Tap Handles 101: Inventory Tracking and Lead Time Management
Let’s start with a hypothetical: your on-premise draft business is growing hand over fist with multiple new placements every week. Life is good! Your distributor sends an email- “Hey, we only have 6 tap handles left. Can we get some more?”. You boogie on over to your supply closet and take a gander at your tap handle su- Oh s&*$. You only have 4 handles left. While selling so much draft beer that you run out of tap handles is a “good problem to have”, it is still a problem nonetheless, and one that can be quite costly if not addressed quickly.
Fortunately, this doesn’t have to happen to you! Keeping track of your tap handle inventory and knowing your vendor’s standard production lead times will help you avoid these costly mistakes. Follow these steps to keep yourself and your new accounts in happy place:
Understand your sales and distribution landscape.
It’s critical to understand what is going on and who the players are in your distribution equation. Here is where your sales team comes in very handy. Ask yourself and your sales reps the following questions to get a better idea of your upcoming tap handle needs:
“How many new draft placements have we made in the last 30, 60 and 90 days? How many have we lost?”
“What are our draft sales projections for the remainder of the year?”
“When was the last time our distributor(s) ordered tap handles? How many did they order?”
“Do we have any distributor/sales focus periods or incentives coming up for our brand(s)?”
“How frequently (if at all) do we recover tap handles from old accounts?”
“How many accounts use tall handles vs. short handles?”
What time of year is it? Draft sales typically pick up in summer months and slow down in winter months, so it might make sense to build in some additional buffer if you are heading into spring/summer.
2. Conduct Monthly Inventory Counts.
“Monthly Inventory Counts? Ugh!” We assure you, we’re not trying to make your life more difficult (quite the opposite in fact)! We know that inventory counts suck, but they are a very necessary and important part of running a business. Chances are that you are already conducting monthly inventory counts of your raw materials, finished goods, merch items, etc., so adding tap handles to the mix isn’t a huge undertaking.
With monthly inventory counts, you have a good feel for how many handles you are going through each month, and if you are starting to run low, you can get your next order together to avoid out-of-stocks. Our recommendation- set a “minimum inventory level” or “par level”, and once reached, a reminder is triggered to let you know that it’s time to order tap handles. Most inventory or ERP solutions have a feature like this already built in, so all you have to do is tell the system what that minimum level is, and you’ll get a reminder to get that next tap handle order together.
3. LEAD TIME!!!
Just because you placed your order before you run out of handles doesn’t mean that your tap handles will arrive in time before you go out of stock. Understanding what current production lead times are with your vendors is critical to ensuring timely delivery. We always recommend having an open line of communication with all of your vendors, as they can inform you of any looming production delays or slowdowns which may trigger an order sooner than you initially anticipated. Checking in every couple of months and asking “What are your current lead times?”, takes all of 2 minutes and can save you hours of scrambling down the line.
Placing your orders with more than enough lead time will help reduce your stress levels, and it will help your vendors with their own production planning so they can get you all the handles you need when you need them. Rush options are often available, but are not always desirable due to higher fees that come along with them.
4. Communication.
Remember those “open lines of communication” we just talked about with your vendors? They don’t just apply to placing orders in the moment! The best vendor relationships are ones that have open and regular communication with each other so that each business can maximize the benefit from the relationship. If you do annual business planning, be sure to share some of those numbers with the relevant vendors. If you plan to increase your draft business by 75% next year, you are going to want to communicate that to your tap handle, raw materials, keg collar and keg suppliers so that they can plan around it. If your vendors are anticipating orders from you in the next year, they can better adjust their own production to meet your needs so there are fewer fire drills and less scrambling to get last minute orders together. Your business might already contract with raw material suppliers, and we’d recommend doing the same with your other suppliers (where it makes sense to).
5. Order Extras!
Surprise, surprise! The people selling tap handles are telling you to buy more tap handles. Well, yeah, but it’s not terrible advice. Tap handles don’t go bad. It’s better to have too many than too few, so if you expect to sell through 200 handles in the next 6 months, maybe think about ordering 250 just to be safe. We usually throw in a few extra, but better safe than sorry! (or so my mom always said when I wasn’t wearing a sweater).
6. Ship, ship, hooray!
While shipping is a relatively small part of the timeline and cost, it can be the difference between getting your handles on time and going out of stock. When getting a quote from a supplier, we recommend asking for an estimated shipping time and cost. Shipping costs and timelines fluctuate almost daily, but your supplier can still give you a rough ballpark estimate that should get you fairly close to your end cost and in-hands date. This way, you can reasonably plan your next replenishment date and share that with your team and your distributor(s) so they can go sell confidently knowing that their handle supply will not be running out. Our advice: avoid expedited shipping whenever possible. It’s fast, but cray cray expensive.
Logistics can be a pain in the butt, but we’re confident that with some educated planning and ordering processes in place, you can keep your sales and distributor teams in healthy supply of tap handles, while also avoiding having boxes of handles that are gathering dust in your warehouse.
