The Brief

Our client is a specialist whisky distillery which distributes in North America, Europe and Australia. Known for its distinct brands, they have rapidly grown off the back of numerous accolades and gold medal awards.

The client required an inventory model to assist with managing its inventory.  Whisky, like many other long maturation spirits, presents unique challenges inventory management. Production and working capital must be carefully planned many years in advance to match expected sales to inventories that are locked in for lengthy maturation periods.  The key requirements of the inventory model:

• Historical plus forecast 5-year model, with the ability to roll forward on a monthly basis
• External data sources to be easily imported and integrated into the model, including long-range sales forecasts, production costings and historical inventory levels
• Output reports to include forecast inventory levels by product, Cost of Goods sold, and working capital requirements

Our Approach

Parity worked closely with the CFO and the finance team to understand the nuances of whisky production and maturation, finished product blends, the range of cask types and sizes, and sales distribution channels and regions. A bespoke inventory management solution was developed using Excel, with Power Query utilised to connect to external data sources. 

Outcome

The inventory model allows management to match whisky production to long term sales forecasts, as well as projecting the expected stock on hand over time. It provides key insights, such as:

• Periods where sales demand would outstrip inventory available
• Periods where increased production was required to meet future demand
• Wine barrel purchases required to meet sales demand
• Key inventory management risks in the immediate to medium term

“The inventory model allows management to match whisky production to long term sales forecasts, as well as projecting the expected stock on hand over time.”

The tool was also used to provide shareholders with an understanding of the likely future capital needs. Parity continued to provide ongoing support at the conclusion of the project.