To Produce or Not to Produce

Proactive Beverage Production Planning

7 Steps to Proactive Beverage Production Planning

It’s every beverage brand owner’s worst nightmare to finally land that big sale only to discover that you won’t be able to fulfill the order on time. Whether due to low finished good inventory or long production lead times, missing a key distributor order can be detrimental to your business. 

On the contrary, the incremental costs of carrying excess inventory and expiring finished goods can also prove to have crippling financial impacts on your bottom line. Managing your production plans requires a sound strategy that finds a balance between these out of stock and overstock situations. While each beverage and each brand has unique triggers that signify the need to produce, it is crucial that every company has a consistent and reliable production forecasting process. 

Here are seven steps to take for a proactive approach to beverage production planning.  

1. Review Inventory Levels

Look at finished good inventory levels at all of your locations. What is the age of your stock and materials? If you have 3,000 cases, but 1,000 will expire next month, you need to note that in your production planning process. Review the quantity and age of each of your SKUs. Also understand how long your current inventory will last given your projected sales movement. 

In addition to finished good inventory, look at raw material inventory as well. Track shelf life and expiration dates so you can plan production around the lifecycle and availability of your materials. 

2. Map Out Your Planned Productions

Understand and document your current production schedule for any purchase orders that have already been submitted. Having a solid grasp on when you will be producing, and how many cases you will be producing, will impact when you schedule your next run.  

3. Dive Into Your Sales History 

Take an honest look at where your sales have been historically. Review where your sales came from, which SKUs are moving, and how quickly they are moving. Consider any special promotions or discounts you offered and how they impacted your numbers. The more sales data you have to analyze, the more informed and accurate your forecasting will be.

4. Lay Out A Solid Sales Forecast

Using your sales history for comparison, lay out a realistic sales forecast. Remember to include any planned updates to your current SKUs as well as any new pieces of business that have closed or will be closing soon. What new initiatives and launches do you have coming up, and what does that mean for production? Plot out different scenarios and what impact they would have on your need to produce within the next few months. Be sure to consider distributor-specific sales and deadlines.

5. Know Your Cash Flow

Align your production schedule with your cash flow to prepare for the payments you’ll need to make at each stage of production. Will you have the cash on hand to order ingredients and materials when you need to prior to your production date? Do you need to adjust your order size to align with the amount of money you’ll have available? There are some significant cash outlays with each production that you need to prepare and plan for.

6. Track Your Lead Times

Know and track your lead times for your raw materials. If an ingredient has a 12-week lead time, you need to look at locking in your production plans sooner or look to place a blanket PO that can cover any production needs that may arise. Also understand your co-packer’s scheduling lead time. Do they have line time available or are they booked for the next two months due to the busy season? Lead times can fluctuate, and it is important to keep a pulse on them to ensure you are able to produce when you need to.

7. Review and Discuss

Your production plan will be ever evolving, with each piece of the puzzle impacting the others. Review each data point independently and as part of the broader business plan. Have open discussions about projections and priorities and revisit your data and decisions often. 

Do you need to adjust inventory levels for an upcoming sales initiative? Should you delay production to better align with your cash flow? The more in-tune with each element of the equation you are, the better you can plan and adjust.

Although there is no exact science to beverage production planning, the more experience you have measuring and analyzing the data, the better you become at building a process that works for your beverage and your brand.
Is production planning causing you stress? Let BevSource manage your production planning so you can focus on selling your beverage and growing your business. Contact Us