Brewing up supply chain resilience in the beverage business

Time is running out for wine and spirits distributors utilizing complex traditional conveyor systems.

After decades of growth within the industry fueled by “Franken-systems” that mix-and-match mechanization, pick-and-packing, and intensive labor to move heavy, fragile, and expensive cases, distributors have hit a wall. Significant consolidation and acquisitions — and a generation of value engineering and incremental improvements to the old model — has led to the point where few optimizations can be made to how things work today.

The system is ready for an upgrade, and wine and spirits distributors are leaning toward robotic automation.

“Industrial companies are set to spend heavily on robotics and automation,” says McKinsey in its 2022 Global Industrial Robotics Survey. Many sectors plan to spend more than $500 million on automation over the next five years, including “15% [of] food and beverage” companies.

Likewise, beer houses are realizing the pressures of labor availability as well as the challenges associated with SKU expansion fueled by growing demand for craft brews and specialty drinks. This expansion of product offerings is great for providing customers with a variety of options. However, it also introduces inventory management challenges, including increased storage and retrieval times for less popular items, as well as a reduction in available storage space.

For both beer and wine and spirits distributors, expanding product coverage and brands means a larger system, which comes at a risk of lower efficiency with piecemealed, highly complex systems. There is a demand for these systems to do more, but that’s only possible if they adopt cost-, time-, and labor-saving robotic goods-to-person automation.

A transition a long time coming

Wine and spirits distribution has been primed for robotic goods-to-person automation for a long time. In fact, if an industry outsider toured a typical, “modern” wine and spirits distribution center, they’d likely be surprised by three things: the sheer amount of conveyor used in transporting these items, the lack of simplicity in these systems and just how much of the process is still defined by the heavy requirements for intensive labor – both in the brute force method that cases are manually transitioned onto and off of conveyor, and the method for picking split cases.

The extraordinary amount of complex mechanization seen within these kinds of systems come not only at a high capital investment but also a high cost of ownership while providing relatively poor reliability due to the numerous single points of failure.

“Activities such as picking, packing, sorting, movement from point to point and quality assurance are already automated to some extent, and these will continue to see heavy investment over the coming years,” says McKinsey.

Automating long-term solutions

Today, the complexities of traditional warehouse distribution methods put too much pressure on the outdated parts of the process.

The use of so much conveyor leads to problems with maintaining mechanization systems and leaves warehouses more susceptible to delays and supply chain issues. A lack of simplicity in systems requires higher qualifications for labor, not to mention higher costs. And the intensive manual labor requirements can make it difficult to find and retain talent that can handle the workload.

Fortunately, distributors that adopt robotic automation solutions leapfrog many of these problems and position themselves to be more resilient in key ways.

For example, one of the largest beer distributors in the United States, with a growing number of spirits brands is zeroing in on areas of their operations that would most benefit from robotic goods-to-person automation. They recently deployed the Exotec ^® Skypod^® system through the integrator Hy-Tek Intralogistics to amazing results:

Increasing case picking and replenishment capacity to 900 cases per hour with three goods-to-person picking stations
Access to all stored SKUs within two minutes regardless of location within system
Automatic pick-to-order for cases in the system, as well as delivery in the appropriate sequence to a “top off” station to become ready to ship
Maximizing vertical space of facility with high density storage racks reaching to the ceiling
Eliminating need for pickers to walk several miles per day in search of goods or engage in strenuous lifting or bending

The business quickly recognized benefits to both labor and warehouse utilization rates. Labor productivity and availability increased due to the shift in staffing and the fact that workers required less training and specialization of tasks. And because of the automated systems in place, the distributor saw an optimal utilization of the available space within the warehouse — benefits it will be experienced for years to come.

Success on tap

Beer, wine, and spirits providers have a critical choice to make: automate warehouse distribution or risk being left behind by competitors that can prepare and distribute orders faster, more efficiently, and at lower costs. Companies that adopt robotic goods-to-person automation such as the Exotec ^® Skypod^® system will continue to grow more resilient to the challenges limiting the industry today. From reducing dependence on labor while boosting productivity to maximizing space within the warehouse, these innovative systems position businesses to meet the ever-changing market demands now and into the unpredictable future.