I came across a fascinating article on cfo.com entitled \u201cHow To Get Beer Across The Border.\u201d This article features an interview with Dan Sullivan, the CFO\/COO of Heineken USA. The interview probes a recent \u201ccrisis\u201d in Heineken\u2019s beer supply chain.<\/p>\n
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This crisis came about due to the ever increasing popularity of the Mexican Cinco de Mayo holiday in the USA. More and more Americans are using that holiday as an excuse to partake in alcohol consumption, which apparently poses challenges for beer companies.<\/p>\n
Heineken recently acquired the maker of the Mexican beer, Dos Equis, which has grown in popularity thanks to the \u201cMost Interesting Man in the World\u201d commercials. Heineken knew that Dos Equis would be in higher than usual demand on May 5, but simply getting more of that beer from Mexico to the USA in time apparently wasn\u2019t as easy as it sounded.<\/p>\n
Explaining the challenge further, Sullivan said \u201cIn the month of April, as we\u2019re getting ready for Cinco de Mayo in the United States, it\u2019s produce season in Mexico. When truck drivers picking up beer in Mexico get to the border, they realize they can make twice as much if they take the produce because it goes bad quickly. So they\u2019ll drop the beer and pick up the produce. The beer just sits there until we can get someone else in to pick it up. We were experiencing as much as 70% order drops, meaning they get to the border and drop it.\u201d<\/p>\n
Though the decision to outsource in an industry where supplier allegience is so fleeting is worth questioning, Sullivan defended the practice by noting the high cost of using dedicated drivers despite acknowledging the supply risk of depending on \u201chuman nature, that individual truck driver.\u201d The three-prong mitigation to this supply risk involved matching produce trucking costs and getting the Heineken team to understand that \u201cthe most important thing right now for the next six days is [getting an adequate supply of beer imported], and we\u2019ll figure out the collateral damage later. This isn\u2019t the time to pinch pennies.\u201d These words and actions are clearly an indication that there was a strategic decision that continuity of supply was more important than cost (read that again, new buyers).<\/p>\n
The article goes on to reveal the complexity of the beer supply chain as well as Heinken\u2019s forecasting techniques. This was definitely one of the most fascinating articles I\u2019ve read in a while.<\/p>\n
Now, if you\u2019ll excuse me, I\u2019m feeling a little thirsty after all this typing on a Friday\u2026<\/p>\n","protected":false},"excerpt":{"rendered":"
I came across a fascinating article on cfo.com entitled \u201cHow […]<\/p>\n","protected":false},"author":12,"featured_media":4049,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[1],"tags":[],"class_list":["post-2875","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-procurement"],"yoast_head":"\n