July 1, 2009
vertical focus | Food & Beverage

keeping the beer flowing

 keeping the  beer flowing

Like Tinker to Evers to Chance, beer distribution is a multi-play proposition in the United States. Here's how one distributor sharpened his relay.

By Peter Bradley

In what has become considered a classic piece of sports writing, Washington Post columnist Thomas Boswell in 1987 listed 99 reasons why he thought baseball was better than football. At number 20: "Eighty degrees, a cold beer and a short-sleeve shirt is better than 30 degrees, a hip flask and six layers of clothes under a lap blanket."

Beer and baseball are natural companions—and nowhere perhaps is that more apparent than in the area around Fort Myers, Fla., where major league teams like the Boston Red Sox and the Minnesota Twins travel for spring training, attracting legions of thirsty fans.

The task of ensuring that those fans—not to mention other vacationers and year-round residents—have their suds falls to distributors like Suncoast Beverage Sales Ltd., a Fort Myers-based wholesaler. In the United States, virtually all beer sales pass through distributors, which serve as middlemen in a three-tier system that takes beer from brewer to distributor to the tap or store shelf. "There aren't any direct-to-consumer strategies as in other industries," says Kevin Brady, president of Satellite Logistics Group, which provides third-party logistics and supply chain services to the beverage industry.

Suncoast, which handles Anheuser Busch beer and other beverages, services more than 1,200 accounts across a 2,500-square-mile territory in southwest Florida. Its customers include, in the nomenclature of the beverage industry, 700 on-premise accounts—bars, taverns, restaurants, and the like—and 500 off-premise customers—grocers, convenience stores, and other stores.

Suncoast serves those customers from a single 56,000-square-foot distribution center, says Tim Mitchell, the company's general manager. The temperature-controlled DC, which houses an 18- to 19-day supply of product, is divided into a bulk storage area, forward pick area, and draft beer storage area. Because beer is perishable, inventory must be managed on a strict first-in, first-out basis. Ensuring proper rotation is particularly important to Anheuser Busch, as it markets its "born on" date to promote the freshness of its products.

The facility is normally a hive of activity, receiving an average of 13 truckloads a day six days a week and as many as 24 shipments a day during peak season. Orders are selected and prepared by the night shift for delivery the next day via the company's private fleet. In total, it ships some 5 million cases of package products and 65,000 units of draft products each year.

For years, the company relied on a paper-based system to pick those orders. But as business grew and the number of stock-keeping units (SKUs) proliferated—Suncoast currently handles 636 SKUs—it became harder and harder to ensure that orders were complete and accurate.

"We'd gotten to the point that there were so many SKUs similar to each other that it was easy for a warehouse worker to make a mistake," says Mitchell. "When a worker has to pull 3,000 cases, it's easy to make a mistake. We wanted to increase accuracy in the warehouse." Eventually, it became clear to all concerned that some kind of automation was inevitable.

Draft pick
After evaluating various options for managing the flow of goods through the facility, Suncoast selected Dematic's PickDirector warehouse control software. The solution includes voice technology from Vocollect, which can be used to manage picking, replenishment, quality assurance, manifesting, and truck loading activities, according to Dematic.

Today, Suncoast workers no longer need paper tickets. They simply scan each product for picking, then receive instructions through the Vocollect system regarding how many to pick. (Suncoast has the system enabled for both English- and Spanish-speaking employees.)

To minimize travel distances, most picking takes place in the forward picking area, which houses a two-day supply of inventory. There, employees using vehicles from the DC's fleet of 10 forklifts and five walkie-riders assemble the right mix of SKUs for each order. After they finish picking, workers count the cases on each pallet. Any pallets with incorrect counts get flagged and set aside so the problems can be sorted out. Once orders are ready, they're loaded onto company trucks. In the morning, drivers head out to make deliveries.

Mitchell reports that implementation went smoothly and workers adapted quickly to the voice-picking system. "They worried about the change that was coming," he says. "Two days after we implemented the system, we had a glitch for about two hours, and they were complaining about going back to paper."

The right stuff
As Suncoast hoped, the new system has cut down on the number of picking errors, although it hasn't eliminated them entirely. "Warehouse workers still make mistakes," Mitchell says. "If the system says pull 45 cases, it's easy to pick 44."But the checks and balances in the voice system—goods are scanned before picking, and the product and volume are then verified —ensure the errors are caught before orders get too far along in the process.

Not only is the new system more accurate, it's more productive as well. "Productivity comes from the worker's not having to go to a central location to get paperwork," explains Tim Post, a technology specialist for Dematic. "The system doles out the work."

The voice technology further enhances productivity by freeing up workers' hands and eyes, Post adds. "When [a worker] finishes a location and gets back on the lift truck, he's not trying to read paper," he explains. "A lot of the process is eliminated. Because of the verbal interaction, he has the ability to keep multiple tasks sequenced without trying to juggle. Each step is validated for a smooth flow of work. He is kept on pace and kept to task."

The system has also proved to be a useful labor management tool, Mitchell says. He can get reports on each employee's productivity and picking accuracy, for example. The system can be adjusted for each worker. "If we know one employee has a lot of mistakes, we might do 25 percent automatic verification. If we know another does not make many mistakes, that percentage might drop to 10 percent."

As it turns out, the improvements in order accuracy have also allowed the drivers and sales representatives to be more productive. Drivers no longer have to verify the count before they head out for deliveries, or haul back product being returned because of order assembly mistakes. Sales representatives spend less time with customers fixing errors.

New plans brewing
Along with providing picking instructions, the Dematic system also develops truck loading plans to ensure efficient loading and unloading. Post describes it as reverse-sequence loading, so that the last goods on the truck are the first off for delivery. "That way, when the driver gets to his destination, the right thing is in the right place," he says. Mitchell expects to eventually integrate that information with a route planning system Suncoast has purchased, a UPS product called Roadnet.

As for what's ahead, Mitchell says that Suncoast is now implementing a second phase of the Dematic system for the receiving function. Workers will scan inbound product and receive instructions on where to store it. Having accurate location information for all inventory will make it simpler and faster for workers moving goods into the pick area. Mitchell hopes to have that up and running by August, well ahead of Suncoast's peak season, which runs from November through March. That's when about 150,000 tourists visit southwest Florida each week, he says. And many of them are looking for a cold brew.

About the Author

Peter Bradley
Editor Emeritus
Peter Bradley is an award-winning career journalist with more than three decades of experience in both newspapers and national business magazines. His credentials include seven years as the transportation and supply chain editor at Purchasing Magazine and six years as the chief editor of Logistics Management.

More articles by Peter Bradley

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