Financing Beverage Warehouse Growth ProjectsSteve Cappella
Capital Investment Project vs. Operating Expenses
The beverage revolution underway in America today is creating a bright future for bottlers and distributors that can adapt to growing market demands, increased SKUs, labor inconsistencies, and space under-utilization.
The challenge of beverage CEO’s today is the struggle to find common ground on the best methods for growing sales while achieving maximum efficiency and still maintaining top quality customer service. While Sales Managers want to introduce more SKUs, Operations Managers are often dealing with warehouses at full capacity, which creates an internal dog fight that usually ends in more brands and reduced operational productivity.
With customer demand shifting from loyal consistent brands to more variety and choices, implementing a fluid distribution model that allows for more items and increased productivity is critical to succeeding in beverage SKU proliferation.
Many beverage companies invest heavily in image infrastructure like grand entrances and lobbies, high tech meeting rooms and plush offices. These investments are important for image and customer impressions. However, often found behind the façade is a poorly organized warehouse with outdated or poorly utilized material handling equipment.
While most owners or managers understand the need for warehouse improvement projects, often during the budget cycle material handling enhancements are often partitioned or cut in favor of more popular projects.
The roadblock for warehouse improvements is not lack of desire but poor information on how and when to allocate capital. The dilemma for the managers is to proceed with a capital expenditure or to continue with ever increasing operating costs and reduced customer service.
Traditionally the easy solution has been to bring in more labor, allocate more overtime or provide more repairs to outdated equipment.
Beverage distribution material handling equipment, warehouse management systems and specialty storage systems have evolved dramatically over the past few years. Many improvement projects can be implemented in a few short weeks and the systems can be lease financed over 5-7 years which provides immediate relief to the operational efficiency while preserving capital.
Operating lease financing is an excellent method to acquire turnkey material handling equipment today without the need for a balance sheet capital improvement project. Seasonal payment plans can be negotiated which allows owners to pay more in the peak volume months and lower payments during the lighter months.
DPSI provides warehouse improvement project services including on-site assessments, optimization design and implementation of material handling and storage systems. Design, materials and installation qualify for operating lease financing. When more brands are brought into the warehouse and the arm wrestling between sales and operations management start, consider cash flowing your improvement through lease financing.