November 2002

By adopting an integrated fulfilment suite from Maginus, the Wine Society has kept ahead in an increasingly multi-channel environment. Peter Rowlands went to sample its service

If you're a member of the Wine Society (and there are 85,000 active customers at the moment), you may well have ordered an extra case or two for the coming festive season. Not surprising, then, that the daily order pick for individual bottles rises from around 3,000 in the summer to 10,000 at this time of year. Forty per cent of the Society's business is conducted between October and December.

Not only does the Society have to deal with this kind of seasonal fluctuation in throughput; it has also had to become increasingly a multi-channel sales organisation. True, 60 per cent of members still order by phone, and another 30 per cent by mail; but more than 5 per cent are now ordering online, and that proportion is increasing steadily.

This kind of complexity, coupled with these volumes, means the Society has had to keep constantly ahead of the game in terms of logistics. It may date back to 1874, and may still exist for the benefit of its members, but it has to operate on a streamlined commercial basis to ensure that it gives those members the best possible value for money.

Until 1965 it was based in London, but then it moved 25 miles north to a large freehold site in the main industrial area of Stevenage, a new town minutes away from the A1 motorway. Here it combines offices for its planning, purchasing and marketing teams with a substantial warehouse complex, which has been progressively expanded to take account of steady growth.

By the late 1990s it had developed a hybrid IT system to manage its operations. This was based on a suite by distribution specialist JBA, but had been extensively modified by the Society to reflect its own requirements. In fact the Society had bought rights to the source code.

"But there were doubts about whether our implementation would be millennium-compliant," says David Marsh, the Society's information systems manager. "Frankly, how do you really tell?"

Rather than struggle to make it compliant, the organisation decided the uncertainly was a good excuse for replacing it. "It was a blessing in disguise," Marsh says. "We were able to buy in a product that was much better suited to our present and future requirements."

That product was Maginus Commerce Software suite from Maginus Software Solutions. At the time Maginus (then known as Mancos) was still selling into high-tech markets, but was beginning to gain a reputation in the retail and direct commerce markets, which have since become its forte.

Wide ranging

Part of the attraction of the Maginus suite was that it was so wide-ranging. It could handle everything from customer interaction and order management to stock management and despatch planning. On top of that, Marsh also liked the fact that the Maginus suite is highly configurable, and so can reflect many of the Society's special requirements. For instance, it can show which wines are for sale and which are not (for reasons of their age, ownership or other special factors).

It will also prevent orders being taken for end-of-line stock if there is no prospect of fulfilling them. This is quite a subtle function, since the Society handles two distinct types of stock. There are "running" lines, which are not held in large quantities, but can be replaced; and there is stock laid down years before, which exists only in finite amounts.

"We're happy to hold product long term," David Marsh says. "It doesn't lose its value, and it will always be in demand."

The classic ordering method is to buy from the Society's various catalogues - originally by post, but now much more by phone. The organisation has its own in-house call centre with a core staff of 30 - augmented at peak times, when temporary staff are usually allocated to paper-based orders.

The Web site was developed around two years ago, and initially demand built quite slowly; but Marsh foresees a significant role for online ordering in future. "Thirty per cent of members have requested a password," he says, "and 60 per cent of those have actually used it to buy online." He adds that there's no particular drive to push members into ordering on the Web, "although it does make the ordering process easier for us." Growth just seems inevitable, he says.

Tasting notes

Maginus was able to swing into action to build the Web site, using its own product, Maginus Webstore. The site includes product information such as drink dates and tasting notes, and Maginus has built in facilities for members to check on the progress of orders and on account history. "It works very very well," David Marsh says.

There is one other way of buying wine from the Society, and that is through a very attractive retail shop at the Stevenage site. This has recently been refurbished and extended, and allows members to browse at their leisure, as well as spotting current bargains. Once again, Maginus has played a role here; it has a software module called Trade Counter, which is based on the company's call centre system. Although not specifically aimed at retail environments, it has all the facilities required, with the added bonus of being easily integrated with the rest of the Maginus suite.

The Maginus suite even helps with some of the Society's special requirements. One of those is to manage orders for "opening offers" - purchases made in advance of the release of certain wines including claret, Burgundy and Rhone. Customers pre-order and pay for the wines while they are en primeur (not yet bottled), but are not charged duty and VAT until they are eventually released perhaps two years later.

"It gives the producers better cash flow," David Marsh explains, "and assures customers of getting the wines they want." They may have to be quick off the mark, though, since some vintages can be over-ordered by a factor of six to one or more, so cut-off dates are imposed..

Building orders

To handle the process of actually building up these orders, the Society has written its own software which it has integrated with Maginus Commerce Software using standard interfaces provided. "It's too specialised to expect an outside company to do it," Marsh says. This measures supply against demand and allocates it among members in half-case quantities. "We aim to distribute the wine to members as fairly as possible."

However, Maginus plays its part in this process. As standard, its suite can handle en primeur purchases and deferred VAT and duty payment, and it also deals with notification of buyers when these are later due.

The whole of the Society's current catalogue is held in stock at Stevenage at any given time, which helps to keep fulfilment straightforward. Over 2 million bottles are stored in the main warehouse, with a value of around £14 million. Maginus looks after replenishment, checking sales twice a day to determine how much new product to order.

The warehouse is divided into fast-moving and slow-moving sections. Fast-moving orders are picked by hand, and the area is laid out in wide-aisle configuration with gravity-feed racking "so that we can flood it with pickers if necessary." But what is fast and what is not? Remarkably, this can vary from one day to another; a daily report is produced, and as there is only space for the top 100 lines, product is switched between sections as necessary.

Customers can order full cases of one product, mixed cases in pre-set configurations, or mixed cases to their own specification. Product is picked by van route and by label. Unusually, there is no picking note (although pick lists are used for the bottle picks); the labels include picking information as well as despatch information.

The Society has its own home delivery fleet, and uses this to handle about two thirds of deliveries (the proportion is currently increasing). It operates out of seven stockless depots at Bathgate, Bristol, Derby, Durham, Gatwick, Manchester and Reading. Inevitably, though, at peak times its fleet has to be augmented by carriers' vehicles. Around Christmas it can be despatching as many as ten articulated loads a day via carriers such as Reality.

The delivery promise is seven to ten days, and currently most deliveries are completed within a week, David Marsh says. "Members tell us accuracy is more important than speed." One potential pitfall arises from the fact that 40 per cent of members' addresses have no house number - just a building name. "Carriers can sometimes struggle with that."

One of the keys to success, Marsh says, is following members' delivery instructions to the letter. "If they ask us to leave the wine in the porch, for instance, we don't put it in the greenhouse."

A further function the Society fulfils is storing vintage wine on a long-term basis on behalf of individual members (it costs only £5.52 per case per year). A whole area of the warehouse is allocated to this, and around 130,000 cases sit silently awaiting the day they are called up. Often the wine can stay in place for many years. Once released, it is dealt with by Maginus alongside mainstream purchases, although it is given priority in the despatch process.

All in all, the Wine Society's supply chain is complex and quite demanding - although markedly less so since the current systems structure was put in place. Which should be reassuring to you, assuming you're a member, as you sip your Christmas drink this year.

How the society's IT system fits together

Maginus Commerce Software sits at the middle of the Wine Society's IT system, handling the majority of the organisation's core logistics and customer relationship functions. Behind it is an Oracle database.

Other specialist software feeds into the Maginus system, including the Society's in-house system for handling opening offers. There is also a separate data warehouse, which uses another Oracle database, and has analytical functions provided by Business Objects.

The company's Web server is hosted externally, again using Maginus software, and is linked to the main system by leased line.

Owned by its members

You can become a member of the Wine Society in return for a one-off payment of £40, which makes you in effect a part-owner of a cooperative founded in 1874. There's no obligation to buy, and nothing more to pay again unless you do.

Membership gives you access to a unique selection of high-quality wines bought by a specialist team, including many sold under the Society's own brand. They're not offered at bargain-basement prices, but range from the affordable to the highly select, and include a range of "Everyday Wines" at under £5 a bottle. Around 800 wines are offered at any one time.

You can also subscribe to a "Wines Without Fuss" service, in which a mixed selection of wines is delivered to you automatically at set intervals unless you cancel in advance.

In support of all this, the Society mounts a programme of tastings and other promotions throughout the country, and offers special selections of wine reflecting the time of year or other special interests. It also produces a regular newsletter to keep members up to date with developments in viniculture.

Delivery is free to any address in the UK, providing you buy a whole case or case of half-bottles at a time or your order is worth more than £75.