Brown-Forman Cooperage Case Problem - Production & Operations Management

Consulting Client Overview

The Brown-Forman Cooperage in Louisville Kentucky (USA) supplies flame-charred white-oak barrels for the aging processes of various bourbon and whiskey products produced under the Brown-Forman corporate umbrella. Some of these barrel-aged products include brands such as Jack Daniel's, Early Times, Old Forester, and Woodford Reserve.

"Located 15 minutes south of the Campus, Brown-Forman Cooperage is one of the world's largest producers of whiskey barrels. A subsidiary of Brown-Forman, the cooperage makes white oak barrels for maturing some of our finest brands, including Jack Daniel's, Early Times, Old Forester, and Woodford Reserve. Brown-Forman is the only major distiller in the world that owns and manufactures its own barrels. In 2009, the Cooperage was opened to the public to tours through a partnership with Mint Julep Tours.

Recently, legislation passed by the State of Tennessee has increased the importance of the activities at the cooperage (barrel-making) facility:

"NASHVILLE, Tenn. (AP) - If it isn't fermented in Tennessee from mash of at least 51 percent corn, aged in new charred oak barrels, filtered through maple charcoal and bottled at a minimum of 80 proof, it isn't Tennessee whiskey. So says a year-old law that resembles almost to the letter the process used to make Jack Daniel's, the world's best-known Tennessee whiskey." (emphasis added)
Your team has been hired as external consultants to assist the Brown-Forman Corporation with making some strategically-driven operations decisions about how best to utilize the Brown-Forman Cooperage facilities to support several of its beverage brands.
You have been asked to evaluate the following set of information, (in addition to any other research that you believe is appropriate) to help your team advise your client. If you find additional data that directly conflicts with information provided in this dossier, please rely on the information provided here, for the sake of keeping a sane manageable process; this company and industry is constantly in flux.
Substantial information is included below to assist you in your analysis.

Your client has requested analysis and advice on the following:

1) What is the current production bottleneck of the Brown-Forman Cooperage production system for "new charred oak barrels"? How many barrels per day can the process currently produce? Rather than creating a visual flow diagram, please create a spreadsheet-and-data-driven spreadsheet with key information and analysis about each process step. Show relationships where task precedence requirements occur, to indicate the flow of parts and sub-assemblies toward producing the final finished product. Identify the bottleneck.

2) Currently, the Brown-Forman Cooperage does not supply oak barrels to one of its facilities, the Canadian Mist Distillery (Collingwood, Ontario, Canada); Canadian Mist currently utilizes an external supplier for those barrels. Canadian Mist is not classified as a "Tennessee Whisky". [Note that some distillers' brands now might not be able to promote themselves as "Tennessee Whisky", and that Brown-Forman Cooperage might be able to sell barrels to competitors as an additional source of revenue in Tennessee.] Perform a supply-chain total cost of supply analysis on the following options:

a) Continue to supply Canadian Mist Distillery with its current external supplier;

b) Supply the Canadian Mist Distillery with barrels from the Brown-Forman Cooperage in Louisville, KY, (possibly by expanding capacity at that location, if necessary).

c) Move the Brown-Forman Cooperage to a brand-new appropriately-sized location that could supply both the Canadian Mist Distillery and its current existing internal customers (lack Daniel's, Early Times, Old Forester, and Woodford Reserve), as well as provide capacity for growth to include new external customers. (Details about these various capacity-related options and costs are described below.)

3) Using both qualitative information and quantitative data, and relevant analysis from part 2 above, recommend a course of action for the Brown-Forman Corporation to provide barrels to Canadian Mist without disrupting barrel supply to its other internal customers (Jack Daniel's, Early Times, Old Forrester, and Woodford Reserve). Supply-chain cost analysis should be consistent for the evaluation of all options, in cost per day of operations. A high-level value-stream map with analysis, should be presented as part of this solution.

4) For existing internal customers only: develop ideal low-cost transportation routes. Compare mileage and transportation costs for "full-truckload" (TL) vs. "less than load" (LTL) deliveries to each internal customer. Does a "full-truckload" (TL) shipping solution to each customer produce advantages, or should more frequent "less than load" (LTL) routes be developed, which would require deliveries to multiple locations from a single truck. Build scenarios with financial analysis, and value-stream maps for each scenario. Consider trade-offs between transportation costs and delivery (order) batch sizes to each customer. What is your recommendation to the client? Should each distillery (internal customer) develop an EOQ-based inventory control system, or utilize some other inventory management policy for barrels, and why? Provide a detailed explanation.

5) Investigate "cradle to grave" product sustainability opportunities for used barrels. By definition (and now by law), used barrels cannot be re-used to produce "Tennessee Whisky". However, they are often used to produce other products after their initial use to make "Tennessee Whiskey". Generate at least three somewhat detailed (on-page each) mini-proposals for economic disposal, recycling, or reuse of these used barrels. Provide high-level value-stream mapping for each of three alternatives, based on local production and consumption of used barrels by Jack Daniel's, Early Times, Old Forester, and Woodford Reserve.

6) Propose several additional projects on which your group could consult for Brown-Forman in the future, based on the information that your team discovered about their organization during this project.

Attachment:- brown forman cooperage case.rar