Insights from Joe McGrath, Systems Development Lead & Host of the Automation Insider Podcast
The beverage industry is transforming, driven by shifting consumer preferences and an expanding range of stock-keeping units (SKUs). Distributors, therefore, must balance the complexities of increased product variety while maintaining efficiency and profitability. The challenge of SKU proliferation is especially evident as demand for spirits, non-alcoholic beverages, and energy drinks continues to rise. Robotic AS/RS can provide a scalable and flexible solution within beverage warehouse automation, helping distributors, bottlers, and others involved navigate these operational challenges effectively.
Understanding SKU Growth in the Beverage Industry
Consumer demand is evolving, pushing distributors to expand their product portfolios to stay competitive. Traditional beer distributors are adding spirits, hard seltzers, and energy drinks to meet shifting preferences. Similarly, soft drink distributors are diversifying their offerings to include low-calorie, functional, and plant-based beverages. As a result, beverage SKU sets are becoming more diverse and complex, with distributors managing an ever-growing mix of products across multiple categories.
This SKU growth has a direct impact on warehouse and distribution operations. Increasing the number of SKUs requires a shift in inventory management, order fulfillment, and storage strategies. Distributors must adjust to handling a larger variety of products while ensuring efficiency, accuracy, and timely delivery.
📊 Inbound Logistics Magazine reports that new product categories are a driving force behind SKU proliferation.
The Operational Impact of SKU Proliferation
Expanding SKU portfolios come with operational challenges that can disrupt traditional workflows:
- Inventory Complexity: Managing more SKUs presents a tradeoff; either larger purchase quantities, which consolidate inventory but require more storage (increasing costs), or smaller, fragmented quantities that maintain storage levels but raise operational costs. Hybrid approaches can also be used, where SKUs are managed differently based on their velocity.
- Order Profile Adjustments: Orders that previously averaged 10 unique SKUs per shipment may now include 50 or more, requiring changes in picking strategies. If no additional changes are made to the operation, this can result in more stops, fewer cases per stop, and in general, a lower CPH for operators.
- Increased Manual Handling: Higher SKU diversity often translates to fewer full-case or layer picks and more individual bottle picks (for wine & spirits), which can slow down fulfillment and increase labor costs.
- Outbound Pallet Instability: Mixed SKU pallets can be more expensive and difficult to build, as well as being less stable and harder to transport, leading to potential product damage and inefficiencies in distribution.
- More Frequent Replenishment: Lower inventory levels per SKU necessitate more frequent replenishment cycles, increasing the complexity of warehouse operations.
- Higher Risk of Stockouts: A single damaged case can have a more significant impact when inventory levels per SKU are lower, increasing the likelihood of out-of-stocks and order fulfillment challenges.
The Difficulty of Predicting SKU Trends
Distributors understand that SKU proliferation is a trend that will continue, but predicting the exact nature and scale of these changes is difficult. New product launches, evolving consumer preferences, and seasonal trends contribute to constant fluctuations in SKU counts. Operations must be designed to accommodate ongoing change without sacrificing efficiency.
📊Learn more about predicting the future of Supply Chain Trends, from the Georgia Tech Supply Chain & Logistics Institute
The Role of Robotic AS/RS in Tackling SKU Proliferation
As beverage distributors navigate the challenges of SKU proliferation, robotic AS/RS systems offer a practical and effective solution. By automating the process of storing products based on specific criteria such as size, type, or destination, these systems enable faster and more accurate order fulfillment while reducing labor costs. Here are 5 key benefits of robotic AS/RS in beverage distribution:
1. Scalability and Flexibility
Robotic AS/RS systems are scalable, they can grow alongside your operation as your SKU count increases. They can be easily reconfigured to handle new product types and changes in order profiles without significant infrastructure changes. This flexibility ensures that distributors can manage small and large SKUs, keeping operations running smoothly even as product varieties expand.
2. Increased Efficiency in Order Fulfillment
With robotic AS/RS, products are sorted quickly and accurately, reducing the time spent on manual handling. The speed and precision of robotic systems lead to faster order processing times and lower chances of errors. This can significantly enhance throughput, even when orders contain a high number of SKUs.
3. Reduced Reliance on Manual Sorting & Increased Workforce Efficiency
Robotic AS/RS helps alleviate the strain on warehouse staff by automating repetitive sorting tasks. Instead of replacing jobs, automation enhances workforce productivity by reducing the physical strain of manual sorting and minimizing errors. This shift can lead to improved job satisfaction, lower turnover rates, and a safer working environment, all while ensuring operations run smoothly even during peak demand periods.
4. Improved Inventory Management
Robotic AS/RS can streamline inventory management by improving the accuracy of stock counts and replenishment cycles. Automated systems can track inventory in real time, ensuring that stock levels are always up to date and help prevent stockouts. With more accurate inventory tracking, beverage distributors can reduce waste and improve stock rotation, ensuring that products reach customers in optimal condition.
5. Enhancing Order Accuracy
Robotic AS/RS ensures that products are sorted and routed correctly to the right orders, which is especially important when dealing with a high volume of SKUs. By minimizing the chance of incorrect picks, these systems improve the accuracy of order fulfillment, reducing returns and enhancing customer satisfaction.
📊 Research by McKinsey & Company highlights that the adoption of robotics in warehouses can improve productivity by up to 30%, making it an essential tool for industries facing SKU proliferation challenges.
How Hy-Tek Helps Distributors Adapt and Implement Beverage Warehouse Automation
Hy-Tek Intralogistics provides data-driven solutions to help beverage distributors manage SKU growth and maintain operational efficiency. Our expertise in warehouse automation and robotic AS/RS ensures that distributors can handle SKU complexity with greater ease. Here’s how:
- Data-Driven Analysis: Hy-Tek’s experts analyze order trends, SKU movement, and inventory dynamics to recommend optimized solutions tailored to each company’s needs.
- Automated Storage Solutions: Robotics-based storage systems efficiently handle high SKU counts, processing smaller increments of inventory as seamlessly as bulk orders.
- Flexible and Scalable Systems: Our automation solutions are designed to adapt as SKU counts fluctuate, ensuring long-term operational resilience.
As the beverage industry evolves, Hy-Tek’s innovative automation and data-driven strategies help distributors stay ahead of SKU growth challenges.
Contact us to learn how our robotic AS/RS solutions can enhance efficiency and optimize your warehouse operations.
For further reading on robotics and the beverage industry, click here to discover how goods-to-person robotics are revolutionizing distribution.
