Recently I sat down with Rick Sweeney, the general manager and executive Vice President of Straub Distribution Company and asked him to share some of this thoughts on the industry and trends in supply chain and distribution.
Straub has over 350 employees, and is considered one of the foremost Anheuser Busch distributors in the USA. Recently Straub installed ITW Warehouse Automation's Vertique case picking system, designed to reduce labor costs in the warehouse and on the road.
Here are some excerpts of our conversation:
Scott Smith: Rick, we're hearing a lot about customer choice and package light-weighting in the consumer package goods segment. Are these trends that are impacting beer distribution as well? If so, how?
Rick Sweeney: The rapid growth of craft beer is a major trend that is associated with customer choice, and our SKUs are growing like crazy because of it. That segment now has growth trends in the mid teens while all the majors are losing share. Clearly people have a wider range of products they are going to choose from, in everything they do, in wine, beer, clothes...really everything. People used to have a set of one, two or three brands, and they wouldn't drink anything else. Today, the average consumers have 15 brands in their mix. They go to the store and ask themselves "what's on sale?" or "what's the occasion?" and that's what they're purchasing.
We've seen a ton of (primary and seconday package) light-weighting in the beer business, and this is where it ends up before it goes to the retailer. We measure damaged product by what comes back on the trucks, and we are up 50% over the last 4 months.
SS: So essentially, your BSL (breakage, spoilage, loss) numbers are going up, so you're saving money on packaging but giving some of the savings back in returned product?
SS: Has automating your case picking area helped?
RS: I would certainly say it's helped, but we did not base any ROI on a reduction in damage because we don't measure the amount of damage prior to loading the truck, so it is difficult to determine where in the supply chain something might have been damaged.
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Straub Distribution handles about 11,000,000 cases per year. Along with this interview with Rick Sweeney, I've compiled a Case Study on Straub's Vertique installation. Feel free to download it as well as the interview transcript.