[caption id="attachment_26518" align="alignright" width="317" caption="(from left) Dave Reed, Elke Wood and Jason Curtis"][/caption]
HEALDSBURG -- A new wine industry supply-chain "insourcing" firm has built up a head of steam in landing clients eager to bring in expertise to cut costs and boost efficiency.
FreeRun Winery Services is on track this year to handle supply functions for 15 to 25 ongoing accounts producing nearly 1 million cases of wine and has proposals pending that would increase that volume by 50 percent, according to General Manager Dave Reed. His 24-year career includes management of purchasing, bottling and logistics for what is now called Treasury Wine Estates as well as consumer packaged goods giants Eastman Kodak and Johnson & Johnson.
Started last year as a division of Memphis, Tenn.-based freight broker Cornerstone Systems, FreeRun has three main revenue streams currently. The first is a fixed retainer to functions like an in-house supply team.
"We've gone out of our way to not be viewed or interpreted as a packaging supplier, distributor or broker," Mr. Reed said. "We like to be viewed as a plug-and-play packaging department."
For example, FreeRun expanded its role for one large Napa wine company from handling scheduling and purchasing to new-product development and innovation.
The second source of revenue is "virtual packaging and logistics." FreeRun signs confidentiality agreements and then starts scrutinizing the total cost of ownership of the supply chain, including costs related to reusing, reworking and wasting materials.
"Many like to go to the supplier and ask what it would sell a widget for," Mr. Reed said. "We'll talk about economic run sizes, consolidation of trucking and gang-order pricing."
That can include purchasing a small producer's 5,000 corks as part of a 1 million-stopper order for all FreeRun clients to lower the cost per unit.
Another example is bulk-to-bottle shifting of wine production to significantly reduce shipping costs and the carbon footprint related to moving filled glass bottles to far-flung markets.
Or the solution might be to combine clients' casegoods shipments from the North Coast to the East Coast via specially designed rail boxcars, something Mr. Reed helped pioneer in southern Napa County while working with the Beringer group of brands.
Likewise, packaging purchases, a common source of 1 percent to 3 percent waste because of unknown wine production yields at the time of ordering, can be shifted between FreeRun clients as surpluses and shortages arise.
FreeRun has formed relationships with four production wineries in California that can offer a range of capabilities to clients, such as certified-organic production from a specific appellation, and provide a source of clients for the firm, according to Mr. Reed.
The third revenue source for FreeRun is called "gain sharing." For example, if a winery had been spending $100,000 for various elements of its supply chain, and FreeRun can accomplish the same for $80,000, then the two split the savings in a $90,000 contract with FreeRun.
To handle the influx of business, Mr. Reed hired Jason Curtis, who has a decade of operations, systems and logistics experience with Coppola Companies, and Elke Wood, who has an equal length of experience from working with the Trinchero family's Sutter Home brand. Cornerstone handles FreeRun's back-office functions.
For more information, call 707-395-0382 or visit www.freerunservices.com.
