There are many ways a distiller can choose to manage operations. Just as complicated as the mashing, blending, and production of great spirits, the business side of managing distillery operations requires a certain touch. Distillery manufacturing alone is complicated when you’re working with limited blending capacities and raw ingredients, while trying to meet demands and make sure you have enough cash available at the end of the month to continue what you love doing.
17-tab Excel spreadsheets, bookkeeping software, whiteboards and notepads seemed to be the only options not too long ago. Even with these makeshift tools, there are still underlying problems with managing inventory, understanding costs and margins, while making sure you have the right amount of raw ingredients to keep barrels full. To top it all off, you also have to make sure you are reporting to the TTB what you are doing every step of the way. Although crafting great quality spirits is your primary objective, crafting the operational tools was probably the last thing on your mind.
Distilleries look to software solutions to find tools that can help solve the typical problems associated with the growth of a maturing distillery. These problems may appear to be specific but they all stem from the larger underlying problem called a “decentralized business environment”.
The Problems of a “Decentralized Distillery”
Inaccurate Inventory: Inaccurate inventory levels are one of the most common problems we hear about in the artisan spirits industry. This is a huge problem for distillers because of the short comings of most bookkeeping software when it comes to handling spirits manufacturing.
When you produce spirits in batches that are always different, it’s really hard to handle that with “assemblies” in common bookkeeping software because you never get the same result.
These “assemblies” would work extremely well if you were assembling widgets in which you use a nut, a bolt and a metal plate every single time. However, spirits batches are ALWAYS different because of the many varying factors like the yeast generation, coloring of the malts and even the weather. It’s the somewhat intangible thing called “artisan” that goes into every mash that causes varying results every time. The art-form of unique, hand-crafted spirits is a double edge sword in that the art-form is hard to account for when your inventory levels are constantly shifting.
Distilleries end up having to manage this outside of their bookkeeping software in spreadsheets, pen and paper or cheap web applications. Therein lies the challenge of trying to keep your inventory accurate and up to date.
Inadequate Accounting: You can bet that the same frustrations on the inventory side are driving your accountant crazy. Tracking inventory in bookkeeping software also makes accounting for it all very challenging. You purchase raw ingredients at different prices, consume them in different quantities and produce spirits with different yields. As if things weren’t already complicated enough, your costs are also different for each style of spirits, each pack type of finished spirits and each batch of whiskey, vodka, gin, etc. The effort it takes to try and keep track of all costs would require a staff of accountants. For this reason most distilleries simply don’t do it or guestimate their costs at the end of the month with complex spreadsheets and simple assumptions.
Poor Planning: Nobody knows how to plan for your distillery better than you and your team. Yet, there still seems to be an overwhelming need for better planning. This is caused by the lack of readily available information to help production planners do a better job planning. You could be making the best decisions, but if the information you use to make those decisions isn’t accurate, those decisions are only as good as the information you use to make them.
Lacking real-time inventory quantities, demand for orders or expected deliveries of raw materials can really put a wrench in your planning abilities. Even if you have that magical 17-tab spreadsheet to take that information into consideration, you still have to manually update that information every time you begin planning. There’s also the risk that the numbers you’re manually inputting may not be accurate in the first place.
The Solution: “Centralizing” Your Distillery
OrchestratedSPIRITS solves these problems by providing a centralized solution for all of the different functions of a distillery. Your controller, sales manager, distiller, production planner and anyone else at your distillery can all interact in the same centralized solution to gain access to information that was previously kept in what’s known as “information silos”. These information silos are fragmented tools or stored data like bookkeeping software, spreadsheets, web tools, pen and paper, whiteboards and those secret recipes and processes in your or your distiller’s head.
So why does OrchestratedSPIRITS solve these problems?
Information Transparency: Information becomes transparent and accessible to all of the different distillery departments when you bring it into a centralized solution. Your production planner can see what they need to produce or order based off of the demands created by sales orders or sales forecasts entered in by the sales manager. The distillers can see what production is prioritized based off of the schedule the production planner has created. Sales managers can see when they can promise spirits to distributors and customers based off of when they are planned to be packaged. Your controller can see when they can expect to receive payment based off of the expected delivery dates of future orders. Information transparency eliminates the frequent hunts for Dave distiller for “that one document”, or constant emails and text messages to find out when the whiskey will be ready to sell. OSpirits allows everyone to get the information they need at every level or even receive alerts when certain things occur.
Process Automation: Processes become automated when every function of your business is using the same application to conduct activities. As purchase orders are received, inventory is automatically made available. As production occurs, raw ingredients automatically decrements and finished goods automatically increment. As finished spirits are packaged, inventory is made available to fulfill orders. As deliveries are invoiced, the customer account balance is recognized until payment is received. There is no need for dual entry or keeping information up-to date. OrchestratedSPIRITS does it all for you behind the scenes.
Automated Accounting: All the purchasing, production and sales occur in the same centralized solution which is built on a robust accounting platform. These means all accounting transactions are automatically created in the system to reflect the operational processes that occurs in real-time. As raw ingredients are consumed in production, a journal entry is automatically created to move the value of those raw ingredients from your raw materials account and into a work in progress account. As finished spirits are produced, a journal entry is automatically created to reflect the value of your finished spirits on your balance sheet. A journal entry is created to book the production variance for each production process if there was a difference between what your recipes expected you to use and produce and what was actually used and produced.
You can run a balance sheet at any time during the day to see how and where your money is sitting on your distillery floor. Run production variance reports to see how production efficiencies or inefficiencies are affecting your bottom line. Track the cost of your spirits by style and pack type so that you know what your real margins are for each sale. There is no need for an accounting staff or complicated spreadsheets to calculate costs. OrchestratedSPIRITS does that automatically for you.
OrchestratedSPIRITS is the only solution that addresses the underlying problems and provides centralized functionality to extend to all functions of your distillery. Our staff of 25 dedicated individuals is committed to solving your problems. We all speak “craft”. You are not just relying on one person that may not be around tomorrow to support you, or even a small marketing group at a large software company just trying to get a piece of the pie. With OrchestratedSPIRITS, you are part of a community who have the same goals and face some of the same challenges.