Wine technology: Caught up in the web

The idea of the internet being solely a medium for selling products is as out-dated as a dial-up connection. Now the potential lies in the web shoring up areas of the industry where efficiency is everything.

IN AN interview with the drinks business almost three years ago, Liv-ex director James Miles made a notable observation. Speaking about the need to reduce costs in a wine trade which was weathering the worst of the recession, he said that the online medium should be considered not just as a tool for shifting stock, but making savings. “The focus of the last 10 years has been on using the web to sell stuff but less focused on how it can be used to make the wine trade more efficient,” he said, adding: “Our view is that the next five years is going to be a lot more about the back office and there are going to be fundamental changes. It may not be as glamorous but in many ways it is more important.”

But what was Miles alluding to? How exactly can the web make the wine trade more efficient, and consequently save it cash? Well, one important development is the increasing use of the net for immediate access to sales and stock information, aiding the salesman in deal- making on the move. Another is the increased availability of real-time data to improve the accuracy of stock control. And a further benefit is the integration of computer systems, and improvement in
data exchange online, which together are reducing the need for the most costly element in wine trading: labour.

Dealing firstly with the latter opportunity, managing director of Vintner Systems Nick Gabb observes the emergence of greater efficiency savings due to the net and new technology: “Everything at the minute is down to getting systems to talk to each other so you can take out the human element.” Continuing, he says: “A three person company can be reduced to a two person one with a good computer system,” while had adds, half joking: “Soon we will be able to sit back and computers can run the world, although someone still has to drink the product.”

In essence, there is more data interchange occurring in the wine business without any human input whatsoever. Take, for example, internet- based ordering, where the purchase, stock level adjustment, and delivery details are all done electronically, requiring nothing more than one person to oversee the processes taking place online.

THE UNIVERSAL PROBLEM

However, both Gabb and Miles highlight an obstacle to the smooth operation of such electronic processes, particularly in the world of fine wine trading, where products often repeatedly change owners and move between storage facilities. And that is the lack of universal identification of the product. Miles explains: “The big stumbling block in the process is the naming of wine because there is no standard way of calling, for example, Château Lafite, Château Lafite. Everyone has a unique way of describing it and it gets more complicated when you get into Burgundy, and Germany even more so.”
Pointing out that one bonded warehouse might have as many as 6,000 different ways of listing the leading first growth on their system, not only is there potential for errors, but a single order could be rekeyed manually into a computer system as many as 16 times as it passes through the supply chain, according to Miles. “Any interconnection of systems has a man in between; it is not an electronic conversation because there are people at either end manually inputting information into the system.”

Consequently, as reported by db back in 2011, Liv-ex launched L-Win, a six-digit code (with a seventh “check digit”) that can be used for each and every SKU in wine with a secondary market value.

As Miles states: “What we stumbled upon is this huge requirement for a common language for the wine name component, because, by just supplying that part as a number, it means people can continue to describe the wines as they want, but the computers can talk to each other, so they can immediately identify Château Lafite as Château Lafite, not Carruades.”Already, L-Win numbers, which can be obtained free from Liv-ex for fine wines, are being adopted by warehouses, who, Miles reminds, “have issues with databases with inconsistent wine names.”

Continuing, he says: “We are now at a point where dozens of people are using L- Win and it is a completely free service.” Not only that, but Liv-ex has developed a tool which will “clean” wine lists. Miles explains: “Everything in this business starts with a list of wines, whether it’s a price list, or goods-in receipt, or orders to upload, and the list of wines is usually in the wrong format, but we have made available online to everyone [through Liv- ex] an ExCel programme which will automatically clean the list and match the wines to L-Win; and once you have an L- Win, you can share data.”

He also points out that there’s nothing new about these codes in other sectors: “An ISIN (International Securities Identification Number) is used for every financial product that’s issued, and books have an ISBN (International Standard Book Number).”

Considering the Liv-ex fine wine exchange specifically, he says: “One of the big challenges was getting L-Win integrated into our own business, and now we have done that, anyone sharing data with us is now using the L-Win.
In summary, he comments: “The trends are allowing businesses to automate a lot of processes that were labour intensive, giving them the opportunity to become more efficient, and allowing business to scale their operations at much lower costs.”

AN INSTANT CONNECTION

Elsewhere, Nicki Stewart, sales and marketing director at TVision Technology, which provides software to UK agents such as Enotria and Liberty, applauds the advent of L-Win, but suggests that there are other solutions. Drawing a comparison with the neutral, stateless language Esperanto, she said: “There used to be the idea that we needed one common language, but you don’t need it anymore, you can just use Google translate, and similarly we can use web technology that can auto-translate terms.”

But Gabb sees possibilities for L-Win beyond its role improving the efficiency of data sharing, exchanges and the movement of wine along the supply chain. “L-Win is a great innovation and will be adopted more in the future, and I can see future systems where you can use an L-Win number to instantly download all the data on a wine that you’ll ever need: you can link it to the proportion of grapes in the blend or tasting notes, the potential to link it to a lot of data is phenomenal.” Continuing, he says: “You would have just one code and when you click on it, it would take you to a standardised database with all the information you need.”

As for the use of the barcode, he says this is not suitable for wine. “The barcode doesn’t take into account the vintage, and most products don’t get a new barcode for each vintage, and if they did, we would quickly run out of numbers.”

ON THE GO

Web-dependent technological innovations are also helping another aspect of the wine trade, and that’s the selling of wine on the move. “Everyone now expects to have immediate access to the system,” states Stewart, who supplies wine businesses with Microsoft software specifically configured for the drinks trade. “People want to be able to see a customer’s buying history, a product’s pricing, stock level and other information right away, wherever they are, not just when they are in the office, or at the end of the day,” she adds, speaking primarily of salesmen. Continuing, she points out: “The latest buzz is all about access you can give to the systems on mobile devices, because no-one wants to have to say ‘let me first check with the office’, or ‘I’ll have to get back to you’.” Consequently, Stewart says she’s currently “working on a project where we are enabling all the field sales guys to have online and offline remote access.”

Prompting such developments are the customers, who, says Stewart, “expect to have product and pricing information immediately.” She evens records seeing a number of wine suppliers at this year’s London Wine Fair walk round the exhibition armed with nothing more than a smartphone. “They didn’t take a stand but walked around the fair with an iPhone and said [to potential customers], ‘we can show you our products’.”

Similarly, Gabb at Vintner Systems states: “A sales force wants access in the field,” and as a result, Gabb has linked his own wine-trade specific software solutions to a system called sales-i. Although Gabb was working on his own sales support software, he said that one of his customers had started using sales- i and he was “impressed” by the technology. “Ours was due to launch last year but we put ours on hold and linked to sales-i last October,” he recalls, adding: “Sometimes you can offer too much and we’ve got everything we need, so by linking to others we can focus on where our true expertise lies,” he says, noting that Vintner has spent 30 years developing systems to manage the complex demands of the alcoholic drinks trade, including solutions to handle excise duty, acquisition VAT, custom quotas, as well as en primeur trading, among many others specific to the wine business.

Such a decision also represents a wider trend towards integration among software solutions for the drinks industry, says Gabb. “More and more are linking electronically to different systems,” he states. Similarly, Tvision’s Stewart talks of “best of breed”, which sees one ERP system (Enterprise Resource Planning) use the best offering for each application, rather than attempt to develop its own solution for every area. She observes: “The idea of using best of breed and pulling them together is 10 years old, but it didn’t fly because there weren’t the integration tools. But now we have the integration tools, so the idea has come back.”

AN EYE TO THE FUTURE

So while information is becoming easier to share and access, there’s another development taking place in the trade that’s improving efficiency, and this centres on increasing the accuracy of demand forecasting.

Chris Porter, director at Porter & Laker, a division of wine trade logistics specialist JF Hillebrand, explains: “We are working even more closely with our customers to deliver supply chain management through collaboration forecasting, clients’ teams working closely with us to understand exactly what is required, week on week, year on year.”

The increasingly accurate planning of the amount and timing of wine shipments stems from Hillebrand’s internal management system. This records every case the company moves and is then linked to another Hillebrand system called Axis, which transmits reports to the shipper’s customers, allowing them to see where their orders are at any one time. “The intensity and intricacy of the data in our systems which we can share with our clients
is unlike any of our competitors,” says Porter.

And, using such information, Hillebrand can supply stock forecasting information, allowing customers to order exactly what they need, as well as consolidate stock movements, reducing costs as well as the carbon footprint of transporting wine.

Hillebrand has also set up a new team to analyse the loadings from “certain suppliers” to see whether efficiency savings can be made. “We have developed an in-house team to look at optimising our clients requirements and loading patterns so they can get the best value,” explains Porter.
“It is wholly proactive,” he adds, pointing out that Hillebrand can see if a customer is loading only 22 pallets in a 24 pallet capacity unit, and as a result, alert them to the shortfall and make recommendations to improve efficiency.

The internet is increasingly being used as a service. This is made possible logistics nowadays because so much is connected to the online medium. In May this year Google president Daniel Alegre remarked that almost everything is done with an internet connection. “The only time one is truly off-line is when you are flying transatlantic and there is no Wifi” he records. Mentioning Nest, a company Google recently acquired that is a thermostat connected to the web, he exemplifies his point: “It learns the best temperature for your home based on usage patterns, goes onto the net, sees the weather forecast, and slowly changes the temperature in a way that is more energy efficient.” This highlights how the net is removing the need for human inputting, while improving efficiencies, whatever the sector. And this is the reason Miles states, “Now everyone and everything is connected to the internet, the web presents an amazing opportunity.”