Category: Supply Chain

Discovering Lost Dollars

 

Satellite Logistics Group leverages its extensive network of more than
1,500 distributors to arrange more frequent collection of smaller quantities
of empty kegs under its popular Kegspediter program.

 

If beverages could be just “beamed” around like they do in “Star Trek,” that would be wonderful. But until that time, beverage companies will be challenged with keeping track of all those various assets that form the backbone of the industry’s crucial supply chain from producers to wholesalers, retailers and finally consumers.

One of the more popular programs currently available to help minimize keg loss in the beer industry is Kegspediter, offered by Satellite Logistics Group (SLG). Through this proprietary program, SLG collects kegs for some 140+ brands from approximately 1,500 wholesaler locations across the country, ships them to one of SLG’s warehouse facilities, where the kegs are audited and de-consolidated by brand, then returned to the specific domestic or international brewery.

Without an efficient keg management process, empty kegs can easily get trapped somewhere in the supply chain, more often than not in the wholesaler’s warehouse until the distributor is notified that the brewery has initiated their return.

“Brewers who manage keg return on their own, typically wait to schedule a pickup until there is a full truckload, which is about 600 kegs,” notes Jeff Sommers, VP of business development, for SLG.  Depending on sales volumes, this could take as long as six months or more.

SLG provides its Kegspediter customers (the breweries) online visibility throughout the process to track their assets from collection to return. “There are several benefits to using the Kegspediter process, one being our ability to reduce keg loss to less than half of the industry average, to around 2 percent,” says Sommers. Sommers explains that SLG leverages its extensive network of more than 1,500 distributors to arrange more frequent collection of smaller quantities of empty kegs for participating Kegspediter breweries.

“Kegspediter has become especially attractive to craft brewers, who may have to wait three to six months to get a truckload of kegs from wholesalers. Our value proposition fits most craft brewers’ business model, specifically at this time when that segment of the market is growing so quickly,” he says.

The key to how Kegspediter works is how SLG captures and uses historical data, combined with brewery sales forecasts and an understanding of brand seasonality, which allows SLG to build loads for pick-up. SLG utilizes a network of common carriers for the collection of the kegs, which are then returned to one of SLG’s nine locations around the country.

SLG also manages about 95 percent of the European import brands, which are returned in container loads to two of SLG’s facilities in Europe. The brewers, which are the ones paying SLG for the service, like it because they are able to retrieve their kegs more frequently thus requiring fewer kegs in their keg fleet. The wholesalers also benefit by receiving keg deposits in a more timely fashion and their valuable warehouse space can be allocated to revenue producing full product.
SLG offers other facets to the Kegspediter program, one being the Keg Census service, which has proven to be very attractive to the larger domestic, and import brewers.

SLG has a process in place to determine the number of kegs either in the marketplace, in wholesaler inventory or in one of the Kegspediter facilities on any given day. “This information is very important to brewers when making decisions regarding the size of their keg fleet as it relates to their production forecasts. The data is a valuable tool for brewers when considering potential capital expenditures for additional kegs,” says Sommers.  

 Kegspediter has proven to be useful in the beverage industry to producers adjacent to the beer segment. SLG recently expanded the Kegspediter service to the wine industry, where it is currently collecting wine kegs for about 25 vineyards.
Aside from Kegspediter, SLG also offers a service called EcoBev, which Sommers says, continues to grow. EcoBev is the first nationwide green solution for the collection, destruction and proper documentation of non-salable beverages. The service addresses logistics, recycling, and chain-of-custody concerns.

Product can be deemed unsalable for any number of reasons. Perhaps the reason is in response to changing consumer preferences, or maybe out-of-date product, perhaps packaging or labeling errors, or a change in marketing strategy, or even product recalls. SLG manages the collection out of the local markets and then coordinates the destruction of the unsalable product in an environmentally friendly manner.  Whenever possible, the packaging is recycled and the liquid is converted to a reusable product, such as fertilizer, irrigation water or ethanol.

SLG then provides certification of disposal and documentation for the brewers so they can request their federal excise and/or duty tax reimbursements.


Additional Solutions
Last January, Brewers Association (BA)-the not-for-profit trade association dedicated to small and independent American craft brewers  launched KegReturn.com, a site that provides tools to help consumers, homebrewers, retailers, wholesalers, brewers and scrap yards redirect kegs back to the breweries that own the kegs.

According to the Brewers Association, keg loss costs craft brewers between $0.46 and $1.37 per-barrel of annual keg production. Assuming 2012 craft beer sales of 13.2 million barrels, according to BA, that is a total direct capital charge to craft brewers of $6.1 million and $18.1 million annually.

And ORBIS, a manufacturer of sustainable reusable packaging, recently announced its collaboration with Today IT to customize and deploy SmartTrak asset tracking software to drive the company’s reusable packaging management program.

Customers of ORBIS Reusable Packaging Management (RPM) will ensure they are extracting the maximum possible value out of their packaging and dunnage assets—trimming significant cost for transportation, lost or untracked assets – while ensuring they have the supply to match demand. ORBIS says it will craft unique RPM solutions based on their customers’ specific needs, including industry-leading visibility throughout their customers’ entire organization.

ORBIS RPM focuses on the effective management of all types of reusable packaging assets, from totes, dunnage and pallets to divider sheets, bulk containers and racks.

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