Don’t make the mistake of skipping out on important administrative tools.
First, the bad news: opening up a craft brewery doesn’t mean you get to brew all day.
Running a business of any kind is complicated. As a startup owner, you have many hats to wear: manufacturing, inventory, human resources, forecasting, and accounting, just to name a few.
In the regulated world of brewery and brewpub management, there are also compliance and reporting concerns to deal with. Every single one of these factors is a business success deal-breaker. More breweries have gone out of business because of poor management than because they make poor-quality beer.
And let’s face it—plenty of sub-par beers are selling by the millions thanks to an excellent business strategy.
The good news is that if you organize your business efficiently, you can maximize the amount of time and energy that goes into brew-craft itself. With good planning, you can minimize headaches and enjoy the benefits of efficient, automated data infrastructure without having to sacrifice quality.
Few decisions are more important than choosing which administrative software to use. The right choice can save dozens of man-hours per week and encourage stable, scalable growth. The wrong choice can mean near-constant expense and frustration.
Either Plan for Growth or Pay for It
It’s one of the most common brewery startup scenarios: a group of beer-loving friends throw a few bucks together and decide to take their personal brew to the public. Whenever someone needs to report or share information, they look for a free or low-cost solution to that one problem and stick with what they find.
Before long, the budding brewery is using three or four different systems to handle its data. Someone might be using QuickBooks for bookkeeping while someone else uses Microsoft Excel for spreadsheets and brew logs, with a significant overlap from Google Docs. At the same time, you’re probably using a personal phone and email account to interact with potential customers and distributors.
Before long, information silos appear. Your brew-masters don’t know what the latest inventory figures are. Your accountant is constantly asking for sales figures. Everyone now has a second job—communicating with the rest of the team—and nobody is fast enough to keep up.
If your brew turns out to be a hit with local consumers, these problems multiply. Now, you need to invest in more barrels and higher-capacity kettles. You might even need to move to a bigger location. Keeping track of all that data quickly outpaces the capabilities of your ad-hoc data infrastructure.
Breweries that wait until this critical moment to upgrade their data infrastructure have to deal with serious costs and unwelcome headaches. Waiting until success forces you to deploy a comprehensive data management solution is like waiting until you’re driving through a foreign country to replace your transmission—expensive, complicated, and frustrating.
Craft beer entrepreneurs who plan for growth ahead of time are able to smoothly integrate new equipment, processes, and employees when the time comes. This is because they have a data management solution in place before they begin the processes that actually generate data.
Introducing Enterprise Resource Planning (ERP) Software
Enterprise resource planning software does exactly what its name implies—it offers a single point-of-access into every resource your business relies on. It gives business owners and data administrators a comprehensive overview of everything that makes your business what it is.
Where an ad-hoc startup environment often consists of three or four competing systems (like QuickBooks, Google Docs, and Microsoft Office), an ERP consolidates all of the most important features of these systems into a single platform. This ensures that all of your data is automatically synchronized between departments.
More importantly, it provides a scalable infrastructure for adding custom functionality that off-the-shelf software can’t offer. ERP solutions that cater specifically to the brewing industry offer powerful, purpose-built features you can’t find anywhere else.
Some of the brewery-specific asset management features you can implement through an ERP include:
- Planning and Executing Production Runs. Once you start producing multiple products, you need to balance your manufacturing equipment’s potential with inventory, manpower, and consumer demand. Having immediate access to the latest data is key to making good production run choices.
- Tracking Batches From Grain to Glass. What happens if you brew a bad batch? How long will it take to identify what went wrong in the brewing process? Great data management means being able to track and analyze the characteristics of each batch in real-time, preventing costly mistakes.
- Accounting for Brewing Variances. Your inventory count needs to reflect brewing variances and potential discrepancies. Missing inventory is trouble all around, especially for your income statement.
- Managing Barrels and Blend Tanks. Off-the-shelf commercial software doesn’t offer any specific categorization for barrels and blend tanks. Only a custom brewer’s ERP can effectively track and manage these kinds of assets.
- Consolidated Communication. Does your sales team know when your new IPA will be ready to ship? Do they know which customers and distributors are interested in that upcoming product? Do your brew-masters know which products they should dedicate more resources to? Implementing a brewery ERP solution ensures that information flows freely between your employees.
- Better Planning and Customer Service. Your distributor is going to like the fact that you can plan production runs with an eye towards meeting the demands of next week, next month, or next year. An ERP will help you plan ahead for peak periods, dry spells, and everything in between.
ERPs Let You Focus on Processes, Not Individuals
In the beginning, it’s easy to delegate responsibilities among a craft brewery’s first employees. You probably already know who will be the chief brew master, who will run inventory, and who is best-suited to handle the brewery’s finances.
But even the most optimistic brewery entrepreneurs need to build their business’s foundation on processes; not individuals. When a single individual is the only person who knows how to perform a specific process in a business, management professionals call that process a “single-threaded operation.”
Every employee plays a critical role in the success of your brewery, and single-threaded operations threaten that success. If your production runs can’t happen without your brew-master being physically present, you will have to shut down production every time that individual takes a sick day.
When businesses rely on single-threaded operations, personal obstacles become existential threats. A medical emergency, a fight with management, or even a long-due vacation can mean the end of the brewery.
The same goes for accounting, inventory, sales, human resources, facility management, and more. Enterprise resources planning platforms do more than organize the data that your brewery produces. They provide an all-inclusive repository for the processes that you rely on to function.
This is a powerful fail-safe. At best, it prevents the need for panicked phone calls to vacationing employees. At worst, it keeps key employees from holding the entire business hostage when they disagree with management.
What You Need to Know About ERP Deployment
ERP systems are large, complex platforms that come in a dizzying variety of models and formats, with all the bells and whistles you would expect of a highly customized business platform. Upcoming brewers need to know what to expect when shopping for ERP solutions and identify their needs before talking to vendors.
ERP deployments come in two broad models:
- On-Premises deployments use local hardware and equipment to host the ERP software. That means that you have to purchase, maintain, and occasionally upgrade the physical servers your ERP relies on to function. This is rarely cost-efficient, except in the case of very large brewery corporations.
- Cloud-Based deployments work by hosting your ERP software on a remote server, typically maintained by your vendor. This usually comes with a host of practical benefits, like automatic back-up recovery and up-to-date security. Additionally, there is no need to purchase or install any on-premises hardware beyond typical office equipment.
Both on-premises and cloud-based ERP systems can be expensive, but cloud-based systems offer a far better balance between expense and value for brewery startups. Deployment vendors charge a setup and migration fee, then charge a monthly or annual fee for running the system.
For a cloud-based ERP deployment, the monthly or annual fee typically scales in response to the resources you use. This makes cloud-based ERP integration a viable long-term plan—the bigger your brewery gets, the more you can afford to pay for your growing data management needs.
ERP setup and migration costs increase the longer you wait. Deploying an ERP for a brewery startup that already produces 10,000 barrels per year is much more complicated than deploying one for a brewery that has just reached its first thousand.
Although investing in an ERP early can significantly raise startup costs, it is a decision that pays off through every stage of the brewery’s evolution. Effective data management is key to managing growth, making it sustainable, and keeping track of how balanced your brewery’s costs and profits are. Get in touch with the SMB Solutions team to learn more about our OrchestratedBEER offering and the single source of truth.