Trouble Brewing? Why Beer Distributors Need to Digitize Logistics Now

Getting beer into the hands of retail outlets or restaurants seems like a straightforward job. Distributors make the sales, do the deliveries and, where necessary, handle the merchandising. But what happens when market dynamics change – like restaurants closing or scaling back during the pandemic while retail sales skyrocketed? When supply chain glitches impact what products are available? When holidays (like St. Patrick’s Day or Cinco de Mayo) change the typical quantities of Guinness or Corona? Or when sudden changes to traffic patterns alter drivers' abilities to meet delivery deadlines? Or gas prices skyrocket, changing the costs incurred getting products to their final destination?

?The answers to these questions aren’t that simple. Many beer distributors still rely on tried-and-true relationship-based sales. Sales reps, drivers, and customers often have worked with each other for years – even decades – building trust and leveraging their institutional knowledge about the types of products being purchased and delivery timeframes that are required by each customer.

Many also still use antiquated manual and paper-based processes for tracking orders, building routes, and loading trucks. While these methods have sufficed, they leave a lot of blind spots that can impact distributor revenue and the customer experience. Working in silos means:??

• Sales reps lack visibility into whether products are arriving at the right place at the right time, and won't know if something goes wrong until they get an angry call.?
• Warehouse workers are inefficient since all orders arrive at one time, leaving them idle for part of their shift.?
• And merchandisers waste time driving to and from the distribution center to pick up work orders each day.

Times Are Changing, So Must Your Business?

While the personal relationships and manual processes have worked alright, dramatic changes over the past decade – including significant ones associated with the pandemic – have made distributors realize that changes are in order. Customers, used to the instant gratification of Amazon shopping, now want the same experience with their distributors. Instead of waiting for a sales rep to visit or filling out paper order forms, they want to go online when it’s convenient to place orders and get insights on when products can be delivered. They also want advance notice – such as phone calls, emails, or texts – alerting about delivery arrival time, so they can be ready to receive the shipment or have a check ready in advance for COD payments.?

The market is more dynamic than ever too. At the height of the pandemic, distributors saw their mix of business change practically overnight. Restaurants shut down or limited their menus for takeout, resulting in fewer beer sales onsite. Simultaneously, demand for beer at retail outlets increased significantly since customers were staying at home to limit exposure to COVID-19.??

And more recently, gas prices have soared, impacting delivery costs. In March 2021, diesel prices averaged about $3.14 a gallon nationwide, but just a year later, they've surpassed $5.25. For distributor fleets that drive thousands of miles a day, these costs add up and make a big dent in profits, and many customers will not accept a fuel surcharge. Even though distributors have routing accounting systems that can calculate the cost and profit on goods delivered, there are a lot of considerations – like the gas prices, cost of labor, and the fixed and variable costs of the vehicle – that are not factored in. Without visibility into these variables, it's impossible for distributors to truly know the delivery cost of a case or case equivalent, and make changes to improve their margins.

Smart Automation Sets Foundation for Future of Distribution

Greater use of tech is happening in the sales experience (think iPads used by sales reps and customers placing orders on a webpage). But there's still a tremendous opportunity to inject greater automation into the post-sales process. Digitalization is the key – eliminating manual processes; tearing down the silos across sales, delivery, and merchandising; removing bottlenecks, and increasing visibility across the entire operation. By digitalizing operations, distributors can improve warehouse planning, automate repetitive tasks, overcome supply chain hurdles, optimize revenue by making better decisions faster, and build a competitive edge in a highly dynamic environment.?

But how do you get there? We know change is hard, so here are five tips to consider as you explore digital transformation strategies for your logistics department:

• ?Integration is the key – Delivery management software should integrate seamlessly with the software stack and offer robust features that cut through the complexity and enable you to easily find new efficiencies to exploit.
• Consider cloud-based last mile optimization – Modern SaaS platforms allow you to connect dispatchers, sales reps, merchandisers, delivery teams, and others to achieve true visibility and keep customers happy. Make sure the platform enables hybrid routing to maximize flexibility and streamline route planning in real-time.
• Deploy a hybrid routing solution – Distributors should reject the idea that the business must run on a static or base delivery plan. Instead, a solution which supports a hybrid routing model should be deployed. Work to ensure that customers receive deliveries at the right time – based upon the revenue and profitability they deliver back to you.
• Focus on the customer experience – Solutions should focus on what's important to customers – whether it’s a requirement for specific delivery windows, the ability to easily order online, or the need to get products on the shelves quickly. By meeting customers' unique needs, distributors can increase loyalty which translates into more sales and bigger profits.
• Leverage artificial intelligence (AI) to plan perfectly – Instead of best-effort planning like you've been doing for years, the use of AI enables more dynamic modeling and helps distributors derive insights (such as total cost of delivery per case, the best hybrid routes, or how to adapt to supply chain problems) that factor in important variables such as gas prices and traffic.?

If a distributor sticks by the mantra that they've always done things a certain way, there's no upside for growing the business or improving profitability. Embracing digital transformation to increase visibility into operations and optimize them gives the C-Suite the ability to break free from the status quo, explore new opportunities that may not have been possible with their antiquated processes, and expand their business by serving more customers each day with the same fleet and even bringing in new concessions to enhance the product line.