HOLLAND – The beer section in your local grocery store is a radically different place than it was a few years ago. The boom in popularity of craft beers has changed a lot of things – including the technology required to get your favorite microbrew from the brewery to your glass.
Consider what it takes for those beverages to get to store shelves. The MVP of that journey is the beer distributor: They research the options in a growing universe of beers, buy a selection of beverages from breweries, sell those beverages to retailers and restaurants, help educate retailers on prices and promotions, and are tasked with optimizing and replenishing each store to meet the changing tastes and demands of customers.
Not too long ago, a typical beer distributor would have 300 to 400 types of beer on offer. These days, a beer distributor may have 1,500 to 2,000 types of beer, due in large part to all the different craft brews. Not only are there more breweries making beer, each brewery often makes several kinds of beer, including seasonal brews and limited-run varieties that may be in high demand for short periods of time.
As a result, the big buzzword in the distribution industry is SKU (stock-keeping unit) proliferation — which essentially means a significant increase in the number of products they must offer. And along with this beer boom, distributors have had to adapt to new consumer behaviors.
Namely: As craft beers have grown in popularity, consumers have become less brand-loyal. While certain areas or customers used to be a Miller or Coors or Anheuser-Busch loyalists, today’s consumers are actively exploring their new world of options. For a distributor, that means buying trends are far less predictable.
In the distribution warehouse, this has had a transformative effect on critical processes. With so many new SKUs on the scene – and capricious customer behavior on the rise — managing inventory can be a complex puzzle. If a distributor stocks too much of a product, it can go out of vogue or even spoil before making it to store shelves. If a distributor doesn’t carry enough of a product, they can miss big-time sales opportunities. Optimizing inventory requires a delicate balance, and distributors need to get it just right in order to avoid losing money.
These factors have created a fast-moving, fast-changing market in which technology is increasingly important for a distributor’s success. For example, there are a lot more mobile sales forces and delivery teams. In order for a distribution company to remain competitive, they must keep them connected, keep them informed, and ensure they have access to real-time information to make good decisions wherever they may be.
Technology has also become an essential part of the warehouse environment. Along with robust inventory-management software, modern distributors use voice-enabled picking tools in the warehouse and systems that optimize the mix of products for delivery. And of course, all this real-time inventory data is visible to sales and delivery teams on their mobile devices, giving them accurate insights and updates on the road.
But technology is just getting started. In the years to come, it will play an even bigger role in the distribution business. It may even transform the industry entirely.
Over the past decade, businesses have collected more “big data” that they have been able to use. Now, advancements in machine learning and artificial intelligence will help make sense of vast amounts of information, finding new patterns and insights that will help distributors put it into profitable action.
For example, instead of having to adapt to unpredictable sales patterns, AI can help distributors predict future consumer behavior. By analyzing the sales history of certain stores, they can predict the popularity of new products that match the tastes of area customers. And in the warehouse, industrial Internet of Things (IIoT) devices and applications will use synthetic smarts to optimize operations dynamically and instantly.
All of that adds up to an exciting future for distribution companies, who will be able to maximize their efforts like never before. Their employees will have powerful new tools at their disposal, allowing their businesses to thrive in the coming years. Each beer’s incredible journey from the brewery to the store to you is about to get more streamlined, sophisticated, and smart. Cheers!
This guest column was written by Paul Rutherford, president, Rutherford and Associates. Rutherford’s eoStar Route Accounting Software powers modern food and beverage wholesale and distribution organizations across North America. Developed by industry experts, the software combines state of the art forecasting technology and advanced inventory management tools for a fully integrated route management solution for direct store delivery (DSD). For more information, click on http://www.eostar.com/eostar/