Tight-Tight Coupling of Microbrewery Value Chain

Logistics Planning Businesses strive to influence product and service differentiation -- fully aware that the phenomenon occurs in the mind of the customer. Additive to differentiation of brands, products, and services, retailers are increasingly focused on differentiation of their stores as shopper destinations (Flint, 2010). Indeed, differentiation is a key element in the microbrewery industry, in which the customers' capacity for making product distinctions is foundational to competitive strategy. As a case in point, this paper will discuss the relation between differentiation and service-supply chain management in the microbrewery industry.

Service-dominant logic. As businesses move away from a product-focused to a customer-centric orientation, a service dominant logic has developed into a throughline (Flint, 2010). That is to say that, upon close examination of business configurations, service and servicing emerge as primary components of the value proposition -- fundamental components of the value chain. For their part, supply chain managers (SCM) address servicing through process design and the management of resource flows.

Through the efforts of SCM, resources such as information, finances, people, and products are integrated across the business enterprise and beyond, as resources are basic to the production and trade of offerings" (Flint, 2010). Accordingly, supply chain management is engaged in "servicing resource integration by managing flows on both the demand and supply side" (Flint, 2010). This service-supply chain management relationship is particularly evident in the microbrewery industry. There is no opportunity for loose-tight coupling of service and resourcing in the microbrewery business, however, an analogy to lean manufacturing might be applicable.

Supply of raw materials for microbrewery operations, particularly those that rely on the use of particular types of hops, is a time-sensitive endeavor and the construct of inventory simply does not apply to this aspect of the microbrew business. The demand side of the business is undergoing the flux characteristic of the new market that communicates easily and broadly about new products, services, and brands. It has become easier than ever for businesses to build brand loyalty, and to necessarily adapt to the short-term nature of loyalty in contemporary markets.

An inescapable aspect of this new market is the fierce competition driven by the need to differentiate, a key platform for net asset growth of businesses. Microbrewery Differentiation. As part of the differentiation movement, breweries are producing multiple beer specialties over single iconic brands; in part, this drive to differentiate is an aspect of the brand loyalty that gravitates to variety packs and seasonal beers. For instance, warmer seasons call for more refreshing brews such as lagers that are still true to the house brew character.

Ask any microbrew fan about their favorite brews and they will typically make a distinction between wet hops and dry hops. Wet hops are known to provide a livelier flavor to beer than dry hops. In order to yield a high quality hop crop, hops need to be harvested rapidly and at a precise time for the type of crop. Moreover, wet hops must be used within 48 hours of harvest, a factor that easily dictates the supply side demand of logistics.

The dry variety of hops can be shipped across the country by growers, but brewers who prefer wet hops must be proximally close to their brewer customers. There is historical precedence in the beer industry for place-bound manufacture of the beverage. The tie to an advantageous location is an important aspect of the history of beer: Coors has successfully differentiated its brand of beer through the unique use of 100% pure Rocky Mountain high country water.

That said, the microbrewery industry functions in the manner of a handcrafted, rather than mass produced, product. As such, microbreweries are even more place-bound than a larger beer manufacturing company might be. Location, it seems, is everything in the microbrewery business. Breweries, functioning both as the manufacturing and distribution entities of the business, locate near hops farmers. And, given the right growing conditions, there is an unequivocal mutuality to the logistics decisions.

This trend is evident in the homogenization of retail stores that seem bent on carrying all of the same type of products as their competitors, and in the process, loosing the individual focus that may have characterized their retail operations. This diversification thrust is driving the retailers and supply chain managers to establish agile, multiple member partnerships that enable accounts to be serviced with ever more SKUs while holding down costs (Flint, 2010). Microbrew consumers. Microbrews have acquired the new label of craft beers.

According to the Brewers Association, Millennials make up roughly 46% of new craft beer drinkers. These craft beer consumers are notorious for their adventurous appetite for character and variety beers, willingly spending a share of their discretionary monies on entertainment -- a category that includes alcoholic beverages. Accordingly, the only beer category to experience double-digit growth in 2011 was the craft beer category, at 16.3%.

In addition, the craft beer category is attracting an influx of new fans, with 11% of the craft beer drinkers in 2010 in the new drinker category in comparison with the 2011 figure of 46%. The craft beer consumer is primarily white and between the ages of 21-44, 43% with college educations, and 75% earn salaries of $50,000 or more. Given the demographics of the microbrew consumers, they are likely to be found in urban environments, where Millennials are congregating due to their interest in up-scale, culture-rich environments.

Although it may be cliche, the microbrew consumer is often associated with a college or university community. So.