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In our last post, we discussed the business challenges of micro and regional breweries producing less than 30k barrels per year (BBL). Now let’s take a look at the mid-level group of craft breweries who produce between 30k and 80k BBL.
In this group, you will find some well-known brands such as Highland Brewing Company, Flying Dog Brewery, and Oskar Blues. Here you have a need for a robust and extensive financial and distribution application. Applications such as Microsoft Dynamics® (there are four flavors of Dynamics) with third party specialty applications such as VicinityBrew is a powerful solution for these breweries. These larger breweries may have an onsite IT support team and their own in house server. These companies have the infrastructure and bandwidth to support a traditional ERP system.
The number of Breweries between 30k to 80k BBL is booming. This market segment has seen the most rapid growth over the past two years. Understandably, not every craft brewery strives to be a 100k BBL company. But if you are a brewery that has broken the 30k BBL per year mark, you have most likely run into these production challenges.
- Quality Tracking
- Costing Analysis
- Production Scheduling
- Bar Code Data Collection
Challenge: Quality Tracking
Solution: Breweries need a solution that has the ability to store and track all QC test results by brew and recipe, so you can review test results over time and review the number of tests performed by recipe. Brews requiring significant adjustments can be easily identified and the recipes themselves can be reviewed. Also, this gives brewers the ability to adjust recipes based on QC data on the fly.
Challenge: Costing Analysis
Solution: Look for an ERP system that allows you to calculate accurate production costs and compare them to actual sales activity. This makes it easier to identify lower-margin brands. By tying an actual production cost to a brand, such as a seasonal brew, you can then take corrective actions if needed by increasing the selling price of the product or, if necessary, discontinuing a poor preforming recipe. Having this depth of cost analysis allows breweries to be able to see the actual profit per unit.
Challenge: Production Scheduling
Solution: First of all, get out of excel! At this point, if you are producing over 30k BBL, you need an forecast that integrates with production. Software such as Vicinity Brew, allows you to run production scheduling and material requirements planning (MRP). It does this by tracking data from sales order to forecast to brews. The production schedule can be derived from an MRP generation that includes sales orders and forecasts, so all demand for an item is considered during scheduling. If the demand for a given item is not reflected on the schedule, the system automatically notifies the scheduler. Breweries need to be able to make scheduling changes in real time and need to communicate these changes to as many departments as necessary. Keeping everyone informed helps departments set priorities for the production, quality and purchasing.
Challenge: Bar Code Data Collection
Solution: There is nothing magical about bar code data collection. Simply find the best solution for your use. That is to say, look for an ERP system that supports bar code data collection across the entire application. Craft Breweries who are producing over 30k BBL may be needing to record production data on finished goods packaging in real time. A word of warning: when looking for an ERP solution for your brewery, make sure there is a solid integration with a reputable bar code data collection application such as Panatrack. If you already have an ERP solution make sure your systems are well under control before adding bar code data collection. Not doing either of these may cost your brewery greatly in the future. As they say “Bar code data collection is a tremendous thing. A bad process gets repeated at the speed of light”. So make sure your manual process is buttoned up prior to automating it with bar code data collection.
Check out these videos to see more information. Our next part will discuss the operational challenges of craft breweries who are over 100k BBL.
- “From Passion to Profits, Taking your Brewery to the Next Level” Part One (vicinitybrew.wordpress.com)
- “IT’S NOT YOU, IT’S ME….” Breaking Up with QuickBooks (vicinitybrew.wordpress.com)
- Craft brewing booms in Minnesota (miamiherald.com)
“From Passion to Profits, Taking your Brewery to the Next Level” Part 1
If you have spent any time within the craft industry you will find few things:
1. It is the most fraternal and friendly group of people one can ever hope work with.
2. Not all breweries are created equal. More specifically…no two breweries are alike, period.
3. Most breweries are more interested in making exceptional beer than worrying about business and technology challenges. Let’s face it, this is a passionate, artistic group of people who are driven by craftsmanship more than profits.
But as the passion for great beer develops into a real, grown up business, certain key business factors must be addressed. Factors like: “How are we going to keep up with our growing demand?” Eventually, a brewery will come to the realization that they have a need to put solid business practices into place around accounting, distribution, compliance, and production.
A big misunderstanding in the craft brewing industry is that ERP software will be too expensive, too time consuming, and too much upkeep. This is simply not true. Now more than ever, breweries of all sizes have ERP software options designed for their size and budgets. Therefore, let me share my perspective on the IT brewery landscape.
I generally breakdown the craft brewing market into three different segments. I keep my categories simple – Small, Medium, and large.
Small is 5k BBL to 20k BBL, Medium is 20k BBL to 80k BBL, and large is anything over 80K BBL.
Let’s start by looking at three key issues small breweries under 20KBBL may be facing…
- Lack of an integrating Accounting, Operations and Distribution
- Poor Inventory Control
- Formula Management
Challenge: Integrating Accounting, Operations and Distribution
Solution: Find a Brewery Management ERP system that provides a centralized database, making all master files and transactions available in one place. This allows for analysis at the click of a mouse. Microsoft Dynamics® and VicinityBrew include user-friendly query tools that allow even novices to build their own ad-hoc inquiries. Inquiries can also be printed and exported to Excel and saved for on-demand access.
Speed up month-end closing! VicinityBrew and Microsoft Dynamics provide a real-time financial, distribution, manufacturing and inventory-control system. As transactions are processed organization-wide, they’re posted directly to the financial records. Month-end financial statements and supporting schedules are prepared and issued with little effort.
Challenge: Poor Inventory Control
Solution: Craft Brewer’s need a software system that gives you the ability to analyze ongoing material requirements using existing sales orders or forecasts. In VicinityBrew, When MRP is run, material requirements are stored by date and quickly accessible for review. The result: Future capital requirements of inventory are easily identified. VicinityBrew lets you review anticipated raw-material shortages based on a centralized production schedule. Shortages can be calculated by item and day, and can take into account both lead time and safety stock. You can routinely review this data and create purchase orders for items and quantities to specified suppliers
Challenge: Recipe and Formula Management
Solution: Get off excel spreadsheet! VicinityBrew tracks recipes in a central database by both formula and version, it’s a snap to find the correct formula based on user-defined search criteria. This reduces a database of 10,000 formulas to a manageable level. Plus, you can create a new version of a formula from an existing version—and these new versions can be marked inactive until the lab has approved them for production. Once a formula version has run its course, it can be archived and also marked for view-only access.
Because brew logs are created directly from the master formula, all material substitutions or operational changes are reflected in all subsequent batches of the formula. So no worries about whether you’re working with the most accurate formula version possible.
VicinityBrew generates product spec sheets directly from the production formulas, ensuring that production changes are automatically updated on the spec sheet. That means consistent information across the production chain—and no unpleasant surprises for your customer.
Check out these videos to see more information. Our next blog will discuss the operational challenges of Mid-level breweries from the 20k BBL to 80k BBL range.
- Vicinity Manufacturing Supports The Wounded Warrior Project (vicinitybrew.wordpress.com)
- “IT’S NOT YOU, IT’S ME….” Breaking Up with QuickBooks
- The Economics of Craft Beer (smartasset.com)
- Uncle Leo’s Brewery Has Successful Opening Canada Day Weekend (atlanticcanadabeerblog.wordpress.com)