Last weekend, I went up to Chateau Montelena in the Napa Valley to pick up a case of Cabernet Sauvignon that I had purchased two years ago through their wine futures program. Selling wine futures is something that we have seen in Europe for many years, but very few California wineries do it, so I felt pretty good about getting an outstanding red for two thirds of what I would pay at retail. An added benefit of being in their futures club is that you get to taste wine out of the barrel two years before it is released, and before you need to make the next commitment to buy. Effectively, you can look into the future, determine if you like what you taste, and then decide.
It struck me that small manufacturers could use a futures program; to accurately forecast customer demand, to manage their suppliers more effectively, to ensure that supply and demand are matched, and to keep an eye on cash flow needs. A futures program that drives better visibility, improves operational efficiency, and helps manufacturers get control over their business.
But to small manufacturers — constantly fighting fires, managing their business with Excel and simple tools like Enterprise Quickbooks, and manually integrating information from the different functions across the organization — a futures program may sound a little bit like magic.
We all know there is no such thing as a crystal ball that will show you the future. The key then becomes how to manage and control your company so that you can react quickly to what the future brings, both the opportunities and the challenges. And how to do it better than your larger competitors so that you build a sustainable competitive advantage.
Many smaller manufacturers are finding that the best path is to implement an integrated business management solution. With this, all functions across the organization are tightly linked and everyone in the organization can get a 360 degree view of the entire operation, within the enterprise, and across the supply chain. Visibility increases and so does control and operational efficiency. With the rise of on-demand solutions, you can start where the needs are greatest and build on this foundation. You pay for only what you need, risk is reduced, and costs can be tightly controlled. You keep up with the big dogs, at a cost you can afford. Not quite a crystal ball, but the next best thing.
So let me tell you about the roses. In the Napa Valley, as throughout the wine regions of France, you’ll frequently see roses planted along the edge of vineyards. Traditionally they’ve served as an early warning system to protect the grapevines—the equivalent of a miner’s canary. Roses and grapevines are both susceptible to a fungus called powdery mildew, but roses are more sensitive than grapevines. Sulfur won’t cure powdery mildew, but it can prevent it. If a grape grower notices that his roses have powdery mildew, he knows to immediately spray sulfur on his grapes to prevent them from getting the same disease. So the roses provide the same value as an integrated software solution: enabling quick response to challenges so that the organization can flourish.