Supermarkets and Warehouse Stores


 The supermarket revolution has reached Mexico. Some chains maintain stores throughout

large regions of the country, and their stores may be as modern as any in the U.S. However,

their distribution systems are reminiscent of those in the U.S. during the 1950's and 1960's in

that there is heavy reliance on upon direct deliveries to retail stores by suppliers, rather than to

their central distribution facilities. For example, Sigma Alimentos delivers its processed meats

directly to individual supermarkets and even is responsible for restocking and updating in-store

displays. The distribution facilities that are maintained typically have little or no long term

storage, and are cross-dock operations. A typical operation will now be described:

 The chain has 20 supermarkets located throughout southeastern Mexico. Despite
 the fact that all the stores were south and east of Mexico City, in some cases by
 several hundred miles, distribution was handled out of Mexico City. The facility
 is an enclosed platform with loading docks on two opposite sides. Suppliers
 deliver into one side and outgoing trucks are loaded through the opposite side.
 Each supplier are responsible for moving pre-specified amounts to each of twenty
 squares, which represent individual stores. Outgoing freight is loaded by the
 facilities eight permanent employees and some temporary laborers. Some
 refrigerated goods are delivered directly to the individual stores by suppliers.
 The chain also maintains a facility at the Central Market for the purchase and
 distribution of produce and some other perishables. With the exception of fish,
 meats are delivered to individual stores by the suppliers. The chain purchases
 fish directly from boats at Veracruz and delivers to the stores from there. Again,
 this is primarily a cross-dock operation. Due to its small volume, frozen foods
 are delivered one day per week to the facility and then delivered to the stores in
 a company truck. The exception to this rule is ice cream, which is delivered by
 the supplier directly to the stores.

The advantages of this chain's distribution system are low investments in distribution facilities

and labor. This advantage is gained by making frequent, small purchases and relying upon the

warehouse capacities, transportation, and labor of suppliers.