Supply Chain Management of Coca-Cola

Supply Chain Management of Coca-Cola

By Benqi Wei and Changda Song

The Coca-Cola Enterprise is the world’s largest beverage company. Coca-Cola produces more than 500 products worldwide including core brands like Diet Coke, Fanta, Sprite, Powerade, and are sold in more 200 countries. The company has the largest bottling system, the most widespread production, and also the most distributed network. It provides syrups and concentrates to more than 1,200 bottling plants. It has over 900 plants around the world, and every job in Coca-Cola Company generates additional 10 jobs in local communities in Asia, Africa, and Eastern Europe. Coca-Cola Company accounts for 40.5% of the market share.

            Coca-Cola’s unique supply chain is local business oriented. Coca-Cola never ships their products overseas, instead they used a so called “Customer-driven supply chain” approach. Coca-Cola manufacturing plants have the same formula, procedures, and capabilities all around the world. They produce and ship directly to local retailers. “We typically don’t ship Coca-Cola more than a few hundred miles; it’s all about being responsive to the customer’s needs and the local tastes of consumers in every market”, said Steve Buffington, vice president of Coca-Cola supply chain development. In this way, Coca-Cola can save large transportation expense on freighters and local stores can replenish its Coca products quickly and consistently.

Coca-Cola’s supply chain offers diverse choices. It provides a wide variety of packaging types in response to different customers’ demands. The way they work with its large range of customers is called “brand, pack, price, channel, architecture” They use the method to order packages based on reported consumer preferences and other influencing factors. According to Buffington, “planning supply is driven by forecasted customer demand input, seasonality and also by promotions or changes in merchandising in the store.”

Coca-Cola places a significant core value on running its supply chain. In general, Coca-Cola desires the four supply chain guiding principles implemented. “Focus on metrics needing no manual intervention”, this principle is desired to develop a better technology system and to make their products better without humanities’ intervention. “Focus on metrics to drive profit consistency and metric consistency across the supply chain”, this principle requires the accurate information throughout the company. “Focus on industry standards that are not Coke specific”, “Develop a robust system for reporting hierarchies that change when business changes”.

After a decade of suffering from droughts and water shortage, Coca-Cola had to acknowledge climate change as its threat in production. Coca-Cola established the largest bottling factory in India in 1999. Water is the critical ingredient of Coca-Cola’s production. The factory extracts 510,000 liters of water everyday. It requires a ratio of 4 to 1 for every liter of soda being produced. For the past few years, Coca-Cola has been accused for taking large amount of water and responsible for water shrinkage in India. Coca-Cola lost its operating license in 2004. In 2007, the factory had to be shut down under community forces and political criticism. Coca-Cola realized the urgency to create a green supply chain and made its goals in 2012. Coca-Cola projected to “replenish 100% of the water used in our products by 2020”, and “ 7% improvement of water use ratio in production plants by 2012 compared to 2004 baseline”.

Additional information & video about Coca-Cola Company may be found at links below:

https://www.youtube.com/watch?v=3bJwIeinyv8
http://www.worldofcoca-cola.com/coca-cola-facts/coca-cola-history/
http://www.coca-colacompany.com/sustainabilityreport/index.html

Reference:
http://www.linkedin.com/jobs2/view/9349775
http://cdn.journey.tccc.psddev.com/41/42/6b9f776e430882e3a1fbc9474ca2/08%20-%20B_Kelley%20-%20Product%20Supply%20System.pdf
http://www.csc.com/application_services/success_stories/78846-coca_cola_supply_chain_management_success_story
http://www.sdcexec.com/article/10325447/things-go-better-with-cokes-supply-chain