Leading Scottish whisky distiller refines supply chain operations with TROPOS ERP solution

The business challenge:

A strong history of growth through expansion and acquisition has transformed Ian Macleod from a small family trader to a large-scale manufacturer, distributor, seller & marketer of whisky. To support this, the company needed a new integrated IT system that could offer the control and visibility required to manage the operations as one business model, and provide a platform for further company growth.

Growth and acquisition ensures Ian Macleod is the top independent whisky provider

Ian Macleod Distillers Limited is one of the largest and most reputable independent companies operating in the spirits industry. Established in 1933 as a small whisky broker, the family-run firm has significantly expanded its range of top quality spirit brands over the years, and is now the proprietor of many of the world’s finest whiskies.

Key brand acquisitions for the company have included: Isle of Skye Blended Whisky in 1963, London Hill Gin in 1990, and Hedges & Butler Scotch Whiskies in 1998. In 2003, Ian Macleod acquired the Glengoyne distillery in Dumgoyne, Scotland, marking the company as a whisky producer for the first time in its history. Ian Macleod also owns a 50 per cent stake in a bottling firm – Broxburn Bottlers. Combined with its distillery, this provides the company with a fully integrated production platform on which to carry on its business, which is now heavily focused on exporting high-quality whisky and other spirits to foreign markets. Ian Macleod now produces and sells more than 15 million bottles of spirits a year, and has an annual turnover of over £21 million.

The need for tight control over all areas of production through one system

The Ian Macleod management team needed to undertake an extensive review of the IT infrastructure. Up to this point, the company had been using three non-integrated systems to manage stock, manufacturing and financial operations at both Ian Macleod and Broxburn Bottlers.

Mike Younger, Finance Director at Ian Macleod, was principally involved in the decision to replace the technology: “The software was 20 years old and its limitations were clear. The bespoke programs had been designed over the years to include many elements that had stretched it beyond their original capabilities.

Specifically Ian Macleod has evolved from a company that deals with single customers wanting single products, to many customers with multiple product demands, which placed large demands on the system. The supply matrix had become far more complex, and the old system was not well enough designed to support present requirements.”

The key problem with the old system was accessibility. The old system did not fully collaborate the activities of Ian Macleod and Broxburn Bottlers Mike Younger added: “Sharing information between the different stages of production was a complicated process, and the company needed overall transparency. On top of this, the individual reporting processes were late and untidy, which was causing delays in resolving irregularities. For example, the liquid stock in Broxburn was accounted for completely manually, and Ian Macleod frequently lost all visibility of parcels of stock, making control and accounting difficult.

Data processing was simplified so that many intermediate steps with their own variables were consolidated in the system. In addition there was no report writing tool. As a result of Ian Macleod’s increasingly complex business requirements, anomalies were becoming progressively more large and common. On top of this, the Glengoyne distillery acquisition in 2003 significantly expanded Ian Macleod’s supply chain and the company now had to control several key areas of operation as part of a wider business model:

Ian Macleod selected a solution that is tailored for the whisky trade

After a review of the marketplace, Ian Macleod decided to implement SSI’s TROPOS ERP solution. SSI is an established provider of supply chain solutions to the food and drink sector, and TROPOS delivers unique modules specifically designed for the whisky industry. The specialist TROPOS Whisky Workbench module gives Ian MacLeod complete control over the complex area of its cask stocks and blending operations.

Mike Younger again: “A key requirement we had when looking for a vendor was compatibility with the spirit industry – specifically the spirit control and excise warehousing aspects of our operations. TROPOS is all-encompassing, as it treats Ian Macleod and Broxburn Bottlers as one economic entity, whilst allowing their reporting as separate legal entities. The Whisky Workbench ensures processing within the complex blending operations is always 100 per cent accurate. It’s impressive how it fits into our complex business structure, and produces monthly management figures and customs and excise reports quickly and accurately.”

Throughout the project, SSI appointed a highly experienced implementation consultant dedicated to the project. This involved regular budget reviews, regular application housekeeping checks and a rapid support system for staff at Ian Macleod. Over the past three years, SSI has worked closely with the company to extend the functionality of the core ERP system, by installing manufacturing, MRP, scheduling and purchase order processing modules. In August 2006, the company also added bulk stock and vatting stocks.

“The great thing about SSI and its TROPOS ERP solution is that it is highly flexible and scalable, and completely adaptable to our business process architecture,” Mike Younger added. “SSI has a substantial customer base in the whisky industry, and it’s easy to see why. We respected and valued the input of the SSI consultant, and the business process reviews revealed areas of our business we knew the system would be able to enhance, as well as some that we didn’t.”

Immediate and long-term benefits

The switch to a fully integrated ERP solution has given Ian Macleod complete visibility of stock levels and eradicated location, quantity and status anomalies. Real-time information from across the distillery, bottling and third-party warehouse sites can now be accessed by any member of staff, and allows production to be fully co-ordinated. TROPOS has also standardised costing on all of Ian Macleod’s products, which will significantly improve margin and cost control, and there is now better planning of production workload and material supply.

The input of sales forecasts into TROPOS allows Ian Macleod to hold lower stocks to satisfy customer demands as production is triggered ahead of anticipated orders for specific products. Mike Younger: “We’ve been able to successfully change our philosophy to ‘manufacture to order’ – everyone benefits from the visibility TROPOS has given us, from accounts right through to production and sales. On a financial level, the fundamental benefit is money saved in the warehouse – less write-offs, and fewer misplaced items. We’ve been able to reduce our stock levels by 35 per cent – approximately £750,000 worth of goods. We now have substantially better control of the business – we’re no longer having to do double back-flips to get a proper understanding of the supply chain. The system tracks every penny correctly which allows us to concentrate more on the top level results.

Better forecasting and visibility means better service for customers

A large part of Ian Macleod’s business comes from exporting specialist brands of whisky to foreign markets, and the firm receives orders for its products from all over the world. As Mike Younger explains, the TROPOS ERP solution helps ensure that the customer always comes first: “The visibility TROPOS provides has given our customer service team that extra edge, and dialogue between our sales staff and our customers is now at a better level than it ever has been.

“We now work closely with selective customers to agree forward demand plans so prices, service levels and stock availability are all linked together. If a customer suddenly demands more than the predicted order quantity for example, staff are now in a much stronger position to talk about how we’re going to meet their delivery requirements. In this respect, we are now able to deliver a better service to customers whilst at the same time we can be more proactive with our pricing structure – all because we have first-rate control and visibility of our operations.”

A platform for continued growth

Having already enjoyed many of the benefits it was looking for before implementing TROPOS – as well as some extra ones too – Mike Younger is still keen to carry on optimising Ian Macleod’s IT infrastructure even further: “The transaction processing backbone is in place, and the process of streamlining our stock condition is complete – but there are still areas where we’d like to make some enhancements.

“The next step is for SSI to complete the installation of the Microsoft Business Intelligence module – this will allow us to generate business management analysis, and look at how the company is growing and developing over time. As a long term goal, we’re looking to increase visibility and transparency even more, and through that get an even better understanding of the business,” Mike Younger concludes.