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Coca Cola Source Chain Analysis

The Coca-Cola Company is decided on for this job since it has one of the most significant supply chain systems on the planet. The Coca-Cola Company is a beverage retailer, maker and internet marketer of non-alcoholic beverage concentrates and syrups. Coca-Cola presently offers more than 500 brands in over 200 countries or territories and functions 1. 6 billion portions each day. The organization is most beneficial known for its flagship product Coca-Cola. The Coca-Cola Company headquartered in Atlanta, Georgia is the world's largest beverage company. Along with Coca-Cola, recognized as the world's most valuable brand, the business markets four of the world's top five nonalcoholic sparkling brands, including Diet Coke, Fanta and Sprite, and a wide range of other drinks, including diet and light drinks, waters, juices and juice refreshments, teas, coffees, energy and sports beverages. Coca-Cola is the best-selling soda generally in most countries. THE CENTER East is one of the sole regions on the planet where Coca-Cola is not the number one soda drink.

SUPPLY String GRAPHIC

The generic source chain graphic of the beverage industry is normally the same as any other industry with manufacturers, distributors, retailers and end consumers participating in their respective assignments. We will further delve into Coca-Cola's custom-made and somewhat complex supply chain model in the proceeding diagrams.

SUPPLY String MANAGEMENT

Due to the great nature of the company's operations and its own several product lines spread across the world, we shall limit the scope of this project towards the most crucial brand produced by the business, its flagship brand Coca-Cola. This section will entail a brief history of the business's supply string.

The Coca-Cola Company uses a unique supply chain management system where the company only produces syrup concentrate which is then sold to various bottlers throughout the world who hold an exclusive place. The Coca-Cola Company owns its anchor bottler in THE UNITED STATES by the name of Coca-Cola Refreshments. Other Coca-Cola bottlers, who keep territorially exclusive agreements with the company, produce the done product in cans and containers from the focus in combo with filtered drinking water and sweeteners. The bottlers then sell, distribute and merchandise the resulting Coca-Cola product to retail stores, vending machines, restaurants and food service marketers.

The Supply Chain of the company is divided into different levels. This article will mainly be focusing on the downstream activities of the product which entails partnerships with different bottlers, vendors and channels used to attain different suppliers.

Upstream Activities

Upstream activities are limited to the making of the concentrate only. The particular formulation Coca-Cola uses to make the syrup is a very tightly performed trade secret so you can find little information about the exact ingredients and so little information on the costs of these supplies. The original backup of the solution is kept in SunTrust Bank's main vault in Atlanta. The company's 2009 income assertion revealed that the cost of goods sold was in excess of $10M and the operating margin was around 25%. Sweets (sucrose or high-fructose corn syrup depending on country of origins) can be the largest known component used in the making of the syrup and the company uses several systems to monitor the daily deviation in the global price of this ingredient. Some of the systems that the business uses will be discussed later in the record. In addition to sugar, a few of the other elements used in the making of the syrup are Carbonated water, sucrose, high-fructose corn syrup, levels of caffeine, phosphoric acid v. Caramel (E150d) and Natural flavorings. Coca-Cola has different dealer partnerships to procure these elements and these partnerships are out of the scope of the project.

Downstream Activities

The downstream activities on the Coca-Cola Company targets the franchised distribution system where in fact the Coca-Cola Company only produces syrup focus which is then sold to various bottlers throughout the world who hold a special territory. Aside from using its anchor bottler in North America (Coca-Cola Refreshments), they have minority shares in a few of its major franchises, like Coca-Cola Enterprises, Coca-Cola Amatil, Coca-Cola Hellenic Bottling Company (CCHBC) and Coca-Cola FEMSA, but fully self-employed bottlers produce almost half the volume sold in the world. Independent bottlers are allowed to sweeten the drink regarding to local likes. The Coca-Cola Company advances products, produces related marketing and advertising programs, and sells syrup concentrate to impartial bottlers.

Due to the commoditized nature of its products, Coca-Cola Company employs a rigorous distributing system whereby it companions up with local bottlers functioning in various countries and territories. Most of these bottlers have exclusive privileges to distribution with their predefined geographic areas. The Coca-Cola Company sets up the basic suggestions to do business in conditions of operational procedures, customer romantic relationship management and query management and these bottlers have some degree of freedom to build up other SOPs relating to delivery, fleet management and growing credit lines.

To simplify the complete Supply String Management of the Coca-Cola Company, let's review a small channel move process which will help us in expanding a better understanding of how Coca-Cola Company's source chain works.

The Coca-Cola Company headquartered in Atlanta manufactures the syrup and sells it to one of its bottling partners like Coca-Cola Businesses (CCE) which is accountable for selling the product in North America and Canada. Coca-Cola Businesses combines the product focus with other substances to produce and deal the beverage and then market segments its products to retail customers and consumers.

The Coca-Cola Export Organization (TCCEC) is the entity responsible for selling the concentrate to other bottlers around the globe. TCCEC along using its regional office buildings located throughout the globe establishes partnerships with local bottlers who produce the drink using the syrup provided by Coca-Cola Company and then spread it to their respective markets.

One distinctive exception to this general romantic relationship between TCCC and bottlers is fountain syrups in the United States, where TCCC bypasses bottlers and is accountable for the produce and deal of fountain syrups right to certified fountain wholesalers and some fountain merchants.

Operations

In this section, we will describe the bottling functions utilized by different bottlers in production and then distributing the Coca-Cola brand in their respected marketplaces. The Coca-Cola Company establishes the essential guidelines of businesses for all of its bottling lovers and suppliers so most of the functions are standardized and there's a certain degree of centralization to the majority of their proper decisions.

Each bottling spouse services the given geographical area by way of a head office which controls almost all of the functions and it serves as the hub for different entities in the source string. The bottler's head office is working in close cooperation with a local office which is under the direct supervision with the Coca-Cola Export Organization. The bottler's hq links the creation flower with different distribution and sales centers and multiple trade zones together to form a complete resource chain.

After obtaining the concentrate from Coca-Cola Company (Atlanta) through one of the regional offices under the guidance on the Coca-Cola Export Firm, the bottler ships it to 1 of its making facilities. The service produces the ultimate drink by blending the syrup with filtered drinking water and sweeteners, and then carbonating it before placing it in cans and containers, which the bottlers then sell and disperse to shops, vending machines, restaurants and food service vendors. The bottling development plant has its own supply chain which mainly contains two types of items.

General Items

Key Solution Items

Sugar

Empty bottles (Procured on contractual basis from different suppliers)

Crowns

Caps

Crates.

The production information including forecasting actions, the capacity management, multiple seller management and other sales results are held at the creation place as well as the head office.

Enterprise Learning resource Management Software employed by the Coca-Cola Company

Coca-Cola Company uses proprietary software known as BASES and some specific modules of SAP to control all their procedures in the world. This software carries out the functions of the complete ERP for the business and its own worldwide procedures. Information related to physical sales, per capita ingestion fads, response from new product advantages, sales forecasting, seasonal modifications, customer romantic relationship management data, fleet management data and all other related information is supervised by using software. All entities associated with or employing the Coca-Cola Company use this software to communicate with the business. All query management and customer problems are dealt with by using software.

A process depiction of the sales module of the software is described as under for example to help expand facilitate the understanding of the sales process at Coca-Cola's bottling partners.

Distribution:

From the creation plant, the beverages (in the form of cans or bottles) are transported to distribution and sales centers using the bottlers' own fleet of commercial vehicles.

The circulation centers are responsible for storing and controlling the inventory comprising of different SKU and dispatching them off to the marketplace to different merchants. The syndication and sales centers have multiple predefined zones and sub divisions of areas to capture all the merchants and contact tips in the market. Generally this distribution and sales centers have the following departments.

Sales and Dispatch.

Customer Service and Query Management.

Logistics Dept. or Fleet Management.

Storage or Warehousing.

IT Dept.

Each distribution center is accountable for the employing the "push strategy" in the source chain. Each area in the distribution channel has a zone head who's accountable for the performance of his zone and to boost the per capita consumption of his zone. Each area is further divided into different routes and each path has different territories designated to each vehicle. As well as the Coca-Cola drink, the bottlers provide other complementary products as an incentive to key accounts like free chillers and coolers for beverages, pop materials and relaxed credit lines. The bottlers execute several competitive strategies to take full advantage of sales like inter-zone competitions and give large bonuses to top performers. The sales data from each zone is calculated on a regular basis and it can help to form sales reports which in turn help develop short term quarterly sales strategies and forecasts by the local office and also helps The Coca-Cola Export Company identify market spaces for new product development and other business development strategies.

The syndication and sales centers are in close connection with the sellers through the zone managers who provide them with constant opinions about the changing market tendencies and also to help them are more responsive to the needs of the finish consumers and their purchase patters. The retailers can place orders with their respected zone managers or they can call the syndication and sales centers if indeed they require addition stock. A procedural illustration of the repayment process from the stores is shown below as it appears in the BASES software of the Coca-Cola Bottlers.

Demand forecasting is important for Coca-Cola. Therefore, the company uses quarterly sales data to forecast future fluctuations in demands and identify future modifications. Because the Coca-Cola drink is a highly commoditized product there are no such end consumer segments. However, there will vary retailer segments within the resource chain predicated on their degree of operations and ingestion figures. The sellers (like Wal-mart, Kroger and other restaurants chains) have been given specific Marketing Development experts or ASMs to avoid any inconvenience and minimize lead times.

Channel Flows

Following are the channel flows that occur throughout the supply chain from the processing crops to the vendors to retailer and so the final consumers.

Manufacturer

Distributor

Retailer

Consumer

Financing

->

Financing

->

Financing

Financing

Risking

->

Risking

->

Risking

Risking

Negotiation

->

Negotiation

 

Negotiation

Negotiation

Physical Possession

->

Physical possession

->

Physical possession

->

Physical possession

Ownership

->

Ownership

->

Ownership

->

Ownership

Promotion

->

Promotion

->

Promotion

->

Promotion

Ordering

<-

Ordering

<-

Ordering

<-

Ordering

Payment

<-

Payment

<-

Payment

<-

Payment

Information

 

Information

 

Information

 

Information

Financing, Risking physical ownership and ownership copy at each step of the chain. Order taking and repayment journeys backwards from consumer who wants the merchandise from the shop who places an order at the distributor. Information trips both ways where the Company disseminates information about the merchandise to each entity in the source string and needs information in the form of feedback from the end consumer.

Service Outputs

The following will be the service outputs how the Coca-Cola Company provides throughout its supply chain.

Integration and Conclusion

The Coca-Cola Company has one of the largest supply string management systems on the globe and due to its volume there are specific problems and improvement areas that require to be rectified. TCCC is taking necessary steps to constantly improve its ever growing supply string by partnering with different suppliers and bottlers. Several integration attempts are under way to maximize TCCC supply string efficiency. TCCC made sizeable changes with their supply chain in 2004 by combining its three sections in THE UNITED STATES in an attempt to consolidate them into one more efficiently integrated device. An proof TCCC's continued work can be seen by their 2006 decision when TCCC made a decision to bypass most of its bottling companions and deliver its products directly to Wal-Mart to lessen lead times. By making this change and providing right to the warehouses, TCCC improved a 100 year old functional practice.

Another suggestion that TCCC could use is that it could try and create some transparency in its bottling partners. Requiring transparency from its bottling partners could remove domain turmoil problems that arise when one bottler attempts to market its products it another bottler's place to meet its sales quotas (this problem has been seen in Coca-Cola's Asia Pacific market).

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