CASE STUDY $5\mathrm{.}1$: WINE SUPPLY CHAIN NETWORK DESIGN WITH

SUSTAINABILITY CONSIDERATIONS

The global wine market is valued at over US $$300$ billion and is expected to reach US $$407\mathrm{.}97$ billion by $2026.$

Since the early $2000$s$,$ world trade in wine has more than doubled and is expected to expand as global

consumption continues to increase. For example, in $2018,$ wine production was at its highest at $293$ million

hectoliters.

The wine industry is highly global. Grapes are produced in distinct regions of the world, with France, Italy, Spain,

the United States, and China being the major producers, and wine consumption takes place all around the world.

The global nature of the wine industry means the wine supply chains operate on a global scale too.

Stellare Wine is a major wine producer located in Italy. The company owns two large$-$sized wineries in southern

Italy and operates four bottling plants across the country. With plans to expand its sales in the European market,

the company has decided to open three additional bottling plants to supplement its domestic production and is

evaluating potential locations in neighboring countries France, Austria, and Slovenia. The company is in the

process of optimizing its supply chain network design, which involves identifying the sites for these bottling plants.

In recent years, there has been a substantial boost in the sales of sustainably produced wines, and the company

wants to continue targeting this market segment, which has grown from a niche market to a major market in

Europe. Furthermore, wine producers are increasingly under regulations concerning traceability of their products.

All these developments mean the company must incorporate all three dimensions of sustainability$-$economic,

environmental, and social values$-$in identifying the locations for its bottling plants.

Review the following background information related to the wine supply chains and answer the questions that

follow.

In a typical wine supply chain, the first tier is composed of grape growers, who are responsible for the production,

harvest, and delivery of the grapes. Wine producers such as wineries, breweries, and distillers are placed in the

second tier, and these producers transform the grapes they receive from grape growers into bulk wine. In some

cases, a grape vineyard and winery can be a single organization, producing wine from the grapes it grows in its

own vineyard. Next, bulk wine distributors and filler$/$packer companies are responsible for receiving the bulk wine

from the wine producers and turning it into finished goods. Particularly, distributors either deliver the bulk wine

directly to the filler$/$packer companies or utilize the services of a transit cellar to do the delivery. The filler$/$packer

companies, which are also called bottling plants, perform the storage, processing, sampling, packing, and

dispatch of the finished goods. The finished goods, which are now in the form of bottled or canned wine, are

delivered in pallets and cartons to the last two tiers of the supply chain: wholesalers and retailers. Finished goods

distributors and wholesalers are responsible for the receipt, storage, inventory management, and dispatch of

finished goods. Finally, retailers such as liquor stores, grocers, and restaurants receive the wine products to be

sold to end customers.

Questions

How can the factor rating method and the transportation method be used to help Stellare Wine identify the

locations for its bottling plants?

Considering Stellare's objectives, what factors should be included in a factor rating method? The factors

should be exhaustive so they can help the company consider broad aspects relevant to its decision

making. ${26}_{?}$