Description
It is no secret that the craft brewing industry continues to experience explosive growth - a remarkable 15 percent volume increase in 2012, according to the Brewer's Association. As brewers grow their business and expand into new markets, they often find that their supply chain becomes much more complex.
The Role of Supply Chain
in Expanding Brewery
Distribution Networks
>
A close look at how brewers
can achieve a competitive
advantage by optimizing their
supply chain.
WHI TEPAPER
Satellite Logistics Group | The Role of Supply Chain in Expanding Brewery Distribution Networks 2
It is no secret that the craft brewing industry continues to experience explosive growth – a remarkable 15 percent
volume increase in 2012, according to the Brewer’s Association. As brewers grow their business and expand into
new markets, they often fnd that their supply chain becomes much more complex. They have more sophisticated
requirements for asset management, inventory control, transportation, and customer service – and limited
investment dollars to address these challenges.
This report ofers guidance for brewers who are interested in expanding their distribution network while
maintaining focus on their core competency: brewing craft beer.
Common Challenges of Self-Distribution (Why Can’t I Do It Myself?)
When starting out, many craft brewers opt to manage their supply chain internally. As business grows, however,
they fnd that this efort becomes more challenging. Delivering the right brew for markets across the country on
time and in quality condition requires extensive logistics expertise.
Keg management becomes increasingly critical as brewers’ operations expand. Many craft brewers simply do not
have an adequate keg inventory to expand to multi-state distribution and meet a new market demand. As a result,
they may need to purchase more kegs in order to have sufcient on-hand inventory. With an average cost of $125
for a half-barrel, this can quickly become a budget drain.
Tracking and recovering the keg assets that they have spread throughout major markets nationwide can be a
daunting task – one which brewers often lack the time, resources and/or expertise to handle efciently.
In spite of rapid business growth, craft brewers typically do not have the business volume of empty kegs to fll
a truckload and must wait for several weeks to build up enough kegs for a return shipment. This slows keg
turnaround times and impedes production.
In addition, problems can occur when kegs sit unused for lengthy periods of time. Lost or stolen kegs are an
industry pain-point that costs producers millions of dollars each year, resulting in a negative impact on their ROI
and bottom-line performance.
“Brewers need to take into account all associated supply chain costs when calculating the viability of self-
distribution,” points out Kevin Brady, president, Satellite Logistics Group. “They need to look at labor, loss of
productivity, transportation, etc., as these can have a signifcant impact on proft margin.”
Improved Keg Management Streamlines Brewer’s Supply Chain
As sales continued to outpace other segments of
the market, a leading craft brewer realized that
there was room for improvement in its methods
of returning cooperage to the brewery. Satellite
Logistics Group (SLG) was ready to help. The
supply chain solution provider’s Kegspediter®
service proved to be an efcient and efective
way to optimize keg use. By leveraging SLG’s
strategically located consolidation centers
around the country, the brewer was able to
minimize keg storage issues with its distributors,
reduce its investment in kegs and speed keg
returns, ultimately cutting four months from
the cycle time. The new process also helped the
brewer’s distributors to avoid storing kegs until
full export loads could be accumulated and
receive deposit credits more promptly.
Satellite Logistics Group | The Role of Supply Chain in Expanding Brewery Distribution Networks 3
Key Considerations for Expansion (Time to Go Big, Not Home)
As brewing operations grow in size and scale, it is essential for the supply chain to grow along with
them. For optimal efectiveness, Brady recommends that brewers consider several key factors:
1
5
3
2
4
Efcient keg utilization – The speed with which kegs can be returned
and reflled can have a signifcant impact on supply chain efcacy.
Reducing keg cycle time allows a brewery to service its distribution
market with a smaller capital expenditure on kegs, freeing up funds
for other investments.
Quality management – Protecting product integrity throughout the
supply chain is a critical element of expansion. Maintaining product
temperature, ensuring safety during transit, providing visibility, and
reducing the product’s carbon footprint are key concerns. It is also
helpful to have plans in place to handle product that is out-of-date,
produced or packaged incorrectly, damaged, or recalled.
Speed to market – A growing brewer must be responsive to customers’
changing demands. Having the right product on tap and on store
shelves at the right time is critical. Brewhouses and retailers will be
quick to substitute another brand if supply runs out.
Transportation optimization – As brewers expand into new markets,
they will need to distribute kegs across the country and coordinate
their return. Consolidated distribution is often the most efcient and
cost-efective approach. Multiple orders can be shipped together
across the country to take advantage of truckload savings and then
local deliveries are arranged. The same approach works for reverse
logistics as well. Empty kegs are gathered from multiple distribution
points and shipped back to the brewer on a single truck.
Need for more advanced technology – Brewers who are still
managing keg assets with Excel spreadsheets and phone calls quickly
see the value of transportation management software that helps them
manage their freight spend and purchase freight on a transactional
basis. The ability to track and audit their assets also has a signifcant
impact on efciency.
Satellite Logistics Group | The Role of Supply Chain in Expanding Brewery Distribution Networks 4
About Satellite Logistics Group
Satellite Logistics Group (SLG) specializes in supply chain management for the beverage industry. We deliver
innovative and efcient supply chain solutions to help our customers manage their businesses more strategically
and accommodate changing needs. Our core services include Kegspediter® keg management, LogiTrax®
transportation management and EcoBev® beverage disposal. For more information, please visit www.slg.com.
Toll-free: 877-795-7540
Phone: 281-902-5500
Fax: 281-902-5501
Email: [email protected]
Web: www.slg.com
12621 Featherwood Dr.,
Suite 390
Houston, TX 77034
Value of Supply Chain Management Support (It’s OK to Ask for Help)
To handle the growing complexity of their supply chain, many brewers fnd that working with a third-party
provider can be a valuable resource as they build their business. “Brewers are wise to seek help for areas outside
their primary area of focus,” Brady says. “A reliable, experienced supply chain partner frees them up to focus on
their main objective: brewing great beer.”
Finding the right partner requires careful research. Brady suggests that brewers evaluate potential providers
in 10 key areas:
1. Industry expertise – Does the provider have deep relationships in the beverage industry and understand
the challenges brewers face?
2. Solution design capabilities – Have they demonstrated an ability to provide innovative solutions that
meet customers’ unique business needs?
3. Execution – Do they have established processes and best practices in place and a proven track record for
delivering results?
4. Scalability – Will they be able to accommodate changing business needs and future growth?
5. Nationwide network of specialized services – Do they ofer a variety of services (i.e. keg scanning,
consolidated distribution, freight management, material recovery) for a comprehensive solution?
6. Advanced technology – Are their systems and software state of the art and able to provide real-time
visibility and automation where needed?
7. Available resources – Do they have an established distribution network and staf to accommodate current
and future needs? If not, are they willing to invest in the necessary resources?
8. Flexible fnancing – Do they ofer payment options such as “lease to purchase” to help brewers build their
keg inventory cost efectively?
9. Product disposal – Are they able to dispose of non-salable beverages in an efcient and environmentally
friendly manner if the need arises?
10. Quality management – Are they involved in SCOR or another program designed to ensure consistent
quality and continuous improvement?
Partnering with a supply chain provider for strategic solutions can help brewers manage their business more
efciently and cost-efectively while expanding their geographic reach.
doc_305190416.pdf
It is no secret that the craft brewing industry continues to experience explosive growth - a remarkable 15 percent volume increase in 2012, according to the Brewer's Association. As brewers grow their business and expand into new markets, they often find that their supply chain becomes much more complex.
The Role of Supply Chain
in Expanding Brewery
Distribution Networks
>
A close look at how brewers
can achieve a competitive
advantage by optimizing their
supply chain.
WHI TEPAPER
Satellite Logistics Group | The Role of Supply Chain in Expanding Brewery Distribution Networks 2
It is no secret that the craft brewing industry continues to experience explosive growth – a remarkable 15 percent
volume increase in 2012, according to the Brewer’s Association. As brewers grow their business and expand into
new markets, they often fnd that their supply chain becomes much more complex. They have more sophisticated
requirements for asset management, inventory control, transportation, and customer service – and limited
investment dollars to address these challenges.
This report ofers guidance for brewers who are interested in expanding their distribution network while
maintaining focus on their core competency: brewing craft beer.
Common Challenges of Self-Distribution (Why Can’t I Do It Myself?)
When starting out, many craft brewers opt to manage their supply chain internally. As business grows, however,
they fnd that this efort becomes more challenging. Delivering the right brew for markets across the country on
time and in quality condition requires extensive logistics expertise.
Keg management becomes increasingly critical as brewers’ operations expand. Many craft brewers simply do not
have an adequate keg inventory to expand to multi-state distribution and meet a new market demand. As a result,
they may need to purchase more kegs in order to have sufcient on-hand inventory. With an average cost of $125
for a half-barrel, this can quickly become a budget drain.
Tracking and recovering the keg assets that they have spread throughout major markets nationwide can be a
daunting task – one which brewers often lack the time, resources and/or expertise to handle efciently.
In spite of rapid business growth, craft brewers typically do not have the business volume of empty kegs to fll
a truckload and must wait for several weeks to build up enough kegs for a return shipment. This slows keg
turnaround times and impedes production.
In addition, problems can occur when kegs sit unused for lengthy periods of time. Lost or stolen kegs are an
industry pain-point that costs producers millions of dollars each year, resulting in a negative impact on their ROI
and bottom-line performance.
“Brewers need to take into account all associated supply chain costs when calculating the viability of self-
distribution,” points out Kevin Brady, president, Satellite Logistics Group. “They need to look at labor, loss of
productivity, transportation, etc., as these can have a signifcant impact on proft margin.”
Improved Keg Management Streamlines Brewer’s Supply Chain
As sales continued to outpace other segments of
the market, a leading craft brewer realized that
there was room for improvement in its methods
of returning cooperage to the brewery. Satellite
Logistics Group (SLG) was ready to help. The
supply chain solution provider’s Kegspediter®
service proved to be an efcient and efective
way to optimize keg use. By leveraging SLG’s
strategically located consolidation centers
around the country, the brewer was able to
minimize keg storage issues with its distributors,
reduce its investment in kegs and speed keg
returns, ultimately cutting four months from
the cycle time. The new process also helped the
brewer’s distributors to avoid storing kegs until
full export loads could be accumulated and
receive deposit credits more promptly.
Satellite Logistics Group | The Role of Supply Chain in Expanding Brewery Distribution Networks 3
Key Considerations for Expansion (Time to Go Big, Not Home)
As brewing operations grow in size and scale, it is essential for the supply chain to grow along with
them. For optimal efectiveness, Brady recommends that brewers consider several key factors:
1
5
3
2
4
Efcient keg utilization – The speed with which kegs can be returned
and reflled can have a signifcant impact on supply chain efcacy.
Reducing keg cycle time allows a brewery to service its distribution
market with a smaller capital expenditure on kegs, freeing up funds
for other investments.
Quality management – Protecting product integrity throughout the
supply chain is a critical element of expansion. Maintaining product
temperature, ensuring safety during transit, providing visibility, and
reducing the product’s carbon footprint are key concerns. It is also
helpful to have plans in place to handle product that is out-of-date,
produced or packaged incorrectly, damaged, or recalled.
Speed to market – A growing brewer must be responsive to customers’
changing demands. Having the right product on tap and on store
shelves at the right time is critical. Brewhouses and retailers will be
quick to substitute another brand if supply runs out.
Transportation optimization – As brewers expand into new markets,
they will need to distribute kegs across the country and coordinate
their return. Consolidated distribution is often the most efcient and
cost-efective approach. Multiple orders can be shipped together
across the country to take advantage of truckload savings and then
local deliveries are arranged. The same approach works for reverse
logistics as well. Empty kegs are gathered from multiple distribution
points and shipped back to the brewer on a single truck.
Need for more advanced technology – Brewers who are still
managing keg assets with Excel spreadsheets and phone calls quickly
see the value of transportation management software that helps them
manage their freight spend and purchase freight on a transactional
basis. The ability to track and audit their assets also has a signifcant
impact on efciency.
Satellite Logistics Group | The Role of Supply Chain in Expanding Brewery Distribution Networks 4
About Satellite Logistics Group
Satellite Logistics Group (SLG) specializes in supply chain management for the beverage industry. We deliver
innovative and efcient supply chain solutions to help our customers manage their businesses more strategically
and accommodate changing needs. Our core services include Kegspediter® keg management, LogiTrax®
transportation management and EcoBev® beverage disposal. For more information, please visit www.slg.com.
Toll-free: 877-795-7540
Phone: 281-902-5500
Fax: 281-902-5501
Email: [email protected]
Web: www.slg.com
12621 Featherwood Dr.,
Suite 390
Houston, TX 77034
Value of Supply Chain Management Support (It’s OK to Ask for Help)
To handle the growing complexity of their supply chain, many brewers fnd that working with a third-party
provider can be a valuable resource as they build their business. “Brewers are wise to seek help for areas outside
their primary area of focus,” Brady says. “A reliable, experienced supply chain partner frees them up to focus on
their main objective: brewing great beer.”
Finding the right partner requires careful research. Brady suggests that brewers evaluate potential providers
in 10 key areas:
1. Industry expertise – Does the provider have deep relationships in the beverage industry and understand
the challenges brewers face?
2. Solution design capabilities – Have they demonstrated an ability to provide innovative solutions that
meet customers’ unique business needs?
3. Execution – Do they have established processes and best practices in place and a proven track record for
delivering results?
4. Scalability – Will they be able to accommodate changing business needs and future growth?
5. Nationwide network of specialized services – Do they ofer a variety of services (i.e. keg scanning,
consolidated distribution, freight management, material recovery) for a comprehensive solution?
6. Advanced technology – Are their systems and software state of the art and able to provide real-time
visibility and automation where needed?
7. Available resources – Do they have an established distribution network and staf to accommodate current
and future needs? If not, are they willing to invest in the necessary resources?
8. Flexible fnancing – Do they ofer payment options such as “lease to purchase” to help brewers build their
keg inventory cost efectively?
9. Product disposal – Are they able to dispose of non-salable beverages in an efcient and environmentally
friendly manner if the need arises?
10. Quality management – Are they involved in SCOR or another program designed to ensure consistent
quality and continuous improvement?
Partnering with a supply chain provider for strategic solutions can help brewers manage their business more
efciently and cost-efectively while expanding their geographic reach.
doc_305190416.pdf