Today’s beverage distributors are operating in a highly complex environment, and most of their supply chain operations aren’t built to deliver operational excellence within these conditions. Plain and simple—the complexity of distribution operations is outpacing most beverage distributors’ capabilities.
A rapidly growing industry is putting an immense amount of pressure on these businesses. The U.S. beverage industry is projected to reach $270 billion in sales within three years, and business logistics costs already reached $2.58 trillion in 2024.
To keep up with this growth, beverage distributors are continuing to add SKUs, channels, and packaging formats to their distribution networks. The problem is that most of these businesses are still relying on legacy warehouse designs, labour and network models, and supply chain execution systems that were built for far simpler businesses.
Altogether, the lack of supply chain operational growth alongside market growth is causing persistent inefficiency across the entire supply chain network, from inventory to labour, fulfilment, and transportation.
Operational Complexity in Beverage Distribution
When people, processes, and technologies aren’t growing at the same pace as market and business complexity, several operational areas across the supply chain start to feel that disconnect. For beverage distributors, a few of those areas include inventory visibility, warehouse productivity, fulfilment efficiency, and transportation and delivery.
Inventory Visibility
When SKU varieties double in size and a new selling channel is added every year, tracking inventory becomes a lot harder. Systems that once were able to maintain real-time inventory visibility across five products and two channels simply cannot keep up the same performance with a product portfolio well into the double digits and activity across every selling channel. The extent of SKU proliferation is one of the biggest challenges facing beverage distributors today.
For many beverage distributors that are trying to manage this level of operational complexity on legacy systems and processes, the end result is less reliable inventory visibility, inconsistent customer experiences, and operational confusion.
Warehouse Productivity
Today’s warehouses need to be more productive than ever, with throughput and SLA expectations rising by the day. Most warehouse operators today are trying to get more value out of the space they already have, which becomes nearly impossible when you’re managing a complex distribution network on legacy warehouse designs, processes, and technologies.
For beverage distributors, this has created common difficulties like low labor productivity, congested aisles and workstations, and inefficient slotting practices.
Order Fulfilment Efficiency
Legacy people, processes, and technologies also impact order fulfilment efficiency in the distribution centre (DC) as operational complexity grows. Today’s order profiles are much more complex than they once were, and without the right resources, meeting throughput and SLAs can be a constant battle.
Two areas that impact beverage distributors the most are picking complexity and order assembly. Complex orders need intelligent picking processes and systems, and legacy order assembly practices like manual SLAM lines can create a significant bottleneck in high volume DCs.
Transportation and Delivery
The final mile has always been a challenge in beverage distribution, and it remains one today. Inefficient routes become a much bigger problem when you have triple the number of customer orders that you once did. Delivery challenges become a much bigger hinderance, leading to late deliveries, inaccurate orders, and inflated logistics costs.
Why Point Solutions Aren’t Enough
Our consultants have found a common theme after being inside of dozens of these operations—separate, point solutions eventually provide diminishing returns in ROI across efficiency, cost savings, and growth. That’s because typically, the real problem runs much deeper than just one area.
Everything in the supply chain is connected. This means that just updating one system or process, while valuable in certain ways, cannot solve the system issues that lie below the surface. And it’s typically those systemic issues that are driving the bulk of your challenges.
So, while the first or second point solution upgrade may feel like a big improvement, eventually, the returns on those projects will become much smaller, leaving operations leaders frustrated with persistent pain points that they can’t seem to resolve.
A Framework for Building Scalable Beverage Distribution Operations
There is a framework that beverage distributors can use to manageably grow their supply chain’s operational capabilities to match its operational complexity. The key is taking a full four-walls approach to your distribution network, looking at it as an interconnected grid of systems that all impact one another.
This is the framework that we use to help our clients implement holistic improvements in their supply chains.
Start with Organisational Alignment
Effectively managing operational complexity requires true business alignment across departments. The best approach is one that includes the full spectrum of supply chain partners—suppliers, retailers, and wholesalers—and focuses on short, mid-term, and long-range goals. Also consider that consolidation is occurring as distributors buy other distributors and stores buy other stores. Each of these impact how an operation functions and needs to be considered in the overall distribution strategy.
Perform an Operations Assessment
The root causes of your pain points may not be what you think they are. Identification is the most important first step toward making meaningful, scalable improvements in your supply chain network.
Dissect the people, processes, and technologies that are operating in your distribution network today. Complete labour studies to identify operational bottlenecks; audit your systems for excessive manual workarounds and customisations; analyse DC capacity. Once you have an understanding of your full operational reality, use that information to create a roadmap for improvement in each area.
For beverage distributors experiencing SKU proliferation, a capacity analysis (total volume of packages by SKU) can also help pinpoint areas for improvement in DC capacity.
Optimise Material Handling Systems
In high volume, high variability facilities like beverage distribution centres, materials handling systems are foundational to efficient and accurate execution in both order processing and delivery. As SKU proliferation increases, store footprints expand, and order profiles grow more complex, supply chain managers will be looking for more effective methods to manage their inventory, and having the right storage mediums and slotting configurations will be a critical driver toward that goal.
Here’s a piece of advice: pick floor slotting configuration based on SKU movement/pallet building rules to increase efficiency.
Modernise Warehouse Orchestration Software
Many distributors operating in high volume, high velocity environments are finding that the warehouse management systems (WMS) they’ve relied on for decades aren’t delivering the results they need. Rigid workflows, manual workarounds, and legacy architecture are slowing down warehouse workers and driving inconsistent SLA performance.
One of the best, foundational improvements you can make is to assess your existing warehouse orchestration software, whether a WMS, warehouse control system (WCS), warehouse execution system (WES) or a combination, and identify where there are gaps or legacy functionality that’s slowing you down.
Having the right execution system based on your DC’s level of complexity will drive big improvements in inventory visibility, labor costs, and overall customer service.
Consider a Direct-to-Store Delivery Model
Direct-to-Store Delivery (DSD) models are often the most efficient for beverage distributors. This method is lower cost for wholesalers and increases distributors’ efficiency by 25-30 percent. A DSD solution can be ideal for both on-premise and off-premise deliveries.
enVista’s Supply Chain Experts Can Help
As the beverage industry continues to grow, and distribution networks grow more complex alongside it, supply chain operations leaders will need to ensure the people, processes, and technologies in their distribution network are growing in intelligence, scale, and efficiency.
It’s not as simple as implementing a point solution here and there. Long-term improvements that impact your competitive advantage start at the foundation and work outward throughout the entire supply chain.
enVista’s supply chain experts have worked with hundreds of distributors over more than 20 years, supporting systemic supply chain improvements that drive higher efficiency, lower costs, and better customer service. From operations assessments and warehouse design and build to network optimisation, technology selections and implementations, and automation and robotics, our team can support your entire supply chain.
Ready to modernise your distribution network for a stronger competitive advantage? Reach out to us today!
