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$\mathrm{.}3$

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 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 $23$ 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. 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 improvised and sustainable performance.