Lala Expands, Adds Shop, Upgrades Fleet

Aug. 1, 2000
Dairy operations start early each day for Grupo Industrial Lala, the largest dairy producer in Mexico. By 4:30 am, cows are milked on a farm outside Torreon,

Dairy operations start early each day for Grupo Industrial Lala, the largest dairy producer in Mexico. By 4:30 am, cows are milked on a farm outside Torreon, in the northern states of Coahuila and Durango. After being chilled, the milk is picked up by tank trucks and delivered to a central collection point. It is laboratory-tested, then delivered to a pasteurization plant.

Pasteurization and a second round of milk-quality checks are completed within four hours. By the end of the day, the product is ready for loading in refrigerated trucks and trailers for delivery throughout Mexico. Lala operates its own tractor, tank trailer, refrigerated trailer, and refrigerated truck fleets.

"We take care of the milk throughout the cold chain, starting at the farms," says Jorge Villegas, Grupo Lala's technical director.

Lala's main facilities are in the neighboring cities of Torreon, Coahuila, and Gomez Palacio, Durango. The company started out 50 years ago as a cooperative of Mexican dairy farmers who pooled resources to upgrade milk processing and delivery. Today, Lala is a vertically integrated corporation with 23 companies employing 10,500 people. These companies control every step of milk production and distribution. They support Lala's goal of increasing profitability and market share by providing top-quality products using state-of-the-art technology. Lala has captured 26% of the milk market in Mexico.

Geographically, Lala (a shortened form of La Laguna meaning lake or lagoon) is well situated. La Lagunera is the region around Torreon where most of the 220 dairy farms supplying Lala are located. Though this region is well within the borders of the Chihuahuan Desert, it has managed - with the help of irrigation - to become the most productive dairy region in North America, Lala officials say. La Laguna refers to the Laguna de Mayran, a large lake fed by two rivers that existed before the flow of the rivers was interrupted by the building of dams in the 1960s.

Lala has six pasteurization plants in Torreon, Durango, Mexico City, Acapulco, Guadalajara, and Monterrey. This year, these plants are expected to produce about 264 million gallons of milk and 37 million gallons of fruit beverages.

Besides fluid milk, Lala produces and packages yogurt, cheese, and ultrapasteurized milk. Ultrapasteurized milk is packaged in aseptic containers that do not require refrigeration. This milk has a shelf life of more than three months. Lala formed its Ultra Lala division to produce ultrapasteurized milk in 1986. The Lala Derivados Lacteos division was created in 1983 to produce and market cheese and yogurt products.

New Products Lala added more products over the past five years, including various new yogurt flavors. The company sells nationwide to supermarkets, mom and pop grocery stores, and foodservice accounts. For example, Lala sells private-labeled cheese to McDonald's restaurants. In addition, Lala exports some products - mainly ultrapasteurized milk - to Guatemala, Honduras, and El Salvador.

"Grupo Lala grew from a company focused on providing high-quality products," Villegas says. "Today Lala is one of the most dynamic consortiums in the food industry. In Mexico, Lala is ranked 58 out of the country's 500 most important companies. It ranks 258 in all of Latin America."

Two companies comprise Lala's Transport Division. The first, Lala Transportadora, runs tractors and 62 farm pickup tank trailers to collect raw milk each day from the 220 dairy farms. These farms are owned by individual Lala stockholders. "You have to be a stockholder to supply milk to Lala; suppliers are the company's only stockholders," explains Jose Juan Mendoza Ruiz, director of fleet maintenance for Lala Transporte Federal.

Lala Transportadora tank trucks deliver to Lala Enfriadora, the company's headquarters and consolidation point for raw milk in Gomez Palacio. Lala Enfriadora also is the site of Lala's central laboratory, where quality tests are done before the raw milk is pasteurized.

The second transport company, Lala Transporte Federal, is based at another facility on 11 acres in Gomez Palacio. It is the main base for Lala's heavy-duty tractors and trailers. Fleet maintenance is done at 36 work stations divided into preventive maintenance and repair areas. The work areas include a refrigeration repair station, two wash bays, paint area, fiberglass fabrication bay, and tire repair and installation area. A parts warehouse on the property stores repair parts.

From the Gomez Palacio facility, Lala runs 174 tractors and 296 trailers, including 182 insulated tank trailers, 74 dry vans, and 40 refrigerated trailers, says Nayar Galvan, general manager of Lala Transporte Federal. The stainless steel tank trailers are from two Mexican trailer manufacturers, Retesa and Industrias Gonzalez (IGSA).

"This is an appropriate location for the central distribution center since most of the milk supplied to Lala is produced in this region," Galvan says. "We collect the raw milk from the cooling facility (Lala Enfriadora) or directly from the farms and then deliver it to the production plants. Tank trailers used for these hauls have three inches of polyurethane insulation. They are washed and sterilized before each run with clean-in-place (CIP) systems at Lala Enfriadora."

Tractors and refrigerated trailers deliver pasteurized milk to 60 Lala branches in remote areas. From the branches, light- and medium-duty trucks deliver to local customers, Galvan says. The company operates about 1,600 refrigerated straight trucks.

Within the past five years, Lala has upgraded its fleet tremendously. Five years ago, the tractor fleet was old with an average age of more than 10 years. Now the average age of tractors is 2.5 years. The fleet consists of Kenworth T800 and Navistar 9200 models equipped with Detroit Diesel Series 60 engines.

"We have taken a technology jump," Galvan says. "Lala tractors now have improved fuel economy ratings, suspension systems, and engines. For instance, we used to have a diesel lab to check fuel pumps and injection systems, but with the new engines we don't need it, and we've closed the lab. We specify air suspension rather than spring suspension for our trucks. Our truck specifications are based on three factors: fuel economy, driver comfort, and availability of repair parts. Since we've upgraded, the resale value of our fleet is much higher."

Truck Maintenance Shop Another Lala Transporte Federal maintenance shop specifically for straight trucks opened in Torreon in July 1999. The vehicles served by the shop include refrigerated straight trucks and bulk feed trucks for Lala Foods, which operates three cattle feed mills. All 400 trucks are domiciled at Lala facilities in the La Laguna area, including four production plants - a pasteurization plant, an ultrapasteurization facility, and cheese and yogurt plants.

"We built this facility to control truck maintenance from a central location and to achieve more cost-effective parts procurement through standardized truck specifications," Mendoza says. "We do all kinds of repairs at the truck shop, including body work, paint, engine work, wheel balancing and alignment, and refrigeration unit repair."

Lala's new truck shop and its fleet maintenance facilities in Gomez Palacio support the company's goal of maintaining the cold chain throughout distribution. But Lala starts its cold chain efforts well before the product is processed and ready for delivery. They begin as soon as raw milk is stored after cows are milked. Chillers bring milk temperature down to 36 degrees F, and this temperature is maintained while the product is transported in insulated tank trailers to La Enfriadora for lab testing. La Enfriadora has seven refrigerated storage tanks for milk and three for ice cream to store product temporarily before it is loaded in insulated tank trailers for delivery to the pasteurization plants.

Lab Tests Besides keeping the milk chilled, Lala does lab tests to ensure a wholesome, sanitary product. A sample is taken from each tankload of raw milk delivered to La Enfriadora. "We check the levels of fat, protein, lactose, nonfat solids, and total solids," says Goretti Lavin Mora, chief lab technician.

If the milk is found to have an anomaly, additional tests are conducted. Each supplier's product within a tank may be tested. If necessary, the lab traces milk samples to individual cows. Microprocessors are at all stations where cows are milked by machine. Sensors read a ring on each cow's leg. The ring provides an identification number that the system records along with the temperature and amount of milk given by the cow.

"Having healthy cows is an important factor. Our work in this lab is to check the quality of milk from each farm and each cow," Villegas says. "Every month we do a culture on each cow."

In addition to pinpointing disease, these tests also show how feed relates to milk productivity, he adds. Lala carefully controls the feed by mixing raw alfalfa with other ingredients such as sorghum, corn, and molasses stored at company headquarters. Feed is mixed for best milk production, Villegas says.

Temperature- and quality-control procedures continue after milk arrives at the pasteurization plant. Lala's oldest plant is a 50-year-old facility in Torreon. It processes up to about 80,000 gallons (300,000 liters) of fluid milk per day. A second round of lab checks for quality control is performed there. The entire pasteurization process is computer-controlled. Managers can check progress on computer monitors. An alarm is activated automatically if equipment malfunctions.

The Torreon pasteurization plant operates 16 hours a day, seven days a week. During the eight hours each day the plant is not operating, the facility and its equipment are washed and cleaned thoroughly.

Lala managers say the company's meticulous quality-control procedures have paid off.Lala has established a reputation for excellence throughout Mexico.

"The food distribution industry in Mexico is growing to serve an increasing number of convenience stores handling perishables," Mendoza says. "Lala has captured a large portion of the market by maintaining its own distribution fleet and developing strategic alliances with other distributors in areas where Lala does not have branches."

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