Coca Cola and Supply Chain Management - Case Study Example

Supply Chain Management Supply chain is the network through which a business or businesses get involved to make possible the distribution to the end customer. It is not only categorized to the distribution of final and manufactured goods to the end customer but also covers the logistics side of a business in which the raw material and work in process material management is done to carry out with the distributors in order to keep the operations running in an optimal level. By saying the word optimal, it means that there are a number of management techniques available for today’s manager but business has to opt for the one which could give the best fit for its business and operational process and cost structures. Moreover, it has a lot to do with the process that can be occurred in post sale scenario, for example, returning of products, claiming warrantees or repairing along with other operations of customer service management. Management of Supply chain description in the comprehensive words of the APICS Dictionary is: “design, planning, execution, control, and monitoring of supply chain activities with the objective of creating net value, building a competitive infrastructure, leveraging worldwide logistics, synchronizing supply with demand, and measuring performance globally” Different theories/books gave different number of components of supply chain management but the general components remains the same. Those components include: Inventory and forecasting, locations and logistics, marketing, information and communication mediums, product along with its design and development scenario, service and after sale service issues, outsourcing and strategic alliance and lastly the global presence and its issues. The worker in the logistics are the responsible personnel who have to procure, stores, or distributes the product that are of the demand and preference of for the customers. Also the selection of products is of critical importance. The forecasting and procurement than plays the role in order to figure of the demand of customers. Than the management decides how much to supply by seeing the demand trends and how much to store in order to meet future needs or emergency situations. Logistics management system are the drive of information flow among the partners of process in order to communicate how much to supply when to supply and other essential information. Management of Supply chain has integral role now a days in almost every industry and its importance increased exponentially when the business is on global scale. Well laid out process of supply chain process can result into impenetrable competitive advantage. Firms, now days, stream line the functions of it operations with the suppliers and distributors plus enhance the relationship and coordination within businesses in order to create long term business relationship, achieving efficiencies over their respective competitors. Well organized supply chain makes you understand and supervise the process in more effective way that also leads to additional efficiencies as you remove the redundancies and improve the process flow. For example, better forecasting allows you to manage inventory accordingly as required. The electric data flow and communication can stream line our operations with your suppliers, everyone can get to know about the arising needs also helps to supervise and manage the inventories properly. Concept of Six Rights: Supply chain management is the one responsible to get six things done right for its business that are 1. getting the right good, 2. in a right quantity, 3. in the right condition, 4. to the right place, 5. at the right time, 6. for the right cost. Each of these above stated six rights have the equal critical importance as if one of it, if fails in execution, the whole process of supply chain management lost its essence. Following is the scheme of logistics that has been set by the works of research of management and logistics. This scheme is known as Logistics Cycle. The main theme of this cyclical nature make a number of activities dependant on each other for example: Customer services leads to Quality monitoring of Product Selection. All the activities are dependent on each other. 1. Selecting the Right Product: selection of right product is not supposed to be carried out in isolation by the logistics force. As we can see in the typical cycle, Product selection is linked to the customers services and Forecasting. Customer services are the department who are supposed to be interacting and analyzing customers at the first hand. So, the need and specification of a product according to the customer’s preferences can be told best by customer services i.e. ensuring the selection of a right product. 2. In the right quantity: As the demand has been analyzed for a selected product, then the cycle leads the product selection to the forecasting and procurement procedures required to meet the demand of the customers by not allowing inventory to pileup or leaving the demand unmet for the competitors. i.e. ensuring the right quantity of the customers. 3. In the right condition: It is generally observed that the logistics management lacks in maintaining the quality and conditions of a product while products are in transportation or storage stage. After forecasting and procurement, the stage is to store the product or transfer it to the right destinations. While storage, the management has to figure out the right conditions according to the product nature so that the quality remain unaffected. i.e ensuring the right conditions for a product. 4. To the right place, 5. at the right time, 6. for the right cost: these stage is under the same category of the Logistics cycle, Distribution. After creating favorable conditions for the products while storage and distribution, the need is to remain clear about where to deliver the product. In this stage, the logistics management has to figure out costs minimization and freight vehicle optimization by carrying out research what routes and quantity can make this step efficient and effective by delivering the product to right location in a minimal cost at appropriate time. i.e. ensuring product delivery to the right place, in the right time, for the right cost. The execution of six rights depends directly on the staff of logistics. Therefore, staffing and training are of important part of supply chain management. Budgeting is important in order to manage the product selection, quality and quantity, and the costs associated with the storage areas. Supervision of the logistics is essential to ensure the smoothness of process and continuous flow that also avoid irregularities of systems and manage effectively if any arise. Quality is to be ensured at each step of the logistic system in order to ensure the effective execution to the end customer. Quality is not only important while procurement but monitoring quality while storage and when distributed is also essential. Even in some businesses the customer service center are subject to monitor the quality after the sale and delivery for example in the telecom sector. Coca Cola and Supply Chain Management: Coca Cola supply chain management will be under pressure in the days of Olympics and the consumption for its brands will increase exponentially. As being the world’s most renowned brand, cokes consumption will be at its peak. Supply chain management has to be pro-efficient as there will not be exact estimate of increase demand. The logistics should be ready for the unexpected demand from the customers. Forecasting can be carried out by the having information about the existing customers and their purchasing patterns along with having an idea of the foreigners coming to UK for the events of Olympics. As we can see on Coca Cola company home page, where the footer is a proof of how Coca Cola is effective in surveying its customers. By having strong survey and information of about the customer in the region will be helpful in forecasting the expected demand arise in the future. Secondly, the supply chain management has to figure out about the location and storage capacities in the respective locations from where the goods can be delivered to the sales points. There will be need of building up the storage capacities in the surrounding of the crowded and focused areas with respect to Olympics. As the event is not forever, having storage locations on rent will be the priority for the management. Moreover, the storage units should not stock the piles but should have the buffer for unexpected demand else there should be continuous transportation of the goods. This way the addition storage unit has fewer responsibilities to manage the quality of the products. By removing the responsibility from the shoulders of storage units, it creates burden on the transportation vehicles. As Coca Cola supply chain has important component of vehicle fleet in the whole system. As they are already designed to preserve the quality of the products, Coca Cola can save cost by depending on the fleet instead of storage locations. Coca Cola has its system to in which it can track the system wide metric of fuel economy: liters of diesel per 1000 liters of product distributed. Enhancing this existing system for the Olympics event can create economies of scales when talking about the distribution of products through its specialized fleet vehicles. Secondly, the vendor machines is also the specialty of Coca Cola supply chain management that is considered to be the end sale point of many products for the company. Another critical point in the supply chain management is the partners responsible for the bottling and packaging of the Coca-Cola brands. The company has to keep in mind whether their existing partners can manage the rise in demand in the days of event or have to gather more partners. Also, it also has to analyze whether the relationship among the existing partner gets affected by having new players in or not. This decision is of strategic importance for the CCE. Coca Cola supply chain management has to figure out which product to sell at point according to its brand personality. By making a road map of these distribution Coca Cola can cater to the first Right that is choosing the right product to be delivered. The specialized fleet for transportation from the bottling partners is the one designed to take care of the product’s quality. This transportation fleet is the back bone when taking about the product quality and right conditions for that Product to the right destination point. As the products consumption will be high, in time supplies of those products in demand will be of importance in order to retain the market shares. As the fleet is already among the main components of Supply chain instead of having storage locations, Coca Cola, by depending on the fleet instead of developing new storage points can remain cost effective. There are also opportunities for the Company in order to reposition its dying brands with respect to Olympics or create a new brand on with the universal personality. By focusing on specific brands can make operations more clear for the management to carry out. Well, opportunities come along with risks and challenges. References Anily, S., & Bramel, J. (1999). Vehicle routing and the supply chain. In S. Tayur, M. Magazine, & R. Ganeshan (Eds.), Quantitative Models for Supply Chain Management (pp. 147-196). Boston, MA: Kluwer Academic Publishers. Ballou, R. H. (1998). Business Logistics Management: Planning, Organizing, and Controlling the Supply Chain.(4th ed.). New York: Prentice Hall. Davis, T. (1993). Effective Supply Chain Management. Sloan Management Review(Summer), 35-46. Handfield, R. B., & Nichols, E. Z. (1998). Introduction to supply chain management. New York, NY: Prentice Hall. Johnson, M. E. & Pyke, D. F. (1997), Supply Chain Management, The Tuck School of Business, Dartmouth College, Hanover, NH Read More