Production planning for cold brew co-packing is something easily overlooked by the client, but essential to the co-packer. Having spent 20+ years helping small and mid sized manufacturing operations with production planning, one of our founders goes in depth on the behind the scenes processes and requirements for this vital process.
What is Production Planning for a Cold Brew Operation?
Production planning is somewhat obvious… Im trying to plan production duh!. But in to-scale manufacturing, the goal is to balance all the sourcing (supply) with the production schedule (demand) and time it optimally. When done right, correct production planning will minimize costs, maximize efficiency and deliver products on time at the correct quality. In most cold brew production planning, we are using Batch Production.
Production Planning to Raw Materials
We have several key terms that need to be defined. Different terms are used in different industries and styles of planning, but the general ideas are:
- Production Item (PI): The planning element (raw material, or even a key process) which is critical by itself, and needs to be managed. Examples are Green Coffee, Water, Grinding, Filtration etc…
- Due Date: The date the product or event is required for the action to be taken, or the completion of a step
- Master Date: The internal planning date often used this in conjunction with the Due date. For example, if I know it takes 1 day to ship the product, and the Due Date is X, then the Master Date (the date I need to take action to hit the Due Date) is x-1.
On vs. By for a Due Date
- On means that is the date, By means on or before the date (early delivery is ok).
- Co-packers might not have extensive warehouse space, or may charge for space and will use an On Due Date system. Delivering early could result in charges, or simply rejecting the delivery as there is no space to store the product.
- In addition, roasted coffee will degrade over time, and the recipe may call out for tight tolerances on how soon the product must be brewed. Roasted coffee may not be allowed to sit.
- Some co-packers have enough space, or have priced in storage for their clients and have a bigger window of delivery times acceptable.
Green or Roasted Coffee
The planning cycle varies depending on who is sourcing what, and who is processing what:
- If the client is providing the green coffee, AND roasting it then obviously the finished roasted coffee is the PI for planning. The co-packer provides the schedule for when the roasted coffee is required (the Due Date), and obviously how much. The due date then is not when the client needs to be done, but when it needs to be AT THE CO-PACKER. Typically the client would use a Master Date that is when the product needs to be shipped in order for delivery to occur on or before the Due Date.
- If the client is providing the green coffee, but the co-packer is roasting it, then it is very similar to above, but the green coffee is the PI. Typically this also includes storage time. The client could elect to even keep their green coffee warehoused at the co-packer, or regular deliveries from the annex can be managed. For smaller runs, clients can even deliver themselves on demand.
This is the availability of the production line itself. This is where the current state of affairs in cold brew co-packing, and production planning are a mess. It is not untypical to hear from clients that current or previous co-packers had wait times up to 6 months for Line Time. Simply put, this means it is 6 months until the production line is available. You must schedule your run and secure the line time now, and then schedule deliveries and customer demand 6 months out.
There is no question this is the most difficult element to track. Production planning works from the customer demand (the end customer selling the last transaction) back up through all the various steps and processes, sometimes including several different businesses. All these business have their own schedules, and multiple clients. This is why securing Line Time is so critical. Setting the right schedule for production, and then managing the subsequent ripples throughout the stakeholders both up and down stream is key.
Line time is both a function of the specific processes required, as well as the raw materials delivery. It is easy to mis-schedule the delivery of a raw material, and miss out on the line time! Co-packers often attempt to maximize their line time schedule, and have little to no “wiggle room”. This can mean missing the schedule is like missing a bus. You have to wait for the next one to come along. In some cases, that is weeks or months.
Almost all cold brew coffee is “cold chain”. This means the product, pasteurized or not, must be kept cold as part of the food safety program. Cold Storage is more expensive, and often at a premium. Most co-packers require you to have your product picked up ON a Due Date to make room for the next production runs happening on their line. Some clients are using distributors, who can schedule pick ups, some are self distributing, and others need the co-packer to hold their product or deliver it themselves. Each of these steps consumer some kind of resource, either a tangible one like a refrigerator, or require an intangible resource like administration and planning. Each has it’s own costs.
For smaller clients who might not have easily accessible cold storage, renting space in the co-packers cold storage may be the answer. For larger customers, storage on refer trucks, or their own cold storage is best. Distributors often have massive cold storage as part of their logistics support, and can schedule regular pickups with a higher level of service and accuracy. You often get what you pay for with distributors.
While these articles seem verbose, and somewhat exhausting, they really only begin to address the topic. They are meant to be introductions, and provoke more questions than to provide simple answers. They are great starting points for a conversation, and to prepare you for what it takes to get rolling.
We hope to address several other key points in future articles such as the Brewing Process (Roasting, Grinding and Brewing), Food Safety Requirements (at the current time there are federal guidelines coming shortly that will knock the industry on its head), Shelf Stability, Packaging, and Distribution. We believe helping prospective clients navigate the significant gulf between basic cold brew to real specialty co-packing will help set correct expectations, and position our customers for success.
Portola Coffee Lab and Cold Craft have extensive experience with sourcing specialty coffee, roasting development and leading edge brewing techniques. When we work with a potential partner for contracted manufacturing of cold brew coffee it is often surprising at how many factors need to be addressed to develop and scale up beverage manufacturing to high quality standards.
Contact Us if you want to know more about what we can do to help you with your cold brew manufacturing.