The Coca-Cola Company - Case Study Example

Building Quality Organizations Table of Contents 1. Introduction 3 2. Economic Imperative, Social Imperative and Environmental Imperative 4 3. Operations, Administration, Strategy and Long Term Goals and Normative Decisions 4 4. Deming, Crosby, Other Gurus, Communication of Philosophies 5 5. Statistical Process Control, Benchmarking, House of Quality, Pareto Charts, Baldrige Awards and Six Sigma 6 6. Supplier Development, TQM, ISO9000, Quality Assurance and Skill Based Quality Management 7 7. Structural Deficiency 8 8. Conclusion 8 9. References 8 1. Introduction The Coca-Cola Company is the largest beverage company in the world and it offers more than 500 brands. It generates about $1 billion USD in the annual sales[Coc152]. The mission of Coca-Cola is to refresh the world, to create value that leads in making a difference and to inspire the moments of happiness and optimism. The vision of Coca-Cola is made in the light of quality growth and sustainability and it revolves around six P’s, these are people, portfolio, productivity, profit, planet and partners[Coc15]. The operating income (dark blue) and net operating revenue (light blue) of Coca-Cola has been shown below. The net operating revenue has been increased from year 2009 to 2014. Figure 1: Operating Income and Net Operating Revenue of Coca-Cola[Sta151] Coca-Cola has been into a journey of quality improvement. Coca-Cola respects the rights of workplace and human rights to sustain the business. One of the essential ingredients in the products is the sincere commitment to workplace rights and human rights. The company makes sure to treat all the people with respect and dignity. The company ensures safe and healthy workplace, because it is a way to achieve success[Coc151]. From the managerial and legal perspective, Coca-Cola is not a single entity and this company has not control to all of its bottling partners. It operates through multiple channels. The company manufactures and sells beverages, concentrates and syrups. Other than bottling operations, the company owns the brands and perform brand marketing. The bottling partners produce, packs, stocks and then distributes the beverages to the customers, who consume about 1.9 billion beverages per day[c]. 2. Economic Imperative, Social Imperative and Environmental Imperative Discuss the quality journey of your organization explaining the imperatives driving the organization to improve its quality position. Answer: To improve the quality position of Coca-Cola, the organization is driving its attention on the imperatives. Generally, there are three types of quality imperatives on which the organization is working on and they are economic imperative, social imperative and environmental imperative. The economic imperative are the requirements that are met by an organization to stable the economies where the organization is functioning. Coca-Cola has initiated the formation of imperatives such as nutrition, charitable contributions and women’s economic empowerment. Well-being is promoted at Coca-Cola by the nutrition initiative, i.e. offering nutrition education programs that give the information about the choices in hydration and also the expertise are sent to the places where the countries are facing the nutrition problems, especially in children. Similarly, social imperatives of the organization are made to co-operate the stakeholders socially, the social imperatives of Coca-Cola are active healthy living, human and workplace rights, heritage of living and eradicating the problem of child labor in the sugarcane fields. For the sake of improving the quality position related to the environment, the environmental imperatives are created by the organization. These imperatives are the necessities that are met by the organization to improve and to make its role in upgrading the environment. The environmental imperatives of Coca-Cola are climate protection, zero packaging waste, reduction of greenhouse gas emissions, water stewardship and sustainable agriculture. Water stewardship is to provide the same of water to the communities that is used for manufacturing the beverages [The13]. 3. Operations, Administration, Strategy and Long Term Goals and Normative Decisions Discuss the strategic targets set, both long term and competitive and explain how they intend to achieve these goals. Answer: There is a strategic importance of quality in the organization to improve the current quality position by touching on the areas of operations, administration, strategies and long-term targets or goals and normative decisions as well. Strategic targets in these aspects are set to experience stronger growth. The long-term goals are: To maintain the EPS growth to high single digit and to adjust the growth of net revenue to mid-single-digit. To replace the operating income with the profit before tax. To expand the productivity initiatives by $3 billion by 2019. The competitive targets of Coca-Cola are: To increase the alertness and responsiveness of the organization by streamlining its operating model and to bring the compensation targets parallel to the model. To leverage the global strengths by targeting strategically the growth and brand investments. To achieve the long-term strategic goals, the changes in the operating model are made that will empower the employees and it will connect the view of accountability to the results of a business. On this basis, the normative decisions of Coca-Cola are made. The productivity program focuses to reconstruct the supply chain and implement the zero-based budgeting. To achieve the competitive goals, normative decisions are formed to increase the efficiency and discipline in the direct marketing investments. Moreover, the company encompasses a strategy for the incremental investments that will apply to those areas where the Coca-Cola system is excellent in functioning in the field of packaging, pricing and execution [Coc14]. 4. Deming, Crosby, Other Gurus, Communication of Philosophies Explain the quality philosophies adopted by the organization and the way they have communicated them to their employees Answer: A collection of quality philosophies are used by Coca-Cola to perform several activities and to maintain the workplace environment. The set of quality philosophies applied in the organization are of W. Edwards Deming, Walter A. Shewart, Genichi Taguchi, Philip B. Crosby, Kaoru Ishikawa and Joseph M. Juran. To conduct an activity, PDSA tool was created to focus on the improvement of the system and fourteen points of top management were proposed by Deming (1982). To control the quality of manufactured product, control charts that compares the assignable and chance cause were designed by Shewhart (1931). He also worked in the field of statistical improvement and process control. For the purpose of knowing the concept of loss and cost, Taguchi (1986) made a quality cost philosophy. He also invented the ratio of signal to noise and DOE (Experimental Design). According to Crosby (1980), quality in the organization is only achieved when it is conformed with the requirements. He stressed on the involvement of senior management in making decisions and continuing improvement. He also invented the four absolutes of the quality management and the concept of cost of quality. Fishbone diagram and the concept of employee empowerment was introduced by Ishikawa (1990). He also promoted the quality circles and company wide quality control. Juran (1999) designed the quality trilogy and the Pareto Principle. He also contributed to the cost of quality. The organization of Coca-Cola has communicated this set of philosophies to its employees by different means in the process of hiring, training, organizing events, making duties and responsibilities and manufacturing beverages [Muh15]. The number of employees working in the Coca-Cola company can be observed from the graph below: Figure 2: Number of Employees in the Coca-Cola Company [Sta152] 5. Statistical Process Control, Benchmarking, House of Quality, Pareto Charts, Baldrige Awards and Six Sigma Explain how they made use of the various quality tools, measurements, or benchmarks to achieve their goals. Answer: To achieve the strategic long-term and short-term goals, Coca-Cola uses various quality tools. These tools also analyze the performance of the organization at a certain time period. The quality tools utilized by Coca-Cola are Statistical Process Control, Pareto charts, Benchmarking, Baldrige Awards, House of Quality and Six Sigma. Statistical Process Control is a tool in which several statistical methods are applied. It is used to monitor and control the functioning of a process in a way that the full potential of a process is ensured. Pareto charts are a tool to point out the significant situations in a process. The chart contains bars as well as line graphs in which the bars represent the individual values and the line represents the cumulative total. Benchmarking is a useful tool for comparing the performance, policies, strategies, products, etc., of an organization with the top notch organization in the same industry. The aim of Benchmarking is to identify the areas where improvement is needed, analyze the way the other organizations are performing better in that case and finally to use such knowledge to enhance the performance. Baldrige Awards are given to appreciate the organizations for their brilliant performance and it is a formal recognition given by the President of the U.S.A. House of Quality is another quality tool that is used to define the relationship between the desires of the customer and the capabilities of a firm or a product. It is a diagram that discusses the nature of the relationship as per the desires and the capabilities. Six Sigma is also used by Coca-Cola to enhance its capabilities, to increase the performance, to reduce the defects in the processes, improve the morale of employees and recuperate the quality of beverages. 6. Supplier Development, TQM, ISO9000, Quality Assurance and Skill Based Quality Management Discuss the current or proposed management system used to effectively manage the holistic quality nature of the organization. Answer: Strategic Alliance is playing a vital role in managing the holistic quality nature of Coca-Cola by sharing the resources and benefiting each other at the same time. Supplier development is a kind of strategic alliance that is availed by the organization to convalesce its performance by working together with its suppliers. TQM is a management approach exercised in the organization to achieve the long-term success by satisfying the customers. It gives a description of the attitude and culture to the organization that leads to the gratification and fulfillment of the customers. For the purpose of maintaining the quality standards at Coca-Cola, another methods to manage the quality is conforming to the guidelines of ISO 9000. To prevent the mistakes and problems in the manufacturing of the beverages, Quality Assurance tool is used in the organization. To ensure the quality in the beverages, another quality managing tools is used in which the hiring of the professionals is based on the desired skills and this tool is called as Skill Based Quality Management (SBQM). Coca-Cola is strategically alliance with IHG, Endomondo, Mc-Donald’s, Walt Disney, Apple, Nestle and Procter and Gamble[htt]. 7. Structural Deficiency Discuss any deficiency in the organization's structure, human resource management or quality philosophy that has influenced its ability to be a quality organization, and give any recommendations for change. Answer: Structural deficiency is the quality problem at the workplace of the organization. It is a problem in which there is no balance between the horizontal coordination and vertical control in order to fulfill the needs of the organization. Horizontal co-ordination is about the innovation and flexibility and vertical control means the goals of stability and efficiency. The issues arise in structural deficiency are the delay in the decision making process, lack in the quality of the products, lack of innovation, decline in the performance of employees, inability to meet the goals at the right time and the rise of conflicts. In such circumstances, the organization is recommended to use the quality managing tools to improve the current situation. In addition, information must be delivered to the right people to accelerate the decision making process. The departments must be linked horizontally and the responsibilities of each department must be given in clear words. The structure of the organization must be designed as per the nature of the market. To reduce the conflicts, the departmental goals should be similar to each other. 8. Conclusion The Coca-Cola Company is the largest beverage company in the world. To improve the quality position of Coca-Cola, the organization is driving its attention on the imperatives. There is a strategic importance of quality in the organization to improve the current quality position by touching on the areas of operations, administration, strategies and long-term targets or goals and normative decisions as well. A collection of quality philosophies are used by Coca-Cola to perform several activities and to maintain the workplace environment. To achieve the strategic long-term and short-term goals, Coca-Cola uses various quality tools. Strategic Alliance is playing a vital role in managing the holistic quality nature of Coca-Cola by sharing the resources and benefiting each other at the same time. Structural deficiency is the quality problem at the workplace of the organization and recommendations are given to reduce this problem. 9. 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[Online] Available at: http://www.forbes.com/best/2001/0521/026_print.html [Accessed 3 October 2015]. Kent, M., 2015. Letter From the Chairman and CEO. [Online] Available at: http://www.coca-colacompany.com/sustainability/letter-from-the-chairman-and-ceo [Accessed 2 October 2015]. Read More