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Bottlenecks in Breweries: Don’t Run Dry!

Let’s talk about beer; or rather, let’s talk about making beer.

Bottlenecks (no pun intended…) manifest in all businesses, and breweries are no exception. Most organisations have a difficult time identifying their bottleneck but if you work in a brewery, you should find it relatively easy. The brewing process is fairly simple: the collection of ingredients, the fermentation in stills, the harvesting of the beer and finally, the filling of bottles, cans, kegs or casks. In our experience, the bottleneck is most likely to materialise during the brewing process, specifically during the fermentation in the stills. In any environment, the rate at which the resource that makes your product operates determines how much product is made. If in your business you have found that the brewing process is not the bottleneck, you must direct your full attention to improving the area that is. However, most likely, you’ll find your bottleneck to reside in the stills.

Let’s talk about beer; or rather, let’s talk about making beer. Bottlenecks (no pun intended…) manifest in all businesses, and breweries are no exception. Most organisations have a difficult time identifying their bottleneck but if you work in a brewery, you “should” find it relatively easily. The brewing process is fairly simple: the collection of ingredients, the fermentation in stills, the harvesting of the beer and finally, the filling of bottles, cans, kegs or casks. In our experience, the bottleneck for a beer making company should be the brewing process, specifically the fermentation in the stills. In any environment, it makes sense to have the bottleneck in the area that produces the product or service your customers are buying from you. If, in your brewing business, you find that the brewing process is not the bottleneck, you should quickly improve the area that is limiting output until it is no longer the problem. However, most likely, you’ll find your brewing bottleneck will be the stills.

With limited capacity on your bottleneck, you need to know what the best things are to spend brewing capacity on. If you walked into a pub twenty years ago, how many beers would have been on tap? Probably one ale, one bitter, one cider, and if you were lucky, you’d have the choice of not one, but two lagers. Fewer SKUs meant an easier choice when it came to allocating brewing capacity. Today, consumers seek variety, which presents brewers with the dilemma. Twenty years ago, there were fewer, larger breweries even being faced with this dilemma – nowadays there are thousands of new and craft-brewing businesses in every country! With consumers’ desire for more and more new and exciting flavours and increasing competition, it’s never been so important for breweries to assign their limited brewing capacity to the right products.

Directing your brewing capacity towards your ‘core range’ (products you know sell) would be the easiest option and would provide your business with some stability. Producing flavours that you already know are attractive to most people, offers you the chance to satisfy your current customers and enjoy the luxury of steady, repeat, invoiceable sales. However, many customers are attracted by new flavourings, and existing customers might leave if nothing new emerges to excite them.

The other option, therefore, would be to direct brewing capacity toward the creation of more and more innovative new flavours. This would attract excited, new customers and invigorate existing customers by providing them with some variety. It could even give you an edge on your competition. But, launching new products always carries some risk – you could be sacrificing some of your valuable brewing capacity to products that might not sell! There’s no guarantee, no stability. To make things more difficult, launching new products often requires more capacity than running with existing ones due to new setups and processes.

In an ideal world, you’d do both. These are both big needs for your business; the ability to satisfy and retain existing customers whilst attracting new ones. So, how can you achieve both? You already know the answer: you need enough (more) brewing capacity. When working with brewing clients we typically encourage two things to increase brewing capacity at no extra cost to the business. First, always reserve capacity for new products. The business needs to define the minimum number of new products needed and adhere to it. And, second, reduce the interruptions to capacity that creating new products causes. Ensure the new setups and processes are tightly scheduled to minimise interruptions. It’s also important to be confident in your methods when launching new products. Keep preparation and production separate – don’t be experimenting with new techniques on the line! Only allow ‘tried and tested’ methods through to production.

Having clarity on how many new products are to be launched means that you can direct all the remaining brewing capacity towards the ‘core range’. This will allow you to protect your business through satisfying core customers. Establish minimum inventory levels of core production; these should always be available to buy – don’t run dry. Finally, and most potentially importantly, be bottleneck obsessed. Make sure there is no downtime; if your bottleneck isn’t running, your brewery isn’t making money. Efficient planning and execution should ensure that your bottleneck is maximised.

Clarify what to make and how – This isn’t a case of one or the other, you can achieve both by understanding the minimum quantities required and ensuring the capacity is there to deliver.

By Phil Snelgrove, Lauren Wiles