THE UNIVERSITY OF SOUTHERN MISSISSIPPI

Study Abroad in PanamaJuly 2013

THE UNIVERSITY OF

SOUTHERN MISSISSIPPICenter for Logistics, Trade and TransportationAndCollege of Business

Study Abroad in PanamaCoordinated by

Dr. Tulio SulbaranTel: 601-266-6419 - Email: [email protected]

1Ce THE UNIVERSITY OF

SOUTHERN MISSISSIPPI

Jul 2013

A Case Study: A Comparison of Logistics Practices & Facility Layout of Baton Rouge Coca-Cola Production/Distribution Center and Nestle

Manufacturer/Distributor in Panama City, Panama. Presented by:Sergio Chavez

Tel: 601-271-6247 Email: [email protected]

Center for Logistics, Trade and TransportationandCollege of Business


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Video Preamble

Click image to play video. The interview was with Gloria Reyes, Director of Demand, Supply, and Trade from

Click on the image above to go to a website with a video of the Baton Rouge Coca-Cola plant.


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Outline

1- Introduction

2- Information/Data Collection Approach

3- Case Study

4- Results and Results ImpactSimilaritiesDifferences

5- Summary


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Introduction


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Introduction• Definitions:

Milk-run truck distribution involves when trucks pick up products at one or more location(s) and delivers them to one or more destination(s).

• Cross-dock truck delivery moves products from suppliers to a cross-dock and from the cross-dock to the destinations (Berman & Wang, 2006, p. 287).

• Value-added service warehouse is a facility “where key product customization activities are executed, including packaging, labeling, marking, pricing, and returns processing” (Frazelle, 2002, p. 3).

• FocusThe focus of this report is A Case Study: A Comparison of Logistics Practices & Facility

Layout of Baton Rouge Coca-Cola Production/Distribution Center and Nestle Manufacturer/Distributor in Panama City, Panama. More specifically, this report compares the logistics and warehouses of Baton Rouge Coca-Cola and Nestle Panama, by looking at the business functions previously mentioned.


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Introduction: Business Environment in Panama

• Panama uses dollar-based economy and relies heavily on established services sector for over 75% of its GDP. “Services include operating the Panama Canal, logistics, banking, the Colon Free Zone, insurance, container ports, flagship registry, and tourism” (CIA, 2013).

• Approximately 30% of the population lives in poverty but it has been decreasing in recent years along with unemployment.

• There is a shortage of skilled labor and an abundance of unskilled labor (CIA, 2013).• Panama exports $17.97 billion • Main export partners are US (13.1%), South Korea (12.5%), Honduras (10.2%), Japan (9.3%),

India (7%), Canada (4.4%), and Mexico (4.2%). • It imports $24.04 billion • Panama’s major import partners are Japan (23.5%), China (23%), Singapore (18.1%), US

(13%), and South Korea (6%).


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Introduction

This report compares the logistics and warehouses of Baton Rouge Coca-Cola and Nestle Panama, by looking at the business functions of planning, design, scheduling, and material management. These business functions are critical to the comparison of Baton Rouge Coca-Cola and Nestle Panama.


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Information/ Data Collection Approach:Internet

• Used Google • Terms = “Coca-Cola” and “Baton Rouge” and “Panama” and

“Nestle.” • There was an abundance of information about Coca-Cola

Bottling Company United and specifically about Baton Rouge Coca-Cola available.

• There was very little information on the Internet regarding Nestle Panama.


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Information/ Data Collection Approach:Internet Results

• Multiple Articles• Best from Packaging

World Magazine included video of warehouse

• Company webpage

• Very little available on web

• Some parent organization business reports on profit

• Some articles on recent union issues.


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Keywords

Coca-Cola + Baton Rouge

Nestle + Panama

United States

Panama

Information/ Data Collection Approach:Databases

Database Library Results

Academic Search Premiere USM No for Panama

Academic Search Complete

LSU No for Panama

Business Source Complete USM No for Panama

Business Searching Interface

LSU No for Panama

CIA World Factbook Open/Govhttps://www.cia.gov/library/publications/the-

world-factbook/index.html

Country Information Present on Both

EBSCO Electronic Journals Service

USM No for Panama

Economia Y Negocios LSU No for Panama

Fuenta Academica LSU Yes

JSTOR USM No for Panama

MarketLine Company Profiles

LSU No for Panama

SAGE Journals Online LSU No for Panama


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Information/ Data Collection Approach:Database Results

• Multiple Articles in multiple databases

• Nothing on Panama Nestle

• Results were on other South & Central American Nestle locations


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Information/ Data Collection Approach:Interviews

Planned: •Joe Vergeron, Distribution Manager/Special Problems of Baton Rouge Coca-Cola•Ascanio Salas, Director of Operations for Nestle PanamaActual: •Gloria Reyes, Director for Demand, Supply Chain and Exporting Planning (Jefe Planificacion Demanda, Abastecimiento y Comercio Exterior).•Joe Vergeron, Distribution Manager/Special Problems of Baton Rouge Coca-Cola


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Information/ Data Collection ApproachInterviews

Question Business FunctionWhat is the size of the facility? DesignWhat is the size of the property? DesignDoes the facility hold any special certifications? Design

What is the product production? Material management How many SKUs can be handled on site? Materials managementHow many production lines are there? DesignHow many loading docks are there? DesignHow many vehicles distribute the product? Materials managementWhat pallet system do you use? Materials management/DesignWhat software systems are used? PlanningHow many employees are there? SchedulingWhat are the annual sales for last year? PlanningWhat type of warehouse design is used? DesignWhere is product shipped? Scheduling/Materials managementHow many unique products are manufactured/distributed from the facility?

Materials management


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Information/ Data Collection Approach:Interview Results

Question Baton Rouge Coca-Cola Nestle PanamaWhat is the size of the facility? 781,000 square feet Info Not AvailableWhat is the size of the property? 112 acres Info Not AvailableDoes the facility hold any special certifications?

LEED Info Not Available

What is the product production? 45 million 8-ounce serving products per day

33,000 TONS of product annually

How many SKUs can be handled on site? 141 SKUs created on site; 400 SKUs total

300+

How many production lines are there? 4 production lines NATA has 3 (one evaporated, one dry and one condensed milk line) and Los Santos has 6

How many loading docks are there? 98 loading docks NATA = 8 (4 for local and 4 for Exporting) and Los Santos= 2

# vehicles distribute the product? 340 plus vehicles They employ 15 + 3rd party logistic companies

What pallet system do you use? Easy Pallet Distribution System Push-Pull they also employ slip-sheet pallets that requires a special fork lift

What software systems are used? BASIS, MEI SAPHow many employees are there? 520 490What are the annual sales for last year? $9,096,916 $17,500,000What type of warehouse design is used? Warehouse Slotting (slot-

picking) Single and Double deep and/with drive in

Where is product shipped? Vending machines, stores, other distributor

Local, Chile, US and Caribbean - to the US they export “sofrito” and to the Caribbean they export condensed soups and to Chile caldo cazero

# unique products are manufactured/distributed from the facility?

Over 400 NATA = 95 and Los Santos = 45


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Case Study: Nestle Panama SA • Categorized under Dry

Condensed/Evaporated Dairy Prod Manufacturers

• Established in 1937• First Nestle company in Central

America• Produces and distributes local,

nationally, and internationally


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Case Study: Baton Rouge Coca-Cola

• Division of Coca-Cola Bottling Company United

• Produces & distributes to the greater Baton Rouge area and region (Mississippi & Louisiana).

• Founded in 1906


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Results and Results Impact: What was compared

• Warehouse design• Production• Distribution


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Results and Results Impact: Similarities

Question Baton Rouge Coca-Cola Nestle PanamaHow many SKUs can be handled on site?

141 SKUs created on site; 400 SKUs total

300+

How many production lines are there?

4 production lines NATA has 3 (one evaporated, one dry and one condensed milk lines) and Los Santos has 6

How many employees are there?

520 490


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Results and Results Impact: Differences Question Baton Rouge Coca-Cola Nestle Panama

What is the product production?

45 million 8-ounce serving products per day

33,000 TONS of product annually

How many loading docks are there?

98 loading docks NATA = 8 (4 for local and 4 for Exporting) and Los Santos= 2

How many vehicles distribute the product?

340 plus vehicles They employ 15+ 3rd Party logistic companies to distribute

What pallet system do you use?

Easy Pallet Distribution System Push-Pull they also employ slip-sheet pallets that requires a special fork lift

What software systems are used?

BASIS, MEI SAP

What are the annual sales for last year?

$9,096,916 $17,500,000

What type of warehouse design is used?

Warehouse Slotting (slot-picking)

Single and Double deep and/with drive in

Where is product shipped? Vending machines, stores, other distributor

Local, Chile, US and Caribbean - to the US they only export “sofrito” and to the Caribbean they export condensed soups and to Chile a product called caldo cazero

How many unique products are manufactured/distributed from the facility?

Over 400 NATA = 95 and Los Santos = 45


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Results and Results: Impact


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Summary• Nestle Panama SA is a private company in Panama City, Panama. • Nestle Panama distributes locally, nationally, and internationally.

• Baton Rouge Coca-Cola Bottling Company is a division of Coca-Cola Bottling Company United, Inc.,

• Baton Rouge Coca-Cola distributes locally and regionally.

• Warehousing, distribution, technology, etc. are critical business functions.

• Although Baton Rouge Coca-Cola produces more, directly distributes more(no outsourcing), has more employees, a LEED warehouse, and impressive technology, Nestle Panama’s profit is greater because of national and international reach.

• Future studies = how the variety of product calls for different warehousing functions and layouts and the types of distribution used—rails, trucks, ship—for the two locations.


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THE UNIVERSITY OF SOUTHERN MISSISSIPPIfounded in 1910

Thanks!

Center for Logistics, Trade and Transportationand

College of Business

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THE UNIVERSITY OF SOUTHERN MISSISSIPPI