A research essay on cocacola supply chain

A research essay on cocacola supply chain 150 150 Affordable Capstone Projects Written from Scratch


Executive Summary

This report discusses the supply chain of the Coca- Cola Company and its management. The Coca- Cola Company is ranked as the leading non- alcoholic beverage provider globally, with its presence in all countries. The company has aligned itself to offer several brands to the communities it serves depending on customer needs and local preferences. The company has established itself to meet the demands of its products as they arise, thus investing in a well- structured supply chain. The supply chain is comprised of several key components that are well articulated and interlinked to allow smooth flow of products, services and information. This has enabled Coca- Cola to have the largest and well established supply chain management system globally.

The company’s current performance is great. Despite this, the company is still vulnerable to supply chain system risks in its immediate internal and external environment. As such, the company needs to continuously carry out risk assessment exercises inorder to avoid disruptions of work flow. The company needs to continually align itself with changing trends, technology changes and environmental requirements in order to remain successful.










Table of Contents

Executive Summary 2

Introduction 4

1.1 Background Information 4

1.2 The Organization’s Profile 4

1.3 The Vision and the Mission of the Coca- Cola Company 5

2.0 The Coca- Cola Company Global Supply Chain 5

2.1 Supply Chain 5

2.2 Supply Chain Network of the Coca- Cola Company 6

2.2.1 Raw Material 6

2.2.2 Manufacture/ Bottling Plant 6

2.2.3 Warehousing/ Distribution 7

2.2.4 Wholesalers/ Retailers 8

2.2.5 The Final Product to Consumers 8

2.2.6 Recycling 8

3.0 Supply Chain Risk management 8

3.1 Supply Chain Risk 8

3.3 Supply Chain Risk Management in the Coca- Cola Company 9

3.2 Areas of Concern of Supply Chain Risk for the Coca- Cola Company: SWOT Analysis 9

3.3 Risk Mitigation 10

4.0 Utilization of New Technology 11

5.0 Conclusion 11

Bibliography 13







1.1 Background Information

The Coca- Cola Company has established itself as a large multi-national company with the largest supply chain systems globally (The Coca- Cola Company, 2017). Coca- Cola is a beverage manufacturer, marketer and retailer of non- alcoholic beverage syrups and concentrates. Its headquarter officesare located in Atlanta, Georgia (The Coca- Cola Company, 2017).

The company is known worldwide because of one of its products, Coca- Cola, and offers more than 500 brands in the over 200 territories it serves (The Coca- Cola Company, 2017). It is estimated that this company serves 1.6 billion servings daily. It has established itself and products in all the countries of the world except in North Korea and Cuba, and as such, few brands that have achieved such global presence and recognition.

Having itself established in all the countries of the world requires a well-managed global supply chain so as to meet the market demands while at the same time maximizing profits. With such an expansive footprint, the company has prioritized supply chain excellence. The company’s strategy of franchising the bottling system across the globe is perpetuated through the working together of its franchise bottlers in leveraging the opportunities within the company’s well established supply chain system.

1.2 The Organization’s Profile

The company’s roots trace back to 1886 when it was started and built on a strong franchise leadership. Coca- Cola was started by a pharmacist, John Stith Pemberton. He built the first company in Columbus.  The bottling business, however, began in 1899 by two businessmen, Joseph Whitehead and Benjamin Thomas, were granted the right to bottle and sell Coca- Cola in the United States. Franchising of the Coca- Cola bottling business began in 1980 and has seen been on the rise facilitating the presence of the Coca- Cola Company in all parts of the world. The Coca- Cola Company has undergone two mergers in 1986 and 1991 to form the present day company increasing its acquisitions and market presence.

The 21st century has seen the Coca- Cola Company grows rapidly with roots deeply planted in local communities. People tend to seek brands that honor local identities and values, thus the heritage that the company has established for itself has seen its profit margins grow. The growth of the Coca- Cola Company is largely attributed to the strong locally based relationships between the company’s bottlers’ plants, the customers and the communities.

1.3 The Vision and the Mission of the Coca- Cola Company

The Coca- Cola Company has been able to establish itself as the largest non- alcoholic beverage provider through the strict adherence to its mission and vision which provide guidance to the company and each individual affiliated with the company. The company’s mission is to create value and make a difference in the world by inspiring moments of optimism and happiness. To achieve his mission, the company seeks to inspire greatness by providing a great working environment while offering a great variety of drinks that satisfy the needs of the people (The Coca- Cola Company, 2017). The company also strives to build a build a winning network with its partners and to win their loyalty, thus setting the Coca- Cola Company as a global citizen impacting communities. The core values that guide the company dictate its behavior worldwide. The core values include leadership, quality, diversity, integrity, collaboration, passion and accountability (The Coca- Cola Company, 2017).

2.0 The Coca- Cola Company Global Supply Chain

2.1 Supply Chain

In the manufacture of goods and services, manufacturers are faced with a major struggle of determining the right mix of identifying their product with the right consumer base while at the same time charging the appropriate price and quantity to meet consumer demands. This struggle is addressed by supply chain management, which gives insights on these issues, identifying core competencies and the manufacturer’s competitive advantage (Bandaly et al, 2012, pp. 253). If well incorporated in a company’s strategies, supply chain management results in improved processes which ultimately bring forth increased profits through cost reductions and improved customer responsiveness.

A supply chain refers to a system of an organization, people, information, resources, and activities that are involved in the process of moving a service or product from the supplier to the customer or the consumer (Bandaly et al, 2012, pp. 259). The management of a supply chain involves the oversight of the supply chain, coordinating and integrating the flow of product or service within or among companies (Lambert & Cooper, 2000, pp. 69). The process of supply chain management involves the planning stage where strategies are made, the development stage where sourcing of raw materials and services is determined, the manufacturing step, and the delivery or distribution stage in which the final manufactured product is made available to the consumer (Lambert & Cooper, 2000, pp. 79).

The supply chain of any company is comprised of manufacturers, distributors, retailers and the end- consumers. Each of these players has unique roles that they play respectively (Lambert & Cooper, 2000, pp. 69). The supply chain of the Coca- Cola Company is charged with the responsibility of the company’s procurement, sustainability, planning and manufacturing and engineering in meeting the set goals and objectives.The company has a franchised supply chain.

2.2 Supply Chain Network of the Coca- Cola Company

2.2.1 Raw Material

The company’s supply chain system is unique as it involves the production of the syrup concentrate by the company and its subsidiaries which are then bought by bottlers throughout the world who convert the syrup concentrate into finished products as per the market demands and needs. Through this strategy, the company is able to offer a wide variety of products such as drinking water, diet drinks and soda. This strategy is also effective as it has allowed the actual formula that Coca- Cola uses to remain a top secret, thus enabling it to stay in business.

2.2.2 Manufacture/ Bottling Plant

The bottlers hold executive territorial contracts with the Coca- Cola Company. Their main function is to produce the finished products in bottles or cans, sell, distribute and merchandise the products to food service distributors, vending machines, retail stores and recreational areas. The main company has shares in most of the bottlers with the anchor bottler company located in North America. There also exist fully independent bottlers. Independent bottlers are allowed to flavor the products according to local tastes. Through this system, the company has been able to address the market needs, uniquely depending on the territory and the consumer preferences.

The working relationship between the Coca- Cola Company and the bottlers is well regulated. The company sets up the basic guidelines in terms governing operational procedures, customer relationship and query management. This is done so as to ensure that the company’s operations are standardized and that there exists centralization of strategic decisions. The bottlers are assigned geographical areas in which they should operate. The company has six major geographic regions in the world. These include North America, Africa, Pacific, European Union, Asia and Latin America. These departments are managed by area managers.

A head office is then established in that region to control distribution and sales while working closely with a regional office that is directly under the supervision of The Coca- Cola Export Corporation. Each head office is responsible for the link between the production plant and the different distribution and sales center, thus forming a complete chain. The individual bottling plants are then allowed to develop their own standard operating procedures (SOPs) to govern their delivery, management of fleets and the development of credit lines. In order to streamline its supply chain management, the company has tried to limit the number of its bottling plants. By limiting this number, Coca- Cola is able to monitor the supply chain more effectively.

2.2.3 Warehousing/ Distribution

The distribution of the finished product to the region’s distribution and sales centers is facilitated by the bottler’s commercial vehicles. Distribution centers store and manage the inventory detailing the supplies and sales for the retailers the distribution center serves. Distribution centers are made up of the following departments: sales and dispatch, warehousing, the logistics department, the information technology department and the customer service and query management. The company’s distribution network is well articulated as the company continuously strives to integrate demand with supply.

The Coca- Cola Company has embraced technology to help make its distribution process effective in meeting demand as it arises. This has been facilitated by the use of software tools such as the ‘I das’, a software tool that automated the distribution process. The software also contains information of all retailers and wholesalers, thus enabling close monitoring of its business.

2.2.4 Wholesalers/ Retailers

The regional distributors are charged with the responsibility of providing stock to wholesalers and retailers. Wholesalers are also referred to as re- distributors. Retailers and redistributors supply Coca- Cola products to all parts of the geographical region allocated.

2.2.5 The Final Product to Consumers

The final customers of the final manufactured product from the company get their drinks from the many available retail or glossary shops. The Coca- Cola Company has dominated the global beverage market such that in any retail store an individual goes to, they cannot miss finding a Coca- Cola product. Through this strategy, the company has been able to maintain its customer base. The company also moves with changing trends, thus providing beverage brands as per local tastes and preferences.

2.2.6 Recycling

The company’s strategy of remaining an environmental friendly organization has seen it use bottles and can that instead of being thrown into the environment, can be taken back to the bottling companies where they are made useful for the distribution of drinks.

3.0 Supply Chain Risk management

3.1 Supply Chain Risk

The modern supply chain has been made vulnerable to risks due to the issues such as globalization, the pressure to shift from traditional organizations and logistic issues such as contracting manufacturers and distributors (Ghadge et al, 2012, pp. 317). The complexity of the supply chain of an organization increases vulnerability of the company to risk (Bandaly et al, 2012, pp. 260). The vulnerability is further aggravated by economic disruptions such as currency fluctuations and recessions and socio- political trends like political warfare or the current issue of Brexit. Enterprises that have established themselves globally are also faced with challenges such as cross- border movement restrictions, security issues, tariff and non- tariff barriers and infrastructure short- comings. All these risks if unchecked result in functional, operational and macroeconomic risks (Ghadge et al, 2012, pp. 317).

Supply chain risks can be either be unintended or consequential. An unintended or anomalous supply chain risk occurs in the supply chain or the environment while a consequential supply chain risk threatens the operations of the firm (Ghadge et al, 2012, pp. 317). The Coca- Cola supply chain system is also faced with risks just like any other company.

3.3 Supply Chain Risk Management in the Coca- Cola Company

The process of supply risk management involves two major sides: risk assessment and mitigation and responding to supply chain disruptions in an organization. These sides are both critical to an effective supply chain risk management strategy. Companies need to identify these risks and mitigate the in order to ensure an uninterrupted flow of work in the supply chain (Bandaly et al, 2012, pp. 267).

3.2 Areas of Concern of Supply Chain Risk for the Coca- Cola Company: SWOT Analysis

A major challenge for all supply chains is the changing trends and technology processes and adjustments, thus, for a company to have a successful supply chain system, it must move along with the industrial revolution (Manuj & Mentzer, 2008, pp. 194). The Coca- Cola Company has had several areas of concern of supply chain risk in the recent past. The first area of concern for the company is the changing weather patterns. In several parts of the world where Coca- Cola has established itself, there have been several weather disasters that have threatened the entire supply chain in that part of its territories. Such risks can be classified as environmental risks that are driven by external forces such as weather and earthquakes (Ghadge et al, 2002, pp. 326).  For instance, in areas where hurricanes and storms are prevalent, the company is faced with the risk of destruction of manufacturing sites, bottler plants, warehouses, commercial vehicles and even the destruction of life of its employees as well as the communities they serve. Example of natural and man- made disasters that have put the executives and board of directors in Coca- Cola to task include the Japanese tsunami and the Gulf of Mexico oil spill which had major implications.

Expansion of the company’s business and new entrants in the market are an area of concern. The company has been faced with challenges in expanding in some regions such as Africa. In such areas, the company is faced with manufacturing risks, supply risk, demand risks, security risks and operational risks. In addressing demand risk, the company strategizes in coming up with new products that suit the preferences and financial situations of the people in such areas. For instance, in poorer communities, the company accommodates the people by selling drinks in returnable bottles, thus making the price of the drinks affordable. Transportation also presents a challenge in areas where infrastructure is not well developed. The Coca- cola company addresses the challenge of transportation by innovating new ways of transporting their products into otherwise inaccessible areas. This is done by employing armies of entrepreneurs who transport move products by foot or bikes where vehicles cannot access.

The company is also faced with operational risks that may disrupt the flow of work and information in its supply chain system. The company relies on heavy machinery and technology that are vulnerable to mechanical and/ or electrical breakdowns. The machine are also prone to being outdated by the changing technology, thus may lead to a disruption in manufacturing if such a thing occurs.

One major economic risk facing the Coca- Cola Company is the uncertainty in the European market that is set to arise due to BREXIT. If Britain succeeds in exiting the European Union, the markets will be affected as there will be new policies put in place to govern the new market.

3.3 Risk Mitigation

Risk will always be inherent in any supply chain. The Supply chain risk mitigation requires expertise and speed to respond to risks once they have been identified and classified.Risk mitigation strategies include avoidance, postponement, speculation, hedging, controlling, transferring and security. The Coca- Cola Company understands that risks pose a challenge to business and has put in place strategies to manage its supply chain system globally so as to meet consumer demands and on- shelf availability, thus impacting gross profit margins positively.To manage its supply chain risks, the Coca- Company has strived to maintain a good relationship with its distributors, retailers, wholesalers and consumers. The Coca- Cola Company has put in place a comprehensive, proactive approach and works with its suppliers well by considering them as more of partners than suppliers. Relationships in a supply chain are unique and have a major impact on the links of the chain (Bandaly et al, 2012, pp. 253).

4.0 Utilization of New Technology

Technological advancements have been on the rise in the world today and more and more companies are embracing technology to grow their businesses. Today’s marketplace has become so competitive that it is imperative for companies to innovate new ways to streamline their supply chain in order to optimize productivity. Modern technologies have aided companies to create better visibility within their supply chain and to simplify supply chain management. This gives businesses the opportunity to operate more efficiently, have control over their inventories and reduce the cost of operating.

The Coca- Cola Company has employed new technologies to improve the efficiency of its supply chain, thus leading to increased customer satisfaction and retention. One of the strategies that the company has used to reduce on operational cost in the countries it serves is computerized shipping and transporting of its products. The ‘I das’ software as earlier mentioned allows for the tracking of transport and distribution while at the same time storing important information of wholesalers and retailers.

New technologies have been employed in the retailing section of the Coca- Cola supply chain. Retailers have in the recent past faced with the major challenge of satisfying customer needs when it comes to delivery of service. The supply chain of the coca cola company has embraced the use of vending machines and has used the Internet- of- Thinks – like vending machine since early 1980’s. These vending machines have greatly improved the efficiency of service delivery. Recently, the Coca- Cola Company has connected its vending machines to the internet to monitor workflow and the quantity being sold.

5.0 Conclusion

The Coca- Cola Company has established itself as the largest global provider of non- alcoholic beverage drinks. The company has achieved this largely by investing in ensuring an effective and well- organized global supply chain. Its supply chain is considered to be among the largest in the world. However, due to the volume of the company, the supply chain management system is faced with certain challenges and risks that require proper evaluation and the implementation of relevant mitigation strategies.

Throughout the years, the company has been able to mitigate several risks, but still continue being faced with several unavoidable challenges such as weather disasters and changing political trends. This calls for continued supply chain risk assessment and risk mitigation strategies in order to retain the Coca- Cola Company as the number one non- alcoholic beverage provider worldwide. The company has set itself as an example to other companies on the importance of establishing a well- thought out supply chain system.

















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