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Coca-Cola Sabco

Micro Distribution Project

Sabco’s Micro Distribution Center (MDC) Model

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Drivers

• Managed 3rd party distribution with bottler actively engaged in account

development

• Expand outlet base and Increase product availability

• Facilitate delivery in congested and hard to serve areas

• Enable small but frequent deliveries to retail outlets with limited working

capital

Description

• In East Africa, Coca-Cola Sabco works through small-scale distributors -

many using manual delivery methods – to serve small retail customers

needing small drop sizes

• Many of these distributors are first-time business owners; the most

critical success factors are supervision, account development, training,

monitoring, and collaboration

Results to Date

• MDCs are Sabco’s core distribution model in many markets (e.g. 90% in

Kenya and 99% in Uganda)

• Generated company revenues of $420 M and improved customer service

• Created entrepreneurial opportunities for 2,200 MDC owners and over

12,000 jobs; owners and staff support more than 41,000 dependents

IFC

Sabco

$15M loan

$12M guarantee

$10M equity

Pushcart/ bike

delivers to

outlet

MDCs

Retail Outlets

Staff take

orders and

payment

Managed model

Tracking

Trains owner

and staff

The Coca-Cola

Company

Branding,

Concentrate

The challenge and considerations of building micro-

distribution networks at scale

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Category Comments

Strategy

• Map out a clear channel strategy and identify which channels the selected partner will

service. It is critical to understand how channels function and operate in each market.

One size does not fit all.

Selection

Criteria

• Many distributors fail because critical components of the selection criteria are

overlooked. The selection criteria will include important components such as profile,

capital, infrastructure and organizational structure.

Role

definition

• Have clearly defined roles and responsibilities. Assess the organizational structure and

develop a clear support structure.

Cost to serve

• The true cost to serve is sometimes underestimated and companies must assess the

cost to serve for both the distributor and the company. Many distributors fail because

the remuneration is set too low and not adjusted for inflation on a periodic basis.

Complexity • Assess if the distributor can handle the level of complexity in the business. Always aim

to reduce the complexity and standardize processes.

Tracking • Focus on the key performance drivers of your business and don’t overextend yourself.

Take note of the evolution. Emerging market retail conditions change rapidly.

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Design Process

• Step 1: Strategy & Segmentation – Study

consumer and dealer insights (research)

• Step 2: Service Policy – Design the customer

service policy e.g. who, what, where, when?

• Step 3: Selection Criteria – Develop your Partner

Selection Criteria e.g. profile, capital

• Step 4: Picture of Success – Create channel

specific plan. Key components to include

merchandising standards & equipment

• Step 5: Territory & Outlet Survey – Determine

the territory and conduct a every dealer survey

• Step 6: Logistics – Evaluate warehouse and

transportation requirements and impact

• Step7: Remuneration – Develop commission &

Incentive scheme

• Step8: Compliance: Design compliance policies

Design: approach to building micro-distribution networks

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Roll-out

• Launch pilot and evaluate results - 3-6 months. Test different model variances and focus on small

incremental changes. Support roll-out with detailed tracking and impact teams.

Enablers

• Performance measurement - Implement an tracking system, create a dashboard and make

information easily accessible to all relevant parties

• Technology – Consider technology for order generation, mobile banking (e.g.Zap) and

collaboration

• Organization – Review the organizational support and supervision required

• Development – Conduct Basic Business Skills, On-the-job and class room training

• Processes – Develop well defined processes for product, cash, information and reverse (e.g.

returns, glass) flow

Enablers: approach to building micro-distribution networks

Looking ahead: future goals, opportunities and challenges

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Capability Building

Women economic opportunity

Small

Business

Financing

Technology &

mobile banking

Retail

evolution

www.thesupplychainlab.com

www.thesupplychainlab/blog

The Supply Chain Lab is a group of supply chain improvement specialists with a

focus on emerging and frontier markets.