Reducing the Costs of Self-Distribution
Many of the brewers that belong to Craft Beer Professionals do their own distribution.
Although there are considerations of vehicle and driver costs in doing self-distribution, the benefits of selling products directly to drinking establishments and retailers, and the saving of distributor fees may outweigh the benefits that a distributor may offer.
Since the margins on the wholesale (distribution) side of the brewing business are usually a lot lower than on the retail (taproom) side, controlling distribution costs is essential.
Planning Costs
If you are determining how to load your vehicles by starting with orders from your accounting or brewery management system, consider how long it takes to shuffle the paperwork to make up the routes. Even if this is a small amount of time, it adds up over the long term.
Two minutes per day for someone making $30 per hour work out to one dollar. That over $300 per year spent when the person doing the route planning could be doing something productive in the brewery for you.
Transportation Costs
The first step is to identify how much do you pay for driver labor, fuel, registration, insurance and maintenance for each vehicle.
And then see how these costs could be reduced.
Although your driver may be very familiar with the area around your brewery, you probably don’t visit all your customers on every trip. Are there better ways of driving between two stops when the traffic is heavy or bad weather is expected?
If you could save only a few miles each day, how much would those transportation costs be reduced?
And there are other considerations where it is hard to figure out the savings in advance.
If you have multiple vehicles delivering every day, how do you decide which customer gets delivery from which vehicle? How do you deal with customer requirements like not delivering during a busy lunch period? Or delivering in the afternoon to a customer that is only open for dinner?
Reduce These Costs
Once your costs are known, you need to find ways to reduce costs in your manual distribution process. Automating the manual process is one area to investigate for cost savings.
Investigate the vendors that are part of Craft Beer Professionals and see what they have to offer to help reduce your costs. And remember that automation helps. And every dollar saved in distribution costs will add to the profits of self-distribution.
Ron Dombrowski is a serial entrepreneur that has been a principal in three startups in the past 30 years. In these startups, Ron has had both development, marketing and sales engineering roles and has received two significant awards for his development efforts. He has designed and developed applications that have been used in the logistics marketplace to reduce costs through route optimization. He now lives near Atlantic City, New Jersey, and leads the Walzik team from his home office.