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Tue 1 May 2007 01:21 PM

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Fizzy freight

How Dubai Refreshments’ inhouse team of supply chain experts has helped the company establish a dominant position in the UAE's soft drinks market.

Brightly decorated in the famous red, white and blue colours of Pepsi, the production and distribution headquarters of Dubai Refreshments is highly visible from the hustle and bustle of Sheikh Zayed Road.

The company, which is the exclusive distributor of Pepsi products in Dubai, Sharjah and the Northern Emirates, has proved a considerable success following its inception in 1959. It currently accounts for a massive 72% of the soft drinks market within this territory, although, perhaps unsurprisingly, the intense level of demand for Dubai Refreshments' products has posed a logistics challenge of some magnitude.

Whilst similar companies throughout the world have followed the industry trend of outsourcing to 3PL providers, Dubai Refreshments has opted to manage its supply chain inhouse, employing an team of experts with experience in handling logistical operations in a highly competitive sector.

"Being the market leader means demand for Pepsi is extremely high, especially considering the accelerated growth of the United Arab Emirates in terms of population," says Majit Davud, product availability and logistics manager, Dubai Refreshments.

"Ambitious expansion and development plans have been implemented by the government and private concerns, and this growth represents a large logistics challenge," he adds.

The production of soft drinks and its subsequent storage occur at the warehouse, which covers roughly 9000m

. A section of the facility is devoted to the factory equipment, ranging from tanks, mixers, pumps, pipelines, fillers, shrink machines and palletisers. This means storage space is therefore required for both raw materials and the finished product.

"The first stage of the process involves mixing water with the sugar to prepare the simple syrup, both of which are locally sourced. The Pepsi concentrate is then added, which is shipped from the production centre in Cork, Ireland.

This is kept in cold storage before adding CO

which is supplied from Oman," explains Davud.

Amongst other locations, Dubai Refreshments sends a large quantity of stock to its other warehouses in Sharjah and the Ras Al Khaimah. The Sharjah facility measures roughly 3000m

and fulfills storage and sales distribution purposes, whilst the larger Ras Al Khaimah facility, measuring around 5000m

, shares similar duties as well as acting as a filling plant for Aquafina - Pepsi's brand of water.

"We produce the supply of Pepsi products for the Northern Emirates, Sharjah and of course Dubai. We also export the drinks to other countries where there is currently no Pepsi franchise," reveals Davud.

"In the case of exporting, sometimes the customers ships the container to the facility, we load it and then sent it back. Sometimes its vice versa, but either way the containers must be loaded manually," he continues.

With such a scale of distribution, fresh products are normally stored for a maximum of a week, and in some cases as little as 24 hours. The high turnover rate requires a layout design much different to those found in Jebel Ali warehouses.

"We have no racking system, instead we use a pallet stacking system. Pallets are stacked on top of each another, following the spaces marked out on the warehouse floor. The height limitations of each stack is dependent on the product," says Davud.

The Pepsi franchise has quite an extensive range of products, many of which are familiar household names in the Middle East. The Pepsi family aside, which consists of Pepsi, Diet Pepsi, and Pepsi Max, there is also the 7UP and Miranda range, and Mountain Dew.

"When stacking these products we comply with Pepsi International guidelines, which identifies the height at which a product can be stacked according to its CO

ratio and the material it is stored in. For example, Pepsi can be placed in stacks measuring three pallets in height," comments Davud.

A palletiser places the drinks in a controlled fashion on each pallet, where it is consequently shrink wrapped to avoid toppling. A fleet of 14 forklift trucks, mainly Toyota, transports the pallets, which are constantly shifting around the warehouse in order to maintain the flow of fresh products. Forklift routes are marked out on the warehouse floor and strict speed regulations are implemented. Additionally, a warehouse supervisor is on hand to instruct proceedings.

Approximately 160 staff are employed specifically for the handling and distribution of the finished products in Dubai, all of which are trained to Pepsi International standards through the company's safety department. In particular, special care is required for the handling of glass products, which are stacked in moderate height compared to the more durable cans.

"Most of the products have common features which we work around. They need to be stored in covered areas with plenty of ventilation. Whilst they do not need to be kept refrigerated, we try to ensure that storage is relatively cool and that they are not exposed to sunlight for any prolonged amount of time," says Davud.

"Additionally, the products are transported in trucks with shutters and ventilation systems. A quality department ensures all regulations are in check, with a dedicated worker checking the products every ten minutes or so," he continues.

Unwilling to disclose the precise numbers of the Dubai Refreshment fleet, it is undoubtedly of considerable size to contend with the range of customers. Aside distributing to its sister warehouses, deliveries are made directly to the customer from the production centre. It is common to see lorries and trailers mounted outside the docking bays awaiting loading - a process that normally takes up to eight hours.

Traffic restrictions in Dubai complicate this situation a little further. Trailers and trucks are banned from the congested roads at certain times throughout the day. "The road ban occurs at three points throughout the day, therefore limiting our distribution, loading and ultimately sales. We plan around this and ensure the lorries and trailers are in the market or here, not on the road," exemplifies Davud.

"Increased traffic loads on the roads is also posing a challenge to the fleet and again involves intricate planning. The current situation with road construction is another occurrence we have to factor in," he says.

In examples such as this, where demand outstrips supply, the logical step is expansion. With storage space in Dubai evidently decreasing in availability whilst increasing in cost, steps have been made by Dubai Refreshments to keep an eye on the future.

"We have a team studying developments in the area for new warehouses and production facilities. We have high annual growth and it may get to the stage where the space we currently possess may not be enough. A survey is underway looking into new warehouse options," reveals Davud.

Over the last five years, the company has experienced a boom in business that it firmly believes will continue in the future. On the global scene, rivals Coca-Cola have a clear hold on the soft drinks scene, so particular merit must be made to Dubai Refreshments for maintaining such a presence in the local market. Whilst logistics has made a vital contribution to this success, Davud is far from resting on his laurels. "Market share is set to increase next year and over the coming years, and we must maintain our performance. It is growing into a huge operation, and I have a vast number of people directly consulting me," he says.

Placed with the question of outsourcing the Pepsi franchise logistics duties, Davud is not adverse to the idea. "The trend is outsourcing and if we realise in the future that outsourcing could be more productive than we would evaluate the possibility, but only if it can be better," he smiles.

The global and regional history of Pepsi

Pepsi-Cola, most commonly referred to as Pepsi, was first produced in America in the early 1980s by pharmacist Caleb Bradham under the name "Brad's drink". Initially engineered to cure stomach pains, the syrup consisted of carbonated water, sugar, vanilla, rare oils, and kola nuts. Acquiring its trademark in 1903, Bradham hired a warehouse and began mass producing the formula until 1929 when the company suffered bankruptcy due to fluctuated sugar prices as a result of World War I. Eight years later, the company was purchased to rival Coca-Cola, During the great depression in 1934, Pepsi introduced a 12 ounce bottle which succeeded in boosting its status. The 1950s saw major rebranding which again was altered in the 1960s, when the famous ‘Pepsi generation' slogan was first introduced. The 60s also saw the company branch out into other drinks, with the introduction of Diet Pepsi and the purchase of Mountain Dew from the southeast region Tip Corporation. In 1965, the Pepsi-Cola Company merged with Frito-Lay, forming PepsiCo, which it has remained to the present day. Meanwhile in the Middle East, Dubai Refreshments was just starting operations. Opening its first warehouse in Dubai in 1959, the company began establishing Pepsi in the local market. Under the guidance of Alan Salem, CEO, Dubai Refreshments has experienced a boom in the last five years.

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