Supply Chain Management Analysis - Research Paper Example

Summary Paper of the of the and number submitted Introduction This study shall highlight all basic aspects associated with supply chain management. Supply chain or logistics management concept is utilized by an organization in order to bring their products to market place. The concept can be defined as flow of services or goods from manufacturer to customers. It basically comprises of raw material storage, finished goods, work-in-progress inventory, products that are moving from one point to another before being consumed. Supply chain management is about designing, monitoring, planning, controlling and executing supply chain activities. The major objective of this kind of framework is to create net value, leverage logistic systems worldwide, develop competitive infrastructure, measure overall performance in global context and synchronize demand with supply conditions. There are interconnected networks involved in supply chain management so as to deliver products or services to end customers. In this study, supply chain management strategies implemented by Coca-Cola Company shall be outlined. It would even encompass other related areas such as improvement in supply chain function, impact of current technology on system, impact of outsourcing activities, rules or regulations associated with supply chain strategy and further recommendations for improvement of supply chain strategy. The paper would be written from critical perspective in order to identify strengths and loopholes closely knitted with supply chain management activities. Supply chain management is linked with other areas such as logistics, operations management, information technology and procurement. Coca-Cola Company is a multinational beverage manufacturer, marketer and retailer of various non-alcoholic beverages. This company has its operations spread across the globe. Supply chain or logistics management systems Coca-Cola in current scenario is considered to be most powerful brand. This beverage maker is a dominant player in global soft drinks industry. The company’s achievements are largely based on its excellent operating or supply chain procedure. Supply chain management function of the company has been elaborated in figure 1. Figure 1: Supply Chain of Coca-Cola Company (Source: Olhager, 2003) There are six geographic departments of this global business like Africa, European Union, Pacific, Asia, Latin America and North America. Supply chain function of the company can be divided into two categories such as material flow and information flow. Flow of information takes place from suppliers to customers and vice-versa, along with materials flow from raw material storage to consumption. Figure 2: Supply Chain Process (Source: Olhager, 2003) As per figure 2, raw materials are acquired from suppliers and then it is transferred to manufacturing department. Assembling junction is responsible for bottling activities and delivering final products. These products are then transported to retailers which in turn reaches end customers. Innovative companies like Coca-Cola Company are focused on productivity gains. The supply chain process of this company encompasses product adaptation, supply chain responsiveness, developing new products over the time period, improvement in key processes, new process mechanisms and cost involved in serving customers. Marketing and sales strategy is also involved within supply chain management process. These two activities are aligned with planning for new process and products, and then placing required order. Manufacturing department is responsible for collecting orders in order to transfer raw materials into finished products (Maloni and Benton, 2008). The finished goods are then transported to specific destinations. After order fulfillment as per figure2, products are dispatched to warehouse locations. From the warehouse, on basis of demand conditions, either bulk delivery or individual delivery is encouraged by the company. Delivered items finally reach retailers, which is later purchased by end customers. Supply chain function improvement The supply chain function of Coca-Cola Company has improved in recent years. There have been certain improvements in the system to address customer market demand efficiently. The common objective of its supply chain function is to enhance accessibility of products by customers. 16 million retail outlets are available across the globe that is actively indulged into selling Coca-Cola products. This company from past few years has standardized capabilities, practices and processes for all their widespread operations. The major factor contributing towards supply chain improvement is capacity building locally and leveraging best practices globally. Their supply chain function is so designed that products do not have to be transported over wider geographical region. The parent company encourages development of local company in context of their widespread operating regions. This kind of business is regarded as local business, which takes into consideration local taste and preferences. Customer-driven supply chain concept enables the company to standardize its product formula for all geographical regions. Coca-Cola Company works in collaboration with customers in relation to price, brand, channel architecture and packaging. Demand driven approach followed by Coca Cola Company usually starts with shelf place and ends with customer service. From past few years the firm has restructured its supply chain operations by controlling overall inventory. Customer demand is firstly forecasted by the company so as to facilitate manufacturing process. The wide range of products offered by the company is supported by different multi-packs and price points (Kirby, 2003). Segmentation supply chain structure is an innovative strategy which has been incorporated by the company. This structure includes utilization of refrigerated distribution or taking support of third party distributors. Segmentation structure enables the company to incorporate responsive or agile or efficient-dominant supply chain on basis of customer’s portfolio and specific needs. Impact of current technology Technological advancement has been able to incorporate changes within supply chain management system. Coca-Cola Company over the years has been utilizing enterprise resource planning framework. This has supported the firm to integrate different form of supply chain approaches. The flow of data and utilization of technology has been demonstrated in figure 3. Figure 3: Use of Technology (Source: Lambert and Pohlen, 2006) ERP technology has been incorporated by the company so as to support sales operations, financial operations, distribution and sourcing. It can be stated that technology brings forth integration within the system. On basis of technology, every department of Coca-Cola Company can effectively co-ordinate with one another. E-Distribution and e-Procurement are two concepts which have gained significance only after incorporation of technology. Raw materials are procured by the firm on basis of this technology and this ensures eradication of any loopholes from the system. Stock level determination and identification of market demand is only accomplished through information technology infrastructure. Impact of this technology has been positive towards increasing capability of supply chain activities. The inventory turnover time of the company has considerably decreased and this in turn has reduced overall operating costs (Croxton, Garcia-Dastugue, Lambert and Rogers, 2005). To be more precise the firm has invested lump sum amount in technology so as to provide best products and services to its customer base. Technology has proved to be highly beneficial for Coca-Cola Company in terms of greater visibility, greater accuracy, and reduced cost on transportation, more economic, high productivity, less paper-work, increased deliveries on time, greater capacity utilization and faster information accessibility. The smooth flow of products to address customer market demand is facilitated through technology based supply chain process. Impacts of outsourcing The outsourcing activities have significant impact on supply chain operations. Supply chain management function is adversely affected by IT and warehousing outsourcing. The supply chain strategy is majorly affected in certain areas such as integrated IT systems of logistics and manufacturing, restructuring of overall logistics procedure and adaption of reverse logistics mechanism. Outsourcing and supply chain management function is inter-related concepts since they both are considered as performance and profit enhancers. Supply chain management encourages direct involvement of a company in to different stages of functions and operations. On the contrary, outsourcing promotes transfer of risks from one party to another, enhances level of flexibility, etc. Supply chain strategy is closely knitted with procurement of raw materials to delivery of finished products to end customers. However there are many large organizations actively indulged into outsourcing non-core business activities. This affects supply chain strategy because third party needs to be incorporated into the system and there would be more need for integration of supply chain activities. There are some common processes being outsourced by companies like purchasing, research and development, logistics, human resources, operations, service management, customer relations, legal processes, training, finance and sales or marketing. Outsourcing provides flexibility to an organization along with some limitations. For instance, outsourcing purchasing process might delay the entire supply chain process (Olhager, 2003). An organization needs to keep buffer time so that any delay in outsourcing phenomenon can be addressed appropriately. Supply chain strategy also changes when focus is on outsourcing service management. This is simply because strategy then involves accomplishing tasks on specific time period rather than focusing on quality standards. Outsourcing is an essential tool for any organization to explore maximum benefits associated with supply chain management function. Rules and regulations related to the supply chain Coca-Cola Company has incorporated most innovative supply chain mechanism. The company saves up to $1 billion through its supply chain operations. This is simply because Coca-Cola Company focuses on optimization of global supply chain. There are different components associated with supply chain of Coca-Cola Company like suppliers, retailers, distributors, etc. The company needs to focus on certain laws or regulations which are inclined towards human rights, sustainable agricultural practices, supplier guiding principles, etc. Coca-Cola Company works in collaboration with suppliers in order to promote sustainability throughout supply chain process. Suppliers in supply chain process directly purchase products from farmers. The rules concerned with sustainability are integrated across supply chain process. Coca-Cola Company directly engages with their supplier base in order to promote quality products. Suppliers are sent prior notice in context of permissible materials to be utilized by the firm in later phase of supply chain management process. Supplier guiding principles of the company encompasses all those laws which are to be followed by wide base of suppliers. Rules linked with environmental protection are also of much importance for Coca-Cola Company. It is observed that maximum environmental degradation results due to supply chain activities. Carbon footprint needs to be reduced by the company at every stage possible. Packaging and manufacturing process are key aspects which contribute towards serious environmental impacts. Government as well as the company has framed laws regulating environmental impact by undertaking environmental friendly practices into the system. Human Rights Policy is applicable for all supply chain partners of Coca-Cola Company. Top management needs to deal properly with all supply chain participants so as to deliver best possible outcomes. The company even hires contractual agreement based labors. There are rules associated with ethical treatment of the firm towards such labor. Recommendation and plan An efficient supply chain model is based on market competition and quality standards. Coca-Cola Company is inclined towards developing a supply chain structure which could reduce overall operational costs. It is recommended that the company should focus on capacity of outbound logistics system. This kind of capacity expansion shall facilitate absorbing demand peaks without affecting delivery dates. Transportation cost of Coca Cola Company is relatively higher in comparison to its competitors. The new recommended strategy for the company would be to minimize costs with maximum utilization of available resources. This strategy would upgrade the overall supply chain management structure of the firm. Agile supply chain management strategy would be the most appropriate for Coca-Cola Company. This strategy is related to quick response of the company towards growing or declining consumer market demand. The company can transform its operations to more technology based and this can eliminate barriers towards reducing overall operational costs. This strategy can involve electronic pick slip report. It is a technology based mechanism where technology is used to procure raw materials and deliver finished goods or work-in-progress to warehouse centers. Transportation or warehouse which is totally based on information technology can reduce operational costs of a firm. Radio frequency identification method is recommended for the company in order to enhance supply chain operations. The recommended supply chain strategy shall include technology based operations to reduce costs and increase efficiency of the system. Management information systems incorporated within any company facilitates effective relationship building between suppliers and customers. The overall costs of supply chain operations can be decreased only when speed of supply chain activities is increased in order to accomplish set goals or objectives. Expected benefits of new strategy The strategy recommended for supply chain operations of Coca-Cola Company is highly effective for long term success and growth. Supply chain function of Coca-Cola Company encompasses procuring quality raw materials from suppliers and then transporting it to required departments. This strategy has enabled the company to save lump sum amount at the end of a financial year. However there are certain recommendations which should be incorporated within supply chain strategy of the company. The new recommended strategy is highly beneficial for the firm since it is aligned with future growth. Reduction in operational costs and maximum capacity utilization are two measures which ensures sustainability for an organization. The first benefit associated with this new strategy is gaining economies of scale. It is often observed that technology enables a firm to speed up entire process and decrease costs. Customer driven supply chain management process has proved to be beneficial for the company over the years. Technology based supply chain mechanism would involve initial lump sum investment but initiate high return on investment in future years. The major benefit of new strategy shall be increase in supply chain process involving procurement to delivery of finished goods. Gaining economies of scale will be linked with optimizing overall process so as to gain profit margins for long term. An organization can remain competitive in the market place only when it is able to address customer market demand more efficiently. Other benefits linked with this new strategy shall be obtaining higher levels of customer satisfaction and enhancing brand image in the market place. On the other hand, the strategy would even support the firm to control inventory levels and indulge into stock replenishment activities. Conclusion As per the study, supply chain management is an important concept for all real-world organizations. There are many organizations which invest into supply chain operations and this enables a firm to accomplish set goals. Coca-Cola Company is inclined towards offering quality products or services to customer base. These quality standards are aligned with supply chain objectives of an organization. Over the years this organization has attempted to deliver innovative products to consumer market. The supply chain strategy of the firm is all about procuring quality raw materials from suppliers and then transferring into manufacturing units. Coca-Cola Company indulges into bulk delivery as well as individual lot delivery to specific retail outlets. In overall context, it can be stated that the organization adopts market replenishment activities. Supply chain management strategy basically incorporates meeting supply and demand conditions. Customer market demand usually changes from one organization to another. This demand is analyzed by an organization so as to manufacture products. Market driven or segmentation structure of supply chain management process has benefitted Coca-Cola Company since many years. There are different laws or rules which are applicable for supply chain operations of the company. It encompasses human rights, supplier guide, etc., which governs entire supply chain process. A large base of customers is maintained by the company in diverse geographical markets. Global leadership position acquired by the company in soft drinks industry is on basis of its innovative supply chain management process. The worldwide expansion of this beverage manufacturer is due to its local business concept. References Croxton, K.L., Garcia-Dastugue, S.J., Lambert, D.M. and Rogers, D.S. (2005). The supply chain management processes. International Journal of Logistics Management, 14 (2), pp. 13-36. Kirby, J. (2003). Supply chain challenges: building relationships. Harvard Business Review, 91 (7), pp. 65-73. Lambert, D.M. and Pohlen, T.L. (2006). Supply chain metrics. International Journal of Logistics Management, 14 (2), pp. 1-25. Maloni, M. and Benton, W.C. (2008). Power influences in the supply chain. Journal of Business Logistics, 25 (4), pp. 49-73. Olhager, J. (2003). Strategic positioning of the order penetration point. International Journal of Production Economics, 85 (3), pp. 319-29. Read More