Every Drop Counts
How inventory management software helps breweries boost profits and produce better beer.
Know your numbers. This is a maxim that breweries – or any business for that matter – need to stick to if they stand a chance at achieving growth and sustained profitability. Producing a great beer is one thing, growing a great beer brewing business is another thing altogether.
Regardless of how many retailers or thirsty customers there are clamouring to fill their fridges with your tasty brew, if the numbers are off the margins will be too. In the beverage industry margins can either catapult a business to profitability and growth or crush it into debt and submission. What’s more, once a business starts down the slippery slope of inaccurate inventory levels, a host of avoidable and costly issues begin to rear their ugly heads – obsolescence of overstock, shortages of raw materials, delays and shut downs in the brewing process, loss of entire batches, off target forecasting and erroneous re-orders.
Not surprisingly then, how a brewery manages its inventory – from purchasing through production and packaging to sales and shipping – has a major effect on the business as well as the beer.
Mistakes can be extremely costly, delays in production can put a dent in customer service targets, and a single misstep in the ordering, production or distribution of products to customers can end up costing the business big time.
This is why it is very important for breweries to exercise complete control over the flow of inventory.
Old school won’t cut it anymore
When inventory managers are reliant upon outdated, inefficient and inaccurate inventory control practices – think multiple spreadsheets, a small army of web applications, hand written notes and data submitted from other departments – the business will begin to haemorrhage money.
Trying to accurately track, trace and account for the perishable inventory breweries depend on without the tools to do so will result in a rising of unnecessary costs. If an inventory manager is reliant upon manual data entry to record the latest hop and barley depletions, based off ‘best guess’ estimates provided by the production notes handed in by the brew master, there is no way an accurate, real time appreciation of the inventory can be achieved.
Why accurate inventory levels matter
Maintaining accurate inventory levels at all times is the holy grail of inventory management. Failing to do so results in a number of outcomes which all – in one way or another – contribute to ramping up expenses and driving down efficiency, productivity and profitability.
The challenge of ensuring inventory levels are accurate is more acute in the case of a brewery. This is because the ingredients that go into producing a great beer are perishable. So, not only is there a challenge in terms of ensuring all the working parts in the buying, production and distribution of raw materials are synergized, but the clock is against you too.
Perishable inventory runs a much higher risk of obsolescence than non-perishable goods, which makes it all the more essential to know at all times how much is on order, on stock as well as how much needs to be ordered to meet future demand and incoming purchase orders.
For instance, if the inventory manager is under the impression that the amount of hops in inventory is sufficient when it actually isn’t, forecasting will be off and the next re-order will come up short. If this happens in a high-demand bracket, or if a large purchase order suddenly comes in from a customer, the chances are high that demand will be left unfulfilled – leading to lost sales and potentially the loss of a valuable customer. Conversely, if inventory is under-estimated, the next re-order could bring in more hops than is actually necessary. This then leads to an overstock issue where the hops may possibly go to waste. It is also worth mentioning that surplus inventory levels unnecessarily tie up cash flow, raise costs – labor and storage – and render the business unable to capitalize on sudden opportunities that may arise in future.
The intangible costs can be just as damaging
Apart from the tangible and measurable costs inaccurate inventory levels can have on a brewery, the intangible costs of poorly managed inventory can take a toll too. If your inventory manager is constantly having to run around from the office to the brewery to the warehouse to confirm or collect missing data, efficiency takes a nosedive, staff morale plummets and friction between department heads is likely to occur. In short, the sailors on the ship are driven towards desertion or mutiny.
When inventory data does not match up the inventory manager most likely has to resort to conducting a manual, physical stock take. This is both unproductive, time-consuming and costly.
The bottom line is that if there is no way to integrate all the inventory control mechanisms at play – spreadsheets, accounting software, web apps, written notes etc. – then the inventory manager is not able to do their job. Skilled labor is hard to come by and losing qualified and highly trained staff can prove to be a major setback.
Most inventory issues are rooted in a fundamental disconnect between the various departments and processes of the brewery as well as inefficient manual inventory control practices such as using spreadsheets.
Cloud based SaaS inventory management solutions allow for seamless integration between all departments. With a cloud based inventory management platform in place, inventory can be managed in real time, by all important team players, across departments and processes. So, for example, the brewmaster will be able to input and update production data – how much and which raw material – he or she uses in real time, from an iPad, tablet or even a smartphone.
The inventory manager can now rely on up-to-date, real-time data to determine inventory levels and forecast future demand far more accurately. With a cloud based inventory management software system in place, seemingly complex tasks can be accomplished with ease and efficiency.
Cloud based brewery inventory management makes it possible to accurately keep track of all raw ingredients as well as offsite brews. The right amount of ingredients for each beer recipe can be picked across multiple warehouses to produce every single batch with minimal waste and integration with all vital systems and programs –accounting, eCommerce, Point of Sale (POS) and analytics – can be seamlessly achieved.
The net result is optimized efficiency, productivity and profitability and of course, the production of high-quality, mouth-watering beer tracked, traced and accounted for down to the very last drop.