BJMP 6023 SUPPLY CHAIN MANAGEMENT

Team Members:
AHMAD KHUZAIMI BIN AZIZ 818581
SHARANYA RAMASAMY 822484
SHARMILA DEVI SUBRAMANIAM 822511
SHRI BRINDASHINI THANAPAL 822512
TIROSHA GOVINDASAMY 822513
K.MOGANAMBAL A/P KRISHNAN 822712
 Executive Summary
- to discuss on the SCM of the selected company and how does supply chain
has changed the business entity to a larger perspective in the global
expansion.
- We have chosen Coca Cola Company to be discussed and greater views on
the solutions that can be done for this emerging world of Supply Chain
regardless of the boundary, which has been set by the company itself.
- Our studies will be included on the main problems faced by Coca Cola
company in developing and sustaining their Supply Chain Management as
well as giving some opinions on the solutions that can made from time to
time basis.
- It has five elementary studies, which includes the Situational Analysis of Coca
Cola, major issues faced by the company, alternative solutions in helping
them, recommendations on the solution given and how to implement all
this.
- This study can help to understand better in Supply Chain Management and
how does it work for a global company which operates from decades with
plenty improvement and high growth rate
 Introduction

The Coca-Cola Company known as the predominant beverage seller of

Coke drink is a Multinational Company in America situated in Atlanta,
Georgia incorporated or invented its business in 1886 by pharmacist John
Stith Pemberton.

Initially this business was set as non-alcoholic beverage concentrate and

syrups. Later, the Coca-Cola brand and formulas was bought by Asa Griggs
Candler in 1889 and rebranded it in 1892.

The origins of bottler started in 1884, which reflected the business in a

huge way. Over the years, Coca Cola bottler has been the most inspiration
worldwide to promote their packaging differently from time to time.
Supply Chain Overview
• The supply chain processes in Coca Cola Company is operated by subsidiary of Coca Cola
from the parent company, which runs all the supply chain management.
• Knowing further as Hellenic Bottling Company of Coca Cola (Coca Cola HBC) is one of the
world’s largest bottlers of Coca Cola and has the strongest business foundation that grows
in a long term.
• As said, they are the partner of Coca Cola manufactures who sells the concentrates, base
and syrup to the bottling company, which does their marketing mix as well and distributes
the end products to the customers or suppliers.
• They operate nearly about 28 countries around the world with 600 million potential
customers and 136-brand portfolios.
• Coca-Cola HBC operates from Ireland in the west to the Pacific coast of Russia in the east,
from the Arctic Circle in the north to the tropics of Nigeria in the south.
• This provides attractive opportunities for growth and not dependent on any particular
market.
• In year 2016, the Dow Jones Sustainability Indices recognised HBC as the beverage
industry leaders in Europe and the world for the third consecutive year.
 No of
employees:
29427

Net profit
Customer
(2017): 426
Charter: 94.2%
million (euro)

Details

Supplier Coca Cola Supply

spending: 3,138 Chain Director:
million (euro) Marcel Martin
HBC has 55 plant
over the world
with 267 filling
lines and 169
warehouse and
distribution
centres.
 Supply Chain Quote:
“Our supply chain plays a central role in
our business, ensuring that, in all our
processes, we minimize our
environmental impact and ensure
sustainability in our value chain.”
Supply Chain Mission:
“Our mission is to become the leading supply
chain function in our industry in terms of
customer service and cost efficiency. To achieve
this, we focus our efforts on keeping our people
engaged, excelling in sustainability, reducing our
costs and building best-in-class customer service
and responsiveness”.
Supply Chain Process of Coca Cola HBC
Situational Analysis
ISSUES AND PROBLEMS
• Their supply chain was also old and slightly
outdated compared to modern companies
• Depending on bottling partners
• Negative impact in product (health issues)
Ethical Issues
• Being one of the largest beverage
companies in the world, Coca-Cola has a
lot of pressure with ethical issues.
• This company has been involved in racial
discrimination, misrepresenting market
tests, manipulating earning and disrupting
long-term contractual arrangement with
distributors.
Society and environmental issues
• Coca-Cola is extremely active in all aspects
of society and environmental issues.
• They have made multiple steps to prevent
harm to the environment through their
production of products.
• Some of these solutions include eco-
friendly facilities and equipment. Coke has
been very efficient when it comes to
environmental issues.
• Throughout the years, they have developed
a goal of being water neutral. This means
that every drop of water used by the
company will be replenished by 2020.
Child Labor to develop Coca Cola Company
• Besides, businesses purchasing sugar from El
Salvador, including The Coca-Cola Company, are
using the product of child labor that is both
hazardous and widespread.
• Harvesting cane requires children to use machetes
and other sharp knives to cut sugarcane and strip
the leaves off the stalks, work they perform for up to
nine hours each day in the hot sun.
• Child labor is rampant on El Salvador’s sugarcane
plantations,” said Michael Bochenek, counsel to the
Children’s Rights Division of Human Rights Watch. “
Accreditation issues on Central Science Laboratory
• Coca-Cola tries to undercut the credibility of CSE's test
results by raising questions about the accreditation of the
CSE lab and the equipment and methodology it used.
• In the same breath, Coca-Cola says, "The methods used to
test our finished products have been developed by the
company and Central Science Laboratory (CSL), which is an
independent laboratory used by the U.K. government.
• Although the validation of the methods has not been
completed, they represent the state of the art in terms of
procedure and technology.
• CSL runs an international program to test the proficiency
of laboratories in analysis, including pesticides .
 GENERATION & EVALUATION OF ALTERNATIVE SOLUTIONS
Unlock the power of its people
• According to the statistic, Coca Cola is now having about 62, 0000 employees
around the globe.
• A major revamp and initiative within the company had seen a major decline in
the total workforce number.
• Over 6 years’ period, the company workers have decreased from 150,900 to
61,800 in 2017, almost a downsizing rate of 10% annually. The company
initiative in driving operational efficiency and low business cost model, together
with couple of more other initiative including the digitalization has made the
number workforce they required reviewed. With revision of every aspect of its
business model, the company is looking into improving the business
performance at optimal cost.
• The problem will surface whether they could really improve their performance
(in terms of return in monetary value) with now having less than 50% workface
available compared to the last 6 years.
• The company has many more initiatives to implement; one of those is to unlock
the power of its people.
• They intend to unleash their current number workforce talent to create more
value to company – e.g. implement digital platform, align business strategy etc.
• It is a good move by the company; relook back at their employee areas of
expertise and identifying contribution they can make to the company.
• In doing so, the company may need to intensively invest financially and in term
of time to identify those value added things.
Bottler issue/ shortage of production (quantity) to meet demand

• Coca Cola offers non-alcoholic beverages ranges from soft

drinks, bottled water, sport drinks, and energy drinks.
• The ingredient and syrup will be send to the bottler who
the process follow Coca Cola standard to produce the final
product.
• Coca Cola is not the capital heavy business operation,
which invest and control the bottling process, but it is
done via what they call as partner (more than 200 bottler)
who will meet their customer projection demand.
• Coca cola only managing their bottler involvement to
ensure they are meeting the demand and quality desired.
• Hence, proper control over the production (bottling) is
paramount for the business operation.
Bottler issue/ shortage of production (quantity) to meet demand
(cont’d)

• Possible issues that may arise are controlling over the partner business
model and ensuring the partner is meeting their demand request.
• The current bottling partner company is over 200 company across the
globe; as it is very hard to micro manage them to meet the demand.
What Coca Cola did, they hold major ownership and acquiring certain
percentage in the bottling company interest and heavily control or
perhaps monitor their performance. They are now moving towards
another approach beginning 2017 and we are agreeable to their
approach.
• The current model, Coca Cola is returning the ownership to the bottling
company and implementing franchising process to their bottling partner.
• These moves ensure the franchise-bottling firm to meet Coca Cola
demand, allowing Coca Cola to utilize their capital (from ownership of
share percentage) to internal operation cost, and make sure Coca Cola
maintain low CAPEX utilization model within their business. They need to
however set a standard where the franchising company need to adhere
and meet the demand required to ensure it does not affect business
efficiency.
Digitalization and investing in IT infrastructure

• Coca Cola is taking digitalization and investing in IT infrastructure process as one of their
main priority move in pushing the company forward. Digitalization has allowed their
customer and employee to experience a different level of efficiency and effectiveness.
• Digital infra allows the company to operate fast, assist them in many things that otherwise
need to be done manually and which the workers now can utilize their time to do more
things. Implementing this strategy is aimed for the company to be closer to their customer,
and exponentially increase the company performance.
• Its allows visibility in product movement, customer now can quickly access to their various
kind of product line up and put order and give Coca Cola mode to give impactful advertising
mode.
• Nevertheless, the possible issues that may arise due to this move would be big expenditure
to be allocated to maintain and to continuously develop the digital platform and software.
• As the IT things is quickly changing, the cost that would be incurred and that may be re-
incurred back is within a short period i.e. time factor or obsolete of IT and technology.
Changing the mind-set of every employee i.e. 62,000, in implementing and operating the
digital/IT things is another challenge. In addition, it would be costly as well as it is a fight
against time to implement it within the company.
• The implementation need to be done fast as to avoid the company from lapse in term of
implementing the system than the rest.
Healthy beverage issue
• Coca cola investing in improving their beverage quality, beverages line-
up, and awareness of their customer towards healthier lifestyle.
• The possible opinion that circling for every consumer especially with
regard to heathy product is whether the product is safe and healthy to
consume.
• Coca cola identifying this issue very well, while many other rivals also
producing same product nature, instead Coca Cola is introducing
healthier product line up for their consumer i.e. coca cola diet, coca
cola zero sugar.
• This set them different from their rival. Some consumer has perception
over ‘not a healthy diet to consume Coca Cola as it has high volume of
sugar’, but the company offered another segment to win this market.
Coca Cola is continuously improving their product quality and quantity,
as well as educate consumer on their brand quality.
• These initiatives are aimed to bring market confidence towards their
product and to continue support their brands.
• A couple of Coca Cola initiative as well may give a different perception
in the eye of the consumer on how Coca Cola really care about the
healthy issue. Initiative like promoting recycling and partnership with
few parties to provide sustainable water perhaps is actually to bring
consumer confidence in Coca Cola aim to deliver best, healthier
product to their customer via their various beverages product in the
market.
Predicting the launch and early stage demand
• In the expansion of technology management, Coca Cola
should use the data analytical information to generate sales
performance in a broader way to take up the demand rate.
Since its operating globally, the data performances should
be accurate to forecast the sales load in the presence of
supply chain network.
• With the sales demand data or forecasted data, Coca cola
can predict their distribution channels and apply operation
and maintenance scheme to keep their inventory in control.

Minimize pipeline time

• In supply chain management, minimizing the pipeline time
will help the multi distribution channel to keep the supply
pipeline in short which reduces the risk.
• By monitoring sales on timely manner, can actually help the
cycle to minimize the pipeline time with sufficient inventory
profile.
Customer Relationship Management

• Customer relationship management provides the

structure for how the relationships with customers will be
developed and maintained.
• A strategic approach and an operational approach is
required to incorporate with segmenting the customers,
internally reviewing the customer/supplier profile,
identifying the opportunities with customers, and to
develop the product and service agreement.in building
the most versatile relationship, Coca Cola must know
what customer wants and supply them their preferences.
CRM, which contains customer information, is a dominant
tool to keep relationship stronger.
• This could help in supply chain cost reduction and make
things flexible in handling their needs.
Sustainability Approach
• Coca-Cola has done a good job in taking steps to boost its long-term
sustainability, both for itself and for its peers across its entire value chain.
• They also signed partnership in 2013, with the World Wildlife Fund to cut the
carbon emissions linked to each of its products by 25% before 2020 (off a 2010
baseline) (i.e., reduce the carbon footprint of the “drink in your hand” by 25%).
• This is to focus on the entire value chain – ingredient sourcing, manufacturing
processes, packaging formats, delivery fleet, and refrigeration equipment. The
company has certainly made progress, cutting the CO2 embedded in the “drink
in your hand” by 13% at YE2015, multiple initiatives were recognized. For
example, the company has taken drastic measures in reducing the carbon
footprint of its commercial fleet.
• Coca-Cola has transitioned its transportation vehicles to become the largest
heavy-duty hybrid commercial fleet in North America, with over 650 hybrid
delivery trucks, and has begun building a fleet of zero-emission trucks of
alternative fuel vehicles (AFVs) in North America, which currently exceeds 750
vehicles.
• In addition, Coca-Cola has emphasized improving the environmental
performance of its refrigeration systems with HFC-Free coolers. The company
has spent over $100 million over the past decade to make its coolers more
socially responsible, developing devices that reduce electricity use by
monitoring usage patterns and adjusting lighting and temperature to maximize
energy efficiency.
 RECOMMENDATION
Make Supply Chain Visibility a Strategic Priority
• In today's digitally connected world, Coco Cola must create a digital logistics
platform for enterprise and supply chain-wide visibility. Achieving end-to-
end visibility should be a key strategic initiative, driving benefits through
increased efficiency, lower inventories, and improved fulfilment, while
setting the stage for additional value through next-generation command and
control.

Improve Supply Chain Metric and Score carding Systems

• Performance measurement is essential to achieve functional and corporate
objectives and to drive continuous improvement. Simply adopting a more
comprehensive set of metrics and distributing them to the appropriate
managers can drive significant benefits. However, use of logistics score
carding tools can improve results by providing faster, more consistent
responses to actual or incipient problems.

Use Strategic Outsourcing, But Maintain Technology Control

• Coco Cola leaders must continue to use logistics outsourcing strategically,
but adopt common, tightly integrated supply chain technology throughout
the network, regardless of who manages the facility, to achieve competitive
advantage through supply chain excellence.
RECOMMENDATION
New Product Expansion
• Opportunities that exist for the company in the future is expanding market share in the
noncarbonated beverages segment, a restructuring of their business model, and better consistency
of earnings results.

Information Sharing
• Coca Cola could improve the transparency of different level s of their supply chain. The transparency
of the supply chain has been getting more important as internet becomes more accessible.
Consumers want to know more about the process and ingredients of the products as they are
worried for the safety and quality of the product. They are also more concerned on what impact
does the manufacturing of the product do to the environment.

Improvement in Quality Control

• Coca Cola have stringent control on suppliers to ensure that the ingredients received are of good
quality and consistent. However, it is not just the suppliers that constitute the overall quality of the
beverage drinks produced. The choice of ingredients made by the company also influences the
quality. Coca Cola must ensure the ingredients used doesn’t cause negative effects and meet the
consumer’s healthy lifestyle strategy. If the right ingredients are used effectively, it could be one of
the company’s competitive advantages against other competitors.
 IMPLEMENTATION
• Innovation
Replacing human power with technology will be a
drastic way to enhance the process flow of their
delivery. New products must reach the end users or
else the product will be considered as a failure.

• Automation and technology

It will ensure zero errors and reduces their
operational costs. Most importantly Coca Cola need
to reduce their inventory holding and increase their
sales to remain competitive in the market.
• Explore more relationship with technology
partners
Coca Cola shall explore more relationship with
technology partners such as Oracle that there are
currently engaging in establishing smart logistics
network aimed at improving delivery reach and
efficiency and reducing the logistics cost.

• Investing in Cloud solution

it is an importance factor for digitalization. Coca Cola
incorporating Salesforce whereby the social and mobile
cloud technologies including the flagship sales and CRM
application will eventually help companies connect with
customers, partners and employees.
 Conclusion
• Coca Cola Company has a massive dimension in Supply
Chain Management.
• Their sustainability over the decade has brought them
to an upfront stage and lead to many success stories.
Their brand image is the most strongest ever in other
beverage industries.
• Concluding to this study, no doubt it a global company,
yet it needs more room of improvement in a timely
basis.
• Their weakness can be strength if more
recommendations and solutions being picked up from
the emerging world.
• Their supply, chain management is also good but they
still need to focus more to become even better in
supplying their customer needs and preferences.