Tuesday, July 15, 2014

Craft Beer and its Impact on Warehouse Operations

By: Brian C Neuwirth of Unex Manufacturing

The craft beer business is booming,  In 2013 sales grew by 18% and the continued growth now comes from over 2,700 U.S. breweries.  With growth comes an introduction of  new SKUs and suppliers which presents a unique opportunity for beer wholesalers.   According to the NBWA, in 1996 the average beer distributor carried 190 unique SKUs from an average of nine different beer suppliers. By 2010 that number had ballooned to 536 SKUs from 18 different beer suppliers. Most estimates place the average SKUs today in the thousands. SKU proliferation has had a widespread impact on warehouse operations and is leaving beer wholesalers asking what can be done to accommodate this 10-fold increase in SKUs?  There is the opportunity for increased revenue derived from a larger product offering but the challenge of being able to store these products efficiently in a warehouse that was designed to house 190 SKUs.

At +AK Material Handling Systems (Unex), we work with beer wholesalers and have seen first-hand the challenges that our customers have faced integrating these additional SKUs into their warehouse. The biggest obstacle to overcome is that wholesalers can’t use the same day-to-day processes and pick styles that they used when they had 190 SKUs. It just isn’t feasible and there are way too many items. The processes and design of the warehouse and the actual path that pickers take to select items has to change in order to be more efficient and evolve with the times. Beer wholesalers have to take a page from the grocery distributor’s playbook. Grocery distributors deal with thousands of SKUs and have figured out an efficient way to store and pick those SKUs.

The first thing to do is to analyze your product mix  based on throughput to determine the best storage method Your slow to medium moving kegs (or cases) should be stored on keg racks. Keg flow is a wonderful space and cost-saving alternative to palletized storage. A 1/6 keg can be stored in much the same manner as you would store cases, on flow rack. For example, in this picture
you can see that there are 8 kegs stored across the bottom of this rack. Keg flow helps consolidate floor space and improves stock rotation with FIFO storage. When you pull a keg out for distribution, there is another one that slides in right behind it. And because each lane is labeled, it minimizes the chance of a mis-pick and reduces overall operating cost by not having to correct orders.

The craft and microbrew boom isn’t showing any signs of slowing down or stopping any time soon. Wholesalers need to either expand their warehouses or figure out how to efficiently use the space they already have. Looking to the grocery business gives us a blue print in how to handle this increased SKU proliferation.

If you are interested in maximizng your space with a Unex Keg Flow system make sure to contact AK Material Handling Systems.