Greaves Brewery: Bottle Replenishment Case Analysis
The following is an analysis of the case, Greaves Brewery: Bottle Replenishment. It details the growing beer operation of Greaves Brewery located in the Caribbean island of Trinidad. The purchasing manager for the company, Alex Benson, is uncertain about how many bottles to order from the company’s German glass supplier. His decision is complicated by the possibility of a new bottle design being introduced that would compromise his existing inventory of bottles. Additionally, he is faced with storage limitations and erratic sales, all of which are impacting his decision. He is also concerned about over ordering to avoid issues from an off year, impact from government tax, tourism, and growth of exports.
How many bottles should Alex Benson, purchasing manager of Greaves Brewery, order to support his company’s sales for the upcoming year 2004?
Greaves Brewery was founded in 1924 by John Greaves in the Caribbean island of Trinidad. In addition to being a favorite among the local population, the beer was also popular with tourists which contributed to the export of the beer some years later. The brewery experienced positive growth between 1999 and 2003, which was attributed to peak sales periods during Carnival, Easter, Christmas and Independence.
Throughout the years, the government of Trinidad introduced a number of excise taxes on beer. This negatively impacted sales at Greaves Brewery. Along with normal business challenges and other factors such as number of tourists and U.S. sales, determining the full impact of the taxes on the market made it more challenging for the company to forecast sales.
Greaves also considered other options for bottling manufacturers. The company tried to find a local bottler, but these companies only manufactured clear glass and Greaves needed amber glass for its product. Greaves considered a reputable German supplier they had worked with before that was good with packing and shipping, but because of their distant location and ordering requirements, Greaves had difficulty ascertaining an accurate forecast. Quick turnarounds and cost effectiveness were also a concern.
The empty bottle flow process included returns of used bottles which were all stored with new bottles in a warehouse overseen by a warehouse superintendent. This contributed to a space issue which made the bottles vulnerable to breakage. In addition to overall bottle supply, the exact turnaround time to recycle bottles could not be determined. When stock became low for empty bottles and returns of used bottles were insufficient to meet production requirements, new bottles were requested from Alex Benson, purchasing manager.
In ordering new bottles, Benson would have to review stock control sheets showing empty bottle stocks, finished goods stocks, as well as new bottle purchases along with delivery records. To determine the new bottle order for the next year, the stock control sheets were compared with sales trends. Because the bottles were being shipped from Germany, a long distance from Trinidad, four months lead had to be given ahead of delivery date. Greaves had its annual order from Germany broken into to shipments – one in March that supplied 75 percent of the brewery’s needs for the year and another in August which supplied the remaining 25 percent for the year. The German company allowed Greaves to make changes to their orders; however, there was a penalty for cancellation of orders.
Purchasing manager, Benson had difficulty in determining how many bottles he needed to order to support sales. He was concerned about over ordering to avoid issues with overstocking bottles that would not be used and incur a cost or become a loss when all of the bottles were changed with the new design. The challenge for him was to determine an accurate forecast for Greave’s 2004...