For many breweries, brewing to capacity has been the number one constraint for individual growth. When your demand outpaces your supply, it often creates one of those uncomfortable situations that might be considered a “good problem to have.” This scenario has been a common circumstance for many craft brewers. In response, many breweries have been investing in optimizing and expanding their production capabilities the best way they know how: with new tanks, systems, and people.
What happens as your supply and demand begin to transpose?
Why should you adjust your growth strategy to correct for supply from outpacing your sales demand?
If breweries continue brewing to capacity, regardless of decline or unmatched sales growth, coolers and storage facilities can fill up quickly.
Problems with Overstocking/Brewing to Capacity
- Decreased Shelf Life: By not having packaged beer in front of your consumer, you lose shelf life as products age. Regardless of industry, location, or expertise in your craft, there’s no stopping time
- Cost of Physical Inventory: You spent the money to produce items, but are unable to recognize profits due to overstocking.
- Limited Space: Overstocking can create dead space in your storage areas, consuming this space unnecessarily can disrupt the flow of materials and finished goods through your facility.
- Spent Labor: Excess time dedicated to organizing and taking physical inventory counts.
Breaking the Habit of Brewing to Capacity
Efforts to balance inventory, production, and sales demand to require increased visibility into your production flow and a tighter forecast of future sales. Taking the time to evaluate and measure your supply chain against sales demand will enable your brewery to:
• Run Lean: Save time and money from shifts and resources by only brewing what you need to fulfill sales orders.
• Identify Brewing Opportunities: Does your brewery have extra capacity for contract brewing?
• Optimize Finished Good Production: Quickly adjust your packaging materials to follow next sales trends for your product mix, such as switching between six-packs and various bundles.
Leah Wong Ashburn, President of Highland Brewing Company, described some of Highland’s history and her experience stepping into the role of President a few years ago, compared to today’s craft environment. Leah explained the sense of crisis that an organization experiences in making risky decisions. The risky or “crisis-mode” decisions involve both danger and opportunity. In recent years, Highland “intentionally held back growth and felt a strain, but the brewery is stronger now for being in crisis, asking questions to improve pricing, inventory, and recipes.”
Most distributor or customer orders do not come in with enough lead time to drive your brewing schedule. Using a brewery management system, such as VicinityBrew you can gain real-time visibility into what products you have on hand, in production, and planned for the future. By measuring directly against your sales orders or forecasted demand, you can narrow the margin for error and avoid an overstock situation. Utilizing these insights, brewers can break the habit of brewing to capacity and optimize their brewing schedule and product mix. VicinityBrew offers direct integrations with advanced forecasting software such as SkuBrain to stay ahead of packaging orders well before sales are input.
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