Boston Beer Company Operations Presentation by Vinh-Khoi Le, Daniel Tonkovich, Amanda Yam, and Timothy Peterson

Boston Beer Company By: Vinh-Khoi Le, Tim Peterson, Daniel Tonkovich, and Amanda Yam

Inputs: Cash needed to acquire the raw materials The raw materials

Malt Hops Yeast Water Spices

The labor hours required in production

Inputs and Outputs

Inputs and Outputs (Cont.)

The equipment used in production Gristmill Mash Vessel Lauter Turn Whirlpool Vessel Fermentation Vessel “Bright Beer” Tank Bottling Machine

Output: Samuel Adams Boston Lager

Transmission of Information

Information regarding the characteristics of the beer are obtained via direct sampling throughout the brewing process and recorded in a database.

The Process

The process of making Samuel Adams Boston Lager is considered a batch

Malt Gristmill – Creates mixture of crushed malt

Mash Vessel

Water

The Process (Cont.)

Lauter Tun – vessel that will filter the liquid malt into a

substance called wort

Whirlpool Vessel – to remove protein from hops

and malt

Hops

The Process (Cont.)

Fermentation Vessel

Yeast

“Bright Beer” Tank

Hops to soak

Spices

Bottling

Supply Chain

The supply chain is efficient because it is aimed at managing the delivery and usage of the raw materials used in Boston Lager.

External Members of Supply Chain: Malts - purchased from one supplier Hops - purchased through four dealers Water - received via the tap from the city of Boston Packaging - multiple outside sources Glass bottle and labels - only one outside vendor

Supply Chain (Cont.)

Internal Customers The quality control department The bottling department

The Final link in the supply chain is the delivery of the finished Boston Lager to distributors and customers

Corporate Social Responsibility

Samuel Adams “Brewing the American Dream” Launched in 2008 Help low income, small business owners through loans

and mentoring programs

Sustainability Initiatives Increased usage of recycled materials in their packaging Encouraging consumers to recycle their bottles in

advertising campaigns

Operations Strategy

Second largest US beer maker Approximately 1% of the domestic market by sales

volume

“Better Beer” Craft brewers, specialty beers and most imports Higher price, quality, image and taste

Operations Strategy

Increased attention to the brewing process and the selection of raw material inputs Higher production costs

Hand-selected hops In-house brewing Tasting and Quality Control

Strong reputation with the craft beer industry Premium to be charged for its products.  

Freshest Beer Program

Freshness Tag Buy back expired code Reduced time and temperature the Company’s beers

experience at wholesaler warehouses

Forecasting, production planning and cooperation with the wholesalers

Demand Forecasting

Demand has increased 5% to 7%

Freshest Beer Program Managing relations with

400 independent beer distributors

Seasonal beers Twelve year-round

varieties Four seasonal beers Accommodate

fluctuations with seasonal demand and taste

Capacity Management

Effective capacity: 5,720 kegs per day

Utilization rate: 44%

Process about 7,200 gallons at one time

Agreements with Third Parties if Demand Increases

Expand Pennsylvania and Ohio Facilities

Raw Material Inventory

External: Two-Row Malted Barley Reservoir Tap Water

Internal: Bavarian Hops Bottom-Feeding Yeast

Safety Stock? Sharing program w/

local breweries Some in handy

Work-In-Process Inventory

Unfinished “Juice”: Brewing Fermentation Lagering Finishing

Packaging materials

Distribute finished inventory to partners

Quality

User-Based & Process-Based Reliable Brand Consistent Tastes & Textures

Testing & sampling of material (raw & WIP) before and during main stages of process.

Inspection: Buyback Program Out-of-code Bacterial infection

TQM??

Assessing Process Performance

Internal Measurements Flow Time = 7.5 weeks or 52.5 days Flow Rate = 960 gallons per week or 137.1 gallons per

day About $26 million of Inventory On-site Control Labs and 14 Brewmasters

Assessing Process Performance (Cont.)

Customer-Focused Measurements Freshest Beer Program Only .5% of the Beer

Bought Back

Financial Measurements Net Income Increased

$19 million No Inventories and

Provisions for Excess or Expired Inventories

Recommendations

Successful in Quality, but not at Full Capacity

Continue to Reduce Buy-Back Quantity Reduce Amount of Excess Inventory to Distributors to

Increase Freshness

Improve Inspection Efficiency

Questions?