Supply chain planning on a beer mat

Everything becomes more complicated – except for supply chain planning

Greater product diversity, scarce materials, drastically increased energy prices, retail actions announced at short notice, “volatile” markets with rapid changes in consumer behaviour: It's not easy to plan the production of a brewery these days – is it? That's not quite true. Breweries that use Supply Chain Excellence for Demand Planning from ifm have all relevant information ready – and production under control.

By: Gerald Scheffels for ifm

Not everything was better in the past, but a lot of things were easier. This also applies to the market environment where breweries compete for customers and fight for market share. This business has changed enormously. In the past, a brewery simply brewed beer (in very few varieties) and filled it into barrels and standardised bottles, of which only two sizes (0.5 l and 0.33 l) were available. Beer as a raw material was never a bottleneck, empties were available in vast quantities, and the individuality of the respective brewery or brand only became visible when the label was affixed.

From unity to diversity

Those times belong to the past. Since the 1980s, per capita beer consumption in Germany has fallen by almost 40%. In response to this, the battle for market share began and marketing entered the breweries. Even the shape and colour of the bottles and crates should differentiate the brand from all others. Goodbye standardised bottle, hello bottleneck of empties.

To compensate for the losses in the core beer business and adapt to changing consumer habits, breweries added new types of beer, beer with lemonade or coke (both with and without alcohol), Fassbrause and a lot of other cool “it” drinks to their portfolio. At the same time, the containers have also become more diverse to set themselves apart from the competitors in the beverage market.

Exploding product range, seasonal trends, market influencers...

This has exploded the product diversity of a brewery and made the market more complex. But there's more that complicates operational planning considerably. Within this heterogeneous assortment, there are also various seasonalities, trends and promotions – initiated by the breweries themselves and by retailers.

After all, retailers are under just as much pressure. They capitalise on the popularity of successful brands to run campaigns – sometimes untuned with the manufacturers – and advertise the popular regional product as a (usually weekly changing) special offer.

Challenge: planning the supply chain

Planning the entire supply chain under these conditions – including procurement, empties management, etc. – is more than just a challenge. It is hardly possible with the methods that have been tried and tested for decades, especially as there are other factors such as the desire for energy and resource efficiency, supply chain problems at many levels and immensely rising energy costs. All this against the backdrop that the brewing process takes several weeks, meaning that it is only possible to react to rising or falling demand with a delay.

The ideal: supply chain planning on a beer mat

It would be nice if this entire and increasingly complex process chain with all its time-limited actions could be easily planned and mapped. Preferably – in a brewery this is obvious – on a beer mat (some of you may still remember the idea of a simplified tax return on a beer mat).

Even smaller: IT makes it possible

Is this a utopia? Not feasible? It can be much smaller – in the size of a fingernail, namely in a microprocessor. Of course, it is not only the beer market that has developed rapidly but also the world of IT-based planning options. An established SAP ERP-based solution from ifm ensures that the resulting complexity is manageable.

Supply Chain Excellence for Demand Planning from ifm enables the inclusion of many external information sources, e.g. the company's  sales and marketing, so that promotion and advertising campaigns can be considered. In addition, retailer or publisher data can also be included, for example about regional events, major events or own advertising campaigns.

Looking into the future – with valid forecast and simulation models

With a wide range of forecasting models, ifm's forecasting software makes it possible to create a highly accurate sales forecast. The simulation function also offers the option to calculate various future scenarios, e.g. how the sales forecast will change if a major event is postponed by six weeks or cancelled completely, or how a rainy summer will affect the demand. This makes it possible to prepare the famous “Plan B” in advance, or at least to determine the point of “no return” at which a final decision must be made on the measures to be initiated.

Becoming increasingly reliable: rolling planning

Another highlight is the rolling planning while retaining the original plan. The further the year goes, the more reliable are the assumptions used in the forecast. As a result, the forecast is constantly being consolidated and substantiated. At the end of the planning period, the original plan can still be compared with the actual result. This enables it to check the planning quality ex-post and to improve the planning quality gradually.

All-inclusive: Pegging integrated as standard

Supply Chain Excellence for Manufacturing is the perfect complement to demand planning. This is where demand planning is continued and a coherent, detailed production plan is drawn up. The pegging process is available as standard and its performance has been greatly improved. With ifm pegging, the user does not have to replicate data in external systems but has this functionality in his SAP system. Direct access to the SAP data offers a clear advantage regarding up-to-dateness and performance.

If your supply chain planning no longer fits on a beer mat, that's certainly no reason to despair. The solution is to think even smaller – utilise microprocessors and IT! Technological progress and, in particular, ifm's Supply Chain Excellence Suite offer user-friendly solutions to master the growing complexity.