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OS

OPERATIONS STRATEGY
Case : Delamere Vineyard

Section A: Group 6

Rohit Kumar 18PGP161


Akhila Sarvasuddi 18PGP170
Rimjhim D 18PGP154
Swathi Kiran Kumar D 18PGP226
Naresh M 18PGP235
SSR Krishna 18PGP243
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Introduction
 Richardson has a Winery family business
 Small and Integrated Business
 He choose to undertake all winemaking activities in-house, from grape growing to
bottling, mostly using his own labour until business was prosperous
 Delamere competes in high-priced segment, in which quality is paramount

Market & Competition

 Wine Industry in Tasmania Expanded rapidly in 1980s & 1990s


 Tasmanis’s climate is relatively cool similar to Bourgogne
 Cool Temperatures – Low yields and high costs per ton, but quality grapes
 Wines here mostly are of Ultra Premium Segment of industry which accounted 9%
 Main Products
 Sparkling Wine – Champagne Style – with red pinot noir
 Chardonnay – White Wine – Similar to Burgundy region

GROUP 6 INDIAN INSTITUTE OF MANAGEMENT RAIPUR


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Wine Making Business

 WineMaking is Capital Intensive, in terms of investment and working


capital
 Holding Inventory of wine called substantial working capital –
Premium White Wine – min 6 months & maintained inventory for 12
months
 Red Wine – aged min 12 months - maintained inventory for a year
supply
 Business faced Non - Financial Risks
 Narrow Climate conditions
 Face devastation from pests

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What are Delamere’s strengths and


weaknesses? What does it deliver to
Question customers that other vineyards do not?
(A) What does it take to be outstanding in the
wine business?

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Strengths

 Richardson is the greatest strength with his focus on quality and his personal
attention.
 Richardson has immense knowledge and experience relevant to wine making. (Ph.D
and work experience).
 Location with suitable climate and grape varieties (pinot noir and chardonnay)
preference based on research and inspiration from predecessor
 Denser plantation resulting in strong taste of the produced wine
 High quality wine marked by presence of more complex chemical compounds
 Ultra-premium segment of target customers.
 Cellar door channel to interact with and get feedback from customers directly
 Experience in the field of winemaking, possible variations and their effect on output

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Weaknesses

 Weather dependency (quite uncertain) of the crop and threat from pests while crops are
grown.
 Increasing average quality demand and high competition in the target segment exacerbated
by boutique wineries who enjoyed wine making and could sustain losses for a long term.
 Capital intensive industry where production lead time is high and returns are low.
 High sensitivity of pinot noir (Prone to oxidation and loss of chemicals agents)
 Manual operations and use of open fermenters (prone to oxidation)
 Low consistency due to high possibility of variations in the interaction and development of
around 500 compounds
 Difficult to find the root cause of a quality of the end product with too many compounds

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Differentiation

 Customers can visit the winery talk to winemakers and buy directly from source.
 Knowledgeable connoisseurs who prefer more complex and unusual character can get to
discuss about the wine and its production.
 Considered the feedback from the customer through cellar door sales

Why outstanding in Business

 Richardson’s Quest for Quality and risk taking attitude


 Richardson’s Focus on continuous improvement
 Accumulation of Experience and constant learning about the processes and
evaluation of results
 Understanding the trade-off and balancing between control and expression

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Question What type of uncertainty does


(B) Richardson face?

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Uncertainty of Richardson

 The grape productivity is dependent on climate and the process used by Richardson
is quite vulnerable
 The wine made by him is also inconsistent in taste and other aesthetics. Moreover,
there is a gap between demand and supply for the whole industry
 The wholesalers want a more consistent product both in terms of taste and other
aesthetics
 In such a situation, he is not sure of what to choose between
a. Prevention of oxidation to bring consistency in taste
b. Deepen the color of wine to increase the likability
c. Determine the best mix in the crush to improve the aesthetics. He is not
confident to dedicate resources to more than one project and is in a dilemma
of what to do?
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Question What does quality mean in Wine


(C) Making?

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OS Quality & Steps

• Quality in winemaking is hard to define


• The specific taste experience gained from any given wine derived from the complex interaction of more than
500 aromatically active organic compounds
• These compounds were initially shaped by genetic makeup of the grapes, but they developed during
growing, ripening, fermenting, and maturation stages
• Most of the drinkers typically referred to as taste derived from the wine’s smell
• The taste depended on: the association of aroma with childhood experiences, combination with foods,
cultural conditioning, and personal sense of identity
• According to Richardson “The subjectivity of quality is a cultural thing. You can’t go into a lab and say, That’s
quality.”

Vineyard Crushing Fermentation Maturation


• Grape variety • Drain off a portion • Choice of yeast • Type of barrel
• Planting distances and concentrate • Type of • New or old barrel
• Shape of the wine that remaining fermentation vat • Leave lees or not
leaf canopy • Maceration: • Temperature • Remove excess
• Slow ripening Allowed to sit in a • Chaptalization tannins or not
vat
• Nutrient and energy • Encourage or • Filtration
given to the fruits • Discourage prevent malolactic • Maturation period
oxidation fermentation

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What principles and concepts should one apply


Question to improving a production system such as
(D) winemaking?

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Choices Available at each Phase
Grape growing:
• The variety of grape to plant
• The placement of vines
• Choice between hand picking and machine picking
Crushing:
• Options for the mix of berries and other vegetal material during crushing
• Whether to drain some grape juice to concentrate the remaining
• Whether to macerate prior to fermentation
Fermentation:
• Choice of yeast
• The type of fermentation vat- open or closed
• What to do about malolactic fermentation or chaptalize
Maturation:
• Employ new or previously used oak barrels
• Whether to leave the wine with lees
• Whether to fine and filter
Bottling and packaging:
• The three red wine products bore separate labels
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TQM

• Continual process of experimenting with various options at each phase and eliminating the
options with undesired output

• Improving the customer experience by receiving continuous feedback from customers and
comments from connoisseurs

• The employees are well trained in the processes and accountable for the overall quality

• Monitoring and ensuring quality at each stage starting from the quality of grapes, the
process of wine making to bottling and marketing of the final product

• This will lead to improvement in wine quality through continual improvement

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Proper Inventory
Management

• The production of each bottle can be tracked through inventory management system
• The selling of wines through all the 3 channels must be tracked
• Vineyard production should be integrated with the inventory management system

5S

• Sort- Eliminating the unwanted equipment, vats, materials


• Set- Set the remaining items in order, for ease of use
• Shine- Maintaining clean and hygienic work area. It is particularly important in case of open
fermenters to prevent spoilage
• Standardize- Maintain a basic control of the processes based on prior experience
• Sustain- Make the above points a habit that is inculcated into the employees

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What should Richardson do? How will


Question
(E)
his personality and experience shape his
decision?

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What Richardson should do

 Based on quality parameters in Exhibit-2 and calculations in exhibit-1 it clear that option2 is the best choice
 It has least effective expense and the cost of the expense could be recovered in three years due to the price
increase
 Also cellar door customers would pay a high price for the perceived quality
 The next option would be option 1 due to lower effective expense and improved consistency which is liked
by wholesalers
 The last option 3 incurs highest effective expenditure
 Also Like option 2 it can’t recover the cost
 Though there is a probability of increased aesthetics reliability of output wine reduces due to uncertainty in
output

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OS Effect of Personality &
Experience

 As per his personality of experimenting nature Richardson would love to pursue


option3
 So, he could hire a few employees to take care of the day to day work which have
become somewhat standardized over
 He can devote his time to pursue option 2 and dedicate some resources to
experiment as in option 3 if possible

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THANK
YOU

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