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Running a brewery means managing relationships with malt and hop suppliers, distributors, packaging vendors, cooperage providers, and service contractors. Each of these relationships depends on a contract, yet in an industry built on trust and long-standing relationships, contract negotiation and compliance are often treated as mere paperwork. This can be expensive.
Why does negotiating your contract matter?
Negotiating matters because the contract is the deal. Clear terms define quality before a dispute, allocate risk before a supply disruption, and protect margins by preventing one-sided supplier or distributor terms from becoming the default.
For breweries, this can mean the difference between predictable ingredient costs and unexpected price spikes, and between a reliable packaging supply and last‑minute shortages that disrupt production schedules.
What is contract compliance, and why does it matter?
Negotiating a good contract is only half the job. Contract compliance is the ongoing discipline of making sure you’re receiving what is laid out in the agreement. This includes the price charged, volume received, timing of delivery, and escalation terms.
However, contracts don’t monitor themselves. Someone must check invoices against agreed pricing, confirm that price increases are allowed, and track whether volume commitments, rebates, or service levels were met.
When that monitoring does not happen, the gap between what you negotiated and what you actually receive is price leakage, or contract value leakage. It is quiet, cumulative, and often invisible.
How much does this cost a business?
According to World Commerce & Contracting, ineffective contract management often costs companies around 9% of their annual revenue.
For breweries, leakage appears in practical ways such as:
Most leakage isn’t fraud, it’s drift. Prices creep up, staffing changes, invoices get approved quickly, and nobody compares the bill to the contract. The effect on margin is the same.
What can breweries do to ensure contract compliance?
Breweries can reduce leakage without a legal department by building consistent habits, including:
The bottom line
Contracts are not a substitute for trust in the beer business; they make trust durable. Clear terms protect you when a hop harvest comes in light, a supplier changes pricing, or a relationship evolves. Contract compliance then protects the value you negotiated from leaking away invoice by invoice and batch by batch. Closing even part of that gap can be the difference between a good year and a great one.
About Schooley Mitchell
Schooley Mitchell is the largest independent cost reduction consulting firm in North America, with offices from coast-to-coast in the United States and Canada. On average, we reduce essential business service expenses by 28% and have delivered over $1 billion+ in documented savings to our clients to date.
About the authors
Sean Jackson
Prior to joining Schooley Mitchell, Sean Jackson worked in management consulting and the corporate supply chain industry for more than 20 years. He currently lives in Gaithersburg, Maryland with his wife and two children.
Chris Prall
Chris Prall has more than 20 years of procurement experience. He served Global 1000 clients in various consulting, sales, software implementation, and practitioner roles. He has lived in Gaithersburg, Maryland for the past 15 years with his wife and their twins.
As more and more applications are found for AI in business, some industry leaders are finding that customers may appreciate the human touch more when it comes to customer service. From experts like Gartner and Pew Research, in this issue of The Pulse, we take a look at the findings.
According to Pew Research Center, around half of U.S. adults use chatbots to some extent in their regular life. Additionally, 38% of employed Americans reportedly use chatbots for tasks at work. For this reason, it’s no surprise that companies are investing significantly in AI tools.
However, at the same time, consumer skepticism and data concerns are also a growing trend among the general public. Around two thirds of people feel AI is advancing too quickly, and thus may feel uneasy about seeing it in all aspects of life. Likewise, an overwhelming 71% of Americans believe AI will make their personal data less secure.
When using AI tools in customer service situations, these concerns need to be front of mind.
If your business is adopting an AI chatbot for customer service, Gartner recently released some critical research that you may want to keep in mind. They have found that customers – both B2C and B2B buyers – are open to using customer service chatbots as part of their experience, however, 73% wouldn’t use one again following a negative experience. Meaning, your business likely has only one shot to leave a good impression in these scenarios.
This doesn’t just apply to experiences with your business, either. Customer hesitation towards a chatbot can stem from previous experience with other businesses’ tools. For example, Gartner found that despite 49% of respondents claiming willingness to use a company’s customer service chatbot, in practice, only around 7% did during their most recent service interactions.
According to the research, “if chatbots have previously misunderstood their issue, provided generic information or made it harder to reach a person, customers are more likely to choose another channel.” This includes, notably, switching to a third-party chatbot, rather than the company-provided option.
This reflects a risk to your ROI in a customer service chatbot. One bad impression, even with a platform that isn’t connected to your business, could mean you’re spending money on a tool customers don’t want to use. Even if you improve the tool over time, they may be hesitant.
One of the biggest frustrations customers appear to have with customer service chatbots is being kept away from a human agent. Gartner suggests that the successful tools are the ones that “prioritize reliability over reach” by consistently resolving “a targeted set of issues” and “serve as seamless connectors to human support.”
If your business is looking to adopt a customer service chatbot, it’s important to proceed with caution and strategy. Despite general consumer AI adoption, these tools can be hit or miss with customers, according to Gartner research.
To whom it may concern:
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It offers comprehensive support for a variety of legal matters, including governing document and community association issues, residential and commercial real estate transactions, lease agreements, eviction proceedings, business and contract disputes, and estate planning and administration. Its attorneys also provide representation in litigation and guidance regarding complex property and community-related concerns.
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Sincerely,
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Strategic-Partner
Schooley Mitchell
