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HMRC internal manual

Holding and Movements Alcohol Strategy - Supply Chains

Overview: What types of supply chain are there?

Supply chains come in three broad types:

Concentration supply chains

Concentration supply chains tend to have few customers but a lot of suppliers. For example, a producer who only produces supermarket brands, or an excise warehouse for a large retail supplier where the occupier is the owner, but the goods are released from duty suspension to specific outlets when required.

The customer at the end of this type of supply chain has very demanding requirements, such as expecting just-in-time deliveries. Here there is usually IT links between the buyer and producer, which may well be bespoke or specially adapted systems.

Batch manufacture supply chains

Batch manufacture supply chains have the manufacturer at the hub of the chain and in a similar way to the concentration chain may have many suppliers, but unlike the concentration supply chain has many customers. Here communication will be along normal order and receipt methods, regular customers will usually have specific accounts set up with the supplier.

These chains depend on fast transfer of orders and supplies. Manufacturers in this category include most alcoholic beverage producers.

Retail distribution supply chains

Retail and distribution alcoholic goods supply chains are made up of businesses buying and selling excise goods after they leave a UK manufacturer or are imported to the UK.This category covers the majority of excise supply chains, and is considered the highest risk supply chain.

Transactions covered in the retail and distribution supply chain include:

  • sales in bond at general storage and distribution warehouses;
  • sales whilst the goods are in transit;
  • broker and agent arrangements;
  • wholesale distribution; and
  • shops, cash and carries, pubs, restaurants, clubs.

Retail and distribution traders usually have a lot of customers, but relatively few suppliers.