Bierlein
on hazmat,
Across the Border
For Coca-Cola Mexico, things
go better with logistics
Coke’s supply chain serves customers even in the furthest reaches Latin America
by Ricardo Castillo Mireles
Delivering the right shipment to
the right end customer can be easier said
than done — but the success or failure of
a company depends on accomplishing
just that task. With this thought in mind,
here is a continually evolving success
story.
As a younger reporter, back in 1972, I
went to a village named Cancuc in the
southeastern Mexican state of Chiapas,
50 miles from the Guatemalan border.
After an exhausting climb up the hill on
which this Mayan town is located, I went
to the village’s sole grocery store, only to
find the shelves were virtually empty.
The only two products for sale were ani-
mal crackers and Coca-Cola.
Best practices in distribution
After taking some photos and trying
to talk to the villagers — there’s no
Spanish spoken in Cancuc, just Mayan
— I trekked downhill to the village of
Oxchuc. On the trail, I came across a
man who was obviously the Coca-Cola
supplier. He held a whip in his hand
which he used to gently touch a mule’s
hind as they moved uphill. He was on
foot, constantly cajoling the mule, which
Chain Gang
“My peak season peaked early.”
L O G I S T I C S T O D A Y
was loaded down with eight wooden
crates holding 24 glass bottles each of
Coca-Cola and a couple of boxes of ani-
mal crackers.
This remembrance taken from my re-
porter’s notebook is not all that important
except for the fact that then, as now, the
Coca-Cola Co. (www.coca-cola.com)
continues to improve its distribution ca-
pabilities every day. It has an impressive
logistics system involving its 13 fran-
chised bottling companies, 60 production
plants and 428 distribution centers (DCs)
spread throughout Mexico, manufactur-
ing and distributing 15 brands of non-al-
coholic beverages, ranging from tradi-
tional Coke to PowerAde.
To continue its success in the second
largest consumer market outside the
U.S., Coca-Cola has established an um-
brella organization in Mexico City where
it controls the distribution network for all
areas. Hands-on distribution is handled
by its 13 franchisees. Only Coca-Cola
Mexico (as the Mexico City offices are
known) reports to corporate management
in Atlanta, while the franchisees report
directly to Coca-Cola Mexico.
The relationship with franchisees is
very close. The main office distributes
“secret formula” syrup to them on a
come-and-get-it basis, and designs and
Jerry King
leads advertising campaigns in which
franchisees participate at their own level.
Importantly, the Mexico City office
designs point-of-sale service manage-
ment tactics, involving a veritable army
of order-takers furnishing it with data.
Coca-Cola Mexico’s major contribution
to its franchisees is to deliver the correct
logistics strategy for each of them, who
in turn place products at the point of sale.
“All bottlers now have computing sys-
tems which, within a few hours, review
all routes and sales territories,” explains
Antonio Grife, Coca-Cola Mexico’s sup-
ply chain, warehousing and transporta-
tion officer. “Truck and workload sched-
uling for point-of-sale distributors used
to take months but now are fully sensi-
tive to real-time market demands.”
The franchisees are in charge of phys-
ical distribution, and in a nation of stark
contrasts between urban and rural areas,
no two distribution routes are the same.
Antonio Elizondo, supply chain man-
agement planning assistant manager for
the company, says operations are seam-
less. At its headquarters, “Coca-Cola de-
livers to the bottlers planning processes
developed for the entire supply chain,
going from raw material to final cus-
tomer deliveries,” he notes.
In the end, however, bottlers design
their own distribution plans.
Rafael Trespalacios of CIMSA, which
bottles and distributes in a franchised ter-
ritory in the western Mexico state of Mi-
choacan, notes that rural distribution is a
way of life in which trucks have to be
ready all the time. “For instance, we
service the town of Huetamo three times
a week over a dirt road,” he says. “To be
efficient, trucks have to be constantly
fine-tuned. A truck in bad shape can seri-
ously alter distribution schedules.”
Franchisees own their distribution cen-
ters, trucks and whatever type of trans-
portation is required for efficient distri-
bution. From Huetamo redistribution is
made to farms and hamlets by whatever
means necessary, including by burro.
In total, the 13 franchisees own ap-
proximately 21,000 vehicles servicing
11,000 established routes, which total 3.5
million visitations a week by sales per-
sonnel. Routing, however, is constantly
changing due to rapid population move-
ments within Mexico, requiring daily up-
dating to keep production consistent with
demand.
It’s like conducting a daily census.
www.logisticstoday.com
p. 12
“Coca-Cola Mexico constantly studies
available computing software and tech-
nology devoted to better business prac-
tices,” says Elizondo. “All of it is aimed
at creating a horizontal distribution
scheme in which are located our cus-
tomer’s [mom-and-pop] retail stores as
well as larger stores and supermarket
chains. With this data we can better fore-
cast and recommend route optimization
and more strategic positioning of DCs.”
Two of the 13 franchisees are con-
siderable larger than the others. Coca-
Cola FEMSA (www.coca-
colafemsa.com) is Latin America’s
largest bottling company, with a pres-
ence in Costa Rica, Venezuela and Ar-
gentina. The Monterrey-based company
is part of a large conglomerate. FEMSA
(Mexican Economic Foment Inc.) that
has four other divisions, including beer,
packaging, marketing — with over 1,300
Oxxo and Matador convenience stores in
the country — and FEMSA Logistica,
which designs distribution operations for
the rest of the companies in tandem with
Coke’s U.S. headquarters.
Coca-Cola FEMSA covers almost half
of Mexico, including the 23 million in-
habitants of greater Mexico City.
The second biggest franchisee is Arca
(www.e-arca.com.mx), a rather new
company created through the merger of
smaller bottlers in northern Mexican bor-
der states.
While FEMSA favors double-dollies
for distribution in heavy Mexico City
traffic, Arca distributes in flat-nosed
trucks, known as “chatos,” which can
carry more bottles and are fuel efficient.
For urban distribution in the hot cities in
northern Mexico, the truck’s short fronts
can easily make turns in the narrow
streets of smaller cities and towns.
In Merida, in the Yucatan peninsula, a
smaller company, Grupo Peninsular,
needs a wide range of vehicles. Roads
are not always available due to summer
rains from constant storms. Often hurri-
canes from the Caribbean force the bot-
tler to employ different truck designs.
Grupo Peninsular is constantly experi-
menting with new trucks.
“An evaluation of a vehicle is made
through performance tests to determine if
the size, motor, transmission and differ-
ential meet our demands,” explains Raul
Cruz, the company’s transportation and
logistics director. LT
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