The following article is a guest post by Greg Shaw, the founder of Keg Metrics, that gives a good overview of why having a keg management process is important and he offers two spreadsheets that you can use free resources to help get your Keg program started on the right foot.
Take it away Greg!
How to Simplify managing your Keg InventoryGreg Shaw - Founder of Keg Metrics
It doesn’t take very much effort to realize
that the hours your organization puts into looking for information on its product inventory and keg shell inventory can be a huge anchor on its profitability. Additionally, insights into cooperage rates, total fleet size, service maintenance records, and customer purchase patterns can dramatically improve your bottom line as well as brand quality.
What’s more is it’s clear that breweries of all sizes (small and large) and distribution processes (with and without distributors) find it frustrating and time consuming to keep track of what is in their walk-in, what is out with customers, and what is available on the production floor to use. Throw in keeping track of when a keg was last serviced or QC’d and the problem gets even more complicated.
I’ve heard some other beer operations companies say you don’t need to worry about it. They’ve basically said just count your kegs or use depletion reports and reconcile against your invoices. The reason why that doesn’t work is because it is only addressing part of the problem and creates strain on other processes in the brewery. It’s lazy thinking and is like sticking your head in the ground and “hoping” everything will work out.
Another solution is to use a pay-per-fill keg rental solution and forget about all the reverse-logistics and again just basically give up on managing the assets. That’s one way to attempt to solve the problem. It can be fast. Consider this though, all you are doing in that case is outsourcing the problem to another company and usually at a premium price.
Being able to manage operations properly is critical to the success of a brewery. If you are currently paying a premium price to outsource the problem, have you ever stopped to think about what happens when times get tough? If you don’t have the muscle built of managing your operations you will then be at the mercy of the market. That premium is certainly going to feel a lot more expensive than it currently is.
Finally, there are software solutions (or “semi-software” solutions) . These vary widely and if you find yourself spending a lot of money on Pay-Per- fill solutions, or wasting hours or days a week managing your kegs and you think that the tools and processes to remove these problems and gain operational insights are too complicated and cost prohibitive, please read on because I’m about to show you how you can do this for free and in a simple way.
Let’s look at a real world situation that was documented in our market research.
Alice and John run a thriving brewery but are constantly facing challenges with keeping track of their beer inventory and keg status.
They are looking to grow but can’t because they have money tied up in their keg fleet and with cash reserves for deposits for each keg. They don’t really even know how much of that cash reserve they can use because it is unknown to them exactly how many kegs are not coming back.
At $100 a pop they care where their kegs are and when they will get them back. They also care deeply about the quality of their beer so freshness is extremely important to them. They try to keep track of when each keg leaves and with who so they know how old the beer in the keg is, and can later follow up should the keg take longer than expected to be returned.
Their brewery employs four people that must coordinate statuses and they have trouble keeping each other up to date. They are constantly trying to communicate what is reserved for the tap room, what is available to sell, how much of each keg size and beer they have available to sell and when more beer is coming off the bright tanks.
They keep going through various spreadsheet formats, but nothing quite works. Some people use a color code for the cell, while others are logging information. It doesn’t take too long for the color code to disagree with the actual text. Ultimately, they give up and just write everything down in a binder. This of course also becomes tedious and is incomplete. It can’t be searched either. It also requires double entry because eventually they need to generate reports and pay their taxes.
They are frustrated.
We’ve heard many stories like this and all kinds of reasons why breweries struggle or simply don’t manage their operations. My favorite is “what’s the point?”.
4 Typical False Reasons Breweries Give for not managing their Inventory and Keg Fleet.
“We are too small to care about keg management”
“We are too new of a brewery to know what problems we need to solve at this point”
“We use a distributor and they manage our kegs for us”
“We Self Distribute so we know where all our kegs are at already”
Unfortunately, the above reasons result in poor operations that costs these breweries a lot of money and growth potential. One of the unique value propositions of craft beer is that it is typically local, always artisan, and always high quality. As you can see from above, if you are not tacking who has what and when they got it, then not only do you put your margin at risk, you are risking brand quality—one of the very elements that defines craft beer.
So how can you quickly get a solution in place easily?
Simple ways to Managing your Kegs for Free
Of course, we are in the business of helping breweries get their keg and inventory management on autopilot but today I’m going to provide the sheets we used to design out our software. These sheets are the output reports we spent years of research perfecting. We revised them from discussions with close to a hundred breweries.
We suggest you take these two sheets, import them into a Google Sheet document and share them with your team to keep them up to date. Avoid using color codes and always use consistent names. Experiment with easy to remember acronyms to make typing on a mobile device easier and less painful.
I like these below but you should do what works for you:
- CLN = Clean
- RCV =Received (aka Dirty and Empty)
- DSTB = Distributed
- TAP = Tapped, On Tap, Reserved for Taproom
- RSRV = Reserved for customer
- AI = Available Inventory
Unfortunately, that alone will not be enough. When you put these sheets into place you’ll want to sit down with your staff and establish some standard operating procedures and expectations for using them. THIS IS THE SECRET SAUCE for success in adopting a method to improve your operations.
Be rigid in your goals but review the process once a week to see if it is helping or hurting your goal. Everyone in the brewery needs to function under the same procedure but be open to changing the procedure if it just isn’t working.
The reason why there are two sheets is because we found that breweries really need two views to look at their data.
- The Current Cycle View
- When properly accounted for this tells you everything about your current cycle kegs like your current available beer inventory, your empty keg count for clean, for dirty, who has your kegs and for how long, when you last serviced your kegs.
- A Historical view for accounting and tax purposes (how much made, how much sold, etc)\r\n
- When properly accounted for this tells you what you made, what you sold. Keeping this up to date makes life easy.
These two views are represented as separate tabs in the single excel file. You should be able to open this in Google Sheet if you don’t have Excel.
The Two views are critical. Without two views we have found that breweries sacrifice one view over the other and then eventually give up on the who thing because data is off in one or more of the sheets. These are two views you’ll find provides the ROI on the effort for the process.
We hope you’ll find a lot of use from these sheets. If you find they do help, please let us know. We’d love to hear it.
Change is hard though. Change in an organization, even a small one like a craft brewery is even harder. Don’t give up, just take one step at a time and look for ways to overcome each obstacle one at a time.
If you’d like ways to make the whole process even easier and ways to put your keg inventory and status on autopilot just reach out and I’ll personally walk you through the benefits and features of KegMetrics.
May you continue to brew fantastic beer!