From data to information, to knowledge and wisdom – in wine businesses
This article first appeared in the March, 2019 edition of The GrapePress Volume 171. Published by Wines of Great Britain Limited. https://www.winegb.co.uk
BY MARK O’CALLAGHAN, WINE NETWORK CONSULTING
A continual frustration for management and winemaking teams is that of system control and flow of information more generally. The implications of getting this wrong can be catastrophic, regardless of winery size. Over the years, our consultants at Wine Network have seen many cases of poor information management in wineries – from laboratory and bulk wine records, through to bewil-dering accounting practices. This type of problem has not been restricted to small businesses either. Those of us old enough to remember when blackberry was more than a wine descriptor may also recall when some of the largest wine companies in the world suffered breathtaking financial losses through software integration problems or by simply not knowing their COGS or margins when the downturn hit. Even more recently, there have been very public, spectacular and expensive cases of inventory control problems emerging in very large wine companies. Bad information leads to bad outcomes at any size. One personal observation is that too many wine people underestimate the level of complexity in a fully vertically integrated business such as a winery. Thinking through the activities and records involved to maintain traceability, costs, composition and history from vineyards through to the customers’ dinner table demonstrates this complexity and probably explains why developing a comprehensive system has so far eluded everyone who has tried.
IN THE VINEYARD: DO YOU SEE WHAT I SEE?
When it comes to vineyard management, the needs and expectations vary consider-ably depending on size. While smaller op-erations might only need basic information such as spray diary records, larger growers are increasingly interested in much more detailed information. For some observations on vineyard information flows, I spoke to Dr David Jordan of ‘Wine to Vine’ in New Zealand. For several reasons, including solid profitability over the last decade and being culturally very open to new technology, New Zealand has been impressive. It has modernised quickly and been an early adopter on many fronts. One interesting example of new informa-tion sources (though less relevant to the UK) comes from the next generation of machine harvesters. Many of them are able to capture live fruit weight data, match it to vineyard position using GPS and relay the information in real time. This real time weight information can be used for press planning, as well as vineyard yield data within a block, rather than averaged across the entire area. Identifying under- or over-productive areas can enable more targeted management if there is the will to do so. When it comes to vineyard management software systems, they should enable a management team to answer (seemingly) simple questions such as: what were our spray inputs to that block; how much did it really cost to run that block last season and how did that compare to the long-term average; how much did it cost us to get each tonne of fruit to the winery? Sadly, we still see too many businesses who can barely answer these questions at the vineyard level, much less know their inputs or profitability by block. There are some good examples of vineyard modules for winery software simplifying intake scheduling – Vintrace’s booking system is a good modern example. Taking intake management to newer heights was an example at a recent ASVO seminar of a winery using software developed for air traffic control, and applying this to the scheduling of GPS-equipped fruit trucks. Another interesting evolution in vineyard information is New Zealand’s Sustainable Winegrowing Programme. Touted as a world leading, whole-of-industry environmental scheme, there are estimates that it now covers as much as 98% of grape production. It has enabled electronic spray recording which now allows benchmarking across regions and seasons to facilitate continuous improvement.
“Until the magic bullet system is released, and as cliché as it sounds, the best approach for wine businesses grappling with information flows is to take a step back and look at the business overall”
IN THE WINERY: NOW, WHERE DID I LEAVE MY…
In the winery, software systems are nothing new and there are relatively few profes-sional wineries without one. There are still some reluctant sites who remain hostile to the idea of them, but the fact is that no modern winery should be without one. From affordable, no nonsense packages such as WineFile to more sophisticated, cloud-based options like Vintrace, there are options for all budgets and there is no reason why any winery should not have a well-run system in place to track stock, analysis, blend histories, compositions and costs. As with any system the information out is only as good as the information in. With robust systems almost ubiquitous, the future seems to be more about inte-gration of other inputs such as laboratory equipment or temperature regulation. Very much part of the trend towards the ‘internet of things’ (IoT), newer software packages such as Vintrace are able to integrate with other systems which manage temperature control systems or measure CO2 flows from fermenting tanks. This is already used in some cellars as a proxy for alcohol conver-sion which generates accurate, real-time ferment charts and (unsurprisingly) is much more accurate and reliable than the auto-mation systems piloted in the 1990s. Cynics will deride these trends as robotic winemaking and relish in all the clichés that go with them, but as with all technological advances, if they are embraced, managed and used well, these systems offer ways to make the simple things even simpler, freeing us up to finesse other aspects of our winemaking and ultimately get better wines into the glass. Other examples of better and more modern information flows include things like bar code scanning with mobile phones and touch screens in grape receival areas but there are more things in the pipeline. The Australian Wine Research Institute has ‘Show Runner’, a software package for wine shows which records comments, scores and helps streamline back-of-house man-agement. These sorts of systems will allow one to track not just the analysis history of a wine (the numbers) but also tasting notes from the entire winemaking team over time. Total Control: Computer says ‘no’ Recently, the author was lucky enough to have a thorough visit to one of the largest Champagne houses and see the inner workings of their new winery (sorry, no photos…). A long way from the glamourous façades of the Avenue de Champagne the winery has an impressive elegance of its own, which stems from the painstaking level of detail and thinking which has gone into every aspect of its development. Of course, the financial considerations are very different to most wine businesses – it showed what can be done with large volumes of profitable wine – but it was still brim full of lessons for winery design everywhere. With respect to software, information flows and control systems, that was just as impressive as any other aspect. That the temperature control system was automated and highly reliable came as no surprise (temperature sensors can now self-calibrate to ±0.1oC) but the approach to CO2 was im-pressive. In addition to a ducting system to vent all of the CO2 out of the building, each tank was fitted with a monitor which fed its data to the computer system. These flows automatically generated ferment charts for the winemaking team, alerted them to potential problems, provided reminders throughout and self-regulated temperatures. The most impressive aspect however was the oversight role of the system. The winery had been built with a comprehensive system of fixed lines and position sensors on all valves so that the system could ‘know’ if a movement operation had been set up correctly or not. For example, when a tanker of juice arrived at the winery, the pump would not start unless all connecting valves were in the correct position, sending the juice from the right truck compartment to the right tank. The wine industry is probably about 10-15 years away from a supervisory role for control systems being more commonplace and, though it may seem a little far-fetched today, it is worth noting that all of the component parts are inexpensive, currently available, widely used in other industries and in ten years’ time are likely to cost about 50% of today’s prices. One New Zealand winery has just done away with catwalks in a new tank farm by diverting the investment to sensors which eliminated the need to be at the top of the tank.
Another aspect of information flows which (surprisingly) continues to cause problems for too many wine businesses is the simple matter of stock control. When a business cannot easily keep abreast of movements (or lack thereof) in stock numbers it can lead to all sorts of problems from bad debts to meaningless forecasting – all of which can become expensive and cripple businesses. The key point is that there are many options available but they must be used with care and attention to detail if they are to be useful – especially in preventing problems by enabling meaningful, concise report infor-mation to the management team.
CAUGHT IN THE NET
Many of the aspects considered above are old problems re-visited, but the shift to direct and/or online sales is forcing many wine businesses to learn a new set of skills and jargon and to do it quickly. The wine world remains ferociously competitive; from fickle sommeliers to laggard payers to dominant retail chains, many (or most) wine businesses in the world realised long ago that direct sales are one of the few remaining profitable channels over which they can have some control. Quite apart from the marketing and rela-tionship work involved in getting a customer to click ‘confirm order’ on their screen, the level of complexity involved in every tiny step to deliver the wine to their doorstep still surprises many people. The integration of systems involves banking and credit card functions, websites, accounting and inventory, stock picking, delivery, insurance and tracking all the way to the customer – not to mention troubleshooting the problems and placating upset customers from missed, broken or stolen deliveries. The nature of the systems involved is often alien to wine business owners who may be from more production-focussed backgrounds, so it is difficult to assess which packages are best. In short, there is no magic bullet and no single package which can operate as seamlessly as the customer experience needs to be. Like the duck paddling hard to give the appearance of gliding effortlessly over the water, it is up to the management team to integrate the right systems. Near enough is not good enough.
WHERE TO NEXT? THE BEST OF BREED
So far, the large and rather expensive efforts at developing a comprehensive Enterprise Resource Planning (ERP) system with vineyard, bulk wine, accounting, logistics and web functions have struggled with wine’s complexity. For that reason, the current trend is towards integrating ‘best of breed’ systems for the various functions and allowing them to talk to each other. Many systems at present use RESTful web services (a web communication protocol) to facilitate integration but making the systems ‘talk’ still requires more work than just plugging in.
Meanwhile, efforts to standardise information flows are continuing where possible, with good examples being the Global Wine Database http://www.gwdb.io/ or an electronic Bill of Lading (eBOL) for wine which transfers all the key information about a particular wine (blend composition, analysis, etc.) between systems. Until the magic bullet system is released, and as cliché as it sounds, the best approach for wine businesses grappling with informa-tion flows is to take a step back and look at the business overall. Viewing it from the perspective of the customer should inform how the various functions should integrate but the management team should also look ahead to allow growth. Oh, and don’t approach the exercise thinking it will be easy or that it will ever be complete!
AUTHOR: MARK O’CALLAGHAN
Mark O’Callaghan is Managing Director of Wine Network Consulting. Based in the Yarra Valley, but working on projects around Australia, the UK and China, Mark is a regular contributor to various wine industry bodies and wine show judge. The views expressed here are his own.