Too Many SKUs? How Beverage Distributors Can Reclaim Productivity

Beverage Distribution: Why Your SKU Count Is Crushing Productivity

Hy-Tek Intralogistics has introduced two warehouse automation solutions aimed at beverage distributors dealing with growing product assortments, labor shortages and strict delivery schedules.

The Erlanger, Kentucky-based supply chain systems integrator announced the formal launch of Hy-Flo and Hy-Sync on Sept. 23. The company says the modular systems are designed to help North American beverage distributors modernize warehouse operations without relying on a single, standardized automation layout.

The issue is becoming increasingly important for fleets and drivers because warehouse productivity directly affects when outbound trucks are released. A delayed pallet build can mean a late departure, a missed delivery window or additional pressure on drivers trying to recover time on the road.

Many beverage warehouses were originally designed to handle a few hundred stock-keeping units, or SKUs. Distributors now may be managing thousands of individual products as portfolios expand beyond traditional beer into wine, spirits, seltzers and ready-to-drink beverages.

Each additional SKU can increase the distance a selector must travel while building a pallet. According to Zac Boehm, Hy-Tek’s chief automation officer and beverage solutions group leader, a facility designed for roughly 500 SKUs may now be picking across 4,000. The added travel can extend a task that once took about 10 minutes to 15 or 20 minutes.

For an outbound operation tied to scheduled routes, those extra minutes accumulate quickly. Warehouse teams may have to complete multiple pallet builds for a single truck, often involving different products stored throughout the facility. Longer walks and more complicated pick paths can create bottlenecks before a load ever reaches the dock.

“Beverage distribution has reached a critical inflection point where traditional manual walk-loops simply cannot keep pace with exponential SKU growth and labor turnover,” Boehm said in the company’s announcement.

Hy-Sync targets long-tail products

Hy-Sync is designed as a more targeted solution. Rather than automating the entire warehouse, the system focuses on the slowest-moving products, which Hy-Tek estimates represent about 60% to 70% of a distributor’s SKU count but only about 10% of its volume.

Those products can create disproportionate travel because they may be stored in scattered locations and still need to be included in customer orders. Hy-Sync is intended to retrieve or consolidate that long-tail inventory to a single downstream pick location. Pickers can then complete pallet builds without walking to multiple distant sections of the facility.

Hy-Tek’s stated goal is to double or triple pick speeds, with the company citing higher performance during the beverage industry’s peak “100 days of summer.” The results described by the company are operational targets and reported outcomes from facilities using the approach, rather than a guarantee for every distribution center.

For drivers, the practical significance is that a more efficient pick process may help warehouses stage completed orders sooner and reduce congestion around outbound doors. It does not eliminate the need for accurate loading, securement or appointment coordination, but it can address one source of delay before those steps begin.

Hy-Flo takes a broader approach

Hy-Flo is intended for distributors seeking a more comprehensive, facility-wide system. Boehm compared the concept to a vending machine: Products are automated during inbound handling, stored within the system and dispensed as needed to build outbound pallets.

Unlike Hy-Sync, which isolates a specific portion of the SKU mix, Hy-Flo is designed to manage the broader movement of products within the warehouse. Hy-Tek describes it as an end-to-end, high-throughput option for operations that need more extensive automation rather than a focused improvement in one area.

The two systems are part of Hy-Tek’s effort to offer alternatives to rigid, one-size-fits-all warehouse projects. A distributor could use a targeted system to address long-tail products or pursue a larger redesign covering inbound storage, retrieval and outbound pallet building.

Labor remains a central concern

Labor turnover is another factor behind the push for automation. Boehm said beverage distribution facilities report turnover rates ranging from 80% to 100%. The impact includes recruiting and training costs, as well as the productivity loss that occurs while new employees learn warehouse procedures.

Hy-Tek presents automation primarily as a way to retain and support workers rather than eliminate the workforce. Reducing long walks, repetitive equipment mounting and other physically demanding tasks may allow experienced employees to remain productive while making warehouse jobs less difficult to sustain.

That focus matters to transportation operations because warehouse staffing problems can affect dispatch reliability. When a facility is short on trained selectors or loaders, drivers may spend more time waiting for freight, dealing with incomplete orders or working around last-minute changes at the dock.

Hy-Tek said prospective customers can evaluate the systems at its 20,000-square-foot innovation lab in Erlanger. The facility demonstrates several approaches, including goods-to-person systems at both the unit and pallet levels. The company also said demonstrations can use a customer’s actual products, which generally must arrive about a week in advance.

As beverage portfolios continue to expand, distributors face a basic space-and-time problem: More products must move through facilities that were not designed for today’s SKU counts. Hy-Flo and Hy-Sync are Hy-Tek’s proposed responses, with one aimed at broader automation and the other at reducing the travel burden created by slow-moving inventory.