There has been so much change and disruption in the beer wholesaler world over the last 10 years. It is truly remarkable what beer wholesalers have had to overcome in their warehouses since they were dragged into the world of SKU proliferation that started in earnest a little over 10 years ago. Wholesalers that were used to carrying a couple of hundred SKUs were seeing their profile of products double and triple over the course of 1-2 years! Incredible! The warehouse, of course, immediately shrank and it seemed the only way to handle the burgeoning demand was to add more space and add more people…this was the path that many of you had to take.
It was back in Nov of 2011 that we integrated the first ever Crane System run with our Cirrus Tech Warehouse Control Software along with our Cirrus Tech Directed Picking and Warehouse Management System to the Nichols family at Eagle of Shreveport. The Crane System is more than just an ASRS that stores pallets. It is a deep lane storage system that efficiently and dynamically stores pallets to take advantage of vertical storage which gave Eagle of Shreveport significantly more space that allowed them to more efficiently handle the crazy number of SKUs that they were taking on. The most amazing part of the system is that the load builders are able to pick off the bottom level of the system, providing even more space savings and, what we would later learn, incredible picking efficiencies, as well.
Change with more change to come…
So here we are 10 years later. We talk to very few wholesalers that have less than 800 SKUs. Most have over 1,500 SKUs. Almost all of them have many NAs, and it seems like most of them are taking on wine and spirits to some degree to actually taking over territory from the traditional wine and spirits distributors. As of this writing, two beer wholesalers have supplanted traditional wine and spirits distributors for the largest spirits brand in the US!
Since January of 2020, beer wholesalers have experienced what may be the most challenging time in the history of distribution… wholesalers are adding even more brands, more SKUs, they've had to deal with a pandemic, consolidation, brewery shortages/out-of-stocks, unheard of labor shortages and a slew of other issues that have significantly impacted the beer wholesaler's ability to get beer out the door in a timely manner.
Through it all and over that course of time, Cirrus has sold over 10 Crane Systems. And every one of our Crane Systems, including the 11-year-old system at Eagle of Shreveport, continues to be the backbone and workhorse of our client's warehouses. While we are extremely proud of our track record and dedication to supporting all of these systems over the years, Cirrus has been resolute to find a more robust solution to add on to and complement the Cirrus Tech Crane System.
Higher Levels of Automation
In June of 2021, I had a conversation with the owner of a large beer wholesaler who was lamenting the fact that his trucks weren't getting out the door some days until 8 or 9 in the morning. "At least we are getting the beer out the door, all of my peers are having to cut routes". The conversation turned to labor issues. They can't find, train or retain anyone that wants to "sling 25-pound cases of beer during the night shift when they can make $15 an hour working at Chick-Fil-A". He told me he "didn't want anyone working in his warehouse" (you could sense his frustration) and that he wanted to explore full automation. I mentioned to him that you can certainly do a more fully automated system, but that the ROI would be quite a bit longer… "Darrell, he interrupted, the ROI doesn't matter! I can't get my F* beer out the door!" And so, our quest for Higher Levels of Automation (HLA) began…
Cirrus has always prided itself on bringing the best-of-breed technology to the forefront. Our manufacturing partners are the best of the best. They build solid-state equipment that does what it is supposed to, and they stand by it. When you add in our industry-leading Cirrus software and ongoing support with a world-class design team and a few key hires… the foundation was set. We would not add new manufacturing partners for the sake of adding new technology. Anyone we partnered with MUST provide the same high-level, best-of-breed, stable, and supportable technology as our crane partners. Cirrus started with a concept that, at a high level, seemed like it would work. So, we set out to vet the different manufacturers of the key components that would make up this fully automated system, and we floated the concept out to a few interested beer wholesaler partners. The interest level was overwhelming. By January, we had meetings with two candidates, and one of them was ready to go down the road with Cirrus. How does a beer wholesaler do this? How do you decide to partner with someone on a concept?
Once the interested party asked us to go down the road of an HLA solution, a lot of things were going on simultaneously. As we were doing a deep dive of their data and crunching every number imaginable for their business today as well as where they thought they would be in 12-15 years, Cirrus was working the back channels with our manufacturing partners. Concepts turned into real design. Best-of-breed case picking solutions, robot companies, palletizing/case conveyor/wrapper manufacturers, and of course, the foundation of it all, The Cirrus Tech pallet handling Crane System were vetted. Every conversation we had with each of them was based on partnership, reliability, service, and, of course, the fact that this thing had to work! As the majority owner of Cirrus Tech, you cannot, after 10 years of the highest levels of delivering and supporting your partner clients, sell something that does not exceed the client's expectations. So how do we, as a company, come to terms with that? There are three reasons. One, we have done projects wherein our software runs systems that are more complicated than the system we designed for this HLA client. Based on that, we know we can make this work. Two, you add in a client data-driven FULL simulation based on year 12 of the client's growth, with the throughput rates of every piece of technology that is going to be in the system. And three, you are the proud owner of a company that has dedicated the last 10 years to the beer wholesaler sector, you've hired the best people in the business, and you have selected manufacturing partners that share your culture and commitment to shared success. This system will not only exceed expectations, it will revolutionize the beverage distribution world.
So, what is this system? In the simplest terms, once a pallet is received and placed onto the pallet conveyor to go into the Cirrus Crane system, it is not touched by humans until it is picked up as a fully built and wrapped pallet to be loaded onto the route truck. There is some layer picking, delayering, sequencing, etc. Because this will be so transformative in the beverage warehouses of the future, I hope you will understand that we can't share all of the details here. For there are our competitors out there that would love to get their hands on our design…. But if you reach out to us, we will gladly share the full concept with you.
Is this Real?
Did you know that in Denver, there are over 40,000 open warehouse positions in the metro area? And they are building more warehouses?! Yes, this is real. And it is needed really badly.
On August 18th, Cirrus Tech signed contracts with an AB Wholesaler for a fully automated system that will grow with them from 10 million cases a year to 17 million cases a year with about 18 people working in the warehouse all while providing them with a 3-5 year ROI! Approximately 18 employees' day one and approximately 20 employees' year 12 - 15. With the construction of the expansion to house the system and the integration of the Cirrus system, it will be a while before you can see this system up and running. But it is coming! (As an aside, to put that system in and run 17M cases a year, it took just shy of 200,000 sq feet!) We will be able to share the name of this wholesaler in the near future.
In the meantime, we are working on these systems currently with several other clients, including one with a 5 million cases a year wholesaler that plans to grow to 7.5 million in 10 years and will be adding substantial wine and spirits. Our system beautifully handles both beer and wine and spirits. One of the owners stated, "I want to see full automation in my warehouse before I die". Yes, this is real.
As you heard, Frank B. Fuhrer Wholesaler Co. in Pittsburgh signed a crane system-only project with Cirrus Tech about three months ago. The design to add on and accommodate the next components that will fully automate his warehouse, when he is ready, is already done. We have the pick path designed so they can operate when the automation add-on is being integrated. There will be no disruption to the flow of beer getting out the door when the future implementation is going on. We truly tried to think of everything.
By the way, we are working with over a dozen potential clients with the Crane System alone, which is absolutely the best way to dip your toes into the world of automation. Whether it grows into something more or just stays with you as an efficient, space-saving, replenishment machine for decades, the Crane Systems is an established piece of automation that has been implemented in wholesalers doing 2M cases a year up to 15M cases a year out of one facility.
Cirrus Tech is perfectly positioned to assist beer wholesalers with automation and efficiency needs, regardless of size or challenges. Cirrus has 25 years of automation and software experience, with over 10 of those working in the beer wholesaler environment. It would be our pleasure to assist you as you go through the process of evaluating your future warehouse needs.
Please reach out to us if you have any questions or would like to discuss the world of beverage automation further.
All the Best - Darrell
Darrell Dunham · President and CEO, Cirrus Tech, Inc.