Learnings from Coca-Cola’s Supply Chain Paper please read the instructions carefully and answer the questions based on the reading of the case that I have attached.
Quick word about use of cases as pedagogical approach
A teaching case is a story describing, or based on, actual events, which justifies careful study and analysis by students. A case contains no right answer to the problem, no correct way of thinking about or analyzing a situation. Rather, a case provides you with issues, problems, choices, and information and expects you to come up with solutions and propose actions using the information in the case. A case requires you to answer the question: “What would you do if faced with the circumstances in the case?” One common mistake students make in case preparation is that they simply repeat the facts of the case and don’t do any analysis. Be careful of falling into this trap.
In preparing the case, both for oral and written discussion, consider the following general questions. It’s not necessary to include responses to these questions in the case write up. The questions are generic to any case and are meant to help you in your analysis.
Who is/are the decision maker/s in the case? What decision is to be made?
Are there other important actors? What objectives do they have?
What are the key issues, that is, the questions that must be addressed or points that must be resolved to reach a decision?
What is the environment in which the decision is to be reached, that is, specific constraints and opportunities affecting the decision?
What specific alternative actions can the decision maker take? With what consequences?
What would you do? Why? Justify your action.
Relevant Resources for this case
There are several YouTube videos on Project Last Mile. Search on YouTube for most recent. You’ll find many descriptions of Project Last Mile as it is currently implemented in several African countries.
See https://www.usaid.gov/cii/project-last-mile (Links to an external site.) for USAID description of the partnership.
Instructions
Please limit your write up to 3 pages, approximately 1100 words, 1.5 spacing, 12 point font. You can use bullet points in your response. There is no need to provide a narrative.
Please number the pages of your submission.
Questions
The original case written in 2016 takes the reader back to the pilot of Project Last Mile in Tanzania with the Medical Stores Department (MSD) in 2010. The project sponsors decided to focus on knowledge transfer rather than more direct support from Coca-Cola (e.g. transporting drug on Coca-Cola trucks). Was this a good decision? Justify your response.
Think about an alternative of piggy-backing medical supplies on Coca-Cola trucks. Coca-Cola makes plenty of profit and can surely add a few more trucks to its fleet. Critique this approach.
For Coca-Cola the Micro Distribution Centers provided the last mile logistics solution in Tanzania. List the pros and cons of using MDCs for medical and drug distribution. Suggest strategies to overcome the cons that you list.
The Project Last Mile website https://www.projectlastmile.com/ (Links to an external site.) provides information on the 8 countries where PLM has been introduced. One country, Ghana, participated in PLM 2011-2013 while the other 7 countries continue to partner with Coca-Cola.
Were components of PLM incorporated into the drug distribution system in Ghana after 2013? Explore external resources to investigate why Ghana decided to leave PLM.
Suggest a set of indicators for each partner in PLM – GFATM, USAID, Coca-Cola Company, BMGF – that can provide the evidence base for countries with poorly performing drug and medical supply systems to adopt the PLM approach. Suggest indicators of ‘success’ for each partner.
What is the role of Coca-Cola in contributing to health problems like obesity, diabetes, tooth decay?
What ethical issues are present in a partnership between an MOH and Coca-Cola?
How would you market the partnership as a Minister of Health to the public at large in a given country? For the exclusive use of S. Khan, 2019.
William E. Youngdahl
Project Last Mile in Tanzania:
Learning from Coca-Cola’s Supply Chain
I feel that if we can understand what makes something like Coca-Cola ubiquitous, we can apply those
lessons then for the public good.
Melinda Gates, “What Nonprofits Can Learn from Coca-Cola,” TED Talk, September 2010.
Melinda Gates, in a 2010 TED Talk, lamented, “You know Coke’s success kind of often makes you wonder. How
is it that they can get Coke to these far-flung places? If they can do that, why can’t governments and NGOs do the
same thing? And I’m not the first one to ask this question, but I think as a community we still have a lot to learn.”1
Gates was hinting at an initiative that was launching the same year, Project Last Mile. Just a month later,
Muhtar Kent, the chairman and CEO of the Coca-Cola Company, commented on Coca-Cola’s commitment
to public-private partnerships as a pooling of collective expertise to tackle broad social challenges:2 “Today,
the supply chains, the distribution networks of businesses, reach every corner of the globe. The research and
innovation acumen is transferable across all geographies. And certainly, in our case, our marketing know-how
and consumer insights are vast and very deep. We have a clear desire to be part of the solution. We also know,
like all of you know, that none of us can do it alone. The only way we are going to have a profound, sustainable,
lasting impact is by working with our friends in government, working with civil society, and us—I call that the
golden triangle—to pool our collective expertise and to ensure that we can deliver on our commitments. I’ve
seen firsthand that this collaboration works very effectively.”
Micro Distribution Centers in Africa
Coca-Cola began importing beverages into Africa in 1928. By 1940, S.A. Bottling Company, an independent
bottler, began operating in Port Elizabeth in South Africa’s Eastern Cape Province.3 In 2010, TCCC CEO Muhtar
Kent stated, “Africa is the untold story, and could be the big story of the next decade, like India and China were
this past decade.”4 By the time of the interview, Coca-Cola was in every country in Africa.
The company’s value-chain strategy focused on protecting its formula for Coke syrup and its other beverages
at all cost and generating product demand by leveraging brand management. Coca-Cola manufactured and
sold concentrates, beverage bases, and syrups to mostly independent bottling operators. These bottlers in turn
manufactured and packaged finished products. They also managed merchandising and distributed branded CocaCola beverages to vending partners who sold the products to consumers. This was the basic model for developed
and emerging economies, but the challenges facing bottlers and the approaches taken to traverse the critical last
mile to retailers differed considerably.
William Asico, president, Coca-Cola Foundation Africa, described the challenges the company faced in
implementing its distribution model in much of Africa: “We had a problem in some urban areas in East Africa to
begin with, where it was very difficult for our trucks to get through. The traditional distribution model couldn’t
What Nonprofits Can Learn from Coca-Cola. (n.d.). Retrieved September 03, 2016, from https://www.ted.com/talks/
melinda_french_gates_what_nonprofits_can_learn_from_coca_cola.
2
1,000 Days: Change a Life, Change the Future. (2010). Retrieved September 01, 2016, from http://www.state.gov/
secretary/20092013clinton/rm/2010/09/147512.htm.
3
Our Company (n.d.). Retrieved October 17, 2016, from http://www.cocacolasabco.com/company/our-company.
4
Africa: Coke’s Last Frontier. (n.d.). Retrieved October 17, 2016, from http://www.bloomberg.com/news/articles/2010-10-28/
africa-cokes-last-frontier.
1
Copyright © 2016 Thunderbird School of Global Management, a unit of the Arizona State University Knowledge Enterprise. This
case was written by Professor William E. Youngdahl for the sole purpose of providing material for class discussion. It is not intended
to illustrate either effective or ineffective handling of a managerial situation. Any reproduction, in any form, of the material in
this case is prohibited unless permission is obtained from the copyright holder.
This document is authorized for use only by Shahid Khan in GH 521 Fall 2019 taught by DEBORAH MCFARLAND, Emory University from Sep 2019 to Mar 2020.
For the exclusive use of S. Khan, 2019.
work. So the franchise owner at the time came up with the idea of setting up a small business that could cover
this urban area, at a distance of 2–3 km, and they would use whatever means possible to get to the retail outlets:
pushcart, donkey cart, bicycle—some would even be carried by hand. That was back in 1999.”5
Coca-Cola Sabco, the East African regional bottler mentioned by Asico, faced the challenge of product
demand outpacing its ability to deliver products to retail customers. Sabco could not maneuver its trucks through
the narrow streets to service myriad small shops. Even if they could, the shops demanded much smaller deliveries
than would have been economically feasible with a fleet of trucks.
The solution, first piloted in Ethiopia, was to establish independently owned micro distribution centers
(MDCs). These MDCs would require warehousing capability to service approximately 150 small retail businesses.
Most deliveries to retail businesses were made by pushcarts to minimize costs and navigate the narrow streets.
Sabco had a well-defined approach for establishing and supporting MDCs:6
• Assess the need. Sabco researched local retailers to forecast demand in order to ensure the viability of any
new MDC.
• Recruit MDC owners. Sabco sales managers directly interviewed each candidate. They required direct
involvement in the business, a strong work ethic, and access to a suitable site and funds for the start-up.
They would also require good relations with the community.
• Define the MDC territory and customers. Ideally, each MDC serviced a maximum of 150 retail outlets
within a one kilometer circumference.
• Provide limited start-up support and guidance. While MDC owners were generally responsible for startup costs, Sabco selectively offered financing to help owners with the initial costs of bottles and crates,
often their largest start-up expenses. Sabco offered guidance on the number of employees to hire and
on wages, but MDC owners did the hiring and were responsible for payroll.
Coca-Cola Sabco’s data department transmitted demand forecasts upstream to the bottling operations from
the MDCs. Truck loading and deliveries to MDCs were optimized by logistics experts using cutting-edge routeoptimizing mapping software. The Coca-Cola supply chain included state-of-the art technology (for production,
planning, and logistics), a well-maintained fleet of trucks for delivery to the MDCs, and carts to manually deliver
product the last mile from MDCs to small retailers.
Project Last-Mile Pilot Project in Tanzania
High-level discussions in 2009—between Coca-Cola, The Global Fund to Fight AIDS, Tuberculosis, and Malaria,
and The Bill and Melinda Gates Foundation—focused on how Coca-Cola’s capabilities could be harnessed to
improve the distribution of essential medicines and health supplies in Africa. These discussions were fueled partly
by the Business Call to Action launched by the United Nations in 2008. This call to action aimed to accelerate
progress towards Millennium Development Goals (see Exhibit 1) by challenging companies to create inclusive
business models that engage individuals at the base of the economic pyramid as consumers, producers, suppliers,
and distributors of goods and services. These bottom-of-pyramid individuals were defined as those having less
than US$8 per day in purchasing power.
Coca-Cola had already demonstrated an ability to respond to the Business Call to Action by creating the
inclusive Micro Distribution Center business model. While the MDC owners did not meet the bottom-ofpyramid definition, many of their employees did. Rather than ask Coca-Cola to write checks or directly transport
medical supplies and drugs, the group decided that Project Last Mile would focus on transferring Coca-Cola’s
core supply chain management expertise to government entities. The Global Fund encouraged a pilot project
with the Medical Stores Department (MSD) in Tanzania with the hope that Coca-Cola’s knowledge in the areas
of supply chain planning, last-mile delivery, and talent management could be transferred to MSD to create
improved and sustainable performance.
@MadeItInAfrica. “Doing Business in Africa the Coca-Cola Way.” How We Made It in Africa. July15, 2014. Accessed
November 15, 2016. http://www.howwemadeitinafrica.com/doing-business-in-africa-the-coca-cola-way/.
6
“Coca-Cola Sabco” in Inclusive Business Models—Guide to the Inclusive Business Models in IFC’s Portfolio, April 2010.
5
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This document is authorized for use only by Shahid Khan in GH 521 Fall 2019 taught by DEBORAH MCFARLAND, Emory University from Sep 2019 to Mar 2020.
For the exclusive use of S. Khan, 2019.
Exhibit 1. United Nations Millennium Development Goals
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
End poverty in all its forms everywhere.
End hunger, achieve food security and improved nutrition, and promote sustainable agriculture.
Ensure healthy lives and promote well-being for all at all ages.
Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all.
Achieve gender equality and empower all women and girls.
Ensure availability and sustainable management of water and sanitation for all.
Ensure access to affordable, reliable, sustainable, and modern energy for all.
Promote sustained, inclusive, and sustainable economic growth, full and productive employment, and decent work
for all.
Build resilient infrastructure, promote inclusive and sustainable industrialization, and foster innovation.
Reduce inequality within and among countries.
Make cities and human settlements inclusive, safe, resilient, and sustainable.
Ensure sustainable consumption and production patterns.
Take urgent action to combat climate change and its impacts.
Conserve and sustainably use the oceans, seas, and marine resources for sustainable development.
Protect, restore, and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat
desertification, halt and reverse land degradation, and halt biodiversity loss.
Promote peaceful and inclusive societies for sustainable development, provide access to justice for all, and build
effective, accountable, and inclusive institutions at all levels.
Strengthen the means of implementation and revitalize the global partnership for sustainable development.
Source: Proposal for Sustainable Development Goals: Sustainable Development Knowledge Platform. (n.d.). Retrieved
October 13, 2016, from https://sustainabledevelopment.un.org/focussdgs.html.
The need for medical treatment and supplies was growing in Tanzania, especially given the HIV epidemic.
Tanzania’s history with HIV and AIDS began in November 1983 with the diagnosis of three patients at the
Ndolange Hospital in the Kagera region.7 By 2008, an estimated 1,400,000 (6% of the total population) Tanzanians
were reported to be living with HIV/AIDS. Of the infected population, women and men constituted 7% and
5%, respectively. Eleven percent of children under the age of 18 were orphans. While most adults knew where
they could get an HIV test, only 37% of women and 27% of men had ever been tested for HIV. Incidents of
malaria also generated significant need for anti-malarial drugs. In one study, 18% of children ages 6–59 months
carried malaria parasites. Malaria was much more common in rural areas than in urban areas (20% versus 7%),
making the last-mile delivery of these drugs very challenging.8
The Medical Stores Department (MSD), established in 1993, was responsible for procurement and
distribution of medicines at a national level. Its main customers included nine Zonal Medical Stores. These
Zonal Medical Stores, in turn, supplied over 5,000 medical facilities that included hospitals, health centers, and
dispensaries (see Exhibit 2). Despite earnest effort, stock-outs resulted in 35–40% of orders from Tanzania’s
medical facilities being unfulfilled. A Global Fund report provided an expanded list of the challenges facing MSD
that included (1) insufficient budgetary allocations, (2) delays in the actual and expanded list of the challenges
in disbursal of the funds, (3) delays in the physical delivery, (4) thefts, (5) inaccurate forecasting at the national
level resulting in stock-outs at the national warehouses belonging to the warehouses of MSD, and (5) faulty
functioning of back-order systems for unfilled items.9
Adrian Ristow was recruited from Sabco to serve as Project Last Mile’s project director. His experience and
interests appeared to be aligned with the project: “I worked for nine years for a bottler (Coca-Cola Sabco) where
I saw first-hand the reach and impact of Coca-Cola into the local community. Most of the countries for which
I carried responsibility (Mozambique, Namibia, Tanzania, Kenya, Uganda, Ethiopia, South Africa, Nepal, Sri
Lanka, Cambodia, and Vietnam) are emerging markets facing many of the challenges outlined in the Millennium
Development Goals (MDGs), with poverty right at the forefront. I reached a stage in my career at the end of
National Guidelines for the Management of HIV and AIDs, The United Republic of Tanzania, Ministry of Health and
Social Welfare. April 2012.
8
Tanzania. 2007-2008 HIV/AIDS and Malaria Indicator Survey. 2008.
9
In-depth assessment of the medicines supply system in Tanzania. Ministry of Health and Social Welfare, Tanzania, in
collaboration with the World Health Organization, 2008.
7
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This document is authorized for use only by Shahid Khan in GH 521 Fall 2019 taught by DEBORAH MCFARLAND, Emory University from Sep 2019 to Mar 2020.
For the exclusive use of S. Khan, 2019.
Exhibit 2. Levels of Service Health Delivery
Level
Country
Type of Facility
National Hospital, MSD,
private wholesalers
Population
36 million
Zone
Consultant Hospital, ZMS
8 million
Region
District
Regional Hospital, Pharmacy 1-1.5 million
District Hospital, Pharmacy 250-500,000
Division
Ward/Village
Health center
Dispensary, medical stores
50-100,000
5-10,000
Community
Health post, ADDO
2-5,000
Remarks
This national hospital offers some specialized
services not generally available in other consultant
hospitals.
There are four consultant hospitals in total,
including the national hospital.
17 regional hospitals.
A number of NGO hospitals function as
designated district hospitals (DDH). More than
481 health centers.
More than one dispensary may be available in a
ward (4,679).
Source: Tanzania. 2007-2008 HIV/AIDS and Malaria Indicator Survey. 2008.
last year, where I really wanted to focus my energy more specifically on the role that large corporates can play in
these types of markets, although I have a particular affinity for Africa specifically.”10
Ristow’s first challenge was to assess the feasibility of translating Coca-Cola’s supply chain knowledge to the
Medical Stores Department. Could the approaches used to efficiently produce and distribute beverages be applied
to medical supplies and drugs? Furthermore, the success of Project Last Mile would depend on the ability to learn
from the pilot program in Tanzania, such that Project Last Mile could be rapidly expanded to other countries.
Based on his own experiences and collaboration with key stakeholders, Ristow believed that Coca-Cola’s supply
chain knowledge could be transferred to the Medical Stores Department and the project could be replicated
in other countries. He knew that he would need help in project planning and implementation, so a group of
consultants from Accenture Development Partnerships was added to the project team. Yale University’s Global
Health Leadership Institute joined the project team to assist with outcomes assessment and documentation of
lessons learned.
The project team had access to data from an analysis of the Medical Supply Department that was conducted
by the Ministry of Health with support from the World Health Organization (see Exhibit 3). This analysis
identified key issues and pointed to potential solutions. To provide structure and direction, the project was
structured into three work streams: (1) Last-Mile Logistics, (2) Core Planning, and (3) Talent Management.11
Last-Mile Logistics Work Stream
This work stream would address the 2010 mandate from Tanzania’s Ministry of Health and Social Welfare that
the MSD deliver directly to the country’s over 5,500 health centers and dispensaries. The last-mile challenge
in logistics refers to the final leg in product delivery. For the Medical Stores Department, the last mile involved
delivery from the zonal (regional) distribution centers to the health centers and dispensaries. For Coca-Cola,
the Micro Distribution Centers provided the last-mile logistics solution in Tanzania. This solution depended on
local entrepreneurs who benefited from clear financial incentives. Ristow would have to determine if this type
of approach could work for a public service provider. If not, he and his team would have to identify alternative
solutions.
An additional challenge that was not faced by Coca-Cola’s beverage supply chain was the need for coldchain logistics. Most vaccines have specific temperature ranges that must be maintained to ensure treatment
Meet Adrian Ristow. ColaLife, Building Unlikely Alliances to Save Children’s Lives. (July 6, 2008). Retrieved September
24, 2016, from http://www.colalife.org/2008/07/06/meet-adrian-ristow/.
11
“The Coca-Cola Company” in A New Global Partnership with Business: Building a Post-2015 Development Framework
to Achieve Sustainable Prosperity in Africa. Harvard Kennedy School, Business Action for Africa, and The Partnering
Initiative, 2015.
10
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This document is authorized for use only by Shahid Khan in GH 521 Fall 2019 taught by DEBORAH MCFARLAND, Emory University from Sep 2019 to Mar 2020.
For the exclusive use of S. Khan, 2019.
efficacy. Cold-chain logistics aims to ensure that a well-managed system (people, policies, procedures, vehicles,
fuel, equipment, and technologies) is in place to deliver vaccines that are safe and effective.12
Core Planning Work Stream
This work stream would focus on creating data-driven systems and processes for demand planning, logistics, and
procurement. The work-stream team would address deficiencies and seek tools to help planners anticipate and
avoid stock-outs. Improvements were needed in overall inventory management and the forecasting required for
effective demand management. Improvements were also needed in managing procurement and tracking supply
chain performance.
Talent Management Work Stream
This work stream would focus on identifying ways to train, evaluate, and motivate Medical Supply Department
supply chain professionals. Trip Allport, one of the Accenture leaders, stressed the importance of ensuring
capabilities: “Giving people the capacity to do their work well, it impacts everything, and it’s quite unquantifiable.
It’s hard to articulate, but it has this rolling effect in all these other areas.”13
Anthony Ristow faced a daunting task. He was responsible for leading the overall project and successfully
navigating the diverse stakeholder map that, to name just a few tasks, included the government of Tanzania,
donors, the Medical Supply Department, Accenture consultants, and Coca-Cola subject matter experts. The
project would clearly lead to new ways of working, and Ristow would have to find ways t…
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