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It’s been 145 years since Don Cenobio Sauza started La Perseverancia Distillery and began making what would become world-renowned Sauza, Conmemorativo, Hornitos, and Tres Generaciones tequila. Situated in Tequila, a municipality of the state of Jalisco, Mexico, the distillery has grown in size and scope over the last century, and is now owned by Beam Suntory.
(Markus Riepe – Contract Logistics Director DB Schenker Mexico, Enrique Valera – Managing Director/CEO DB Schenker Mexico, Fernando Carrasquedo – Operations Manager DB Schenker Mexico, Liliana Bermudez – Supply Chain Manager, Tequila Sauza/Beam Suntory, Servando Calderon – CEO Tequila Sauza/Beam Suntory)
A lot has changed since Sauza turned out his first batch of tequila in 1873, but what hasn’t changed is the manufacturer’s commitment to keeping its primary operations in Tequila. This small town is about 43 miles away from the nearest large city of Guadalajara, where about seven years ago the company decided to locate a new logistics hub.
“When this company was created, its founder never imagined that it would grow the way that it has,” says Maria Liliana Bermudez Gonzalez, Supply Chain Manager. “As a result, we just don’t have any space to expand here because our plant is surrounded by homes and townspeople.”
To alleviate this challenge while maintaining its local operations, Sauza Tequila® looked at how it could improve its logistics and export operations by outsourcing the responsibility to a third party. “We like to work with reputable partners who can handle our non-core activities,” says Bermudez, “while we focus on what we’re expected to do: make great tequila.”
An Honest Assessment
After working for three years with one third-party logistics (3PL) provider, the manufacturer put out a request for tender (RFT) in 2016. Through that process, it hoped to find a new partner that would enable automated logistics processes, make recommendations, and introduce the company to new ways of managing the modern-day export supply chain.
After identifying some activities that it felt could be improved, Sauza Tequila’s logistics team decided to validate whether or not its current processes were optimal. It also compared the firm’s values and culture versus its current 3PL setup.
“We began assessing whether we were in the best condition, or if we could be doing better by working with someone else,” Bermudez explains. “In the end, we felt that there was definite room for improvement.”
After inviting DB Schenker to bid on the project and reviewing several other options on the market, Sauza Tequila picked the company as its new logistics partner. When making that decision, Bermudez says her team was particularly impressed with DB Schenker’s processes and strategies, including its commitment to “lean” implementations. “That’s something we are looking to implement internally,” says Bermudez, “so we saw this as a very good opportunity to work with a provider that can introduce us to a lot of new tools and techniques.”
Another key factor during the qualification process was a visit to one of DB Schenker’s contract logistics operation in Guadalajara, where the Sauza Tequila team got a firsthand look at a best-in-class 240,000-square-foot operation. This helped the manufacturer better envision what its own operation would look and feel like once mobilized.
“Besides the logistics solution designed to optimize space, and streamline the process flow for inbound and outbound material,” says Jesus Barba, DB Schenker Branch Manager, Schenker International SA de CV, “the company identified similarities with DB Schenker’s culture, including quality programs, operational excellence, commitment to customer service, and to take customers further, as a partnership mentality to win together.”
Without Missing a Beat
Before the new Sauza Tequila-DB Schenker relationship could be solidified, both companies would have to work through a few hurdles. The primary challenge involved the manufacturer’s prior 3PL, which was unhappy with the fact that its customer was leaving for another provider. “They basically told us that they were terminating the contract immediately,” Bermudez explains, “so we had very little time in which to set up our operations and our new warehouse.”
Up to the challenge, DB Schenker found the appropriate amount of warehouse space in Guadalajara and began setting up Sauza Tequila’s export operations within a very short timeframe. “The operation had to start several weeks prior to the agreed-upon start date,” Barba explains, “and we were able to support this steep ramp-up while also continuing to set up the operation, hire personnel, install racking systems, and prepare the warehouse management system (WMS) and information system infrastructure without missing a beat.”
Open for Business
In September, DB Schenker opened its brand-new, 50,000-square-foot logistics facility for Sauza Tequila in Guadalajara. From this dedicated facility, Beam Suntory utilizes DB Schenker’s full scope of human resources, warehouse equipment, and contract logistics capabilities to manage the export of its finished goods. “This facility is entirely focused on Sauza Tequila’s end-to-end export requirements,” says Barba.
Within the facility, the Consejo Regulador del Tequila (Tequila Regulatory Council) will have dedicated space where it will perform the validation of products for export. Sauza Tequila is also utilizing DB Schenker’s warehouse management system (WMS) to support and automate its day-to-day logistics operations and centralize the tracking of inventory levels and stock location.
For Sauza Tequila, DB Schenker receives the finished goods, prepares all export documentation, prepares tickets according to customer purchase orders, and generates key performance indicators (KPI) on a weekly and monthly basis. “We’re a company that’s focused on continuous improvement,” says Bermudez, “so as our relationship with DB Schenker grows and matures, we’ll also be looking to them for packaging, shipping, and logistics recommendations that help us achieve our goals.”