There is increased interest in the Coca-Cola Micro (or manual) distribution model, first launched in Ethiopia in 1999. The model has recently been selected by the IFC as one of “Inclusive Business Solutions” focused on distribution. On the 7th and 8th of October I will speak at the IFC conference titled “Inclusive Business Solutions: Expanding Opportunity and Access at the Base of the Pyramid”, which is being held at headquarters in Washington, DC. More info: http://www.thesupplychainlab.com/blog/africa/update-coca-colas-micro-distribution-model/

1. Coca-Cola Sabco
Micro Distribution
Project
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2. Sabco’s Micro Distribution Center (MDC) Model
Description
• In East Africa, Coca-Cola Sabco works through small-scale distributors -
The Coca-Cola
many using manual delivery methods – to serve small retail customers IFC Company
needing small drop sizes
$15M loan Branding,
• Many of these distributors are first-time business owners; the most
$12M guarantee Concentrate
critical success factors are supervision, account development, training, $10M equity
monitoring, and collaboration
Drivers Sabco
• Managed 3rd party distribution with bottler actively engaged in account
development Trains owner Managed model
and staff Tracking
• Expand outlet base and Increase product availability
• Facilitate delivery in congested and hard to serve areas MDCs
• Enable small but frequent deliveries to retail outlets with limited working
capital Staff take Pushcart/ bike
orders and delivers to
Results to Date payment outlet
• MDCs are Sabco’s core distribution model in many markets (e.g. 90% in
Kenya and 99% in Uganda) Retail Outlets
• 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
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3. The challenge and considerations of building micro-
distribution networks at scale
Category Comments
• Map out a clear channel strategy and identify which channels the selected partner will
Strategy service. It is critical to understand how channels function and operate in each market.
One size does not fit all.
• Many distributors fail because critical components of the selection criteria are
Selection
overlooked. The selection criteria will include important components such as profile,
Criteria
capital, infrastructure and organizational structure.
Role • Have clearly defined roles and responsibilities. Assess the organizational structure and
definition develop a clear support structure.
• The true cost to serve is sometimes underestimated and companies must assess the
Cost to serve 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.
• Assess if the distributor can handle the level of complexity in the business. Always aim
Complexity to reduce the complexity and standardize processes.
• Focus on the key performance drivers of your business and don’t overextend yourself.
Tracking Take note of the evolution. Emerging market retail conditions change rapidly.
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4. Design: approach to building micro-distribution networks
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
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5. Enablers: approach to building micro-distribution networks
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
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.
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6. Looking ahead: future goals, opportunities and challenges
Retail Technology & Capability Building
evolution mobile banking
Women economic opportunity
Small
Business
Financing
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7. The Supply Chain Lab is a group of supply chain improvement specialists with a
focus on emerging and frontier markets.
www.thesupplychainlab.com
www.thesupplychainlab/blog