|*Research Group EINADE
Depto. de Organización
Universidad de Cádiz
11403 Jerez de la Fra (Cádiz)
|**Research Group GIDEAO
Depto. de Economía Financiera y Direcci-n
Universidad de Sevilla
Avd. Ramón y Cajal 1
The fact that the period from 1985 to 1989 is widely recognised as one of the most critical in the entire history of the sector of "Jerez-Xérès-Sherry and Manzanilla Sanlúcar de Barrameda" first led us to propose the development of an aggregated economic model which would be representative of the companies belonging to the sector and which would achieve the following aims:
* Study the causes which brought about the crisis
* Obtain an educational tool which employs a systems approach
* Obtain a decision making tool which will help to
avoid, as far as possible, such decisions as those taken in the
previous decade which are now understood to have plunged the sector
into the greatest reorganization of its entire history, producing
a reduction of over 40% in the total area of planted vineyards,
30% of stock and 25% of employees.
We have chosen the maturing, shipping and export
bodegas as being representative of the sector. These bodegas
are the driving force behind the vine growers and cooperatives
and, in turn, exert great influence on the sector as a whole.
We decided to produce a model of the sector based on a study of
the structure of these bodegas, which account for 95% of
the sherry wine produced in the area and are the main force behind
the sherry based economy.
System Dynamics was used in the modeling process
and its conceptualization was based on a description of the system
to be modeled (the sherry sector) and the way in which it operates.
The origins of the imbalance between supply and demand were studied
and we also considered the extent to which excess stock, prices
and investment in advertising have affected the perceived image
of the product. That is to say, at this stage we analysed and
defined the different problems existing in each area and finally
produced a causal diagram.
With regard to the first of these aspects, the decade
of the seventies witnessed a spectacular increase in sales with
the export figure surpassing 303,970 butts (approximately 150
million litres). This figure signified a increase in sales of
117.2% in 10 years. This increase was wrongly interpreted by the
producers as signaling parallel increases in consumption, which
generated enormous hopes in the companies involved and brought
about an increase in production pressures. This led to costly
investment in vineyards, deemed necessary in order to provide
greater levels of stock, and in the four-year period from 1974
to 1977 the sector increased its total area of planted vineyards
by over 100%.
A sharp fall in consumption took place in the main
export markets as from 1979 and this provoked the beginnings of
the problem of excess stock in the bodegas, a situation
which, in turn, brought about the appearance of excess stock in
both the cooperatives and the other producers of must. The imbalance
between the supply and demand for must increased and this led
relations in the sector to such a degree of tension that in 1990,
and for the first time ever, all the affected parties joined together
to implement a four-year restructurization plan which led to a
reduction of both stock and vineyards in an attempt to comply
with current levels of demand.
The formalization process was begun with the formulation
of the production sub-system, this being where the first of the
socioeconomic activities surrounding the sherry making process
take place, and also where the imbalance suffered in previous
years was made most clearly patent.
Once the formulation stage was finalized we moved on to the analysis and validation of the structure. We have attempted to analyse the capacity of the model to generate and reproduce past behavioral modes which closely resemble reality. The reproduction of behavior during the five-year period 1985-90 was taken as the main test of validation. The choice of this period was justified as it is prior to the restructuring plan of 1990. Once the initial levels corresponding to the campaign of 1985 were established, we went on to analysis the model. When the model was compared with historic data from the period prior to restructuring the results obtained showed a degree of concordance for the qualitative behavior of the sector and also the existence of specific decisions which were key to the origin of the aforementioned imbalance, such as:
- The decision to plant more vineyards, due to an erroneous forecast of demand, and their posterior maintenance for over 15 years which led to an exaggerated excess of capacity.
- A reduction in the percentage of the cupo, or quota, for each campaign in an attempt to control the market but which finally led to an excess of stock
- Erroneous decisions made concerning policy for
purchasing must, in the sense that such purchases were carried
out without taking into account existing warehouse stock.
If a model such as the one described here had been
available, then the possible negative results of the situation
outlined above could have been identified and, in turn, could
have been avoided.
The results obtained have increased our confidence
in the reliability of the model as a behavioral simulator and
have allowed us to simulate different policies and situations,
its application enabling us to analysis the long term consequences
for the sector.
Besides helping to increase our knowledge of the
sector as a whole, the model provides a simple, user friendly
instrument which is flexible in its adaptation to possible environmental
Finally, we shall state that both the simulation
and the ensuing sensitivity analysis which we carried out have
increased our confidence in the validity of the model as a representation
of the system which forms the subject of our study. In this way
the results of future simulations could be of great help to those
responsible for decision making within the sector
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