By Aaron Corcoran, Account Executive, Westfalia Technologies, Inc.
For years, the majority of the beer market has been occupied by the big industry players like Anheuser-Busch and MillerCoors. While these industry leaders continue to hold a fair share of the
market, smaller-scale craft breweries are gaining traction.
Today, the craft brewing industry is booming. According to the
Brewers Association, craft beer production volume increased in the
United States by 18 percent in 2014 alone. Additionally, IBISWorld
predicts that the craft and premium beer segments will reach $29.8
billion in revenue by 2019. As these small market and craft breweries keep growing, distributors are looking for new, strategic ways to
obtain a competitive edge while taking on these additional SKUs. For
most, this means doing things a little bit differently in order to operate more efficiently, improve customer satisfaction and cut costs.
Today, one of the most promising solutions for achieving a competitive
advantage is warehouse automation technology.
Maximizing Space Utilization with AS/RS
As craft breweries continue to grow and generate more SKUs,
distributors are struggling to find the necessary space for storing
these products. At the same time, warehouse space is at a premium
and new construction can be an expensive undertaking if not planned
properly in conjunction with an automated storage and retrieval
system (AS/RS). But, by retrofitting their facilities or expanding in conjunction with high-density, multiple deep AS/RS, these organizations
can essentially “do more with less” – they are storing more product in
a smaller or same amount of space, and have room to accommodate
for future growth. There is no need for off-site storage, cross docking
to remote facilities, or costly construction that is not optimized as part
of implementing an AS/RS. While investing in an AS/RS may seem like
a large capital expenditure upfront, it will be worth it, as the systems
typically deliver ROI in three to five years and boast lifespans of more
than 25 years.
Combating Consumption Patterns/Seasonal Spikes
From seasonal (Oktoberfest, summer ale) to unique (chocolate,
banana bread), craft brewery “flavors” are aplenty, which is one of
the chief reasons consumers are flocking to this market. However, the
variety of tastes means that there are major variances in consumption patterns, as well as seasonality spikes, which create difficulties in
managing inventory and optimizing space. For example, if a distributor
has 1,000 SKUs, and currently 200 of those account for more than
80% of their volume moving out the door, there are another 800 SKUs
left taking up the remaining 20% of vol-
ume. Yet, these SKUs are primarily sitting
in the warehouse taking up valuable space.
This does not seem very efficient.
An AS/RS allows for better management
of these “slow-moving” SKUs, but targets
those top 200 SKUs and optimizes their
space effectively. The ability to accommo-
date a distributor’s complete spectrum of
SKUs is built into the AS/RS and
facility design. Then, by bringing
in software, like a warehouse
management system (WMS), and integrat-
ing it with the AS/RS, organizations have total control over their inven-
tory, whether it is a slow-moving brew for the winter months, an IPA
that is popular all year round, or that fast-moving SKU that accounts
for a majority of the volume. Therefore, without having to worry about
their inventory and maximizing space, distributors can focus on more
critical areas, like fulfilling orders.
With a diverse, large number of SKUs, and a need to best serve
the customer in a timely, accurate manner, order fulfillment presents
another challenge for beer distributors. Retailers are keeping less
inventory in stock, so it is up to these distributors to pick, pack and
deliver orders more frequently, while being made up of a more diverse
order profile than in the past. Interfaced with an automated picking
solution, an AS/RS allows organizations to store and retrieve pallets,
layers and cases of beer for just-in-time (JIT) order fulfillment. Case-level picking is especially useful, given the number of SKUs, and helps
assemble a pallet with multiple types of product to fulfill a single order.
AS/RS can ensure optimal order fulfillment, from end to end. It is easy
to pick cases, efficiently locate them to the right pallet, wrap them and
then move them onto the delivery truck.
Optimizing Product Handling/Reducing Labor
Moving heavy cases in the putaway, order fulfillment and delivery
process is, without a doubt, a beer distributor’s most labor-intensive
task. And, it’s no secret that beer bottles are breakable. Automation
technology significantly reduces manual labor to improve productivity,
and ensures the safe handling of products to minimize product
Other Cost Savings
Along with the savings associated with improving space utiliza-
tion, productivity, and inventory management, an AS/RS in particular
provides a number of other opportunities for reducing costs. For one,
automated warehouses require less energy to function due to the
need for fewer interior lights and less space to regulate temperature.
Especially in refrigerated or temperature-controlled warehouses, busi-
nesses experience lower energy costs, often by about 30 percent – a
certain “plus” for the beer industry. Also, many automated warehous-
es report savings due to less waste and lower maintenance costs.
At a time when craft brewing is at an all-time high and the com-
petition for distributing these value-added brands is fierce, investing
in the latest warehouse automation technology is an ideal strategy for
long-term success. Whether a distributor is looking to streamline order
fulfillment, meet changing consumption patterns, or simply maximize
existing space, automation provides the flexibility needed to meet cur-
rent challenges and adapt to meet new ones in the future.
How Craft Beer is Affecting Distributors &
How AS/RS Can Support Ongoing SKU Growth