June 23-26, 2013
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Major multi-line beverage wholesaler gets better with ‘age’
When Milt Odom began selling bourbon, liquor, coffee, tea, meats and candy in Anchorage, Alaska, in 1933, he probably didn’t even imagine that the company he created – that still bears his name – would one day be the premier beverage wholesaler in the Pacific Northwest and one of the largest privately held companies in the area. Today, Bellevue, Wash.-based Odom Corporation stocks 9,800 SKUs from 480 suppliers across seven major warehouses. Through an aggressive pursuit of acquisitions, coupled with organic growth, Odom now offers its customers some of the most popular beer, wine, spirits, soft drink and liquor brands available in its markets of Alaska, Washington, Oregon, Idaho, Montana, Utah and Wyoming.
Eighty years ago, Milt Odom probably did not imagine the inventory management and supply chain planning issues that his company’s prolific growth would create for his legacy company now run by his three sons and current owners – John, Jim and Bill – since 1988.
At the beginning of 2010, Odom’s management team established several strategic objectives designed to improve the efficiency of its sales planning and operations groups. First and foremost, it wanted to optimize inventory levels without negatively impacting out-of-stocks, and at the same time reduce expired product losses as well as the amount of product sold at or below cost in closeouts. Another goal was to maintain inventory turns at eight to 15 turns per year, depending on product type. And finally, the company set its sights on achieving and maintaining target days of supply for certain major suppliers at 21.
To optimize inventory levels and reduce out-of-dates and expired product losses, management knew it had to have complete visibility of inventory, at the item-level, at each of its locations. As Odom’s VP of Planning and Analysis Dennis Angrisani explains, “We also have to see both the inventory age of the product, as well as how much time we have to take action before that product goes out of date.”
Odom selected Salient Management Company based in Horseheads, N.Y., to help provide this high level of visibility by integrating and easily presenting all of the company’s data. With the help of a fast, easy-to-use tool – Salient’s Margin Minder – Odom could improve inventory performance, analyze inventory trends over time and grasp the relationships among key sales measures.
The Salient solution integrates the aging data from Odom’s Warehouse Management System (WMS) with the inventory, purchasing and forecasting data from its System 21 package. “Salient brought it all together in one cohesive view consistent with the way we run the business,” notes Angrisani. “Our prior inventory reports did not have drill down capability to the heart of these issues. With the advent of this aged inventory cube we can now look at days-on-hand by product, supplier, brand or SKU in conjunction with our sales item forecasting. Every morning, I have drillable information about days-on-hand.” That’s a giant leap forward from the days of spreadsheet reports with details only down to Level 1 product dimensionality: the general type of product (beer, soda, wine, spirits, etc.).
“We didn’t have the ability to ask questions about the supplier, the brand, the SKU, the package,” Angrisani continues. “The [Salient] inventory cube not only has information across all of our dimensions of product and all parts of our organization, including the stockroom and sales center, we can also focus on exactly where we are long or short. We can look across our inventory agings just like our receivables agings. We have full drill down capabilities.”
In the six months following the implementation of the Salient inventory cube, Odom reduced the days-on-hand inventory in its wine and liquor business from 54.5 days to 47.9, lowering its inventory carrying costs by $4 million. “The overall goal of this project was to make sure we have the right inventory at the right time. That’s not always doable in the fine wine business, when you are dealing with a boutique wine from a boutique winery and have to purchase their entire annual production,” Angrisani says. “But the lion’s share of our portfolio is not fine wine and it can be purchased more just-in-time, and that’s what we’re seeing in this inventory reduction.”
In its beer business, where marquee labels include Miller, Coors and Heineken, Odom has reduced the aged inventory over 365 days from $354,000 to $71,000. “What good is beer that you’ve had for a year? This stuff is perishable. With the Salient cube we can see what we’ve had for more than 365 days, +272, +181, +90 days. We’re able to see the aging of our inventory, which heads off outdated product. We are using this not only to manage our days-on-hand but the age of the inventory as well.” This newfound data visibility also enables Odom managers to quickly identify and correct data capture errors affecting aging, and bring even more precision to the Salient inventory management solution.
The Salient inventory management tool is used primarily by Odom’s Brand Managers in conjunction with the finance, warehouse operations and purchasing teams. With Salient, “Everybody is singing from the same hymn book – it’s the old adage of ‘one version of the truth,’ ” Angrisani points out.