Ballast point brewery business model and supply chain management

A supply chain management needs to be more efficient because of the expanding worldwide demand and every company's ambition to expand. It's not only about handling logistics anymore. Planning for supply chains has moved into the current decade where technological improvements complicate supply systems while simultaneously increasing their effectiveness. Based on the number of sales, San Diego, California-based Ballast Point Brewing and Spirits is rated 17th among significant breweries (Watson, 2014). This has been due to appreciation of 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.

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.

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 inventory management, 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.

Inventory Management

Inventory management is a very important part of supply chain management. Inventory management is responsible for making sure that there is no excess production and no excess supply. This is made possible by the company’s initiative for managing inventory for their clients enabling them to easily come up with production a trend that is responsive to specific times of the year (Mittelman, 2008). This data is very important as it reduces the supply chain cost by making sure that no excess products are supplied. Excess supply leaves the suppliers with dead stock leading to losses. Technology comes in handy in making the inventory management system more effective at a lower cost.

Inventory management data also enables the company to assess the market performance of a new product in specific geographical parts of the country. Inventory is also kept in terms of customer feedback which can now be collected online. Customer feedback is very important in evaluating the success of the current supply plan and the redesigning of the same. Including supply agents in the Supply Management plan has been very fruitful as it helped boost the relationship between the different parties (Khalid, 2016). This has intern provided platforms for collecting data for trends in the beer and wines market which is very important in forecasting future trends in the Industry.

Forecasting

A good Supply Chain Management plan should be able to foretell of upcoming changes in the industry. The plan should be 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 meets its forecasting needs by analyzing data presented to it from all parts of the industry. 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 forecasting to a Supply Chain Management plan, it has continued to thrive in a very dynamic industry.

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.

A good Supply Chain Management plan must put into place a measure to ensure that products are of the best quality as it is very important for company to attain stable and predictable supply patterns. The company has a range of quality experts that are tasked to make sure that the end product is safe to consume and of a high quality. Quality is also important in maintaining the image of the specific brand and will in most cases determine how the company will scale the supply of a specific brand from the moment it is introduced to the market (Watson, 2014). The company with no doubt brews one of the best beer brands in San Diego which is a fact that has seen the company scale up its supply over time.

Conclusion

Involving all the parties in the industry can be very important in the process of developing an effective and cost friendly Supply Chain Management plan. Having a good business model lays a good foundation for a good Supply Chain Management system while inventory management keeps track of all the dynamics in the market (Khalid, 2016). Harmoniously including forecasting and quality management improves the effectiveness of the Supply Chain Management system.

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)