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Jul 16
2007
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Michigan’s carmakers, also known as original equipment manufacturers, developed what’s known as a three-tier supply system. Tier 1 supplied the carmakers directly, Tier 2 supplied Tier 1, and Tier 3 supplied Tier 2 – although there’s overlap between the layers.
Until recently, Michigan’s wineries were the winemaking equivalent of OEMs. They grew their own grapes – though many must supplement with other growers – and produced and bottled their own wines. Again, there’s exceptions – for instance, most sparkling producers outsource the carbonation facet of production. But by and large, most wineries did mostly everything, and relied on only a first tier of suppliers – the makers of barrels, tanks, presses and other winemaking equipment.
Now, however, there’s operations like Bryan Ulbrich’s Left Foot Charley, which this month opened its winery and tasting room near downtown Traverse City. Not a vine on the premises. Ulbrich plans to contract for all his grapes, making his growers effectively Tier 1 suppliers.
Then there’s other businesses that are Tier 1 in the sense that they work directly with wineries, but are more like Tier 2 or 3 in the sense that they’re distanced from the actual end product. One example is Traverse City’s Safety Net, a technology company that offers point-of-sale solutions including inventory control, high-speed credit card processing, customer information capture and marketing specifically to wineries.
“We help them with everything once it’s bottled from then on,” says Greg Williams, business software manager. For example, the system enables a winery to differentiate and record customers who buy red or white wines, and then market to each accordingly.
“It’s getting more information out of the system so you can make more intelligent marketing decisions,” says Williams, who brought the idea to Safety Net after he moved north from the Detroit area. He remembered meeting Napa company called Elypsis at a trade show a few years back. They offered a similar service. In three years, they had 300 tasting rooms online.
While Michigan’s industry doesn’t yet offer that potential for growth, in just the two years Safety Net has offered winery POS, the sector constitutes 10 percent of Safety Net’s business, and 40 percent of its retail business, Williams said.






Editor's Diary by Joel Goldberg 


