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.
Sergio Chavez Sergio.Chavez@eagles.usm.ed
0-ABSTRACT
Nestle Panama SA is a private company in Panama City, Panama and is categorized under Dry
Condensed/Evaporated Dairy Prod Manufacturers; in 1937, the first Nestle came to Central
America with its move to Panama. It serves Panama City, the capital and largest city in the
Republic of Panama; in addition to the local area, Nestle Panama ships internationally. The
population of the city proper is 880,691 with the metro surrounding area climbing to 1,272,672.
Baton Rouge Coca-Cola Bottling Company is a division of Coca-Cola Bottling Company
United, Inc. Their products are distributed under exclusive franchise agreements with The CocaCola Company and other beverage franchise companies in the greater Baton Rouge area and
surrounding regions. The Baton Rouge facility acts as a bottler and distribution center. Baton
Rouge metropolitan area has a population of 802,484. This paper compared the two facilities and
their logistics. It looked at how materials are sorted and stored or warehoused for delivery and
type of delivery systems in place. This paper sought to shed light onto the practices of two
comparable locations and whether one was more successful than the other and the factors leading
to that success.
1-INTRODUCTION
1.1 Definitions
The following terms will be beneficial for understanding this comparison between Baton Rouge
Coca-Cola Bottling Company and Panama Nestle. Some will apply to only one location and
others will apply to both operations.
EasiTrax is a “powerful, scalable vending management software and hardware solution” (MEI,
2012). The system is designed to streamline operations, control revenue and inventory,
accelerate sales growth, and reduce cost. It is designed to support end-to-end vending and
control/monitor assets, cash, products, machines, trucks, and personnel (MEI, 2012). EasiTrax
does the following: increase productivity, reduce delivery costs, reduce labor costs, reduce fuel
costs, reduce paperwork, reduce waste/loss, reduce inventory levels, streamline operations,
increase customer satisfaction, account for product and cash.
Telemetry, which is the remote reading of measurement devices through telecommunications
(BusinessDictionary.com, 2012); it can be used for multiple applications like credit/debit
acceptance and remote monitoring. Telemetry reports errors such as “Bill validator full; Jam in
bill validator; Changer communication error; Machine not cooling; Temperature too high;
Column jam; Sold out; Coin jam” (Haddon, 2008, p. 2).
Vending machines were first patented in the United States in1884, but vending machine design is
said to go as far back as 62 A.D. (Segrave, 2002). Soda vending machines were a familiar sight
across the United States by 1942 (Segrave, 2002).
Physical distribution “is the process of supplying a market, through the dimensions of time and
space. The process involved the interaction of various functional elements such as inventory and
transportation, to make good available to customers in specific markets at designated times under
specified conditions” (Schary, 1970, p. 6).
Direct truck distribution involves trucks travelling directly from supplier to destination without
stopping.
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 crossdock 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).
1.2 Overview of the Business Environment in the United States
In the United States, the per capita Gross Domestic Product (GDP) of $49,800. The economy is
essentially a private market place economy and is market-oriented. This means that business
have major control in decisions, like expansion, reduction and product development. There has
been growth in what is known as a “two-tier labor market” (CIA, 2013). In this type of market
the unskilled and less educated lower tier is paid less and receives less benefits and the top tier,
or skilled/professional labor, receives benefits, raises, etc. (CIA, 2013).
Imported oil is the major consumption of the United States and prices for crude oil are directly
related to “dampening” of the housing market, decreased value of the dollar (the currency), and
an increase in the US merchandise trade deficit (CIA, 2013). The country has been in a recession
since 2008. Two economic programs were implemented by the government in an attempt to
stabilize the financial market and create economic growth—the Troubled Asset Relief Program
(TARP) and a fiscal stimulus bill. These two programs along with wars in Iraq and Afghanistan
(estimated $900 billion for the wars alone) put a strain on the US economy. Additional strain on
the GDP came in the form of Obama Care which increased almost 9% (CIA, 2013). The budget
revenues are reported as $2.465 trillion and expenditures are reported at $3.649 trillion. Although
the people feel heavily taxed, the ranking for the US is 184 out 215 countries with only 15.7% of
the GDP being made up of taxes. To put this into perspective Iraq’s GDP (first) is made up of
79.9% of taxes revenue and Greenland is 79.6% (second). Our neighbors Canada (38.4%) and
Mexico (23.8%) rank 54 and 131 respectively (CIA, 2013). The US ranks 193 out of 216 in the
amount of deficit.
The current unemployment rate for the US is 8.2%. “Long-term problems include stagnation of
wages for lower-income families, inadequate investment in deteriorating infrastructure, rapidly
rising medical and pension costs of an aging population, energy shortages, and sizable current
account and budget deficits—including significant budget shortages for state governments”
(CIA, 2013). Over 15% of the population lives below the poverty line.
The industries in the US are considered highly diversified and world leading. It is considered a
high-technology innovator and the second largest industrial output in world. The major industries
are petroleum, steel, motor vehicles, aerospace, telecommunications, chemicals, electronics, food
processing, consumer goods, lumber, and mining (CIA, 2013). The main exports commodities
estimated at $1.612 trillion are: “agricultural products (soybeans, fruit, corn) 9.2%, industrial
supplies (organic chemicals) 26.8%, capital goods (transistors, aircraft, motor vehicle parts,
computers, telecommunications equipment) 49.0%, consumer goods (automobiles, medicines)
15.0%” (CIA, 2013). The major export partners are Canada (19%), Mexico (13.3%), China (7%),
and Japan (4.5%) (CIA, 2013). The US imports an estimated $2.357 trillion consist of
“agricultural products 4.9%, industrial supplies 32.9% (crude oil 8.2%), capital goods 30.4%
(computers, telecommunications equipment, motor vehicle parts, office machines, electric power
machinery), consumer goods 31.8% (automobiles, clothing, medicines, furniture, toys)” (CIA,
2013). The major import partners are China (18.4%), Canada (14.2%), Mexico (11.7%), Japan
(5.8%), and Germany (4.4%).
1.3 Focus of the Topic in United States
Baton Rouge Coca-Cola Bottling Company was founded in 1906 by Thomas Daigre. It originally
served a population of 12,000, providing both soda fountain Coca Cola and single serve 6.5
ounce glass bottles. Currently Baton Rouge Coca-Cola Bottling Company “produces and markets
over 400 different product/package combinations” from its current location, which is LEED
(Leadership in Energy and Environmental Design) certified (CCBCU, 2012). Baton Rouge
Coca-Cola is a division of Coca-Cola Bottling Company United, Inc. which is headquartered in
Birmingham, Alabama and has territory in Alabama, Florida, Georgia, Louisiana, Mississippi,
Tennessee, Mississippi, and South Carolina. The Baton Rouge division acts as the headquarters
for the Gulf Coast Region, which has six Coca-Cola distributors (CCBCU, 2012). The Baton
Rouge facility acts as a bottler and distribution center for the metropolitan area of 802,484
citizens.
The Coca-Cola Bottling Company United is the largest privately held U.S. bottler of Coca-Cola,
the operations in Baton Rouge are a major part of the company. The new plant was an
investment of over $178 million and included additional costs of gaining access to groundwater.
(LED, 2013). The Coca-Cola Bottling Company United in Baton Rouge, LA plant has four
packaging lines and is considered to be a flexible design. The production center is 781,000
square feet and resides on 112 acres; it opened in October 2008. The four packaging lines
produce 4.5 million 8-oz servings/day. “The facility handles 400 SKUs, including products under
the Coca-Cola and Dr. Pepper names, and under Southern U.S. brand Big Red. The Coca-Cola
products distributed from the site include soft drinks, energy beverages, juices, waters, sports
drinks, teas, and more. Of those 400 SKUs, 120 are produced and packaged at the plant”
(Mohan, 2011). The production center has one canning line, two PET lines, and one hot-file PET
line; there is also established infrastructure for two additional packing lines. There are 98 docks
that surround the production area for trucks to deliver raw materials directly to the lines they are
designated for. Finished cases of product are put onto pallets in the middle of the warehouse
(Mohan, 2011). The can line at top speed can produce 1,800 cans per minute, the sparkling
bottles line can produce up to 800 bottles per minute (Beverage World, 2011). The plant is the
major manufacturer and distributor in the Southeast and uses some of the most current
technology like “online real-time production monitoring system,” “electronically actuated fillers,
flow meters on the thermal line that measures the millimters that go into each bottle and quality
checks that are conducted to the fifth decimal place as opposed to the second” (Beverage World,
2011, p.47). The plant also uses the Easy Pallet Distribution System designed by Coca-Cola
United. Baton Rouge Coca-Cola can be considered a value-added warehouse and production
facility that participates in all of the common operations of a warehouse: receiving,
prepackaging, putaway, storage, order picking, packaging and/or pricing, sortation and/or
accumulation, and unitizing and shipping (Frazelle, 2002).
Nestle and The Coca-Cola Company have a joint venture together called Beverage Partners
Worldwide, which produces Nestea and Enviga. CCBCU works closely with The Coca-Cola
Company.
Physical distribution “is the process of supplying a market, through the dimensions of time and
space. The process involved the interaction of various functional elements such as inventory and
transportation, to make good available to customers in specific markets at designated times under
specified conditions” (Schary, 1970, p. 6). The type of distribution is “milk-run truck
distribution” in which the trucks typically pick up product from the one location on Plank Road
and deliver to multiple destinations (Berman & Wang, 2006, p. 287). The product distribution is
pre-determined using telemetry, or remote reading of the vending machines through
telecommunications (BusinessDictionary.com, 2012); it reports errors such as “Bill validator
full; Jam in bill validator; Changer communication error; Machine not cooling; Temperature too
high; Column jam; Sold out; Coin jam” (Haddon, 2008, p. 2). Baton Rouge Coca-Cola Bottling
Company utilizes EasiTrax for full-service, which is a vending management solution designed to
streamline operations, control revenue and inventory, accelerate sales growth, and reduce cost. It
is designed to support end-to-end vending and control/monitor assets, cash, products, machines,
trucks, and personnel (MEI, 2012). EasiTrax does the following: increase productivity, reduce
delivery costs, reduce labor costs, reduce fuel costs, reduce paperwork, reduce waste/loss, reduce
inventory levels, streamline operations, increase customer satisfaction, account for product and
cash. For tracking what ships to retail venues, Baton Rouge Coca-Cola uses BASIS, in which
orders are either called in or are entered into hand-helds by employees and then uploaded.
1.4 Overview of the Business Environment in Panama
Panama uses a 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). There is
projected economic growth from the Panama Canal expansion project that will be finished in
2015. The expansion will allow larger ships to cross the canal—the canal will be more than
doubled. “The United States and China are the top users of the Canal.” Panama City is improving
its infrastructure (scheduled to be completed in 2014) with a metro system. “Panama's booming
transportation and logistics services sectors, along with aggressive infrastructure development
projects, have lead the economy to continued high growth in 2012” (CIA, 2013). Another source
of growth for the country is foreign investment. Even though there has been a strong economy,
there is great disparity among the population, and Panama is second in the worst income
distribution in Latin America. Approximately 30% of the population lives in poverty but it has
been decreasing in recent years along with unemployment. The unemployment rate is 4.4%
(CIA, 2013). Panama’s relationship with the US, beyond using the canal, includes the USPanama Trade Promotion Agreement which went into effect in 2012. Panama also entered into
numerous taxation treaties with various countries in order to be removed from the Organization
of Economic Development's gray-list of tax havens. Panama’s GDP is $56.83 billion and it is
ranked 91 out of 229. The GDP grew a over 10% the last year, and Panama ranks 7th out of 220
versus the US which ranks 134th with just over 2%. There is a shortage of skilled labor and an
abundance of unskilled labor (CIA, 2013).
Panama exports $17.97 billion and exports gold, bananas, shrimp, sugar, iron and steel waste,
pineapples, and watermelons. Panama’s 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 and import commodities include fuel products, medicines, vehicles, iron
and steel rods, and cellular phones. Panama’s major import partners are Japan (23.5%), China
(23%), Singapore (18.1%), US (13%), and South Korea (6%). Table 1, below, from the USDA
(2012), provides just a few of the food processors in Panama.
Table 1: Select Food Producers/Distributers in Panama
1.5 Focus of the topic in Panama
In 1937, the first Nestle came to Central America with its move to Panama. Nestle Panama SA is
a private company in Panama City, Panama and is categorized under Dry Condensed/Evaporated
Dairy Prod Manufacturers. It is considered a manufacturer that manufactures and wholesales
canned dairy products including milk, tea, coffee, infant foods, and confectionery (Figure 1).
Figure 1: Codes from Highbeam Business: http://business.highbeam.com/companyprofiles/info/500825/nestle-panama-s-a
Nestle Panama is a private manufacturing company (Figure 2). It employs between 100 and 250
employees.
Figure 2: Company Intelligence Report from Free Sales Website
http://free.salesfuel.com/CoIntell/CoDetailsPersonnel.aspx?CompanyID=36210
Nestle Panama produced six thousand tons of evaporated milk, processed chesses, tomato based
sauces in 2006. That same year, sales abroad for Nestle Panama reached $7.5 million. Nestle
Panama exports to Guatemala, El Salvador, Honduras, Nicaragua, Costa Rica, Haiti, and other
Caribbean islands and has plans to expand. This expansion includes sending products like Milo
and NesCafe to Chile, Venezuela, Brazil, the United States, and Mexico (Berrocal, 2007). Last
year’s revenue for Nestle Panama was 17,500,000 in Panamanian Balboa, which is
approximately the same in American dollars (Figure 3).
Figure 3: Capital from Panama: http://www.nestle.com/assetlibrary/Documents/Library/Documents/Financial_Statements/2012-Financial-Statements-EN.pdf
The parent organization is Nestle S.A. and was found in 1866. It merged with another company
in 1905—Anglo-Swiss Condensed Milk Co.—and became the giant that is today. It is the
“world’s largest food company with a focus on Nutrition, Health & Wellness” (Nestle, 2013).
They are responsible for over 80 brands, from dog food to coffee to baby food and more. They
sold over $10 billion in 2012, employee over 25,000 employees, have 25 manufacturing
facilities, 35 distribution centers, and 15 sales offices in the US alone. Worldwide revenue was
over $97 billion.
The following business functions are the focus for this comparison: planning, design, scheduling,
and material management. These business functions are critical to the comparison of Baton
Rouge Coca-Cola and Nestle Panama.
Planning in general is the looking to the future—long-term and short-term (Dictionary of
Business, 2006). Planning includes a variety of types of planning: strategic, resources, etc. One
planning software is EasiTrax is a “powerful, scalable vending management software and
hardware solution” (MEI, 2012). The system is designed to streamline operations, control
revenue and inventory, accelerate sales growth, and reduce cost. It is designed to support end-toend vending and control/monitor assets, cash, products, machines, trucks, and personnel (MEI,
2012). EasiTrax does the following: increase productivity, reduce delivery costs, reduce labor
costs, reduce fuel costs, reduce paperwork, reduce waste/loss, reduce inventory levels, streamline
operations, increase customer satisfaction, account for product and cash.
Warehouse design is important for efficient and cost-effective distribution. A warehouse is a
“large building where goods are stored” (Dictionary of Business, 2006). A 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). In addition
to warehouse design and planning, scheduling is a key-component in operations. There are
several components of scheduling that are important. “The transit time is the time in days that is
required to deliver goods from your premises to the customer location. It is defined for a route.
The loading time is the time in days that is required for loading a delivery item. It is determined
from the shipping point, the route, and the loading group of the material. The pick/pack time is
the time in days that is required for allocating goods to a delivery as well as the time in days that
is required for picking and packing. It is calculated using the shipping point, the route, and the
weight group of the order item. Finally, the transportation lead-time is the time in days that is
needed to organize the shipping of the goods. This might include booking a ship and reserving a
truck from a forwarding agent. It is defined for a route” (SAP, 2013). However without this last
component, production would be for naught—materials management—because if does no good
to produce and house a product if you cannot distribute it.
Physical distribution “is the process of supplying a market, through the dimensions of time and
space. The process involved the interaction of various functional elements such as inventory and
transportation, to make good available to customers in specific markets at designated times under
specified conditions” (Schary, 1970, p. 6). There are several types of distribution; two of the
main types are direct truck distribution and milk-run distribution. Direct truck distribution
involves trucks travelling directly from supplier to destination without stopping. 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). Both of these distribution methods may involve cross-dock truck
delivery. 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).
In today’s distribution of materials, technology plays a vital role. For instance, telemetry, which
is the remote reading of measurement devices through telecommunications
(BusinessDictionary.com, 2012) can be used for multiple applications like credit/debit
acceptance and remote monitoring. Telemetry reports errors such as “Bill validator full; Jam in
bill validator; Changer communication error; Machine not cooling; Temperature too high;
Column jam; Sold out; Coin jam” (Haddon, 2008, p. 2). In Baton Rouge Coca-Cola, B.A.S.I.S is
the internal system used to track accounts, payments, overages, shortages, and revenue.
Technology can also be used to streamline operations. EasiTrax is a “powerful, scalable vending
management software and hardware solution” (MEI, 2012). The system is designed to streamline
operations, control revenue and inventory, accelerate sales growth, and reduce cost. It is
designed to support end-to-end vending and control/monitor assets, cash, products, machines,
trucks, and personnel (MEI, 2012). EasiTrax does the following: increase productivity, reduce
delivery costs, reduce labor costs, reduce fuel costs, reduce paperwork, reduce waste/loss, reduce
inventory levels, streamline operations, increase customer satisfaction, account for product and
cash.
1.6 Focus
The 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.
2-INFORMATION DATA/COLLECTION APPROACHES
“The success or failure of today’s business may be affected by the design of the supply chain
network. Warehouses are the parts of supply chain network that connect among suppliers,
manufactures, distributors and customers”. The design of the warehouse has a big impact on the
cost-effectiveness of the operation. Typically warehouses are designed to be rectangular in
shape. There are typically three types—two blocks with stocking aisle running parallel to the
warehouse with I/O point located in the middle of head or end of the aisle… Second and third are
one block with stocking aisles running vertical to the warehouse with I/O point located in the
middle and lower left respectively” (Sooksaksun & Kachitvichyanukul, 2010). The study by
Sooksaksun & Kachitvichyanukul (2010) indicates that two-block warehouses are more efficient
by providing lower distance travel.
2.1 Internet
Data was collected via two methods. The first part of the research involved searching the Internet
and online databases available through The University of Southern Mississippi’s library system
and Louisiana State University library system. Google was the search engine of choice. Terms
used were “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. One of the most helpful resources was an article published in
Packaging World Magazine that provided details about the facility and the number of production
lines, bays, etc. In addition to this article other articles were found. The company’s webpage
provided a wealth of information at both the corporate level and local level. Looking online for
information regarding Nestle Panama was much more difficult. There was very little information
specific to Panama. Most information was either superficial or was about the parent organization
Nestle or Nestle Centroamerica.
2.2 Databases
Table 2 shows the databases that were consulted, and table 3 shows the keywords used for
searching. These databases were selected because they are business related or as broad general
databases contain business resources. Two of the databases are government resources and are
open access. The keywords were selected based on the project.
Database
Academic Search Premiere
Academic Search Complete
Business Source Complete
Business Searching Interface
CIA World Factbook
Table 2: Databases Consulted
Library
USM
LSU
USM
LSU
Open/Gov
ht t p s : / / w w w . c i a . g o v / l i b r a r y / p u b l i c
ations/the-worldfactbook/index.html
EBSCO Electronic Journals
Service
Economia Y Negocios
Fuenta Academica
JSTOR
MarketLine Company Profiles
SAGE Journals Online
Results
No for Panama
No for Panama
No for Panama
No for Panama
Country Information
Present on Both
USM
No for Panama
LSU
LSU
USM
LSU
LSU
No for Panama
Yes
No for Panama
No for Panama
No for Panama
Table 3: Keywords/Phrases Used for Search
Keywords
Coca-Cola + Baton Rouge
Nestle + Panama
United States
Panama
2.3 Interviews
It was anticipated that the following interviews would take place. For Baton Rouge Coca-Cola,
Joe Vergeron, Distribution Manager/Special Problems. In Panama, an attempt was made to
interview Ascanio Salas, Director of Operations for Nestle Panama; however, the interview took
place with Gloria Reyes, Director for Demand, Supply Chain and Exporting Planning (Jefe
Planificacion Demanda, Abastecimiento y Comercio Exterior).
The goal of the interview was to answer the questions below especially for Nestle Panama since
very little information seems to be made public. Missing information from Coca-Cola was
answered via email interview. In Panama, every attempt was made to get the Nestle Panama
information on the spot. Information not gathered on site was emailed to Nestle Centroamerica
and the contact in Panama. The interview questions, found in table 4, were specific to the
following business functions: planning, design, scheduling, and materials management.
Table 4: Interview Questions
Question
What is the size of the facility?
What is the size of the property?
Does the facility hold any special certifications?
What is the product production?
How many SKUs can be handled on site?
How many production lines are there?
How many loading docks are there?
How many vehicles distribute the product?
What pallet system do you use?
What software systems are used?
How many employees are there?
What are the annual sales for last year?
What type of warehouse design is used?
Where is product shipped?
How many unique products are
manufactured/distributed from the facility?
Business Function
Design
Design
Design
Material management
Materials management
Design
Design
Materials management
Materials management/Design
Planning
Scheduling
Planning
Design
Scheduling/Materials management
Materials management
The interview instrument contains information that is commonly available for companies in the
United States but is not readily available for Nestle Panama (Table 5). The basic information for
Coca-Cola Baton Rouge was obtained through current contacts.
Table 5: Interview Questions and Responses
Question
Baton Rouge Coca-Cola
What is the size of the facility?
781,000 square feet
What is the size of the property?
112 acres
Does the facility hold any special
LEED
certifications?
What is the product production?
45 million 8-ounce serving
products per day
How many SKUs can be handled on site?
141 SKUs created on site;
400 SKUs total
How many production lines are there?
4 production lines
Nestle Panama
Info Not Available
Info Not Available
Info Not Available
33,000 TONS of
product annually
300+
NATA has 3 (one
How many loading docks are there?
98 loading docks
How many vehicles distribute the product?
340 plus vehicles
What pallet system do you use?
Easy Pallet Distribution
System
What software systems are used?
How many employees are there?
What are the annual sales for last year?
What type of warehouse design is used?
BASIS, MEI
520
$9,096,916
Warehouse Slotting (slotpicking)
Where is product shipped?
Vending machines, stores,
other distributor
How many unique products are
manufactured/distributed from the facility?
Over 400
evaporated, one dry
and one condensed
milk lines) and Los
Santos has 6
NATA = 8 (4 for
local and 4 for
Exporting) and Los
Santos= 2
They employ 15+ 3rd
Party logistic
companies to
distribute
Push-Pull they also
employ slip-sheet
pallets that requires a
special fork lift
SAP
490
$17,500,000
Single and Double
deep and/with drive
in
Local, Chile, US and
Caribbean - to the
US they only export
something called
“sofrito” and to the
Caribbean they export
condensed soups and
to Chile a product
called caldo cazero
NATA = 95 and Los
Santos = 45 ----at
NATA they also
repackage milk
powder
20,000,000
17,500,000
15,000,000
9,096,916
10,000,000
5,000,000
Panama Nestle
Baton Rouge CocaCola
0
Panama
Nestle
Baton
Rouge
Coca-Cola
Figure 4: Approximate Comparison of Profits
Figure 5: Baton Rouge Coca-Cola Facility
Figure 4 is a comparison between the annual sales of the two companies. Figure 5 is the outside
of Baton Rouge Coca-Cola. The facility opened in 2008. It is a state of the art facility. Figure 6 is
a comparison of the two companies on pallets, products, and employees. Although Panama
handles fewer products and pallets, they outperform Baton Rouge Coca-Cola in profits. Figures 7
and 8 are images of the production lines. A visit to the following website, provides insight on the
new facility with an excellent video: http://www.packworld.com/machinery/fillingsealing/newcoke-plant-designed-future-mind.
600
500
400
Baton Rouge Coca-Cola
300
Panama Nestle
200
100
0
Pallets
Products
Employees
Figure 6: Comparison of the two companies: Pallets, products, and Employees
Figure 7: Baton Rouge Coca-Cola Plant Can Inspection
Line 1 by Anne Marie Mohan, Senior Editor
Figure 8: Baton Rouge Coca-Cola Plant Full Pallets on
Line 1 by Anne Marie Mohan, Senior Editor
Nestle Panama SA, founded in 1937, is a private company in Panama City, Panama and is
categorized under Dry Condensed/Evaporated Dairy Prod Manufacturers. It is considered a
manufacturer that manufactures and wholesales canned dairy products including milk, tea,
coffee, infant foods, and confectionery. It employs between 100 and 250 employees—in each of
its 2 facilities in addition to headquarters. Figure 9 shows two Panamanian Nestle workers and
Figure 10 shows some of the executives found at Nestle Panama.
Figure 9: Panamanian Nestle Workers from http://html.rincondelvago.com/industrialactea-panamena-y-globalizacion.html
Figure 10: Some Panamanian Executives
from http://www.dealante.com/nodo.php?nodoid=19783
The next figures—11 and 12—show the outside of the Nestle Panama administrative
facility which is located in the interior of the city.
Figure 11: Nestle in Panama City, Panama by Sergio Chavez
Figure 12: LA PRENSA/NICOLAS PSOMAS
http://mensual.prensa.com/mensual/contenido/2007/03/25/hoy/negocios/9289
99.html
3-CASE STUDY
Nestle Panama SA is a private company in Panama City, Panama and is categorized under Dry
Condensed/Evaporated Dairy Prod Manufacturers; in 1937, the first Nestle came to Central
America with its move to Panama. It serves Panama City, the capital and largest city in the
Republic of Panama. The population of the city proper is 880,691 with the metro surrounding
area climbing to 1,272,672. Baton Rouge Coca-Cola Bottling Company is a division of CocaCola Bottling Company United, Inc. It was founded in 1906. Their products are distributed under
exclusive franchise agreements with The Coca-Cola Company and other beverage franchise
companies in the greater Baton Rouge area. The Baton Rouge facility acts as a bottler and
distribution center. Baton Rouge metropolitan area has a population of 802,484. The two
companies are comparable in that they are both manufacturers and distributors in metropolitan
areas so it stands to reason that they face similar issues (Figure 13).
Population of Service Area
802,484
39%
Panama City
1,272,672,
61%
Baton Rouge
Figure 13: Population Comparison of Service Areas
Nestle Panama manufactures and distributes confectionary food, powered milk products and
beverages, including Nestle water. Baton Rouge Coca-Cola manufactures and distributes
beverages. Nestle Panama is located at Urbanizacion (La Loma) Calle 69 Oeste 74D
Apartado 0834-00368 (Figure 14). There are two production facilities in addition to
administrative headquarters located in Panama. NATA produces Dairy products and their
primary product “leche evaporada Ideal” makes up 60% of their sales in Panama. It is
considered to be their flagship product. Los Santos, the other facility, produces tomato based
products.
Figure 14: Map of Nestle Panama Created with Google Maps
Nestle Panama SA is a private company in Panama City, Panama and is categorized under Dry
Condensed/Evaporated Dairy Prod Manufacturers; it was established there in 1937 and serves
Panama City, the capital and largest city in the Republic of Panama. Currently, Ricardo Ramos is
president of the company. Unlike Baton Rouge Coca-Cola that expanded as recently as 2008,
Nestle Panama has downsized in about a decade ago by selling off the equivalent of over
$700,000 in infrastructure to Cooleche—Panama’s Chiriqui Milk Producers Cooperative
(Factiva, 2002). Nestle Panama employs approximately 200-280 employees per facility. In recent
years, they have struggled with union negotiations (Amorin, 2012).
Panama is uniquely positioned for global trade with the expansion of the Panama Canal and the
Colon Free Zone. There are many manufacturers and distributors in Panama as conditions are
favorable for foreign-owned companies. Nestle Panama produced six thousand tons of
evaporated milk, processed chesses, tomato based sauces in 2006. Sales abroad for Nestle
Panama reached $7.5 million in 2006 and they export to Guatemala, El Salvador, Honduras,
Nicaragua, Costa Rica, Haiti, Caribbean islands, Chile, Venezuela, Brazil, the United States, and
Mexico (Berrocal, 2007). It is a private company that is a part of Nestle S.A., which was
founded in 1866. It is the “world’s largest food company with a focus on Nutrition, Health &
Wellness” (Nestle, 2013). There are between 100-250 employees at each facility.
Baton Rouge Coca-Cola and Nestle Panama have some similarities in being manufacturers and
distributors. They both provide the local community as well as others. Baton Rouge Coca-Cola
has a world-class manufacturing facility and warehouse. Baton Rouge Coca-Cola is located at
9696 Plank Road, Baton Rouge, Louisiana U.S. (Figure 15)
Figure 15: Map of Baton Rouge Coca-Cola Created with Google Maps
Both companies are positioned to have access to other countries—with Panama being situated
between the Caribbean Sea and Gulf of Panama/North Pacific Ocean (Figure 16) and Baton
Rouge being situated on the Mississippi River and the Gulf of Mexico (Figure 17).
Figure 16: CIA World Factbook Map of Panama
Figure 17: CIA World Factbook Map of the U.S.A.
(star added for Baton Rouge)
4-RESULTS AND RESULTS IMPACT
The following business functions were the focus for this comparison: planning, design,
scheduling, material management, and technology. These business functions are critical to the
comparison of Baton Rouge Coca-Cola and Nestle Panama.
Baton Rouge Coca-Cola is a large facility that is very technologically advanced both in
warehouse design, equipment, and supporting technology applications. They employ both MEI,
EasiTrax, and B.A.S.I.S. In addition to planning and scheduling through these technology
applications, the production center uses state-of-the art flexible design and equipment. The CocaCola Bottling Company United in Baton Rouge, LA plant has four packaging lines and is
considered to be a flexible design. The production center is 781,000 square feet and the four
packaging lines produce 4.5 million 8-oz servings/day. The facility handles 400 SKUs of which
120 are produced and packaged at the plant (Mohan, 2011). There are 98 docks that surround the
production area for trucks to deliver raw materials directly to the lines they are designated for.
Finished cases of product are put onto pallets in the middle of the warehouse (Mohan, 2011). The
can line at top speed can produce 1,800 cans per minute, the sparkling bottles line can produce
up to 800 bottles per minute (Beverage World, 2011). The plant also uses the Easy Pallet
Distribution System designed by Coca-Cola United. Baton Rouge Coca-Cola can be considered
a value-added warehouse and production facility that participates in all of the common
operations of a warehouse: receiving, prepackaging, putaway, storage, order picking, packaging
and/or pricing, sortation and/or accumulation, and unitizing and shipping (Frazelle, 2002).
Baton Rouge Coca Cola uses warehouse slotting which is a system that determines the most
“appropriate storage location” for items in the warehouse. Each items location is determined by
the “frequency of physical touches” or the number of times it is picked, moved, etc. Slotting is a
method that can be used to increase efficiency. It is especially appropriate for Baton Rouge Coca
Cola since the majority of the products are similar in size, the amount of access bays, and the
consistency of storing specifications (Piasecki, 2012). Panama Nestle uses single and double
deep rack storage with drive-in capabilities. In single deep, pallets are stored one deep and “each
pallet is independently accessible” which means that any item can be stored at any location. In
double deep rack, pallets are stored two deep. Although each lane is accessible, the “rear position
is blocked by a pallet stored in the front position. To avoid double-handling, only 1 sku occupies
each lane.” Drive in access allows for putaway and retrieval to take place on the same aisle
(Shakeman, n.d.). This system is appropriate for Panama Nestle because of the variety of product
type handled.
Nestle Panama and Baton Rouge Coca-Cola are similar in some ways. First, both companies are
production and distribution centers. Coca-Cola Baton Rouge distributes regionally but Nestle
Panama distributes internationally. Nestle Panama produces and distributes milk produces
(nutritional and ice cream) and prepared dishes and cooking aids. Beverages, confectionery, and
pet care, along with additional milk products and prepared dishes and cooking aids, are imported
to the facility for redistribution. The only Nestle product not found in Nestle Panama by
production or import is pharmaceutical products (Nestle, 2012). Baton Rouge Coca-Cola
produces and distributes beverages. Like Nestle, some products are produced on site and others
are imported in to the site. In the case of Baton Rouge Coca-Cola, finished products are shipped
to the following end points: vending machines, stores, restaurants, and other distributors in the
geographic area—Louisiana and Mississippi. Panama Nestle produces and distributes finished
products to stores and other distributors nationally and internationally. The variety of product
type makes it necessary for them to outsource their distribution to third party trucking while
Baton Rouge Coca-Cola owns over 340 vehicles and utilizes 98 bays—Panama Nestle owns 15
trucks and has 10 bays over 2 facilities.
“Panama has 140 food processing companies. These include dairy processors, meat and poultry
products processors, fishery products processors, fruits processors, beverages and spirits, bakery,
snacks, among others” (USDA, 2012). “Panama is a multicultural and multiethnic society, and
this has created a demand for frozen and refrigerated deli products, ethnic and typical foods.
Many supermarkets offer a wide range of ethnic food products, including Chinese, Kosher,
Spanish, Latin American and Italian, among others. Growth in the service industries, work
schedules, larger female workforce and long home travel distances have also increased the
number of people dining out at lunchtime; moreover, this hectic lifestyle has fueled a demand for
supermarket prepared or ready to cook food in individual and family sized portions” (USDA,
2012).
GDP
Unemployment Rate
Living in Poverty
Major Industries
U.S.A.
$15.66 trillion
8.2%.
Over 15%
Petroleum, steel, motor vehicles,
aerospace, telecommunications,
chemicals, electronics, food
processing, consumer goods,
lumber, and mining
Panama
$56.83 billion
4.4%
About 30%
Services include operating the
Panama Canal, logistics, banking,
the Colon Free Zone, insurance,
container ports, flagship registry,
and tourism
Main Exports
Agricultural products, industrial
supplies, capital goods, consumer
goods
Gold, bananas, shrimp, sugar, iron
and steel waste, pineapples, and
watermelons
Export Partners
Canada (19%), Mexico (13.3%),
China (7%), and Japan (4.5%)
Main Imports
Agricultural products, industrial
supplies, capital goods, consumer
goods
China (18.4%), Canada (14.2%),
Mexico (11.7%), Japan (5.8%),
and Germany (4.4%)
US (13.1%), South Korea (12.5%),
Honduras (10.2%), Japan (9.3%),
India (7%), Canada (4.4%), and
Mexico (4.2%)
Fuel products, medicines, vehicles,
iron and steel rods, and cellular
phones
Japan (23.5%), China (23%),
Singapore (18.1%), US (13%), and
South Korea (6%)
Import Partners
Table 6 shows some of the similarities and differences between the United States and Panama.
Just as there are similarities and differences between the countries, there are some similarities
and differences between Baton Rouge Coca-Cola. These similarities and differences in the two
facilities and their logistics show that success comes more than one form and there can be
overlap even the two facilities are over 3000 miles apart.
5-SUMMARY
Nestle Panama SA is a private company in Panama City, Panama. It was Nestle first location in
Central America. It serves Panama City, the capital and largest city in the Republic of Panama.
Baton Rouge Coca-Cola Bottling Company is a division of Coca-Cola Bottling Company
United, Inc., which acts as a bottler and distribution center. This paper looked at the business
functions of planning, design, scheduling, and material management for these two businesses by
comparing their warehousing, distribution, technology, and other logistic functions. These
business functions are critical to the comparison of Baton Rouge Coca-Cola and Nestle Panama.
Information was gathered using the internet, databases, email interview, and face-to-face
interview. The companies and countries share many things in common and many differences, but
their success—and they are both successful—is dependent on their facilities, production,
technology, planning, distribution, and logistics. Although Nestle Panama’s profit is greater,
when recalculate for the international distribution, the companies have a much closer profit
margin.(Figure 18). Both locations are strategically placed for water, rail, and road shipping but
only Nestle Panama uses all three. Future studies on this topic could include issues that the
companies face and compare whether they differ by location, 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.
20,000,000
18,000,000
16,000,000
14,000,000
12,000,000
Baton Rouge Coca-Cola
10,000,000
Panama Nestle
8,000,000
6,000,000
4,000,000
2,000,000
0
Unadjusted Annual Profit
Adjust Annual Profit
Figure 18: Annual Profit Comparison after Removing International Sales from Nestle.
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