Up to speed; computer technology keeps pace with industry changes - beer distribution

Modern Brewery Age, Jan 22, 1990 by Gene Langston

Up to Speed Computer technology keeps pace with industry changes.

When distributors were just starting to embrace in-house computer systems in the early 70s, wholesalers buying the systems seldom sold more than 100 packages or serviced more than a few hundred potential customers. Not many distributors had heard of word processing or hand-held terminals, or even a five-year business plan. Vermont Information Processing's first 20-odd customers bought a computer that had 9.1 million, or in some cases, 13.7 million bytes of disk capacity, and what would be a miniscule amount of memory by today's standards.

That is an illustration of how little was required of a computer to handle a top-flight beer wholesaler in the 1970s. Today, the same wholesalers are using computers that have nearly 10 times as much disk capacity and 64 times more memory.

In this article I would like to relate some of the many changes in the beverage industry and their effect on the increasing size and complexity of the computer systems that wholesalers now employ.

Back in 1973, this business seemed much simpler. Many changes have occured over the intervening years, ranging from the predictable and inevitable to the downright explosive.

Since 1973 there has been a great proliferation in the number of packages that a wholesaler must sell. Not only that, but the type of product being sold goes far beyond the realm of malt beverages and wine. Not only does a wholesaler sell many more brands of beer now, but products like bottled water, soda, wine coolers and snacks occupy as much space on the product list as beers. One wholesaler I can think of sells nearly 200 products today, while back in '73 he was selling 51. Other distributors I could cite have increased their product list by 200 percent since 1975. Another obvious change has been the increasing degree of consolidation. This consolidation of territories, leading to large increases in the number of accounts being serviced, is more prevalent now than ever before in the industry.

Another difference today is the dramatic change in the product mix, or distribution of packages. The impact is obvious: more products and accounts that mean more transactions. For every added transaction, a computer needs a bit more space to keep track of it. Since, believe it or not, there is a finite amount of space available in any computer.

Some industry changes have had less obvious yet still significant repercussions. First on this list would be the bottle bill. This change falls under the "less obvious" category because wholesalers have always had to deal with a certain number of empties. The full goods went out and sometimes an empty case came back. Now, however, it has become crucial to know just how many empties are being picked up and exactly where they are coming from. This change is significant because the bottle bill (in 14 states as of now) virtually doubles the number of transactions that are being processed daily on wholesaler's computers.

No less significant to wholesalers have been computerized brewery reporting requirements. Detailed records of purchases and depletions must now be stored on the computer. Many things that were once accomplished by "feel", like sales reporting, inventory monitoring and product ordering have become a normal computer function. This information can now be output instantly to a transmitting computer that is wired directly to breweries. In terms of computer capacity, this has meant greatly increased storage requirements.

There have been other recent changes have have been no less significant. This has been a result of an increased level of sophistication in a wholesaler's operations. A prime example is that most wholesalers now do their own accounting in-house, on their own computer, as opposed to employing an outside firm. Wholesalers now require daily control over the P&L and balance sheet. Daily sales, accounts receivable and inventory transactions are stored on the computer for financial analysis as well.

Another example of increased sophistication is the broadened use of the computer for all types of analysis. Nearly every manager, including the owner, has or should have a computer terminal on their desk. Credit managers have the ability to check credit worthiness on a screen instantly. Sales managers track distribution, product introductions and new placements every day on their CRT, and dispatchers set up loads and route trucks using the computer terminal. Today information is available and analyzed in real-time, not as of the end of the last month. Not only that, but the same computers used in running the beverage distribution side of the business are also used for things like word processing and spread sheet functions as well. Sophistication means more transactions, more storage and more memory to run more programs.

Of course, the computer itself has changed a great deal over the years. The base size of most computers has changed just to accomodate larger and more efficient operating systems. The number of operators or users, the need for more printing capacity, adjustable hardware and advanced application software have all pushed the computer industry to bigger and hopefully better systems. By the same token, software producers have paced the growth of their software with the changing technology.