Coca-Cola Supply Chain Management Function - Case Study Example

Coca-Cola SCM Affiliation Coca-Cola SCM Supply Chain Management Function What is supply chain management? Supply chain management is the running of a system of businesses that are linked. The businesses are linked by one major aim; the eventual availing of a service or product to the customers. Supply chains characterise the current trend in competition among businesses as they compete, not as a single business, but inside supply chains. Supply chain management avails the chance to seize the collaboration of the integration of businesses. Hence, it provides a novel means of running the linkage among the supply chain management business partners. It is a functional system that comprises the running of the source materials’ movement into the business, various scenarios of how the products and services are produced, and the management of how the services and the products are delivered to the customer. Hence, functions like obtaining source materials, and the ownership of distribution mechanisms are passed on to other businesses that are specialised with these functions. The regulation of the day to day logistics by the parent business is decreased, while, the number of business partners increases. Supply chain management enhances the speed of the movement of products and goods and minimises the cost. It enables the management of the inventory, transport, supply, customer service, and the distribution (Lambert, 2008). Short brief about soft drinks (Coca-Cola Company) The Coca-Cola Company produces a variety of soft-drinks. Its headquarters is in Atlanta. The company produces the syrups that are used to produce the various soft drinks and sells them to bottlers around the world. It has an estimated 3,500 types of soft drinks under its name. Soft drinks are beverages that contain no alcohol, but are carbonated, have sweeteners and are of different flavours (The Coca-Cola Company, 2011). The Carbon (IV) oxide gives soft drinks their unique taste while the sweeteners provide the calories. Over the years, Coca-Cola has continually produced different soft drinks under various brands totalling to over 500 in nearly every country around the world. Coca-Cola Company old Supply Chain Management and a Model Explaining SCM The old supply chain management of Coca-Cola Company involved several stages. It included the internal supply chain, the distribution and logistics network, the supply network, and finally to the customers. The internal supply chain was composed of production of the various beverages that it produces, the sourcing of the ingredients, the distribution to its business partners, marketing and sales, and the accounting of all the finances. The marketing and sale of its products have been characterised by strong advertisement campaigns along with sponsorship of various major global sporting events. The distribution was done through cooperation with companies around the world. These distributors, who are mainly specialised in supply mechanisms then distribute and sell the beverages to the retailers who sell the product to the consumer. There are logistic partners who assist Coca-Cola with the management of these associations with distributors worldwide. A model supply chain management includes; the source materials supplier, the manufacturer, the distributor, the retailers, and the customers. All these are coupled with logistical support Thus: The suppliers provide the materials. The manufacturer manufacture the products. The assemblers or distributors assemble the products and distribute them to retailers. The retailers then sell the products to the customers. Problems with the Old SCM One of the problem with the old supply chain management of Coca-Cola is the selection of the distributors. The problem is coupled with the amount that each distributor needs. In case the distributor lacks the capacity to distribute Coke’s products in their region, it leads to a fall in the company’s revenue. The old supply chain management of Coca-Cola is also faced by fluctuations in demand, the yield obtained from the supply and the overall cost of the old SCM. The old SCM is faced by differential impact resulting from decisions made by Coca-Cola. The reason being the decision may benefit one member of the supply chain and negatively impact another. Hence, the cost and profits obtained from the old SCM is altered. The differences in the demand of Coca-Cola products is a problem in the old SCM.(Olson, 2011). Coca-Cola’s new Supply Chain Management and its Efficiency Due to the problems encountered with the old SCM, Coca-Cola had to develop a new SCM. The new SCM aimed at attaining steady reports along with getting immediate information. The new SCM comprises of linking of decision-making and the supply chain. The new SCM was combined with SAP BusinessObjects, which is a software and the supply chain management of ITC, which is a US operations company. The principles of this new SCM were a change in attention towards metrics that required no labour-intensive involvement, stability in the profits accrued throughout the supply chain, advancement of a strong reporting system, and emphasis on the standards of the industry that are not particulate to Coca-Cola. Coca-Cola also acquired Coca-Cola Enterprises that enabled it to dissociate assets. By so doing, it enhanced the Return on Assets. It did so by developing an interrelated outlook of the metrics and rationalising the processes. CCE also developed a new supply chain management that incorporated one IT program in all the business entities. Thus, it automated the SCM. CCE partnered with CSC to provide the SAP-empowered business. To fill the gap between demand and supply, CCE developed the Genesys program that reduces the period between the various systems in the SCM (Sapardanis, 2014). Thus, Coca-Cola has combined two terminals of SCM by developing and utilizing SAP Enterprise Resource Planning and subcontracting various applications to CSC (Sapardanis, 2014). The new SCM avails efficiency in terms of linkage between demand and supply into one system, utilising information technology into the system to avail automation, easier integration, and cut on the time taken from one supply chain member to the next. Advantages of Partnership to help deliver new SAP-enabled Business Transformation The advantages of the partnership utilized by Coca-Cola is that it has cut on costs that would have come about if Coca-Cola undertook the transformation on its own. Utilising partnerships enabled Coca-Cola to make use of partners who have established a reputation in that line of business and curved their way. Hence, the partners offer a cheaper means of undertaking the necessary changes and developments. It also enabled the company to choose a partner who offered the best quality of partnership that is needed. For example, CSC is said by Sapardanis (2014) to have a robust ‘front office,’ and ‘back office.’ The partnerships also benefit Coca-Cola Company by ensuring the rapid deployment of its programs to many locations. Hence, Coca-Cola gains value for its money in a timely manner (Sapardanis, 2014). Integration System that Coca-Cola Company Uses The Coca-Cola Company uses a software driven integration system. The software driven integration system is known as Genesys program. The integration system allowed Coca-Cola to connect the demand and supply seamlessly. The system hinders inefficiencies resulting from breakage of the passage of information along the supply chain management. It automated the processes in the SCM between the retailers and the manufacturer, CCE. Hence, saving on time and expenses (Tallant, 2010). References Lambert, D. M. (2008). Supply Chain Management: Processes, Partnerships, Performance (3 ed.). Sarasota: Supply Chain Management Inst. Olson, D. L. (2011). Supply Chain Risk Management: Tools for Analysis. (S. Nahmias, Ed.) New York: Business Expert Press. Sapardanis, C. (2014). Coca-Cola Supply Management Success Story. Retrieved from CSC: http://www.csc.com/application_services/success_stories/78846-coca_cola_supply_chain_management_success_story Tallant, J. (2010). Coca-Cola-The Evolution of Supply Chain Management. University of Phoenix. The Coca-Cola Company. (2011). 125 years of sharing happiness. Retrieved from coca-colacompany: http://assets.coca-colacompany.com/7b/46/e5be4e7d43488c2ef43ca1120a15/TCCC_125Years_Booklet_Spreads_Hi.pdf Read More