Supply chain management of a brewery business

It becomes necessary to boost supply chain management efficiency because of the expanding worldwide demand and every company’s ambition to expand. Logistical management is no longer the main concern. The planning of supply chains has moved into the current decade, where technological developments complicate supply networks while also increasing their effectiveness. According to the amount of sales, San Diego, California-based Ballast Point Brewing and Spirits is the 17th-ranked big brewery in the world (Watson, 2014). This is because proper supply chain management planning as a very effective tool to scaling up of sales.

The company was founded in 1996 by Jack White and has since then grown to greater lengths. The company also had the first San Diego micro distillery after prohibition. Founder Jack White had a taste for beer since college where together with his roommate Pete A’Hearn had a home brewing idea implemented at their UCLA apartments (Watson, 2014). The company has since then grown in terms of size of sales as it adopted proper supply chain management plans. On top of setting an ideal number of planners, the company successful supply chain management plan can be primarily attributed to proper identification of planning drivers which include; laying the foundation by a good business model, proper inventory management, forecasting or adopting an approach that is demand driven, quality control.

The Ballast Point Company takes pride in crafting of good quality beer. The beer starts with Wort which is a mixture of hop, water and grains. The Wort is actually yeast food. When yeast is added to the Wort, it consumes the sugar in the grain then excretes alcohol. Hops are for providing bitterness and flavor. The quality assurance team at Ballast Point has to perform a number of daily lab routines (Simpson, 2011). Measurement of gravity is among the many important roles played by the quality team. Using stir plates and a hydrometer, density of sampled batches of beer is measured. This is important in tracking fermentation and making sure the final drink is healthy. The team also measure the amount of oxygen absorbed. Oxygen is very important for the fermentation process but turns to a challenge when canning and bottling. Another crucial point is viability testing and cell counting. Cell counts are made and viability tested every time yeast is reused as good quality yeast is expensive and has to be reused.

Business Model

The productivity and cost of labor production has increased thanks to technological advancements impacts on lowering the cost of production. During the same century, resources and input materials has been projecting in the other direction. The prices of commodities since the year 2000 have more than trebled. The demand and supply dynamics behind these volatile facts are likely to increase the pressure as middle income consumers are likely to increase by 2.5 billion come the year 2030 (Khalid, 2016). The effect of climate change and the relationship between water, energy and food will result to risks without proper actions resulting to a reduction in profit margins and increased costs in the supply chain.

Ballast Point Brewery understands all the dynamism as it aims improving the resilience and efficiency of their supply chain resources. The company’s business model is based on the development of a framework that aims at lowering supply cost while increasing its efficiency. The company’s products are bottled and sold in bulk to deport that supply to retailers (Simpson, 2011). The break down in supply makes it easy to manage inventories responsible for quality and production management.

An important aspect of the Ballast point business model is how it improvises on market data in determining the next move for the company. The company reacts differently to different market indicators making their business model one of the most dynamic models. The sources of information vary as they could be entirely extracted from the internet and the social media to be specific, or they could have been manually collected using questionnaires. The model is definitely of a kind bringing into focus issues faced by the final consumer and integrating them to the final business model. It is in order to appreciate that the Ballast Point Brewery business model lacks rigidity with regard to actions taken relative to changes or anticipation of changes in the industry.

On top of the data based business model, a proper supply chain management system is necessary to make sure that these products get to the destined market on time. The demand for beer and wines has over the last decade grown tremendously and raises the need for an effective supply system that minimizes on delivery cost and time while maximizing on effectiveness (Khalid, 2016). To make sure that supply chain management system works properly, it was developed alongside the business model to make the two systems harmoniously yield maximum results.

Supply Chain Management

Ballast Point Brewery focused their supply chain plans on a system that enables them to optimize customer services and cash. The company came up with a plan that is adoptive to demand and supply dynamics. Online stores have been a very important part of the brewer supply chain plan where the company encourages its distributors to open online stores to increase their coverage. This is because the demand is growing so fast to an extent that the company’s growth cannot meet this demand, and has to improvise. Bringing technology and human capital into harmony has resulted to what is currently one of the biggest brewing companies in San Diego (Simpson, 2011).

The company understood the importance of proper inventory management in the overall supply chain cost now and in the future. The plan should be able to adjust to changes in trends in the beer and wine businesses (Khalid, 2016). The supply chain management integrates with technology which facilitates proper big data analysis, collection of feedback and forecasting future trends in demand, supply and supply chain management. It is very important to note that, the company not only believes in the supply chain management plan but also implements it. The company could not have achieved its sales milestones if it had not laid for the Supply Chain Management plan and implemented it. The following features were identified to positively impact the business model and Supply Chain Management plan of Ballast Point Brewery.

This information has not only been important in foretelling future market trends but also in assessing the performance of a new or an existing product in the market. In fact the variables can be used to anticipate weather a new product will perform well before resources are allocated to the same. Among many other factors, I think the fact that Ballast Point business model has been based on scientific methods of decision making has been a very important aspect in their success story. Data will be updated on a daily basis on social media platforms and it remains the responsibility of the company to know on how to best harness this data to their best interest.

A good feature of the Ballast Point Supply Chain Management system is the flexibility that it presents. The availability of data as part of the broader business model enables the system to be dynamic relative to real time analysis of the market situation. The plan should is responsive to changes in demand and supply hence reducing costs resulting to excess demand or supply. Excess supply may harm the company financially as the beers shipped are more than those demanded by the consumer. This means that a cost was incurred in shipping products that will not be sold as anticipated and are likely to lead to losses (Watson, 2014). Excess demand on the other hand means that the company’s plan does not maximize on the market potential leading to a high supply cost that could have otherwise been lower.

The company should be able to properly react to the analysis of data presented to it from all data sources including customer feedback which is very essential in remodeling of a business model. Inventory records of the demand of the specific products enables market experts to come up with market trends over time making it easy to foretell future industry changes. Customer feedback is also very important as it is the first hand information from the final consumer. All this data is analyzed and the result is the company’s ability to foretell future trends and adjust the Supply Chain Management plan accordingly (Simpson, 2011). Making forecasting part of your plan by setting standards on how the system should react to anticipation of specific changes is of essence. Due the company’s appreciation of the importance of flexibility to a Supply Chain Management plan, it has continued to thrive in a very dynamic industry.

Conclusion

The beer and wines business is a very competitive business and only the best tend to survive. A data based business model and Supply Chain Management plan is the major reason why the company stands out in the industry as it reacts to issues on the ground as soon as they happen. To increase the advantage of data availability, Ballast Point concurrently developed the business model and the Supply Chain Management Plan to increase the amount of data available to either team.

References

Khalid, A. (2016). Managing Supply Chain Risks and Vulnerabilities through Collaboration: Present and Future Scope. The Journal of Developing Areas, vol. 50(5), 6-97.

Mittelman, A. (2008). Brewing Battles: A History of American Beer. New York: Algora.

Simpson, J. (2011). Creating Wine: The Emergence of a World Industry, 1840-1914. Princeton, NJ: Princeton University Press.

Watson, B. (2014). “National beer sales and production data” Brewers Association. Retrieved from http://www.brewersassociation.org/statistics/national-beer-sales-production-data/ (Accessed 30th June 30, 2017)