Post updated December 2020
Keeping a finished product mix available for consumers is one challenge; but how does the craft brewer respond on the front end of brewery supply chain – when a raw material shortage threatens overall production?
Keeping your craft beer supply chain flowing is just as difficult as finding the perfect brew. You must coordinate the purchase of raw materials, avoiding spoilage, cross-contamination, extended cleaning and storage/space issues. If you offer seasonal brews, it further complicates product line integration.
How you manage these tasks will make or break your brewery supply chain.
This year has stretched many of the resources and supply chains for breweries big and small.
“Covid-19 may even prompt companies to judge supply chains more on their resilience and reliability during a crisis, and less on their ability to minimise surplus stock and their efficiency of delivery. “Before Covid-19, just-in-time demand and no excess stock [in supply chains] was seen as desirable,” says Mr. Yearsley, a partner at consultancy Deloitte who specialises in supply chains and procurement. “In future, maybe excess capacity for supply chains will be seen as desirable because it builds buffers into supply chains to cover changes in demand.” Financial Times, May 28, 2020*
Clearly small-batch brewers are not alone in their brewery supply chain struggles!
Here are key steps to follow that will start you down the path of supply chain redundancy, no matter the size of your brewery:
• Negotiate Alternatives: Since the majority of our supply demands are agricultural, the impact of weather affects availability. Brewers should search for alternative suppliers, but make certain they are paying attention to quality, service, technical support and ease of doing business. Do this now in order to be prepared for the unexpected.
• Understand Supplier Contingency Plans: Create a risk-management culture by talking with suppliers about their contingency plans, including eliminating supply bottlenecks and improved information sharing. Your supplier may check the box indicating redundancy, but many times the plan sits on the shelf collecting dust. One good question to ask is, “What is your plan in the event of a product recall?”
• Create IT Redundancy: If you’re using IT analytics to run your business, it’s important to have an emergency plan in case of systems failure. Scalable software, secure internal infrastructures and re-routable processes all create redundancy in your back up plan. Reliance on a hosted solution on a reputable data center can mitigate this risk.
• Safety Stock: One possible way of keeping ahead of the supply chain shortage game is to order supplies in higher quantities, which could ultimately reduce your overall costs. Monitoring and preventing spoilage of course is important, but if space isn’t an issue, it’s always better to carry safety stock.
We recommend considering an integrated brewery management system that links forecasts to production schedules to supplier contracts as a way to mitigate some of the risks inherent in your brewing business. Knowing what you need in your specific brewery supply chain, when you need it and from who you get it will help you achieve a competitive advantage in an increasingly tumultuous global economy.
Huber, Nick (2020, May 28). Pivoting production eases pressure on pandemic-hit governments. Financial Times. https://www.ft.com/content/c040fdd0-80a0-11ea-b0fb-13524ae1056b