As any experienced brewer knows, managing the inventory is among the most important and complex parts of the operation. Both strategically and in everyday brewery management, getting your inventory right can go a long way toward building efficiencies, minimizing losses, and enhancing profitability.
That’s especially true in today’s craft brewery market where profits are stagnating while competition continues to increase. Businesses that are able to maintain effective brewery inventory control get a crucial leg up on their competition.
Of course, many brewers haven’t cracked the formula of brewery inventory control yet. The efficient management of raw materials, work-in-progress goods, and finished products is nothing if not complex. But if you can get it right, it will become a core part of your brewery operation’s long-term success.
The Keys to Effective Brewery Inventory Control
Before diving into the benefits of brewery inventory control, let’s start with a quick examination of what it takes to get there. There are six components that need to be right from the start:
- Grasping the fundamentals of inventory management, including key terms and control metrics to keep things consistent and transparent.
- Tracking inventory through software that helps you manage both internal inventory and any external needs throughout your supply chain.
- Automating inventory where possible, from running regular reports to automated reorders and alerts as ingredients or finished products run low.
- Forecasting processes using both your own and industry-standard data to anticipate order and production needs.
- Contingency planning for the unexpected, from orders taking longer than anticipated to ingredient and product spoilage or waste.
- Setting clear goals that enable you to not only manage your inventory daily but also improve your brewery inventory control over time.
Related: 6 Keys to Effective Brewery Inventory Control
Getting all of these pieces right can take time, and it will certainly take effort. But once you do, the benefits of enhancing your inventory control are immense. We’ll outline seven of the most important advantages you can see from prioritizing this process below.
Benefit 1: Reduce Your Ingredient and Inventory Waste
Inventory spoilage is among the most potentially significant issues breweries can face, particularly because of the diverse ways it can happen. From storing ingredients too long to a faulty process, all the way to keeping kegs in rotation for extended periods of time, any inventory wasted can become a significant cost that’s not easy to recuperate.
Gaining reliable control over your inventory means reducing the risks. You’ll gain a better handle on the age of ingredients and products, knowing exactly when a reorder might be necessary. That insight also continues into your production planning, discussed in more detail below. With a better forecast of your future production, you won’t need as much inventory on hand at any given time, reducing the risk of spoilage and waste.
Benefit 2: Optimize Your Production Planning
Effective brewery inventory management, as mentioned above, also plays a central role in optimizing your production planning. With greater understanding and better reporting on your inventory flows, you’ll gain more insightful data on how much you need to order and produce going forward. That means better planning and fewer delays caused by inventory shortages or stockouts.
When you’re on top of your inventory control, you can take it even further. Analyze anything from cost patterns to fluctuations of completed goods to enhance your understanding of the optimal points for producing new beer. Over time, that means building up your efficiencies to ensure that every batch you brew is perfectly optimized to ingredient availability, equipment production timelines, and customer demand.
Benefit 3: Improve Your Cost Accounting and Cash Flow Management
Don’t think about your inventory management as solely based on physical ingredients, packaging, materials, or products. The costs associated with these pieces matter just as much. Once you manage your inventory accordingly, you can build budget efficiencies that enable you to optimize the cash flow of your entire brewery.
For example, once you know exactly how much every item in your inventory costs, you can better understand the expenses of your overall orders as well. Combine that with production planning, and you’ll always know how much money to budget for reorders.
However, you can even take it further. Combine your inventory cost accounting and management to get a better idea of your cost of goods sold (COGS). That enables you to understand where to improve your supply chain to lower your COGS and improve profitability.
In other words, effective brewery inventory control has a direct impact on your finances. By knowing where you’re spending and how to improve your processes, you can build up your profitability over time.
Benefit 4: Build Central Operational Efficiencies
Your brewery’s success depends on a complex flow of operations that begins at the ordering stage and moves through to finished kegs stored at local bars and restaurants serving your products. Inventory management, of course, is not the only process you should optimize to get it right. But it does touch every step for the entire flow to work efficiently.
The key is automating your ordering process, helping to ensure that you always stock the right level of ingredients and packaging materials. It also moves all the way through to your management of finished beer, ensuring that you always know when to swap out kegs or internal inventory and avoid serving spoiled or low-quality products to your customers.
Benefit 5: Improve Your Brewery Management Decision-Making
Because of the benefits listed above, effective inventory control can play a central role in helping you make better decisions when managing your brewery. Just some of the many examples of this advantage include:
- Evaluating vendors across your supply chain to make sure you’re working with the most reliable, cost-efficient, and highest-quality partners possible.
- Making more informed financial decisions, thanks to a better understanding of how every order you place affects your cash flow and bottom line.
- Considering which of the products you brew are most effective in helping you attract customers and maximize your profitability.
- Making better decisions on how to best utilize your equipment based on which orders and inventory you can work with over a specific time frame.
Related: 8 Ways to Transform a Brewery with the Right Inventory Software
Each of these decisions is improved by leveraging not just hunches but data. Once you get full control of your inventory and data begins to flow in, you can gain confidence in making the crucial calls that help keep your brewery moving toward success.
Benefit 6: Increase Your Customer Satisfaction
You might not think of inventory control as directly connected to building a reliable base of satisfied customers. But in reality, that connection is much more straightforward than you might think.
It all comes down to the reliability of your product. Research shows that while craft beer customers are happy to try out new products and breweries, they will only come back if they can reliably expect the same quality in the future.
That means two things above all: your products need to be reliably available, and they need to be reliable in terms of quality. Stockouts due to inventory delays can be devastating, as can inconsistent brews that don’t line up with the memory or expectations of your customers.
With optimal control of your inventory, both of these potential risks begin to decrease. As a result, you can raise customer satisfaction, ultimately enabling you to run a more successful brewery business.
Benefit 7: Enhance Your Bottom Line
Finally, and as a result of all the above, controlling your inventory strategically has a tangible impact on your bottom line in more ways than one:
- Find better value on your orders and reorders, reducing your cost of goods sold.
- Improve operational efficiencies to reduce the time your equipment will be idle, hence not generating revenue.
- Improve your cash flow management and cost accounting to build efficiencies and minimize financial waste.
- Accurately forecast the need for future inventory to reduce wasted production.
- Reduce product and inventory spoilage, leading to better products that your customers will love.
Combine each of these points, and you’ll get a more efficiently run brewery with the inventory management needed to pull it all together. The result is a stronger bottom line, which is especially vital in an environment where brewery profit margins continue to shrink.
Leverage Brewery Software to Enhance Your Inventory Control
Of course, managing your inventory isn’t effective if it’s done manually. Each of the above steps in isolation would take up so much time that you lose important efficiencies elsewhere. Instead, bring these benefits to your business with software designed for more effective and efficient brewery inventory control.With the right brewery-focused software, the benefits for your business could be immense. That’s where Ekos comes in, offering a platform that specifically helps you optimize and manage your inventory—and all your operations. Request a demo to learn more about our platform and how it can help you gain control of your brewery inventory.
