Coca-Cola Supply Chain

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Coca-Cola is the world’s largest beverage company. They employee over 146,000 employees offer over 3,000 products worldwide and operate in over 200 countries. The company was founded in 1886 but it wasn’t until 1891 when an Atlanta business man secured the rights to the company that the vision of Coca-Cola was established and their expansion begun. In 1899 Coca-Cola’s first bottler relationship was established. This bottling relationship allowed the company to grow aggressively and expand into 9 different countries as early as 1920. Coca-Cola’s “System” is a very unique approach to supply chain and distribution management. The company leveraged the success of its bottler systems to expand throughout the world quickly and with limited penetration issues. Coca-Cola’s supply chain includes partnerships with over 275 bottlers worldwide. This system allows them to operate globally but think locally. Coke generally manufactures and sells the concentrate to the bottlers. Coke is responsible for the brand marketing but the bottlers manufacture, package, merchandise and distributes the final product to the vending partners who then sell the final product to the consumers. Coca-Cola started as a regional manufacturer and they made a strategic decision in 1899 to form bottler relationships in order for the company to focus its efforts in their core strengths. Coke is the most recognizable brand in the world because instead of worrying about the capital investment required to purchase machinery and plants they spent their time and money on marketing and brands image.

The soft drink industry is a low-margin game so it is important for organizations to streamline their supply chain and find efficiencies in any area possible. Coke is on a mission to modernize its supply chain. They understand that for long-term, sustainable growth they must replace their dated systems and modernize platforms across markets to create a cohesive view of metrics and processes (Sezer). In 2004 Coke partnered with SAP to create applications to help improve its store delivery systems (Foley). Coke believes by putting new capabilities into the hands of account managers, delivery drivers, and in-store merchandisers they can keep their product flowing smoother and more consistently to their customers. This will allow Coke to integrate its entire value chain in an SAP suite. Margaret Carton, CIO, believes this will “improve our processes, execution and information availability.” In 2003 Coca-Cola spent most of the year integrating three North American business units. The goal of this integration was to streamline IT, supply chain, and procurement operations. Coke reported that because of this integration they expected to realize up to $150 million in savings (Foley). Key Supply Chain Initiatives:

1990’s – MRPII
2000 to 2002 – Value Chain Assessment
2003 to 2004 – ISO and OSHA
2004 to 2005 – Align SCOR (Supply Chain Operations Reference) and Best Practices 2006 – Lean OEx and Sensei Team Created
2007 to 2009 – Industry Standards and Lean Principles

Coca-Cola understands that its success is heavily leveraged by the relationships they have with their suppliers. They seek to create joint value with their suppliers by effectively working with them in all stages of the supply chain. Below is Coca-Cola’s supply chain management strategy to work with their suppliers.

(Nicosia) You can see by the diagram above that they place an emphasis at having supply chain relationships and leaders throughout the organization. Coke has realized that suppliers should be people they partner with versus use. In previous years they looked at the bottom line, tried to extract as much value as possible and shared very little information with them. Now they look at suppliers from a cross-functional perspective (cost, quality, specifications, and standards), try to solve problems together, understand their supplier’s success is in their best...
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