Supply Chain Management Instructions and questions: 1 – Assumptions: In this question, you are required to create all necessary assumptions which should form an integral and aligned part of your response to the subsequent questions (max. 2 PowerPoint slides, 2 points). 2 Supply Chain Mapping: Map the supply chain of PRI as completely as possible. Using the time-cost-service quality trilogy, please evaluate where to place and why the following markers: W (predictable waiting points), F (predictable service failure points), and $$ (zones of high resource utilization). Include a table with these dimensions and your justifications within the supply chain (max. 2 Power Point slides, 4 points). 3 - Value Chain Analysis: With the available data, design a percentage-based value chain and comment on the values allocated to operations in a broad sense. Justify your design with the assumptions from question 1 (max. 2 Power Point slides, 4 points). 4 - Data Analysis: With the available data (see tables of the case), discuss the various situations you anticipate and the emerging problems. Utilize tables and charts and be visually expressive. If you want to use ChatGPT or CoPilot Pro in order to ask for some insights from the tables feel free to do it (max. 3 Power Point slides, 4 points). - 5 – Planning Process: Comment on the planning process and use it to propose improvements. These improvements should be based on the analysis of previous data and the case description. The primary goal is to enhance customer service levels and reduce delivery time, assuming a focus on increasing PRI's responsiveness. Justify using tables, charts, or visual aids (max. 3 Power Point slides, 4 points). 6- Lessons Learned: Discuss the lessons learned from this case and how they intersect with two major areas of supply chain management knowledge: impact of inventory and impact of installed capacity. Comment and make the appropriate financial connections. Use suitable performance indicators to enhance your response (max. 2 Power Point slides, 2 points). Maximum Number of Slides: 15; excluding 1 cover page and 2 final optional slides for appendices or supporting material. Absolute Qualification Criteria: Use of PowerPoint slides. No overlap with peers' work. Maximum allowable slides: 15 for responses + 1 cover page + 2 final pages for additional supporting material (total 18 slides). Do not use .zip or compressed files; use a cloud link if the file is too large to be sent via email. Use also a .pdf if you want. Valuation Criteria: Content depth and sustainability of the response. Professional visual presentation with a unique layout and the use of 'German slides' (densely packed but visually appealing slides). Clear differentiation from peers in assumptions and approach to responses. Innovation and ability to create unique proposals and frameworks for response. Depth of internet research./n PREMIUM SPIRITS SUPPLY CHAIN MANAGEMENT Pernod Ricard Italia Giuseppe Stabilini Sergio Venturini SDA Bocconi School of Management n° 14057 Copyright © SDA Bocconi, Milan, Italy No part of this publication may be copied, stored, transmitted, reproduced or distributed in any form or medium whatsoever without the permission of the copyright owner. Distributed by The Case Centre North America www.thecasecentre.org All rights reserved Rest of the world t +1 781 239 5884 t +44 (0)1234750903 e info.usa@thecasecentre.org e info@thecasecentre.org 617-0031-1 SDA Bocconi SDA Bocconi School of Management G. Stabilini, S. Venturini 617-0031-1 Premium Spirits Supply Chain Management Pernod Ricard Italia n° 14057 Premium Spirits Supply Chain Management Pernod Ricard Italia Introduction¹ “In recent years, our organization has evolved significantly, mainly because of the environment in which our company operates. The severe financial crisis that is affecting Italy is supporting the evolution of this negative scenario. It is now important to become proactive towards consumer demand, to anticipate sales phenomena and predict trends and patterns. This change has involved the company in all its different departments, but a central and primary role is played by the Supply Chain (SC). In recent years, its function has undergone a clear evolution. It has become key, central and essential for good business operation, both from the point of view of profitability and in regard to the level of service offered to our customers. The old functional organization is not effective anymore. The focus now is on business processes, not on functional professionals. All the functions, from sales to production, are driven by corporate targets: create value both for our customers and stakeholders. Any activity or decision is evaluated on a company' perspective. You are now fully involved in a shareholder view! As you know, we need strong integration between SC and all other company departments. There are two keywords: collaboration and dialogue. The target is to optimize every process and decision. However, it is no longer sufficient to have excellent communications internally. Today, excellence is also essential in the dialogue, cooperation and exchange of information with all companies operating upstream and downstream in the chain, which produce value in terms of products and services to the final consumer. This is especially true for a retail company like Pernod Ricard Italy which imports large quantities of products from suppliers all over the world with long lead times, and resells, even small amounts, to a large number of customers spread across the whole of the national territory. Italy's current economic environment complicates and at the same time further empowers the SC. The financial crisis is forcing deep cuts to businesses, and it has been noted that large savings can be made simply by optimizing supply chain management. Minimizing the amount of in-stock products allows the company to cut costs significantly in several areas (cost of storage, handling and inventory, rental fees, etc.). 1 The case is written in collaboration with Gianluca Berna (Supply Chain Manager) and Rodrigo Sanchez-Cespedes (Chief Financial Officer) Pernod Ricard Southern Europe. The authors would also like to thank Federico Gobbo for the database analysis and the support given during the development of the case. The data analysed in the case reflect the situation at Pernod Ricard Italia in the period 2013-2014. For the purposes of this case study, the data have been modified so as not to disclose suppliers' names and sensitive information, such as product names, volumes (on and off trade) and gross margins. Copyright © SDA Bocconi, Milano, Italy 2 SDA Bocconi SDA Bocconi School of Management 617-0031-1 Premium Spirits Supply Chain Management Pernod Ricard Italia The challenge comes from the fact that we need to continue supporting our commercial department in serving our customer with the best service possible. Here is the contradiction that complicates the game: to reduce inventory without ever failing to get the product to the consumer." n° 14057 These are the opening words from the last board meeting, during which the Supply Chain Manager at Pernod Ricard Italia illustrated the need for a radical change in both decision-making and organization. Pernod Ricard Pernod Ricard is a French company, founded in 1975 following the merger between the two companies Pernod and Ricard, both famous for their aperitifs. The Group has rapidly grown to become a leader in the wine and spirits market, and the absolute leader in terms of market share of premium and prestige products. In Appendix I a general overview of the global market of Wines and Spirits. Pernod Ricard ranks now (2014) as the world's second-largest international spirits group by volume. Net Sales 7,9 billions €. Net profit 1 billion €. Pernod Ricard faces competition in its business lines, primarily from: • large multinationals in the Wines & Spirits segment; smaller companies or producers of local brands. Pernod Ricard is present worldwide with 80 ‘Market Companies', 101 production sites and more than 18,000 employees. In only a few years, it has become the industry leader in many Asian countries, such as India and China, rising fast in emerging markets and continuing to develop and consolidate in mature markets. Figure 1. Pernod Ricard Infographic CO- LEADER OF WINE & SPIRITS WORLDWIDE NO.1 IN PREMIUM AND PRESTIGE SPIRITS WORLDWIDE €7,945 M NET SALES 19 BRANDS AMONGST THE WORLD'S TOP 100(1) +2% 18,523 EMPLOYEES IN 80 COUNTRIES €2,056 M PROFIT FROM RECURRING OPERATIONS Since its beginning, and particularly over the last decade, Pernod Ricard has built one of the most comprehensive portfolios of Premium brands in the industry on an international scale. Copyright © SDA Bocconi, Milano, Italy 3 SDA Bocconi • • SDA Bocconi School of Management 617-0031-1 Premium Spirits Supply Chain Management Pernod Ricard Italia n° 14057 This portfolio covers all spirits categories and is illustrated by the 'House of Brands' concept, which classifies the Group's priority brands into three segments: • the 'Top 14', which consists of the Group's 14 strategic spirits and champagne brands. The Top 14 includes: • 2 global icons, • 7 strategic Premium spirits brands, • 5 Prestige spirits and champagne brands; the 4 priority Premium wine brands; the 18 key local spirits brands. Figure 2. Brand portfolio (extract) STRATEGIC INTERNATIONAL BRANDS ABSOLUT VODKA RICARD JAMESON GINUVIT Rovono MALIB BEEFEATER Ballantine's Club 12 0-7- STRATEGIC WINES ENWOOD The group's Head Quarter (holding company) is based in Paris, France. Markets are organized with 3 regions: Asia and Rest of the World, Americas, Europe (including France). The group has 80 market companies (PR Italia is one of them) and 101 production sites. Copyright © SDA Bocconi, Milano, Italy 4 SDA Bocconi SDA Bocconi School of Management 617-0031-1 Premium Spirits Supply Chain Management Pernod Ricard Italia Figure 3. Pernod Ricard Group BRISH DISTILLER PERNOD RICARD AMERICAS CHIVAS BROTHERS HWANA CLUB INTERNATIONAL HOLDING Pernod Ricard PESNOD RICARD EMEA SOCIETE PERNOD SOCIETE RICARD MARTELL MUMM PERRIER XOUET THE ABSOLUT COMPANY PERNOD RICARD ASIA PERNOD RICARD WINEMAKERS In the last 3 years, the group acquired competitors in the wine and spirits business, while older business and brand were discontinued. As a result, the net sales slightly decrease without effecting the net profit results. Figure 4. Key financial figures of the last 3 years (P&L; BS) n° 14057 In millions of euros Net sales 30.06.2012 30.06.2013 (1) 30.06.2014 8,215 8,575 7,945 Gross margin after logistics expenses 5,047 5,351 4,987 Advertising and promotional expenses (1,571) (1,644) (1,503) Contribution after advertising and promotional expenses 3,476 3,707 3,484 Profit from recurring operations 2,114 2,231 2,056 Operating profit 1,969 2,119 1,817 GROUP NET PROFIT 1,146 1,172 1,016 Group net profit per share - diluted (in euros) 4.32 4.40 3.82 GROUP NET PROFIT FROM RECURRING OPERATIONS 1,201 1,228 1,185 Group net profit per share from recurring operations - diluted (in euros) 4.53 4.61 4.46 In millions of euros Assets Non-current assets 01.07.2012 (1) 30.06.2013 (1) 30.06.2014 21,770 21,030 20,968 of which intangible assets 17,360 16,753 16,449 Current assets 6,522 6,499 6,646 Assets held for sale 52 8 2 TOTAL ASSETS 28,343 27,537 27,616 Liabilities and shareholders' equity Consolidated shareholders' equity 10,719 11,179 11,778 Non-current liabilities 13,910 11,940 11,933 Current liabilities 3,707 4,418 3,905 Liabilities held for sale 7 0 0 TOTAL LIABILITIES 28,343 27,537 27,616 Copyright © SDA Bocconi, Milano, Italy 5

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Supply Chain Management Instructions and questions: 1 – Assumptions: In this question, you are required to create all necessary assumptions which should form an integral and aligned part of your response to the subsequent questions (max. 2 PowerPoint slides, 2 points). 2 Supply Chain Mapping: Map the supply chain of P