• Diageo


    Diageo is, quite simply, the largest and most profitable spirits company in the world. The company plays a crucial role in the Scotch whisky industry; owning 27 malt distilleries that cover all four whisky producing regions – Speyside, Highland, Lowland and Island. Apart from including evocative names such as Cragganmore, Dalwhinnie, Glenkinchie, Lagavulin, Oban and Talisker, these distilleries account for almost one third of the total industry capacity. Diageo’s two grain distilleries account for more than one third of total grain whisky production and the company’s Johnnie Walker Red Label brand is the world’s top whisky, achieving sales of several million cases.

    The fact that 2½ million people have been through the 12 visitor centres in Scotland reflects a general fascination with the history, tradition and mystique of the industry. However, Christine Wright, Inventory and Supply Manager at Diageo, points out that some parts of the business attract less attention than others: “Each week, 20,000 casks are moved in and out of our 49 warehouses throughout Scotland to provide the whisky needed for the blending programme. Warehousing is a physical and laborious process and has tended to be the forgotten side of the business.” However, the introduction of expert systems computer technology during the past year has given a fillip to the blend selection process at Diageo.

    In addition to Red Label, Diageo produces some 60 blended whisky brands, including Bell’s (the best-selling Scotch whisky in the UK), Dewar’s White Label (the best selling Scotch whisky in the USA) and Johnnie Walker Black Label (the most awarded Scotch whisky in the world). Meeting the requirements of tightly guarded recipes for blends such as these involves the combination of a variety of factors. As well as the proportions and numbers of malt and grain whisky types and the different makes (from different distilleries), criteria are set for the wood profile of casks (new wood, refill, bourbon casks or sherry casks), the use of mandatory makes and years, and the overall year profile. Achieving these quality constraints is mandatory, but the logistical challenge of locating suitable casks is less restrictive: “We want to maximise our operational efficiency without compromising the quality,” states Christine Wright. However, Diageo’s Blackgrange warehouse site alone houses around 3 million casks, indicating the scale of the challenge. In practice, 50% of the casks that were being moved were not required – simply allowing access to those identified by the selection process. With casks ranging from 200 litre (bulk volume) barrels to 500 litre butts, it is not surprising that this wasted effort was the cause of some friction between the warehouses and staff working at Distillers House in Edinburgh. “We might just as well have been on Mars, as far as they were concerned,” comments Christine Wright. “Although we had 100% accurate positional information about all the stock, casks had to be selected numerically. Given the practical challenges involved in warehouse management, casks are seldom stored numerically.”

    Operating on a large Digital VAX at Diageo, their warehouse administration system and an associated bar-coding scheme provided details of the site and exact position of the whisky stock within each warehouse. Now, Diageo is using a Windows-based system operating “XpertRule” as part of a client/server solution to optimise the blend and cask selection process.

    Information held on the VAX about recipes, site constraints and the blending programme is given to the XpertRule system, which works out the best combinations of stocks to produce the blends. This information is then supplemented with positional information about the casks from the VAX. The system then optimises the selection of required casks, keeping to a minimum the number of “doors” (warehouse sections) from which the casks must be taken and the number of casks which need to be moved to clear the way. Other constraints must be satisfied, such as the current working capacity of each warehouse and the maintenance and re-stocking work that may be in progress. The whole process takes around 24 hours to run, normally starting on Friday and providing the complete weekly schedule back to the VAX for Monday morning.

    Lancashire-based expert systems specialist, XpertRule Software Limited, has worked closely with Diageo to develop the software application using XpertRule. The system is based on the use of “genetic algorithms” and adopts the Darwinian principle of natural selection to optimise the selection process. The random creation of solutions (chromosomes) and mixing of the parameters (genes) creates new chromosomes that have the greatest “fitness to survive”.

    Diageo has seen significant commercial benefits since the system was delivered, as Diageo’s Commercial Director – Operations, Turnbull Hutton, points out: “The incidence of non-productive cask movements has plummeted from a high of around 50% to a negligible level of around 4% and our cask handling rates have almost doubled.” He adds: “The new technology enables staff to concentrate on what they want to achieve, rather than the mechanism of how to go about it. They can concentrate on the constraints that they wish to impose and get the system to do the leg work of finding the best scenario within those constraints. It means that the business can be driven by primary objectives.”

    Currently, access is required to around 130 doors each week; which is around half the level before the new system was installed. Not surprisingly, the system has improved relationships between the Distillers House and warehouse staff. Although the “Positive Partnership Deal” operated by Diageo means that none of the warehouse staff affected by the efficiencies will be faced with redundancy, enthusiasm has been expressed quite openly by those involved in pulling out the casks for each week’s blending, as Christine Wright points out: “The system has been so successful in identifying casks within the warehouses that some of our chaps seemed to expect the casks to leap from the racks onto the vans.”

    Warehouse staff are now asked to provide weekly information about the maximum number of casks they are able to move on any site, warehouses that may only receive or despatch casks, as well as details of other restrictions that might apply, such as upgrading warehouse facilities or constraints resulting from inclement weather. These constraints are added to the variables assessed by the XpertRule system and help to guide the selection process. Christine Wright explains that there are important by-products resulting from an ability to take account of these issues: “Not only does the lack of wasted effort allow warehouse staff to get on with their work, but it enables them to plan ahead and organize long-term maintenance programmes. It encourages a mind-set that is strategic, rather than reactive, and empowers managers to manage their own sites.”

    Five full-time staff used to be employed at Distillers House to handle the blend selection. “It was a boring and repetitive process,” says Christine Wright. “The actual process of blend selection now involves only a few keystrokes and three hours of one person’s time. The other staff can therefore be involved in more interesting work. Realistically, it is wholly impractical for people to do what the XpertRule system now achieves.”


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