Efficient management of your brewery, cidery, or winery is more important now than ever. It’s vital to track your business activity accurately to ensure you have the information you need to make sound business decisions – no matter what unexpected challenges arise.
It all starts with inventory tracking — you have to track your process from raw ingredients all the way through the income statement. To do this effectively, you need to record all movements related to inventory, production, sales, equipment maintenance, and packaging. If you have the right processes in place to track those elements, you’ll get good data that can help you plan the future of your business.
Here’s Why Inventory Management Is Important
So, what can you gain from good inventory management?
1. Forecast inventory needs.
Knowing what packaging materials to order and when, so you never run out of bottles and cans, your preferred closures, or anything else you need.
2. Track inventory costs.
Has the cost of working with a certain supplier gone up astronomically over time? Are you spending too much on certain items? You can answer these questions when you accurately track your inventory and associated costs.
3. Manage batches in production.
Keep an eye on batches from afar, including inventory needed for each batch compared to what’s on hand, current costs, current quantities packaged, and more.
4. Monitor product performance.
Know which products sell at the highest margin so that you can plan next year’s growing, purchasing, and production schedule accordingly.
5. Know your COGS.
You can’t get an accurate COGS number without tracking the cost of all related inventory, production, and packaging items. Knowing this information helps you price your products appropriately to make a profit.
6. Use financial data to make decisions.
When you record all costs associated with production, from raw materials to packaging, you can use cost accounting to get an accurate picture of your finances and make informed decisions.
7. Make TTB reporting easier.
When you diligently track inventory, production, and sales, filling out reports for the TTB becomes a much faster process. Inventory management software can even automate some of this for you.
Benefits of Inventory Tracking Software vs. Spreadsheets
If you want to do inventory management right, you absolutely cannot do it in notebooks or on clipboards (paper can be lost or damaged) or whiteboards (information can easily be erased). These methods may work while your team is small and your production volume is low, but to get the insights you need as you grow, a reliable system of record is required.
For that reason, many craft businesses seek out software that can help. While you may start out with spreadsheets, you’ll find that they rely on complicated formulas that can easily break, and sharing them among team members isn’t an easy process. Sure, you can share a Google Sheet, but how do you communicate tasks or work orders associated with them or show relevant team members where the numbers came from? Plus, it’s difficult to forecast your future needs and reconciliation with your accounting software at the end of each month can be a nightmare.
Choosing a Software Solution
The right software will help you keep track of inventory, plan and record production activities, manage sales orders and invoices, and sync with your accounting software to make end-of-month reporting seamless. A cloud-based system allows you and your team to manage your business from wherever you are, so you can assign new work orders, keep an eye on activities, or check in on sales from anywhere in real time. You’ll also be able to answer questions about your business that help you solve current problems and plan for the future with confidence. For example:
- How much does it cost me to produce this product?
- What price will make me a profit on that item?
- Based on forecasted sales, when should I order more packaging materials?
- What is my COGS, and is the revenue I’m bringing in helping my business grow this year?
- Are all my inventory and sales activities accurately reflected in my accounting software?
Inventory management is just one aspect of great business management software, so make sure you do your research. No matter which tool you choose, prioritizing inventory management in your craft beverage business will pay off. When you know your business intimately and can plan ahead, you’ll be able to handle any crisis that comes your way.