H. Supply Chain Management
Stone Brewing uses supply chain management to help establish a system that allows them
to distribute there products to 38 different states. The supply chain that Stone uses is illustrated
below in figure H.1. The chain works in the following order: Ingredients, such as hops are
barley, are acquired from small farmers in Washington State. These small farmers are considered
to be tier 3 suppliers who then sell there hops to larger suppliers in larger tiers who then sell
directly to Stone. The bottles that Stone uses are purchased from a large bottle manufacture in
Portland, OR. This manufacturer is considered to be a tier 1 supply due to the large quantity of
bottles they supply. Once the bottles have been purchased they are shipped to a label designer in
Los Angeles, CA where the bottles will have the Stone IPA labels baked onto the glass. This
process is both costly and time consuming. Once the bottles have been labeled they are shipped
the Stone’s brewing facility located in Escondido, CA. The procurement process is very
important for Stone to receive quality ingredients and glass but also in a timely manor. After
Stone receives all of the necessary supplies then they will brew and bottle the beer at their main
location. Once the beer has be bottled and packaged it is then shipped to Stone’s main
distribution warehouse which is only a mile away from their brewing facility. From that point it
is sent to various distribution centers located throughout the US. These distribution centers will
then ship the beer to local stores where it can then be purchased by customers. Stone Brewery’s
successes in the market place it dependent on their ability to meet the demand of their customers.
It is important that Stone provides value to their customers by ensuring that the freshest beer is
available and delivered in a timely fashion. If there is a failure in their supply chain then they
are unable to provide a consistent value to their customers.
Figure H.1 - Shows the Supply Chain used by Stone Brewing.
Supply Chain
INGREDIENTS
STONE BREWING
S3
S2
S1
S3
Washington State
LABELING
Escondido, CA
BOTTLES
S1
S1
Portland, OR
Los Angeles, CA
STONE DISTRIBUTION
CUSTOMERS
STORE
STORE
Escondido, CA
STORE
Key S3 = Tier 3 Supplier
S2 = Tier 2 Supplier
S1 = Tier 1 Supplier
Problems & Uncertainty
During the supply chain management stage there can be some uncertainty at times with
the supply chain itself and the inventory. Stone maintains as much inventory as their facility
can handle but they are dependant on outside supplier to maintain a consistent supply of
ingredients and glass bottles. Stone will typically brew up to three different types of beer at a
time, this process of brewing has a two week turn around. If a store would like to have a certain
type of Stone beer, then they must give Stone a minimum of two weeks notice for their order to
be accepted. Since brewing is a timely process, order limitations and time restrictions are
necessary to prevent falling behind schedule.
Another major part of their inventory is the bottles they have to package the beers in.
The main problem with their bottling system that may cause delays in their supply chain and
distribution is that unlike many other brewing companies who have blank bottles shipped where
they can put any paper label they need depending on the model beer being brewed and shipped,
Stone has the labels etched in the bottles through a kiln process before they are shipped to Stone.
This can cause a serious problem because Stone will have bottles that already come pre-labeled
with the model of beer they are brewing at the moment and if a bullwhip effect takes place they
may not have the time nor bottles in stock to brew the demanded beer because they will not have
the correct labeled bottles to package the beer and will need to have the suppliers send out the
correct labeled bottles which could take a long time. They may also not have enough time to
brew a whole new batch of beer because of how long it takes to produce especially during the
fermenting stage and it is unfortunate for the beer companies because no matter how much man
power you may have at hand to help speed things up, beer fermentation cannot be rushed and
needs to fermented and chilled and aged for about 2 weeks.
Stone always tries to keep extra inventory around just in case something of that nature
may occur, however they may not have enough to produce three brews worth of packaging. They
also try to be as accurate as they can on the sales and typically always succeed with deadlines of
packaging and distributing.