Tight-Tight Coupling of Microbrewery Value Chain Case Study

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…