Yes!

14. 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

15. 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

16. What Causes The Problem?

17. Problem Cause? • Murphy’s law? • Mercury in retrograde? • Supplier neglect? • Broker neglect? • Control state neglect? • Unpredictable sales? • Poor forecasting? • Communication / Disconnected / Invisible

18. What To Do About It? Technology Based Solution

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

21. Bringing It In House • From the Control States to NABCA • From NABCA to Sazerac • What happens inside Sazerac

22. 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

23. NABCA Data feed from West Virginia

24. NABCA Data feed from Mississippi

25. NABCA Data feed from Pennsylvania

26. NABCA Formatted Inventory data in Data Warehouse

27. 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

28. RPG Language Polls The NABCA Computer To Get Data

29. When We Get The File It Looks Like…..

30. RPG Language Formats Data For Use In COGNOS

31. NABCA Bailment Inventory Data Viewed Through Our Own System

32. Right There With Our Other Inventories

33. Cognos view showing last 5 days of Inventory

34. Cognos view showing Estimated Days on Hand

35. 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

36. Using “SAM-I-AM” Case Study: NABCA

45. Time to Reorder?

48. Adhoc Reporting