The Importance of Six Right Concepts of Supply Chain Management for the Coca Cola - Case Study Example

Supply Chain Management Coca Cola — Purchasing & Supply Chain Operations Introduction All firms look for competitive advantage [ CITATION Por80 \t \l 1033 ] for profitability. Strategy has bee defined as a combination of differently performed activities. Without materially changing activities the approach taken to perform them is the strategic decision that pays off [ CITATION Por961 \t \l 1033 ]. One such strategy is managing suppliers through long-term collaborative relationships. Supply chain management is the art of managing the flow of materials, finances, and information as they move in course from the supplier to manufacturer to wholesaler to retailer to consumer. It involves these flows both within and among companies, that is, it is both — inter-firm as well as an intra-firm concept. Supply Chain Management (SCM) covers all the components required for the production and delivery of goods. The components involved in SCM include: planning, purchasing, inventory, production, storage and transportation. The events are initiated by the planning department, which assess the market demand for the product/s and accordingly generates a purchase order for raw materials for production. Once the suppliers deliver the raw material it is inventoried and forwarded for production. Finally, the manufactured product is ready to be transported. All these operations are interlinked and together form the SCM, but these are just the broad categories of the activities involved in SCM. There are further processes involved under each of these main categories. The emergence of global markets and software technology have replaced the former supply chain strategies, introducing leaner practices that improve the supply chain management by integrating all the activities on a single platform, while furthering trust and cooperation with suppliers [ CITATION Buo971 \l 1033 ]. Businesses that take advantage of web-based software and internet communications, are better informed and therefore capable of making more informed decisions. The free-flow of information between suppliers, manufactures and transporters, makes it possible to keep track of the events at every stage of the supply chain. This element leads to greater efficiency in management of the supply chain, providing ample opportunity for alternative planning in case of contingencies. Lack of proper supply chain management can lead to significant losses, as has been witnessed in the case of the US food industry, which suffers losses of $ 30 billion annually [ CITATION Fis97 \l 1033 ]. Adopting lean practices for supply chain management can reduce the procurement function of the business enterprises. This results in each vendor having one point of contact, one contract and thereby offering one price for all locations. Moreover, benchmarking is being extensively used to set goals and standardise processes to ensure constant results across the supply chain. Following the established best practices result in enhanced efficiency of the supply chain operations leading to cost benefits and effective utilisation of available resources. Findings In order to maintain a position of leadership in the market Coca-Cola should consider the following suggestions: Information sharing: The company has to be willing to share information within the organisation as well as across organisational boundaries to ensure quick response times by all the parties involved. Swift and flexible: In today’s market the availability of a wide variety of products tend to sway the customer towards competitors. As such, supply lead times grow stronger by the minute; the companies have to discard the fixed planning cycle concept, to be able to provide adequately timed responses to changes in demand and supply. More efficient demand planning: The centre of attention needs to be shifted from chasing the customer, persuading him to buy the product, to developing customer driven products that have the potential to satisfy the consumers to the optimum and at the same time reduce the selling effort involved. The company should assume the concept of marketing rather than selling. Market maturity: Instead of applying run of the mill strategies throughout the lifecycle of the product, the company must constantly review and analyse the already prevalent and current strategies, improve them and introduce better and more efficient planning strategies regarding the product. Doing this will drastically reduce the need to maintain a large working capital and unmanageable stock levels, leading to increased profits through reduced wastage and optimal utilisation of the available materials. Ensure coordination: There should be coordination among the functional and technical departments of the company. The managerial and the implementation departments should be in a state of complete understanding and cooperation in order to achieve timely deployment of strategies and plans thereby reducing the cycle time for all policy decisions affecting the key areas of operation of the organization. The Six Right concept of Supply Chain Management consists of the following: 1. The Right Product Mix: Coca-Cola needs to ensure that the product range being produced has sufficient market demand so as to satisfy different segments of each market. 2. The Right Quantity: The product has to be produced in the quantity that is sellable, that is, the quantity supplied at any point of time should be sufficient to meet the actual demand in the market. 3. In The Right Condition: It is imperative for the company to ensure that the product is manufactured, packaged, transported and sold in a manner and period of time, during which it is in the condition of being consumed. 4. To The Right Place: The company has to make certain that the product reaches an appropriate market so as to make it available to the target consumers. For this adequate warehousing and transportation facilities need to be set up. 5. At The Right Time: The product should be available to the customers at the right point of time that is, in accordance with the preferences of the consumers, seasonality of the product, so on and so forth. 6. For The Right Cost: This is a crucial factor in determining the success of the product. The price has to be set in a manner that is within the affordability of the group of the targeted consumers along with yielding substantial amount of profits. Conclusion Coca-Cola needs to lay focus on the above mentioned six rights as they are of utmost importance for the company to achieve its intended goals. Identification of the need of the consumers is an extremely important factor in developing a product and doing a survey of the populace of wherever the event is being held would prove to beneficial for the company. The company can then go about developing a product that provides maximum satisfaction to the consumer; thus, ensuring repeated and constant sales. The anticipated quantity demanded needs to ascertained, so that supply does not exceed demand and vice versa, enabling optimal usage of resources through reduced inventory and maximum output. A stable and fast transportation system needs to be developed along with sufficient warehousing facilities in order to make sure that there isn’t a shortage of availability of the product in the market at any point in time. The price of the product has a direct bearing on the sales and thus, the success of the product. Certain factors need to be analysed when setting the price of a commodity. Firstly the cost of production must be kept in mind and the price should be sufficient enough to cover such costs. Secondly the price of competitive products must be considered, a higher price may prove to be fatal for the estimated sales figures. Modern business, especially of the global variety now depends more on collaborations rather than competition. A well organised supply chain ensures that the objective of customer satisfaction will be largely achieved. Competitive edge is also gained through better management of the supply chain as companies with tighter supply chains can effectively reduce costs. References CITATION Por80 \t \l 1033 : , (Porter, 1980), CITATION Por961 \t \l 1033 : , (Porter, 1996), CITATION Buo971 \l 1033 : , (Buono, 1997), CITATION Fis97 \l 1033 : , (Fisher, 1997), Read More