Supply Chains for Coca-Cola and Adidas - Case Study Example

A Comparison Report on Supply Chains for Coca-Cola and Adidas Introduction This a comparison report on the supply chains in the 2014 FIFA World Cup that was held in Brazil. The supply chains of drinks by Coca-Cola and supply chain of jerseys and shoes by Adidas will be compared and analysed. To ensure proper delivery of the products, the two companies ensured that they came up with high-quality products through the use of advanced technologies that gave them a competitive advantage over their competitors (Alsbies, 2015). The two companies will be compared according to their supply chains design, the importance that each company gave to quality and to the end consumers, the importance that timing and cost have on the supply chain and sustainability in both companies. Overall Design of the Supply Chain Coca-Cola supply chain. Coca-Cola Enterprise was involved in the manufacture and distribution of juices, water, sports energy drinks and soft drinks such as Coke and Fanta. The company sources most of the required ingredients from the locals thus helping to make the supply chain shorter and faster which enables the company to meet the demand high (Coca-Cola, 2014). Once the company receives the ingredients and the components it needs to produce, it focuses on producing high-quality drinks that meet the customer’s expectations. It also ensures that the drinks reach the consumers at the right time (Adhikari, 2014). Coca-Cola operates factories that have the fastest production lines. Once the products were processed and bottled, they were distributed to stores. The products were then distributed to retailers, the company always ensures that it is in constant communication with the retailers because they inform it about the customer’s views and complaints. The company ensures that it does not use ingredients that are restricted. Coca-Cola has a production network that enables it to increase or lower the production capacity depending on the level of demand. Coca-Cola uses advanced technology when producing the drinks which give it a competitive advantage over its competitors. Adidas supply chain. Adidas was involved in the provision of football jerseys and balls during the FIFA World Cup. The company outsource most of its production from over 1000 independent factories around the world (Adidas Group). Just like Coca-Cola, Adidas produces its products according to customer preferences and the level of demand. Adidas sells its products through its own retail stores and it also has joint ventures with partners. To ensure that quality is not compromised throughout the supply chain, Adidas constantly monitors the performance of the suppliers and those that comprise on quality are removed from the supply chain (Adidas Group). Just like in Coca-Cola, Adidas ensures that the company does not use restricted products in the factories. The company ensures that it reduces Volatile Organic Compounds emissions and it also ensures that all the factories follow the ‘better Place,’’ program that the company started in 2007. The company also follows all the legal requirements (Alsbiei, 2015). The company uses technologies that give it a competitive advantage over its competitors, in terms of speeding up the production process, enhancing the quality of the product as well as saving time and energy required in the whole process (Alsbiei, 2015). Customers play an important part in sustainability in both companies. Coca-Cola customers returned the bottles to the company so that they could be recycled. Adidas customers, on the other hand, disposed the jerseys packages thus, helping to avoid pollution of the environment. Importance of Quality and End Customers Coca-Cola used a pull system in delivering the drinks to the consumers at the 2014 FIFA World Cup games. The company produced the drinks according to the customer's preferences and the level demand. It used a pull manufacturing system where the production is determined by the demand. This helped to reduce inventory and storage space needed which helped to reduce storage cost which, in turn, helped to reduce the cost of the producing the drinks. So as to be successful in a business an entrepreneur must utilise his resources efficiently so that he can get the maximum output and eliminate waste. Coca-Cola used a Just-in-Time approach which helps to reduce the amount of waste in the production process (Vokurka, and Lummus, 2000). The company was able to meet the customers demand during the event because it is always ready to meet excessive demand. Adidas also used a pull manufacturing. Adidas supplied jerseys and balls depending on customers demand that is, the company produced jerseys and balls depending on the number of players in the event and the number games to be played. Coca-Cola also manufactured the drinks according to customer demand. The customers in both examples shaped the supply chain strategy. Coca-Cola continually improves its drinks by listening to customers specifications, it also listens to customer’s complaints and then makes the necessary changes. Quality is imperative in both examples because if the Adidas offers low-quality jerseys them the demand will decrease and if the goods are high quality the demand will increase. According to Vokurka and Lummus (2000), customers demand to have a variety of high-quality products that have a fast delivery system. Both companies ensured that they produced high-quality products so that they could ensure high demand for their products. Coca-cola established a cross-geographical and cross-functional team concerned with evaluating the customers changing needs and expectations as well as the expectations of other stakeholders (JMSUD, 2014). Both companies adopted technologies that enabled them to produce high-quality products. According to Vokurka and Lummus (2000), technological advances offers businesses new ways of improving their products and better ways of manufacturing the commodities. They further add that these technologies create new competitive environments and companies must ensure that they keep on advancing the technologies so that they do not lose their customers to competitors. The customers need low-cost goods that are of high quality and that have many varieties. The two companies were able to provide a variety of products because they both used high technologies in the production process. Coca-Cola is governed by a framework called KORE which ensures that the products meet the highest international manufacturing standards. It also ensures that the company meets all the legal and government regulations in all the countries it operates in (JMSUD, 2014). KORE encourages innovation and learning which helps to improve the quality of the products. Coca-Cola promotes a custom driven production system through KORE framework. According to JMSUD (2014), KORE makes the level of quality and the operational control to be the responsibility of all the individuals in the supply chain and not the responsibility of only those who are at the top as it was previously. Adidas also considers the quality of its products to be an important determinant of success. To ensure that suppliers meet the quality needed, this company has put in place a multi-level monitoring system which enables it to assess the performance of the suppliers. The company then shares this information with the sourcing teams which makes the decision as to whether the company will continue partnering with a specific supplier or not. The level of purchase affects the quality of a product this is because an increase in the level of purchases necessities quality improvement so that the high level of demand can be sustained. To improve the purchasing experience of the customers, Adidas has online stores that enable it to reach more customers through the internet (Alsbiei, 2015) Timing and Cost Timing affects the logistics and the overall supply chain, for example, if the raw materials are delivered late, then the production process will be delayed which will, in turn, affect the delivery of commodities across the entire supply chain. The two companies ensured that they made timely delivery of their products to the event so that they could not lose their customers to their competitors. Coca-Cola ensured that it got the raw materials on time so that the manufacturing process could go on smoothly. It made sure that it had a coordinated supply system from the factories to the end consumers. Adidas also ensured that it made its delivery on time because it knew that delays would make it lose its customers to competitors. As stated earlier, the goal of any business is to be able to provide customers with high-quality products that meets their needs and that are delivered on time. Procurement function of the supply chain has an impact on the cost in both companies. If Coca-Cola or Adidas has a procurement problem such as lack of an important raw material then, it will lead to an increase in the cost of the commodity produced. This is because the factories will have to wait for the raw materials to be delivered. Adidas ensures that all the suppliers supply the items they are supposed to on time because if any supplier fails then the entire process will be affected. Late delivery of items will lead to increase in the production cost which will, in turn, increase the cost of the end commodity thus leading to a decline in demand. A decrease in the level of demand reduces the profits made by the Adidas. Coca-Cola also ensured that it delivered the drinks because any delay on the supply chain will translate to an increase in the costs incurred in the overall production process. An increase in the cost of production would lead to an increase in the cost of the drinks which would, in turn, make the customers buy them from Coca-Cola’s competitors. Both companies are at risk of delays due to internal and external issues. Sustainability Sustainability is important because it allows companies to not only focus on the company’s gains but to also take part in improving the community around it. Sustainability allows the products to move smoothly in the supply chain because if the company does not follow the rules it might end up facing legal issues. A report by Coca-Cola revealed that the company had improved water efficiency by 25% compared to its water use in 2010. The same report showed that the company reached a 75% recovery rate for all the cans and bottles used (Coca-Cola, 2014). The company was, therefore, able to recover most of the cans and bottles used in the event thus helping to protect the environment. This report also showed that the company had reduced the carbon contents in the drink by 25% thus making them healthier to consume. Just like in Coca-Cola, Adidas also ensured sustainability by ensuring that all the sports jerseys and shoes were created using sustainable materials and that they are produced through a proper process. According to Adidas sustainability report of 2014, the company put measures in place to reduce the level of energy consumed by 20%. The company also aimed at reducing carbon emission by 30% in the production process. The company also aimed at reducing the amount of waste produced by each employee by 25% while water saving per employee was to be increased by 20% (Adidas, Group). The company was also able to reduce paper packaging thus helping to reduce pollution of the environment. The consumer plays an important part by ensuring that he disposes off the packaging from Adidas properly as this will reduce the land pollution. The customers should also ensure that they return the Coca-Cola bottles to the company so that they can be recycled. KORE ensures that the company meets all food safety requirements, protects the environment and observes the occupational safety and health measures (JMSUD, 2014). To ensure quality is observed, all businesses in the Coca-Cola system must ensure that they document and implement all the safety and quality guidelines provided by KORE (JMSUD, 2014). Coca-Cola supports activities that promote healthy and active lifestyles. It sponsors games in communities that help to bring people together regardless of their ages or origin. For example, it has sponsored the Olympic since 1928 and the World Cup from the 1970s. The company has partnered with many organisations such as HARITIKA an NGO in India that aims to eradicate poverty in the central regions of India (Adhikari, 2014). The company promotes gender equality by giving equal opportunities to all the workers. The Coca-Cola Africa Foundation in 2012 gave about $1 million to partner organisations which help people affected by HIV/AIDS (Adhikari, 2014). Like Coca-Cola, Adidas also makes a difference in the community by coming up with groups that aim at improving the community’s wellbeing. A good example is the company’s Adi Dassler Fund that partners with other organisations to help children in the community to join programmes that teach them important life values as well as sports (Adidas Group, 2013). Both companies are involved in improving the communities around them. References Adidas Group http://www.adidas-group.com/en/sustainability/compliance/supply-chain-structure/ Adidas Group (2013). http://www.adidasgroup.com/media/filer_public/2013/08/26/2007_adidasgroup_printed_report.pdf Adhikari.I, 2014., Sustainability @ Coke. http://ipajournal.com/uploads/2010/04/Sustainability-at-Coca-Cola.pdf Albisei, O. 2015., ADIDAS GROUP Strategy Analysis https://www.researchgate.net/publication/281740663_ADIDAS_GROUP_Strategy_Analysis Coca-Cola (2014). Sustainability Report 2013/2014. http://assets.coca-colacompany.com/77/4c/2a44a5234a3ca65d449d174a0ded/2013-2014-coca-cola-sustainability-report-pdf.pdf Vokurka, R.J. and Lummus, R.R., 2000. The role of just-in-time in supply chain management. The International Journal of Logistics Management. Johnsrud Metropolitan State University Denver. 2014. Coca-Cola Quality Management System Manual. https://aileenjohnsrud.files.wordpress.com/2015/11/coca-cola-quality-manual.pdf Read More