Supply Chain Structure of Coca Cola Company and Samsung Company - Case Study Example

Supply Chain By Student’s Name Institution Course Prof Name Abstract This report compares and analyzes the supply chain structure of Coca Cola Company and Samsung Company particularly Samsung S4. Supply chain refers to linking of subsidiaries Companies to allow flow of raw material and finances as well as technological information between the organizations. Supply chain management is the process of designing, controlling and monitoring these processes to allow the organization have value net and have a competitive edge of the market. The Coca Cola Companies deal with production of beverages whereas Samsung S4 is one of mobile phones produced by Samsung company. The analysis demonstrate how the flow of raw material, finances and technological information for production flows through these organizations. The decision making process and the way it affects the organization, the consumers and competitors is also explored .The role played by consumers in the chain of supply is well outlined and the importance of maintaining quality of the product being produced in the chain of supply so as to maintain the market share is well outlined. Introduction Every product that reaches a final consumer represents the cumulative effort of multiple organizations. Supply chain is a set of organizations directly linked by one or more downstream or upstream flows of products, finances, services and information from a source to final consumer. To maintain the quality and effectiveness of the organizations involved in supply chain management, the operation management, information technology, logistic and procurement need to be controlled to ensure a competitive infrastructure, synchronizing supply with demand, leveraging logistics worldwide and measuring performance of the institutions globally to ensure there is a net value of their operation (DeFranco 2015). In this report we shall compare and analyze the supply chain of Samsung S4 and that of Coca Cola. Coca Cola is one of the world’s known beverage manufacturer with an estimated 1.3 billion beverage being served every day. It offers nearly 400 beverages product in more than 200 countries across world. Major beverage includes Diet coke, Fanta and sprite (Handayati 2013). Samsung is the world leading electronics manufacture having diverse range of electronics components. Samsung electronics has assembly plants and sales network in more than 80 countries. Its major electronic components include semiconductors, Flash memory, lithium-ion batteries and hard drive devices (Sundram 2011). The company in recent years has diversified in consumer electronics making it the largest manufacture of smartphones with Samsung S4 having the highest penetration in the market. Supply chain management is the active monitoring of supply chain activities such as movement and storage of raw materials, work-in process inventory and finished good from point of production to point of consumption to maximize customer value and achieve a sustainable competitive advantage (Jurevicius 2015). Supply chain activities cover areas including product development, sourcing, production as well as information needed to co-ordinate these activities. These organizations are linked together through physical and information flow and allow the chain partners to coordinate their long term plans and control the day to day flow of goods and materials up and down the supply chain (Lambert 2008). Findings Coca Cola operates as a franchised distribution system whereby the Coca Cola Company produces only the syrup concentrate which is then sold to Coca Cola enterprises throughout the world. Coca-Cola enterprises buys concentrate from the coca Cola company and combines it with other ingredients to create beverages (Brownsell 2011). All business owned by coca cola enterprise are centrally controlled with information technology being the backbone for expanding its production of high quality beverages across its business units in the world. On other hand, Samsung S4 is product of Samsung Company. Samsung Company has subsidiaries which specialize in production of specific components while other produces and assemble components from the other subsidies to produce items such as laptops, television sets and mobile phones (Park 2014). Decision making that affects the subsidiaries organization is entirely by the Coca-Cola enterprise because it owns and control the distribution process of syrup concentrate which is used in the manufacture of most of the drinks circulating in the market. Therefore, the final price of the products from Coca Cola is standardized within a country while in Samsung S4 phone, different components produced by different subsidies poses a challenge in standardizing their price. However, items that require assembly of different components from the various subsidiaries may be having a standard price as these companies are controlled indirectly by Lee Kun-hee, the chairman of the Samsung Company who together with his family owns 2 percent of Samsung group total market value. Supply chain of Coca Cola is usually designed to meet the demand in a distinctly local preposition. Operating locally in every market ensures fulfilment to meet locals needs. In some areas they require refrigerated distribution while in others require the product as ambient (Handayati, 2013). This help in customer segmentation increasing loyalty to the Coca-Cola brand. Samsung S4 operate on a fixed distribution channel which may not be directly to the market. In most cases, Samsung opens one shop in a region which stocks all the components produced by Samsung (Ayers 2006). Distributors such as wholesalers and retailers buy phones from these outlets and sells them to the final consumer. Coca-Cola deals with production of human edible thus sales of products from coke lies on human wants and may be controlled by the weather condition or health condition of a population which affects the demand of the Coca-Cola products. High content of sugar may reduce the demand of coke as not all people likes much sugar. Samsung in turn produces a wide range of mobile phones i.e. Samsung S II, Samsung SII and Samsung S4 (Sundram 2011). The invention of Samsung S4 greatly aroused the consumer preference of mobile phones making it one of the highest selling phones in the market in 2013. Law of demand controls chain of supply of Coca-Cola in the market. The products from the Coca cola enterprise reaches market within 48 hours from time of production due to the high technology used in production process which eliminates situation where demand outstrips the supply. They have also warehouses where products may temporarily be stored before being taken into the market. In the case of Samsung S4, continuous improvement of features of S4 to improve its performance and reliability are strength of Samsung (Jung 2014). Samsung S4 with improved features is sold at higher prices before the competitors are able to introduce similar product into the market. Once a similar product is manufactured, Samsung drops its price to maintain a competitive edge of its S4 in the market. Environmental impact from the manufacturing process of Samsung S4 and the materials they supply has led to environmental pollution and degradation of the soils. To ensure sustainable management of the environment, Eco-partner Certification Programme has been started to support efforts of reducing pollution on the environment through recycling and incineration. In the case of Coca- Cola the impact of it activities are monitored by re-using and recycling of the bottles used for packaging its product. Water is the largest raw material for Coca-Cola and reducing possible waste of water ensures sustainable management (DeFranco 2015). Decision making impacts both the competitors and the consumers in different ways. In Coca cola, decision making is centralized. Decision to increase price of commodity may reduce customer willingness to buy the product and competitor may take advantage of this by lowering or maintaining their price to increase their sales. Whereas in Samsung S4, decision making is controlled by different shareholders (Jurevicius 2015). When the cost of item is cut down, it may force the competitors to go out of the market. Many consumers may now afford the product hence increasing its demand resulting in more production. Hence in making any decision, the response of the consumer and competitor must be considered. Advertisement by Coca Cola that shows Coke as a drink for refreshment rather than a drink for taking when thirsty may have a long term benefit to the Enterprise as people will be taking it to quench their thirst and for refreshment (Coca-Cola Company 2012). For Samsung, Continuous production of quality hardware components over many years has resulted in an image being impacted on people mind that items from Samsung are good quality and this places the Samsung S4 in a better competing edge. When making decision they must put into consideration consumer take on such decision. Advertisement through merchandizing and sampling of Coca Cola product in supermarket helps reach direct consumer increasing volume of sales. The suspected use of pesticides is negatively affecting the demand for its product. Water consumption has raised questions in water scarce region (Handayati 2013). Samsung S4 has been getting stiff competition from some Chinese competitors in the smartphone market. Samsung has to invent, innovate and redesign its marketing strategies’ in order to maintain market share in critical arenas like the United States (Park 2014). Companies only engage in production after realizing presence of certain niche in the market. The gap may necessitate the introduction of new product or modification and improvement of the existing product in the market. In case of Coca Cola, the need to take coke instead of drinking water after a meal may necessitate entry of Coca Cola production in that market (Brownsell 2011). The need to improve communication has made Samsung to develop Samsung S4 whose features keep on improving after every year. Advertisement to create awareness and persuade customers to buy the product helps in penetration of component into the market hence manufacturing of these product guided by the pull and push manufacturing. The quality of the products produced by the company helps to shape the market segment of each product. The presence of competitor in the market guide the manufacturing companies on type of quality to produce to avoid stagnation of the product in the market. High quality products over those produced by the competitor helps to push the market of the products in the market thus acting as an important guide in the supply chain to determine the level of investment needed to produce components that will have a return on investment and realize enough profit to sustain sub-sequent innovations in the market. Consumable beverages from Coca Cola have been able to maintain competition for over a decade due to high quality of innovative products produced by the enterprise. By creating confidence on quality to the consumer, the sales of the company keeps on improving year after year despite presence of other competitors in the market such as Pepsi. Samsung S4 high quality has created confidence in consumer making them loyal to items produced by Samsung Company. Subsequent modification of Samsung S4 has a wider acceptance in the market despite presence of many competitors (Sundram 2011). Realizing this has encouraged Samsung put more emphasizes on research to enhance higher quality of every component reaching the market. This boost market for Samsung and has an overall of impacting on supply chain. Conclusion Supply chain of the Coca Cola company is exclusively upstream flow and downstream in regard to finances, logistics and technological information. Decision making is though centralized system and consumers plays a great role in decisions to be made as their response affect sales of the brands product. In Samsung S4, great deal is spent on research to develop and modify its features while monitoring the activities of the competitors. Supply chain is well defined with different subsidies company developing different components which are assembled to make a final item such as laptops. The quality of the products being released into the market is a major consideration by both companies. Production of high quality product will increase customer loyalty to the brand product which helps in developing long term aspects of the business entity. References Lambert, D.M., 2008. Supply chain management: Process, partnership and performance. United States of America. The Ohio State University. Brownsell, A., 2011. Strategic Direction: Making Coke’s brand fizz (Coca-Cola’s future marketing plans in the context of its 125th anniversary, 28 (2), p.52. DeFranco,K.J, &Jr. 2015.The Coca-Cola Company: A Short SWOT Analysis. Available at: http://www.valueline.com/Stocks/Highlights/The_Coca- Cola_Company__A_Short_SWOT_Analysis.aspx#.VmP4HuL3Zf5 Handayati, Y., 2013. International Journal of Value Chain Management. An analysis of collaboration between Coca-Cola and Carrefour using drama theory, 17 (10), p.23. Jurevicius, E. 2015. SWOT analysis of Samsung. Available at: www.strategicmanagementinsight.com/products/swot-analyses/samsung-swot- analysis.html. Park, M.G, & Jeong, U.D. 2014. Management of enterprise crises in Japan: Design of conductive composite elastomers for stretchable electronics. Singapore. World Scientific Pub. Co. Sundram, P.K., 2011.Benchmarking: An International Journal. Supply chain management practices in the electronics industry, 40 (21) p.103. Ayers, J.B., 2006. Hard book of the supply chain management. Boca Raton: Auerbach Publications. Jung, S.C., 2014. International Journal of Software Engineering and Its Applications: The Analysis of Strategic Management of Samsung Electronics Company through the Generic Value Chain Model, 8 (23) p.133-142. The Coca-Cola Company.2012.Product safety and quality in every serving. Available at: http://www.coca-colacompany.com/sustainabilityreport/me/product-safety-and- quality.html#section-safety-and-quality-in-every-serving. Read More