WAREHOUSING MASTER CAPACITY PLAN

Table of contents

1. Executive summary 4

2. Seasonality and effects on warehousing system

i. Production and sales seasonality F10 5-7

ii. Strategic stock 8

iii. Strategic stock days 9

3. Depot network

i. Historical data and changes 10

ii. DNO results 11

4. Future requirements

i. Procedure 12

ii. Current capacities and short term deficits 13

iii. Projected fulls and empties needs 14

5. Warehousing master capacity plan policy

i. Objectives & policy 15

ii. Calendar 16

2
1. Executive Summary

Purpose
1. Create a consolidated information source regarding capacities throughout the distribution chain.
2. Generate an alignment planning tool for interrelated areas: Supply Chain and distribution.
3. Develop planning tools for future capacity requirements.
4. Develop planning and measuring tool for PEAK seasons.

Key findings
1. Confirmed strategic stock at 6 stock days, in line with RIC and modelled into warehousing capacity models.
2. Historical data dictates adequate seasons to conduct studies, improvements and layout changes as well as
expansions and construction in CD1 during first quarter of fiscal years – Low inventories are directly related
to production plan and demand estimates.
3. Further alignment is needed between production, SC and distribution. Alignment must be generated in order
to plan capacities and schedule infrastructure changes i.e: Not previous plan overhauls and maintenance due
to inventory build-up requiring storage space.
4. Confirmed priorities for F12 and specific locations require temporary solutions for next peak season. Guayas
deficits will be covered by CD1 Pascuales.

Recommendations
1. Application of the suggested procedure and policy for the warehousing services department.

4
 2. Seasonality and effects on warehousing system
Demand seasonality and production limitations require anticipated production to meet peak in
demands as was evident in F10…

180,000

160,000

140,000

120,000
hectoliters

100,000

80,000

60,000

40,000

20,000

0
WK14

WK16

WK21

WK23

WK25

WK27

WK32

WK34

WK36

WK43

WK45

WK47

WK52

WK01

WK03

WK10

WK12
WK15

WK17
WK18
WK19
WK20

WK22

WK24

WK26

WK28
WK29
WK30
WK31

WK33

WK35

WK37
WK38
WK39
WK40
WK41
WK42

WK44

WK46

WK48
WK49
WK50
WK51

WK53

WK02

WK04
WK05
WK06
WK07
WK08
WK09

WK11

WK13
Normal PEAK Normal

SELLOUT PRODUCTION CAPACITY RIC

As yearly demand fluctuates seasonality requires fixed production capacity to anticipate production for inventory buildup during peak seasons as
obeserved for December and February. Anticipated production and the resulting inventory buildup (operational + strategic stock) is required due to
the heavy capital investment that is needed for additional production capacity.

5
 2. Seasonality and effects on warehousing system
Throughout the year production anticipates peaks in demands and production capacity reductions…

180,000

160,000

140,000

120,000
hectoliters

100,000

80,000

60,000

40,000

20,000

0
WK14

WK23

WK25

WK27

WK29

WK31

WK33

WK42

WK44

WK46

WK48

WK50

WK06

WK08

WK10

WK12
WK15
WK16
WK17
WK18
WK19
WK20
WK21
WK22

WK24

WK26

WK28

WK30

WK32

WK34
WK35
WK36
WK37
WK38
WK39
WK40
WK41

WK43

WK45

WK47

WK49

WK51
WK52
WK53
WK01
WK02
WK03
WK04
WK05

WK07

WK09

WK11

WK13
Normal PEAK Normal

HL PRODUCED EXCEEDING SELLOUT SELLOUT REAL PRODUCTION

Real production during F10 exceeded demand at various points during the period. The excess production was a result of the
necessity for inventory buildup due to plant maintenance, stops, overhauls, as well as the anticipated production of due to peaks in
demand.

6
 2. Seasonality and effects on warehousing system
System inventory is highest preceding plant stops due to maintenance and overhauls as well as
peaks in demand…

180,000

160,000
hectoliters

140,000

120,000

100,000

80,000

60,000

40,000

20,000

0
WK14

WK22
WK23
WK24

WK32
WK33
WK34

WK41
WK42
WK43
WK44

WK51
WK52
WK53

WK08
WK09
WK10
WK15
WK16
WK17
WK18
WK19
WK20
WK21

WK25
WK26
WK27
WK28
WK29
WK30
WK31

WK35
WK36
WK37
WK38
WK39
WK40

WK45
WK46
WK47
WK48
WK49
WK50

WK01
WK02
WK03
WK04
WK05
WK06
WK07

WK11
WK12
WK13
HL PRODUCED EXCEEDING SELLOUT SELLOUT REAL SYSTEM INVENTORY REAL PRODUCTION

1. Demand seasonality and production plans should aid in warehousing capacity planning to determine adequate seasons to
implement layout changes, construction and conduct analysis and improvement studies, i.e: Shallow inventory weeks: WK 20-
25, 40-43.
2. Anticipated production and resulting inventory profiles aid in determining optimum maximum level of inventory required to
meet demand and thus plan warehousing capacities.

7
 2. Seasonality and effects on warehousing system
Analysis of F10 Peak shows that strategic stock build amounted to 133,852 HL…

CALCULATED IDEAL STRATEGIC STOCK BUILD BASED ON F10 EXPERIENCE

HL PRODUCED EXCEEDING SELLOUT [1] + GAP VS NORMAL INVENTORY ONE WEEK AFTER PEAK [2]
[1]: HL PRODUCED EXCEEDING SELLOUT = 93,281 HL
180,000 [2]: OPTIMUM CD2 INVENTORY GAP AT PEAK END = 40,571 HL
[3]: IDEAL STRATEGIC STOCK BUILD = 133,852 HL
160,000

140,000

120,000
hectoliters

100,000 1
80,000
2

60,000

40,000

20,000

0
WK40 WK41 WK42 WK43 WK44 WK45 WK46 WK47 WK48 WK49 WK50 WK51 WK52 WK53 WK01

PEAK
HL PRODUCED EXCEEDING SELLOUT SELLOUT OPTIMUM SYSTEM INVENTORIES REAL SYSTEM INVENTORY REAL PRODUCTION

8
 2. Seasonality and effects on warehousing system

F10 STRATEGIC STOCK BUILD CONVERTED TO DAYS COVER

STRATEGIC BUILDUP HL [3] / AVG. DAILY DECEMBER SALES [4]

[3]: STRATEGIC BUILDUP = 133,852 HL

[4]: AVERAGE DAILY DECEMBER SALES = 20,368 HL
7.00 [5]: IDEAL STRATEGIC STOCK BUILD = 6.6 DAYS

6.50

6.00

5.50
Days

5.00

4.50

4.00

3.50

3.00
F11 F12 F13 F14 F15

RIC RECOMMENDED STRATEGIC STOCK DAYS SRATEGIC STOCK DAYS MODELLED IN DEPOTS
AVERAGE RIC STRATEGIC STOCK DAYS SRATEGIC STOCK DAYS PEAK F10

9
 3. Depot Network
Implementation of RtM has lead the way to As NDP continues to advance in provinces sqm available for storage have
been reduced as a result of consolidation and closure of warehouses with
significant changes in the depot grid… standards below the minimum required. Larger territories and higher
Previous NDP volume demand clusters implied the continued and new operations of
Depot network In route towards world larger scale warehouses:
class distribution F09 350 2,500
marked the beginning of
300
NDP implementations in 2,000
Ecuador. Initial territory 250
1,500

sqm
consolidations and 200

hl
consequent closure of 150 1,000
thrid party warehouses in 100
GYE and UIO were made 500
50
effective. Loading for T3
0 0
delivery operations for
GYE and UIO were F09 F10 F11
centralized in depots. Sqm per site HL per site

Further changes by NDP executions are expected until the end of Q4 F11
The warehouse footprint was significantly
generating a final WH footprint begginging F12.. So far storage demands
consolidated as a result of NDP GYE and
have been met but future requirements require planned capacity expansions.
UIO reducing the foot print from 149 to 102
warehouses: F11 peak season
required additional 50,000
F07 F09 F10 F11 capacity to be rented out 40,000
101 94 91 52 by third parties. Projected
Distributors 30,000
demand capacities
Warehouses 149 102 81 58 require CAPEX and 20,000
Capacity HL - 120,233 127,881 114,578 capacity planning. 10,000
Capacity sqm - 19,980 20,040 17,861 F12 and future capacity 0
expansions have been Prev. NDP F10 F11 PEAK
RtM and NDP continued to advance throughout F09-F11, with prioritized and confirmed
further consolidation of territories and warehouses on a provincial by a depot network CD1 CD2C
level. Major territory consolidations and subsequent warehouse optimization study. CD2B CD2A
consolidations in provinces aroused in Costa during F10 and into Peak temporary solutions Total M2 required
F11.

10
3. Depot Network
Future depot network requires warehousing Depot optimization pin points # sites F12
sites in optimum locations and with possibility of strategic locations for current Type Inventory
and future warehouses. These COS SIE
site expansions in the upcoming years… results and locations have been
classified into three warehouse CD2A owner 5 5
categories which are aligned
with upcoming RtM wave
initiatives. These initiatives CD2B owner 15 4
include consolidating the control
of inventory and the
development of world class
CD2C 3P 7 10
infrastructure in CD2 sites in
provinces.
By owning the inventory in selected sites we: reduce working capital for the
system, liberate significant partner capital to invest in credit to PoS, and/or
CN Plants
infrastructure, simplify supply management,
Volume 0 – 39.9K improve sell-out visibility and Atacames

Volume 40K- 99.9K enable later direct invoicing in

Volume >100K Provinces. Otavalo

Sto. Domingo
Coca

A detailed study was carried out to determine 10 enterprise owned depots will
the optimal depot network. The study took initiate construction during F11
Quevedo
into account volume projections, T2 and T3 and extend into upcoming Montecristi
Ambato

costs as well as road conditions: years. Initial CRC approval for

phase I was completed in Q4
Network Optimization Results # F11. Site locations are aligned
CN Plants 2 with CD2A site grid confirmed
Provincial Warehouses by DNO and priorities have Cuenca

> 100K Hls 12 been established in a basis of Machala

> 40K & <99K Hls 13 current capacities and projected CD2B
< 39K Hls 16 F12 deficits. Loja CD2C
Total Sites 41 CD2A_DN Depots
PLANT

11
4. Future Requirements
Future storage requirements are planned two fold and with specific objectives. The master capacity
plan is to be conducted in order to determine requirements for upcoming fiscal year and long term
requirements…

TOOLS /
TIME HORIZON OBJECTIVE FOCUS KEY INPUTS
SOURCES

DETERMINING
CAPACITY 1. SITE SPECIFIC 1. BUDGET VOLUME
DEFICITS FOR 1. DISTRIBUTION
2. GLOBAL 2. CURRENT CAPACITIES AND PROJECTED
NEXT FISCAL UPCOMING PEAK PLANNER
CAPACITIES CHANGES OVER NEXT FISCAL YR
YEAR SEASON AND 2. CD CAPACITIES
RESULTING INCLUDING 3. STOCK DAYS AT CD1 AND CD2
PLANNER
INITIATIVES FOR CD1 4. PROJECTED HL/M2 AT LOCATIONS
PEAK PLAN

1. CD2BC WH 1. 3 YR PLAN VOLUME PER SITE AND CAGR

CAPACITY PROJECTIONS FOR FULLS
PLANNING OF 1. SITE SPECIFIC MODEL CD2A
EXPANSION 2. 3 YR PLAN PILSENER 600 RB CONTAINER
2. GLOBAL 2. WH CAPACITY POPULATION FOR EMPTIES
STRATEGIES AND MODEL
LONG TERM CAPACITIES
REQUIREMENTS 3. PROJECTED EXPANSIONS AT CD1 & CD2, I
ACROSS THE INCLUDING 3. DISTRIBUTION
CD1 PLANNER 4. PROJECTED HL/M2 AT LOCATIONS
GRID
4. CD CAPACITIES 5. PROJECTED 25 YEAR VOLUME PER CD2 FOR
PLANNER SQM ALLOCATION AND REQUIREMENTS

12
4. Future Requirements
Final wave of NDP will conclude Projected volumes for F12 and warehousing capacities into F12 suggest storage deficits in
Costa CD2s and Pascuales. F12 storage requirements were estimated as a product of 10 stock
during Q4F11. Final consolidation of days and the average F12 December sales. Guayas deficits will be covered by Pascuales
the warehouse grid lays out initial expansions due to proximity to the production plant. F12 capacities and requirements confirm
logical order for depot construction and pin points specific locations which will require
depot network prior to capacity temporary solutions during peak season:
expansions due to projected deficits
100,000
during F12… 18,882

hectoliters
80,000
60,000 3,404
Sqm hundreds HL thousands 40,000
16,000
20,000 4,643 4,419 3,090 4,235 3,900

350 24 0
181 1. Depot 2. Depot 3. Depot 4. Depot 5. Depot Otros Cluster Pascuales* Otros Cumbaya*
2,000
Quevedo Sto. Esmeraldas Montecristi Machala Clusters Guayas Clusters
51
300 298 Domingo Costa Sierra

Depot construction logical sequence Other Solution through Sierra

250 priorities PSC/cross docking
85 1,500
544 Capacity Deficit PEAK F12 [HL]

200
During F11, storage capacity in
100000
73 1,000 Pascuales was reduced as area
150 406 88,172
50,000
was lost to manufacturing for
80000
palletization and depalletization 4,221

hectoliters
10040,000 operations. As a result efforts 60000
30,000 500
throughout Q4F11 will be targeted
128 735
5020,000 at improving effective HL/m2. 40000
10,000 Such efforts include layout
optimization and capex 20000
0 0 0
investments in order to create
Q4F11
Prev. NDP F10 F11 PEAK
Q4F11 73,511 69,290 69,290
better storage areas. Capex for 0
CD2C new roofed areas will be executed
CD2B CD1 CD2C F10 F11 Loss to F11 F12
CD2A to comply with F12 requirements. manufacturing
Peak CN CD2B CD2A
PEAK 3rd Party
Peak temporary solutions Total M2 required Additional Required Required HL

13
 4. Future Requirements
Warehousing capacity for FULLS is saturated due to F11 distributor warehouse consolidation and loss of
space in Pascuales to Manufacturing, empties capacity not under pressure…

70,000 CD2s: 42 F11 PEAK: Shortfall covered by

Avg: 736m2 rented and other temporary
60,000
CD2s: 72
facilities.
50,000 Avg: 277m2 F11 Q4: Final consolidation of NDP
warehouses will further eliminate
sqm

11,030 19,064
40,000 1,636 4,825 20,678 21,179
space.
2,447 2,447 3,617 2,249
5,096 1,442 1,442
30,000 5,096 8,309 8,309 8,309 8,309 F12-F14: Pascuales warehouse
19,980 18,404 10,318 8,514 expanded to ultimate capacity and
20,000 CD2A depot capacity created in
10,000 provinces according to 3YP
21,294 21,294 20,053 20,053 25,453 25,453 25,453 25,453 programme.
0 F15 ON: Capacity expansion will
Prev. NDP F10 F11 PEAK Q4F11 F12 F13 F14 F15 need to continue midterm based on
CD1 CD2C CD2B CD2A Peak temporary solutions Total M2 required volume growth.

25000

20000 14,265
sqm

15000 8,486
6,793 6,741
6,833 F11 – ON: Warehousing capacity
5,671 5,875 for empties is not under pressure
10000 4,277
despite significant area lost in
distributor consolidation, as space is
5000 available in Pascuales and further
7,928 7,928 7,928 7,928 7,928 7,928 7,928 7,928 provision wiil be added at new
0 depots
Prev. NDP Q4F10 F11 PEAK Q4F11 F12 F13 F14 F15

Empties area available CD1 Empties area available Prov Empties Need total

14
 5. Warehousing Master Capacity Plan Policy

Master capacity plan TOOLS INPUTS AREAS INVOLVED

policy and procedure

WAREHOUSING MASTER

Monthly
aims to generate a Distribution
Planner

CAPACITY PLAN
cyclical planning CD1 Capacities
process by which Capacity
Distribution

Bimonthly
Q1
Models and TL Capacities
information is readily planner Operations
available and alignment CD2 Capacities
[Cos, Sie, Gye, Uio]
between areas is Lay Out

Q4
Services
Optimization
assured… T3 Capacities [WH and delivery]

Peak
Peak Controller

REASON WHY: Data Areas alignment /

TASK Model execution
consolidation Info request
Currently, planning for future
logistic requirements is time USES:
consuming. Planning
Sell Out
Supply chain
processes and measurements 1. Information source regarding capacities

Monthly
are affected mainly due little throughout the distribution chain. Optimum Demand planning
alignment between distribution 2. Alignment tool between areas. Applications inventories
- supply chain and lack of include planning in the distribution and
supply chain monthly committee. CD1
credible and consistent source Supply planning
3. Planning tool for future capacity inventories
of information in respect of
historical, current and planned requirements. Monthly
4. Planning and measuring tool for PEAK
capacities.
seasons. Adelantos Credit/sales

15
 5. Warehousing Master Capacity Plan Policy
Warehousing master capacity plan policy requires specific tasks throughout the fiscal year, proposed work
plan for F12 includes and is aligned with events such as low inventory weeks and 3YP workout:

Quarter: Q1 Q2 Q3 Q4

Month: April May June July August September October November December January February March

Information management and consolidation

Update current and projected CD1 capacities      
Update current and projected TL capacities      
Update current and projected CD2 capacities      
Update current and projected T3 capacities      
Update projected Sell Out            
Update projected Optimum inventories            
Update projected CD1 inventories            
Update projected credit requirements            

Tool kit applications

CD capacities planner - Short/ Long term planning            
Warehousing capacity model CD2A 
Warehousing capacity model CD2BC 
Lay Out Optimization 
Peak Plan distribution     
Peak Controller    

Warehousing master capacity plan results  

Information request to distribution 

Information request to supply chain 
Information request to credit 
Application of planning and optimization tools 
Final results 

16