The Coca-Cola Company's Manual Distribution Centers | Free Essay Example

The Coca-Cola Company’s Manual Distribution Centers

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Topic: Business & Economics
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Introduction

Coca Cola’s Demographic Information

The Coca-Cola Company is the largest beverage company worldwide with a brand presence in over 200 countries. The company was started in 1886. It has grown to be one of the largest and most successful companies globally (Hays, 2005). The company has grown from about nine servings a day to 1.9 billion globally. The business has been a key driver of innovation in markets, in addition to an investor in local communities in the countries where the company has established itself (Hays, 2005). The firm is successful due to its commitment to brand values. The leadership of the company has also evolved to sharpen its focus on the external marketplace with increased effectiveness, productivity, and most importantly speed.

The company’s portfolio has over 20 billion- dollar brands (Hays, 2005). The company offers a range of products mainly in the non-alcoholic beverage industry. Some of the products offered by the company include the very famous coke, diet coke, sprite, Fanta, and Dasani among others. It provides a range of products from the healthier choice of beverages, mineral water, and carbonated soft drinks. Further, the company is the largest provider of still and sparkling beverages. It has over 500 brands that are distributed to its consumers worldwide (Hays, 2005).

The Coca-Cola company is committed to satisfying the needs of a wide range of its customers who have different needs and preferences. The company does not target a specific market for its products. Instead, it adapts to the various needs of its consumers through the development of new products. Its target audience comprises the youths between the ages of 12 and 30. The coke brand is meant for people in this age group. However, the company considers each consumer their target market. Thus, it has come up with various products for each age group (Hays, 2005).

The company has come up with supply chain strategies that assist in cost reduction while at the same time increasing efficiency in the organization. The supply chain of the company is responsible for ensuring that the demand for the company’s products worldwide is met every day. The company applies multiple formulas to guarantee success in its supply chain. Its supply chain is global but in ensuring the demand is met, the supply chain is local (Tallant, 2010). Therefore, the company operates locally in each of its markets that are served by the local bottling plants.

The company guarantees proximity to the marketplace by ensuring that the bottling plants are well distributed to cover a small region. The local approach is referred to as the customer-driven supply chain, which enables the company to respond to the local needs and preferences of its neighboring consumers (Hays, 2005). It has multiple supply chains for its products. It uses segregation in the supply chain to guarantee efficiency. Therefore, some markets are served directly by Coca-Cola while others have their distribution channels and third-party distribution partners. In 2015, the company was planning to seek some of its production plants to its largest independent bottlers, thus assisting in unloading assets that have low margins to reduce the costs of production in the United States (Tallant, 2010).

The Coca-Cola Company examined the logistics end of its business to trim down the cost and build a more sustainable system. Each country where the company operates has its bottler or bottlers who are separate entities, although the company sometimes controls its operations. The business uses various distribution methods with the most common being the use of manual distribution centers (MDCs). The independent businesses are linked directly to the local bottlers where they operate in densely populated areas (Tallant, 2010). These businesses charge the products for just the liquids and not the cost of packaging. They are run from shipping containers, which have their inventory delivered at set intervals.

The products are shipped to the MDCs mainly by lorries or containers. The distribution from the MDCs to retailers is mainly manual, as it relies on handcarts and bicycles (Tallant, 2010). This strategy is most successful in regions that have many people where labor-intensive circulation to the ultimate consumer is possible since the distance to be covered is small. For the products to reach the consumers in the remote areas, it takes the effort of small entrepreneurs who get the products from the MDCs to their small establishments (Tallant, 2010).

Therefore, the Coca-Cola Company is only involved in a small part of the freight flow mainly between the company and the bottlers. The rest of the distribution is made possible by the marketing department in Atlanta, which promotes the products to ensure that the demand remains high, even in the remote areas.

Future freight flows for the company will include decisions such as those implemented by the company in China where it decided to concentrate its entire production (Tallant, 2010). The decision that was implemented by the company is based on the proximity to raw materials. The canned sodas are preserved in containers for shipping since this plan allows effectiveness in circulation (Tallant, 2010). The use of containers by the company will facilitate movement with multiple transport modes. Thus, the use of inter-modals will guarantee efficiency in freight flow for the company.

How the Supply Chain Supports the Organization’s Strategic Goals

Major efforts are required to build the micro-distribution centers (MDC) supply chain network. It involves expertise, time, and capital. It also includes forming relationships and duties, aligning procedures, training personnel, adopting the technology, and capitalizing on capacity. According to Games (2012), Coca-Cola has a strong supply chain that competes profitably with other beverage manufacturers in the market.

Its strategic goals for MDCs supply chain management include achieving efficient fulfillment. In the Coca-Cola Company, the objective of the logistics network is to ensure that records are accessible to consumers to realize their need for the merchandise. The produce venture slogan that shows how a person can’t promote products that are not accessible in the stores reveals the importance of logistics network supervision.

Coca-Cola applies the strategy of leveling its supplies with demand in a timely fashion through the practical use of supply-chain processes. MDCs operate in collaboration to capitalize on the yield, maintain homogeneous dealings, and/or lessen inventory capacities. In line with its strategic goals, such steps help Coca-Cola Company to reduce wastage, transportation costs, and/or introduce effectiveness in the supply chain. A decrease in logistics system operating costs is imperative, especially during turbulent financial periods when Coca-Cola and other businesses desire to preserve their resources.

The MDCs system emphasizes all elements of logistics network processes, although shipping and stock records are price management goals. Patel (2007) reveals how the company’s supply chain has helped in increasing customer value and achieving cost-efficient and effective products. MDC’s supply chain focuses on value creation for customers. Customers are the reason why Coca-Cola is in business. Hence, they create the cause for a supply chain. Therefore, the MDCs logistics network supervision helps to guarantee the uninterrupted realization of client needs and demands. The purpose of maintaining client worth kicks off with a market-oriented buyer overhaul course that is founded on the prevailing consumer demands. MDCs approaches, plan, and potential stem from these logistics system requirements, which result in high-class service, minimized inconsistency, and little or no exceptions to handle.

A supply chain seeks to facilitate a company’s financial prosperity through MDCs. The MDC’s supply chain system focuses on cost reduction, which involves the streamlining of stock levels to minimize inventory-carrying expenses while at the same time modernizing operations to reduce labor expenses. Coca-Cola also deploys the MDCs logistics framework to augment its commodity demarcation, improve on transactions, and/or venture into a fresh clientele base.

The objective of the MDCs here is to maintain the aggressive benefit and/or improve the investor’s worth. Based on the strategic goal of creating network resiliency, which the supply chain addresses, Coca-Cola is aware that it may encounter abrupt and severe supply chain disruptions, which may be caused by natural disasters, inclement weather, go-slow strike, and supplier failures. Such disruptions will influence negatively the flow of its products, thus leaving the company exposed to financial and reputational damages (Noe, 2013).

According to Hill (2015), supply chain disruptions are associated with a decrease in shareholder value. With the cost of outages in mind, Coca-Cola needs to assess and manage these MDC’s supply chain risks. The commonly used pre-separation programs that it has adopted involve risk identification, assessment, and reduction. To minimize the vulnerability of MDCs disruption risks, Bovet and Martha (2000) recommend Coca-Cola to embark on linking security and safety issues, creating redundancies in the MDCs supply chains, and investing in personnel through cross-training workshops. It also needs to establish the capacity to identify interferences, how to manage any distractions, and/or restore programs to curb potential threats.

The Strengths of this Supply Chain

The Coca-Cola supply system’s micro-distribution center model, which is currently being tested and implemented in different forms in more than 25 countries around the world is an approach that has the strength of managing the company’s core business requirement. According to Dani (2015), it has the strength of positively influencing the company’s millennium development goals. The Coca-Cola Company has prioritized the MDC model as a critical component of its customer commitment to the ‘Business Call to Action’, which is a program launched in 2007 by the British Prime Minister, Gordon Brown.

The initiative’s objective is to mobilize big businesses to contribute to the achievement of the Millennium Development Goals through new investments that enhance their key competencies and value chains. The MDC model, which is a business call, facilitates the adoption of an independent monitoring technique to track the progress of the commitments and their contributions towards development. The supply chain model aims to mobilize the Coca-Cola Company’s core competencies in various ways, including creating new employment opportunities and enterprises in emerging countries.

The design helps to enhance the quality of supply chains by helping local business entities to diversify and increase their competitiveness. According to Tallant (2010), the MDC model enables admission to areas that are difficult to access by big trucks.

Such regions include crowded urban centers that have dangerous terrains. Narrow roads are also associated with restrained movement. Hence, the model also addresses this issue via the establishment of handcarts that can deliver goods through such roads. It allows for small drop supplies at retail outlets. The proximity of the MDCs to their stores makes it possible for them to make frequent, but small deliveries. The model improves customer service. For instance, under the traditional model, stores and customers had to wait for unreliable truck deliveries and risk of disruption and running out of supply. With the new MDC system, retail outlets have access to products.

Weaknesses of the Supply Chain

Several parts of the MDCs model fall under different crucial business functions. They often come under the jurisdiction of various departmental administrations. Such a state of the Coca-Cola Company’s supply chain can cause hindrances if the ordering, accounting, marketing, sales, production, or transportation departments do not collaborate. No matter how small or large the MDCs are, only one individual is assigned to manage the supply chain.

Hence, the lack of a person to not only monitor the work of MDCs managers but also engage them in constant communication with each other exposes the chain to potential problems. A key factor in managing the MDC’s model of supply is to have redundant parts or an alternative plan.

For example, if the delivery truck breaks down, the manager should know how to get a replacement. Imposing performance benchmarks for various components of the supply chain model will also help in spotting potential problems early enough to handle them (Bovet & Martha, 2000). While Coca-Cola is the world-leading and largest beverage company, its supply chain is also exposed to perennial competitors such as Pepsi, which produces beverages with almost the same supply chain, despite being an entirely different company with product differentiation, as it derives a lot of its revenue from the sale of snacks.

According to Dani (2015), another weakness is the absence of healthy beverages in the supply chain. Obesity is a primary health issue that is common among individuals in contemporary society. The business environment is fast changing. Hence, individuals are adopting innovative approaches that do not expose them to foods that are associated with fatness. Carbonated beverages are one of the main products that have fat components. Coca-Cola is the leading manufacturer of carbonated beverages. The discernment is that the intake of drinks in emerging economies may decline since many individuals will choose a healthy feeding option.

Metrics that the Organization utilizes for its Supply Chain

The Coca-Cola Company has adopted the commodity safety and quality metric. It has laboratories whose agenda is to evaluate the worth and safety of the company’s products before they are taken to the clients. Regardless of the earlier adoption of Sophisticated Scheduling Maximization and SAP expertise, Coca-Cola was also grappling with the finest brainpower that applied to its itinerary and bazaar. Games (2012) asserts that the combination of SAP with ITC’s supply chain performance management, which involves the adoption of the ITC framework and SAP Consulting is a significant step for Coca-Cola.

It enables it to link MDCs supply chain goals effectively with business goals, thus enjoying uninterrupted supply chain operations. Coca-Cola utilizes a set of supply chain guiding policies, which include its emphasis on metrics that require no manual intervention. Such metrics enhance the company’s profitability across the MDCs. Another metrics is the company’s focus on the beverage industry standards that specify the status of products that beverage companies should sell. Besides, Coca-Cola focuses on developing a comprehensive system for reporting hierarchies that shift when the business changes.

According to Hill (2015), Coca-Cola does not have many stock-keeping units as compared to other beverage companies in the food industry. Even though it has over 2.3 million delivery destinations, coordinating transportation at this level is a huge challenge. To manage the delivery, Coca-Cola has adopted a vehicle routing software with the help of a university student who developed the algorithm that is compatible with the business’ requirements. As a result, transportation managers at every distribution center can utilize the latest tool to minimize delivery time and distance on the day-to-day operations.

Transportation Initiatives and Innovations that the Company has Implemented

In remote or bad terrain places, MDCs use pushcarts or tuk-tuks to operate. However, in more developed countries, they use the biggest heavy-duty upgraded commercial convoy as it is witnessed in North America. Such trucks are specialized hybrid delivery vehicles whose emission has been reduced by 30 percent, meaning that they consume 30 percent less fuel than average delivery trucks.

The region enjoys extra all-powered non-carbon-releasing delivery machines to the advancing convoy of substitute energy automobiles. The company has also embarked on research on how to exploit the options of light-duty propane and natural gas. Noe (2013) reveals the company’s custom-designed Smart Driver Procedure, which is a strategy of training its drivers about eco-driving techniques such as the application of minimal braking and real-time gear changes.

Another transportation proposal is the fine-tuning of the CPU talent configuration and the deployment of Telematics, which have led to a decrease in the amount of energy consumption, redundancy, and emission traces. In 2011, the American Gas Unit acknowledged Coca-Cola in the regional Uncontaminated Convoy Enterprise Forum whose goal is to fast track the implementation of power-competent and substitute gas automobiles in the places of operation. The company was also awarded the “CALSTART Blue Sky Award, which recognizes leadership and technology initiatives that allow safe and efficient transportation, thanks to its efforts to promote and adopt hybrid and electric trucks” (Coca-Cola Company, 2016, para. 6).

According to Patel (2007), another innovation that Coca-Cola and the MDCs came up with was the design of its packaging materials that consume minimal natural resources while at the same time conserving its products. It has also ensured that the packaged products are safe for transportation to retailers and consumers. In the past two years, Coca-Cola has applied the system full-light weighting technique, which has led to cost-savings.

Light weighting is mainly a market-by-market strategy where bottlers select the packaging plan based on consumer demand, terrain, climatic conditions, and legal requirements. The company’s bottlers from all regions in the continent are always seeking options to advance their product wrapping design.

Another innovation that Coca-Cola has implemented involves recovering the beverage containers for recycling, a move that results in enhancing the value of the packaging materials. The bottles are recovered through several channels that include the Coca-Cola system, industry-financed collection companies, community-based recycling procedures, and government programs (Patel, 2007). Besides the superior monitoring of reprocessing, the company seeks to advance society-reuse plans while advocating the participation of casual recovery framework since superior sewerage management strategies have been deployed in developing economies.

Recovery and recycling are strongly affected by local laws and regulations, which vary based on market situations. According to Tallant (2010), Coca-Cola recognizes how innovation and collaboration are significant when it comes to advancing the company’s vision. Hence, it works hand in hand with the local administration, non-profit-making institutions, neighboring societies, and other drink makers to invent stewardship agendas that are valuable to the countries it serves. It also creates employment opportunities.

In the emerging bazaars, Coca-Cola cooperates with the manufacturing associates to assist casual assortment programs to convert into reserved recuperation systems that have the potential to create maintainable employment. In industrialized bazaars and regions, the corporation backs up the plans that involve the shared patching-up of goods through business recuperation companies or additional constructive methods. A recent innovation, which has a positive impact on the environment, is the change of standard metrics for more sustainable and safe packaging that is spearhead by the ‘Consumer Goods Forum’. The company is a party to the discussion. Hence, it plays a key role in improving this program.

Transportation Initiatives and Innovations that Coca-Cola should Consider

Coca-Cola is actively seeking new methods to provide cleaner, safer, and more efficient power in terms of transportation, operations, and carbon emissions. In 2010, the company began an unsystematic assessment of energy cells that do not require any ignition. According to the Coca-Cola Company (2016), such cells could “convert natural gas and other relevant hydrocarbons into usable forms of energy such as heat and electricity” (para. 5). Coca-Cola is also considering testing fuel cells that will operate on redirected biogas. According to Bovet and Martha (2000), this advancement is expected to produce about 30 percent of the company’s power requirement while minimizing the plant’s carbon footprint by a similar percentage.

One of the Coca-Cola Company’s key objectives is to enhance the ecological impact of its cooling gadgets and retailing equipment across the continents where it operates. The innovations should establish fuel supervision tools that decrease energy expenditure by over 30 percent by analyzing and scrutinizing the spending graph before changing illumination and heat to enhance effectiveness. It is also considering phasing out the utilization of hydrofluorocarbons (HFCs) from its cooling units.

Getting rid of the HFCs in the refrigeration framework will lower the carbon-corresponding emissions significantly and hence the effectiveness and durability of the machine. Dani (2015) confirms the company’s target to create a water-sustainable operation to reduce water usage and/or have a water-neutral effect on the neighboring communities. It seeks to develop a mechanism that can safely return the amount of water used in the production of the products to the local communities and ‘Mother Nature’. To reach its water usage target, Coca-Cola should develop and adopt a water conservation program to identify actions that can conserve the water. It should embrace recycling and reclaiming water through the company’s membrane water treatment system.

The Next Step to Improve the Supply Chain

The supply chain should adhere to the Coca-Cola Company’s international supplier requirements, which outline key expectations and regulations when doing business with the company. It should also formulate a set of rules for the agricultural ingredient suppliers to minimize sustainability challenges, especially agriculture. Also, the Carbon Disclosure Project, which defines vendors’ threats and potential regarding climate conservation, assists Coca-Cola Company to understand its overall carbon footprint, the steps that exist to minimize it, and the best practices that it may adopt in the supply chain. The business emphasizes various central issues that have a leading effect on the logistics network’s principal business. Such areas include farming, wrapping, and cold-drink amenities (Games, 2012).

The recent plan concerning supplier alignment seeks to adopt the Plant Bottle packaging. The supply chain should carry out corporate social initiatives such as the groundbreaking Project Last Mile initiative to assist African governments in getting essential medicines and supplies to remote communities. This plan will expand the supply chain support into additional needy countries. These actions should include robust and solutions-oriented partnerships that will address global challenges such as health and shelter. According to Noe (2013), the Last Mile program uses the Coca-Cola logistics systems, MDCs supply chain, and marketing procedures to improve health standards across Africa.

Conclusion

The paper has discussed the all-inclusive supply chain models such as the Coca-Cola system’s MDC model that enables companies to fulfill their capacity to inspire economic development, which does not interfere with their core business operations. It has discussed how MDCs can deliver both direct and indirect development advantages, which are both healthy and economic. The study has addressed some instances in which the MDC model has contributed to creating employment opportunities while at the same time acting as a platform for entrepreneurship, which has led to the empowerment of youths and women.

The supply chain model has catalyzed a human capital development in the region, which was considered weak and unproductive. Hence, based on the above analysis, the Coca-Cola Company’s supply chain has been productive in terms of supporting the corporation’s strategic goals. Despite the few weaknesses, the company stands a better chance of integrating various innovations to upgrade the supply chain.

Reference List

Bovet, D., & Martha, J. (2000). Value nets: Breaking the supply chain to unlock hidden profits. Chichester: Oxford Publishers.

Coca-Cola Company. (2016). Sustainability Update: Energy Efficiency and Climate Protection. Web.

Dani, S. (2015). Food supply chain management and logistics: from farm to fork. London: Kogan Page.

Games, D. (2012). Business in Africa: corporate insights. Johannesburg: Penguin Books.

Hays, C. (2005). The real thing: truth and power at the Coca-Cola company. London: Random House Trade Paperbacks.

Hill, C. (2015). International business: competing in the global marketplace. New York, NY: McGraw-Hill Education.

Noe, R. (2013). Human resource management: gaining a competitive advantage. New York, NY: McGraw-Hill/Irwin.

Patel, R. (2007). Stuffed and starved: markets, power and the hidden battle for the world food system. Toronto: HarperCollins.

Tallant, J. (2010). Coca-Cola: The Evolution of Supply Chain Management. Berlin: GRIN Verlag.