A Centralized System for Running a Brewery
The majority of small businesses use more than one piece of software to run their business. The use of more than one piece of software results in inaccuracy, double entry, limitations, and lack of transparency.
A centralized system is important for running a brewery. By using a single centralized system you can streamline accounting and business management in your brewery, while making your business processes more transparent. By increasing transparency in a brewery operation, it will allow for automated internal transactions, cross department reporting and unobstructed communication.
A Centralized Brewery
"Get more out of every barrel!"
By keeping the flow of information centralized you can increase transparency between the different business processes in a brewery and increase productivity. Different departments can then manage their business process in a single centralized system. By having a single centralized system, you can ensure that information is transparent and accessible to all the different departments of a brewery. When information is transparent and accessible to all the departments of a brewery, the individual business processes can operate dynamically as a single operation.
Business Processes of a Brewery
Supply Chain > Production > Inventory > Sales
When looking at a brewery operation, we can identify 4 business processes. These 4 business processes are as follows:
Supply chain is the process of managing the purchase and inventory of raw materials. This process is necessary to ensure the appropriate supply levels for production.
Production is the process of managing the conversion of raw materials into finished goods. This process is necessary to ensure the appropriate inventory levels of finished goods.
Inventory is the process of managing supply levels of finished goods. This process is necessary to meet demand from sales.
Sales is the process of managing the sales transaction that occurs at the point of sale. This process is necessary to drive all of the other business processes.
The Not So Centralized Brewery
How many systems does your brewery use?
The "not so centralized brewery" uses multiple systems to manage their brewery. Typically they will have bookkeeping software to manage their cashflow, excel spreadsheets to manage production & business intelligence, paper notebooks to manage recipes & lab data and the remainder is managed off the top of someone's head.
The problem with a "not so centralized brewery," is that the business processes of a brewery are managed separately and proprietarily. When business processes are managed separately and proprietarily, a black hole is created. This black hole represents the obstructed informational flow between the different business processes in a brewery. Since all of the business processes in a brewery are dynamically related, this causes inefficiencies and hinders process flow between departments.
For example the brewer uses his/her system (i.e. notebook) to manage & plan for production. However, this system does not take in consideration the upcoming sales that the sales manager is managing in his/her system. The sales manager must communicate that information to the inventory manager, who must communicate to the brewer, and who then must communicate it to the purchasing manager. In an uncentralized system, there is a greater risk of informational flow being obstructed or lost.
Benefits of a Centralized System
"1 Brewery, 1 Software!"
Having a centralized system can benefit an organization significantly. A centralized system can streamline and automate the business processes of a brewery.
When you use multiple systems, you typically have multiple accounting records. Although a single bookkeeping software is used to manage cash flow, other accounting activities such as production is managed using spreadsheets.
In a centralized system, all business processes are accounted for in inventory and the appropriate accounting transaction is created behind the process.
A good example is if a production order is submitted, all raw materials inventory levels are deducted and when the production order is complete, the finished goods inventory levels are increased. The accounting transactions for process is automatically created behind the scenes. The "COGS" GL account is debited and the "WIP" GL account is credited. When the production order is complete, the "WIP" GL account is debited and the "Finished Goods" GL account is credited.
In an uncentralized system, it is common to create multiple reports from the different business processes and then use the information on that report to create a cross department report in a spreadsheet. This is typically quite time consuming and creates in consistencies in the accuracy of the spreadsheet.
In a centralized system, all business processes create an accounting transaction behind the scenes and store that information in a centralized database. By doing so, you are able to generate cross department reports which are created with a click of a button and are accurate.
A good example of this is an inventory audit report which looks at how inventory items flow through the different business processes in a brewery. An inventory item like hops might show up on a purchase orders, production order and a sales order.
Planning and MRP
An uncentralized brewery always faces the problem of running out of beer. This problem is not cause by the lack of planning, but rather by the lack of collaborative planning between the different departments.
In a centralized brewery, all planning from the different departments are centralized. This allows for collaborative and accurate planning.
A good example of this is how Material Requirements Planning or MRP works in a centralized system. MRP calculates requirements of production and recommends purchase orders or production orders based on demands and forecasts. When calculating these recommendations, MRP takes in consideration all open sales orders, open purchase orders, open production orders and minimum inventory quantity levels that have been processed in the centralized system by the various departments.
Sales Management and CRM
In an uncentralized system, sales is the business process that is managed the most separate and proprietary. It is common to have delivery delays because the other departments did not prepare for the increase orders that sales had put through.
Although in both a centralized and an uncentralized systems, sales dictates all of the other business processes, in a centralized system sales opportunity management can help the other departments prepare. By knowing how much sales are expected to close, the other departments can prepare themselves for these orders.
A good example of this is if the sales manager has a large sales pipeline, the other business processes can prepare to meet the demand of sales orders which may come through in the next few weeks. The sales manager can process sales orders for a later delivery date and this demand would feed into the MRP module for accurate planning. In addition, a manual forecast can be created by the sales manager to also be feed into the MRP module for a speculative demand.
Recipes Management / QC
In a typical brewery all recipes and quality control data is typically kept in the brewers notebook or in some cases, the brewers head. This makes consistency of the beer, the sole responsibility of the brewer. Even brewers will admit that they make mistakes, however if there is no centralized record for each production run, there is no way to find out what really went wrong. Assumptions are then substituted for facts.
In a centralized brewery, all production records and quality control measures are logged in the centralized brewery. These records and logs can be pulled out of the database or reported on.
A good example is if there is a consistent issue with the production of a beer. You can audit the bill of material or variances of that production to see if your recipe is not accurate or if your recipe is not being followed accurately.
Advantages of a Centralized System
Accuracy, automation, transparency and real-time information.
By having a centralized system, you will have the advantages of having better accuracy, transparency, automation and real-time information. These advantages can increase productivity, efficiency and profitability.
When using multiple systems you are required to re-enter information from one system to another. By making dual entries, you are relying on the accuracy of a person. We all know that people make mistakes and if that mistake is a decimal point or two off, it may be a mistake that a brewery cannot afford.
In a centralized system, all business processes use the same information or re-entry is automated by a computer. The accuracy in a centralized system is certain and can be relied upon.
When using multiple systems all processes between systems are manual. Automation of multiple systems can only be achieved by integrating the systems together. However, integrations are generally expensive and challenging. By having multiple links, you have more break points which can create similar problems to that of dual entry.
In a centralized system, processes are automated simply because they use the same information. All information is stored in a centralized database and are used in all processes. Additionally, a process from one department may cause a trigger or event to occur in a different department.
When using multiple systems, information and communication is obstructed. In order to get information from one system, you must obtain access to that system. Communication of information also tends to get lost between systems.
In a centralized system, all information can be transparent to all departments. Although you may choose to restrict certain information to certain departments or people, the majority of information can be made transparent to others directly from the system.
When using multiple systems, you generally must consolidate the reports from the different systems in order to calculate the information you need. Complex 17-tab spreadsheets are created to do this, but it still requires manual data entry or in some cases manual calculations to get what you need. In addition that lag of information from a system may delay the information the is requested
In a centralized system, all information is always up-to-date. This is possible because all processes that occur are captured in a centralized database, along with the appropriate accounting transactions. This ensures that you are getting real-time information.
OrchestratedBeer - "Get more out of every barrel!"
Orchestra Team has designed business management accounting software specifically for Craft Breweries, called OrchestratedBeer. OrchestratedBeer is built on SAP Business One and is affordable for the smallest of breweries. Although SAP is the same software that companies such as Molson Coors use, the SAP Business One solution is designed for small and midsized companies like yours.
OrchestratedBeer helps you manage all of the brewery processes in a single centralized system in order to get accurate reports and help you make the right decisions. Contact Us!