The term “manufacturing” is universally used to describe the process of making something. In most cases, that “something” is a product to be sold to a consumer or to another business to be used to make something else. Businesses that are engaged in this market need processes and systems to manage the day-to-day functions of the business. But many organizations that “manufacture” something do not consider themselves manufacturers. Companies that make candy and confections call themselves “artisans” or “confectioners.” Companies that make bourbon, whiskey, etc. call themselves “distillers.” And companies that make wine call themselves “vintners” or “winemakers.” These businesses do produce a product, but they don’t think of themselves as manufacturers.
With this in mind, a typical software solution built for traditional manufacturing companies might not be an ideal solution for a winemaker. These companies face many of the same disruptions in the marketplace that other manufacturers do, but with additional pressures and challenges. Most manufacturing companies use ERP (Enterprise Resource Planning) systems to manage their day-to-day operations. In addition to the standard financial, operational and distribution processes, wineries have to manage a significant number of additional business and agricultural issues. Ingredient attribute visibility and cost control, for example, need specific attention. Regardless of the stage of the winemaking process—the growing season, harvesting, fermentation or bottling—there are many attributes specific to the winemaking business that must be accounted for and understood to allow for informed decision-making. Additionally, ease of use and the ability of a solution to fit the culture of those in the wine industry are crucial. As one California wine executive told me, “We are Napa Valley, not Silicon Valley.”
Twenty-twenty has been a year that has seen disruption, including a global pandemic, hurricanes, fires, civil unrest and the adoption of new technology on a global scale. Manufacturers and producers of all products have had to adapt to more changes and disruption than in recent memory. The wine industry has been especially ravaged by many of these issues and the mantra of that industry is now, ‘be prepared for anything and expect the unexpected.’ Being prepared and expecting the unexpected must begin with using integrated processes and systems, foremost among them an ERP solution that addresses the unique requirements of the winemaking process.
Wineries must manage their business within the framework of three segments: Vineyard Management (agriculture), Grape Contracting (produce suppliers), and Winemaking (processing, blending and bottling/packaging of agricultural products). To do this, winemakers need a comprehensive enterprise management system running on a future-facing technology platform that enables integration of all other systems, data and devices used in the business.
A winemaker’s ERP solution needs to be agile, and most importantly, allow for visibility into each of the segments I’ve listed above throughout the entire process and have the capabilities to manage each distinct operation in the process. Furthermore, this ERP solution should be adaptive, and by that I mean, flexible enough that it can be updated, extended and personalized by users to meet ever-changing business conditions. With a solution like this, winemakers can manage key processes and functions of the business from the growing of the grapes to the sale of the finished product. Stem to stem, nothing less.
Vineyard (Agriculture) Management
A winemaker’s ERP solution must be capable of helping them manage the operations of a complex agricultural calendar, which is different from the standard corporate calendar. This calendar allows management to plan and track all the operations, processes, labor and materials used to keep the vines and soil healthy, and to monitor growth and progress during the growing season. Costs including labor, water, nutrients and other materials need to be tracked. Direct costs, burden and overhead have to be calculated at each level. Labor scheduling and the types of actual labor performed in parallel with the growth and attributes of the grapes over time are essential data that needs to be measured. The specific labor processes required at different stages of the process can be predicted and performed in a timely and organized manner. The ability to calculate total production in each vineyard to project vintage planning or sale of over-production is also essential.
With the ongoing changes to climate and the environment, the ability to track weather in correlation with attributes throughout the growing season of the different grape types and strains provides further data that can be used to make current decisions and for historical reference in future years. Data regarding soil moisture, watering and application of nutrients can also be integrated and correlated with weather and produce attributes from field observations and laboratory measurements. The Vineyard Manager can have all of the information needed to support each day’s decisions and planning ahead, including the detailed costs of the projected harvest volume. The final step of the agriculture process is to deliver the harvested grapes to the crush to start the wine production. The costs for each block’s harvest and the amount of juice produced from those grapes are now known and recorded for further roll-up through the winemaking stages.
Third-Party Grower Management
Many times, winemakers need to purchase grapes from third-party growers to balance blends or to compensate for changes in seasonal volumes. Producers need an ERP solution that allows for the setup of all the supply details and business clauses in the contracts with the third-party producers. The contracts need to include quantity, date and quality specifications and preliminary price. Final price is determined by evaluating the attributes of the delivered product. Payment planning and scheduling is provided, and payments or adjustments based on costs incurred, such as technical site visits, can be included. Lot tracking and tracing of third-party grapes is paramount to the process for traceability integrity. The quantity and attributes of the grapes delivered to the crush and the volume and attributes of the resulting juice are all recorded and available for final price determination and payment reconciliation.
Winemaking and Blending
A winemaker’s ERP must provide visibility, control and tracking of the entire process of blending and winemaking. From the receiving of the grapes for the crush to the bottling of the wine, monitoring each step via a synchronized process with a reliable system is crucial as each wine is unique and adaptations are needed based on the attributes at any stage. Two primary capabilities supporting winemaking and blending are defining all of the process steps, the equipment to produce wines and the defining of analysis steps that should be performed at specific points in the winemaking process. This is critical to the decisions that will be made when moving on to the downstream steps of the process. With regard to the structuring of planned production operations, the release of material into the workflow needs to be facilitated by ease of use tools and user-friendly screens that make scheduling operations easy. This interactive functionality allows producers to keep track of the tanks and barrel levels, identify wine production steps and keep traceability from the field to the end product with detailed production cost and detailed quality attributes.
Cellar management is another essential element needed in an adaptive winemaking ERP system. The ability to track and manage locations, cellar mapping and barrel tracking is critical. The ability to track and trace all lot numbers through each stage is a requirement for compliance with certification regulations. Critical documents and reports such as Certificate of Origin and Organic Process Certification have to be produced by the touch of a button.
Winemaking at a Crossroads – Adaptive Functionality is Critical
The wine industry is at a crossroads. Disruptors appear to be here to stay. Change is the norm, and the ability to adapt to these disruptions will determine the future of these organizations. An adaptive ERP system with the following features is a start:
- Attribute visibility from soil to vines to grapes to juice to wine
- Correlation of time and weather attributes
- Lot tracking and traceability from the field to the bottle, including third-party sourced grapes
- Detail of all production costs at all growing and producing levels
- Scheduling of the labor from vineyard through bottling
- Scheduling of all vineyard and winemaking equipment and operations, to increase productivity, visibility and control throughout winery operations
- Tracking of the history of attributes and conditions to inform decisions, avoid problems, and increase efficiencies
- Managing the critical crush and blend operations
Global producers of wine face ever-increasing disruption caused by factors that include technology-driven innovation, changing consumer preferences, and economic and geopolitical and societal events. In order to survive and thrive, winemakers must be able to innovate and change business models at unprecedented rates of speed, and an adaptive ERP system is a good place to start.
Stephen Dombroski is director of consumer markets at QAD, a leading cloud ERP solutions provider.