Reference no: EM131630577

Question: Critical Thinking Exercise

Extranet to Support Craft Brewers

There are currently more than 3,000 breweries in the United States, double the number a decade ago. Much of this growth has come from the popularity of craft brewers who, by definition, produce no more than 6 million barrels annually- many produce much less. Within the craft brewing industry, there is a strong trend toward packaging beer in four packs of 16-ounce cans rather than the six packs of 12-ounce cans, bottles, or jugs associated with the major U.S. brewers. One practical reason for cans is that glass bottles typically cost more, which can make a big impact on the bottom line of many small brewers. In addition, craft brewers use 16-ounce cans as a means to set themselves apart from traditional beverage companies, and many have built their identities around the distinct look of their 16-ounce can. However, most craft brewers are too small to afford their own canning lines. Ball, Crown, and Rexam are major can manufacturers who work with many craft brewers to fill their cans. But these companies recently raised their minimum can order to the industry-standard truckload, which can range from roughly 155,000 to 200,000, depending on the size of the can.

Typically the smaller breweries and their distributors need only a few thousand cans at a time. The new minimum can orders translate into a lot of cash up front as well as an increased amount of storage space for breweries. Many small breweries are struggling as a result. A new type of company, mobile canners, has emerged to address this problem. These firms haul their equipment to breweries, spend less than a day filling and labeling a few thousand cans, and then move on to the next customer. Over the past three years, about two dozen mobile canner companies have started offering mobile canning across the United States. You are the owner of one of these mobile canners serving craft breweries across the Midwest, a very competitive market. One of your employees has approached you with an idea to set up an extranet that will allow your craft brewery customers to communicate their production schedules to you electronically. Their individual production schedules would be fed into a master schedule that would enable you to see and plan three to six months into the future. This way you could commit the people, equipment, and other resources to ensure that your customers' needs will be met. Running out of cans is catastrophic for the brewers. If you let down a customer who is depending on you, you've lost a customer for life.

Review Questions

1. What advantages does use of an extranet provide versus more conventional methods of communication-over the phone, via fax, etc.?

2. What measures can you take to control access to the master production schedule so that only authorized customers may enter their data?

Critical Thinking Questions

1. What potential start-up issues may be involved in preparing your craft brewery customers to use this new system? How will you overcome these issues?

2. Can you identify any other purposes for the extranet in addition to one-way communication of production schedules? Briefly elaborate.