Is Keg Tracking Worth The Cost?
By Nick Amador on August 19, 2021
Regardless of team size, systems, or diligence, the reality of craft beer distribution is that uncertainty exists the moment a keg leaves your facility. Will the product be consumed while still fresh? Will the container eventually make its way back to your brewery?
These questions are just a few of the many that surround the craft beer distribution abyss. The seemingly simple solution would be to implement a mobile keg tracking software capable of monitoring kegs, contents, and locations, keeping turnover quick and inventory safe. But is it quite that simple? Are the costs associated with a keg tracking system – both financial and labour-related – really worth your brewery’s investment?
In this article, we’re going to explore the business case for keg tracking, answering the question of whether or not it is worth the cost. From loss rates and expenses to turnover and fleet-size management, it’s critical to understand the investment potential of a system prior to putting one in place. Before we get there, though, let’s take a moment to discuss the keg-tracking solutions available to you and your team.
What is Keg Tracking?
Put simply, it’s the process of tagging and tracking kegs through the production and distribution process, gathering insights into where containers are and what’s in them. For most breweries, the process involves a combination of scattered papers and scribbled whiteboards, but advancements in mobile keg tracking tech are helping to solve this.
Modern keg tracking tools range from primarily hands-off solutions – such as IoT and RFID technology – to more labour-intensive, hands-on barcode scanning software. Deciding which system is right for your team will depend on two key factors: your budget and desired labour input. There is an inverse relationship between the cost of keg tracking and the number of labour hours involved in managing the system. For software that doesn’t require constant human input, such as IoT software that can keep track of a keg's location via GPS signal, you can expect to pay far more money per keg, per month, than you would for a manual keg tracking solution.
Regardless of your brewery size or budget, there has been a tracking solution designed to fit your needs. You can learn more about the various keg tracking systems available, alongside the pros and cons of each, by checking out our article on brewery keg tracking in 2021.
For the purpose of this discussion, we’re going to focus on barcode scanning software – a tool that allows breweries to monitor keg locations, statuses, and contents using barcode stickers and mobile scanners or phones. Although being the second most labour-intensive keg tracking solution – ahead of only the fully-manual system that precedes it – barcode scanning software offers an affordable, reliable, and relatively efficient way of maintaining your most important asset.
Barcode scanning software will provide a workflow that allows for backward-looking scan data, providing insights into every fill, clean, delivery, and return of a unit. These backward-looking data points allow your team to monitor inventory levels, reconcile units, and plan for the future with a detailed understanding of product demand and turnover cycles.
Sounds great, right? But at what cost?
How Much Does It Cost To Track Your Kegs?
For most keg tracking software, pricing will be on a per-unit basis, charged as a monthly subscription fee. As mentioned in the section prior, the monthly fee associated with tracking will vary greatly depending on the type of system you’re hoping to use.
For systems with minimal reliance on user input, like RFID and IoT, you can anticipate costs of several dollars per keg, per month. Although on the expensive end of the spectrum, these scalable systems offer incredible fleet visibility – and decision-making data – with minimal workflow impediments or room for technical error.
On the other side of that spectrum, stemming primarily from the manual labour required for successful operation, you’ll find barcode scanning software. You can expect these tools to range anywhere from $0.10-$0.30, per keg, per month. When implemented and managed correctly, barcode scanning software can provide tremendous value, offering detailed fleet insights and assisting with ongoing brewery management and planning. Team buy-in is paramount, however, as the heavy reliance on user input requires that all kegs be scanned diligently through the process for the data to remain reliable.
How Much Does It Cost To Not Track Your Kegs?
Unfortunately, calculating the loss associated with not actively tracking your keg fleet is slightly more complicated than calculating the cost of putting a system in place. This is due to three key factors:
First, it’s been documented that the average North American craft brewery operating without a keg tracking system can expect to lose anywhere from 5-8% of its keg fleet, annually. At an average individual keg cost of $100 – ranging from $75-150+ depending on volume and material – it’s quite easy to see how costly this can become. Is your team operating with 400 kegs? Factor in a potential yearly asset loss of $3,200. 2,000 kegs? Expect the number to climb closer to $16,000. The larger you get, the more difficult it becomes to keep your fleet in order.
Second, you must factor in the cost of slow keg turnover. The longer it takes for each individual keg to make its way back to the brewery, the more kegs you’ll need to have in rotation to meet demand. By proactively managing your keg collection – and increasing turnover as a byproduct – you can reduce the capital requirements necessary to meet operational demand, freeing up the money for other important projects.
Third and final, you must consider the cost of compromised quality – certainly the most difficult of the three to assign a dollar value to. As your kegs linger at licensee locations, the likelihood that a customer is going to receive a product of reduced quality will only increase. Seeing as quality is the backbone of your draught sales success, it’s important to prevent this from the beginning.
With both the costs of having and not having a system now outlined, let’s take a look at the potential return on investment of keg tracking software.
Keg Tracking Return-on-Investment
With the average keg costing approximately $100 USD, and the average brewery losing anywhere from 5-8% of their untracked fleet per year, we can quickly calculate an expected barcode keg tracking software return on investment for various fleet sizes.
Breweries on the smaller side of production – those operating with approximately 700 kegs or less – can anticipate a return of roughly 175% per dollar invested into a barcode keg tracking software. This number is calculated by factoring in the cost of a keg tracking system and the savings associated with reduced keg loss once it’s in place – the figure doesn’t even begin to take into consideration the added benefits of quicker turnover and improved quality.
As the fleet grows, so does the potential investment return. For breweries operating with between 1,000-2,000 kegs, the expected annual return on investment hovers around 275%. For those operating with more than 3,000 kegs, that figure shoots up to approximately 450%.
Kegs are expensive, and the gradual loss of 5-8% of your total float each year will act as an invisible shackle. Operational inefficiencies and compromised product quality can be just as damaging. Regardless of the keg tracking system, you opt to go with – the likes of IoT and RFID having different, yet still positive return outlooks – the very-visible monthly cost shouldn’t overshadow the invisible ones that will slowly deteriorate your brewery’s potential.
The Keg Tracking Decision
When determining whether or not your brewery should invest in keg tracking software, it’s important to consider current operations and their alignment with future objectives. Plans for brewery growth, increased sales, and improved quality will be difficult to execute without the help of brewery tech tools, and from managing current inventory to forecasting future sales and production requirements, an affordable keg tracking system is a wonderful place to start.
To learn more about Kegshoe keg tracking and how we help hundreds of breweries around the world better manage their keg fleets, contact us today!