If you want a Coca-Cola, there’s usually one close by—
no matter where you might be in the world. And that’s no
accident. An executive for the best-known brand name in
the world stated the objective simply: “Make Coca-Cola
available within an arm’s reach of desire.” To achieve that objective, Coke works with many different channels of distribution. But that’s just the start. Think about what it takes for a bottle, can, or cup of Coke to be there whenever you’re
thirsty. In warehouses and distribution centers, on
trucks, in gyms and sports arenas, and thousands of
other retail outlets, Coke handles, stores, and transports more than 400 billion servings of the soft drink a year. Getting all of that product to consumers could
be a logistical nightmare, but Coke does it effectively
and at a low cost.
Fast information about what the market needs
helps keep Coke’s distribution on target. Coke uses
an Internet-based data system that links about one
million retailers and other sellers to Coke and its bottlers. The system lets Coke bottlers and retailers exchange orders, invoices, and pricing information online. Orders are processed instantly—so sales to
consumers at the end of the channel aren’t lost because of stock-outs. Similarly, computer systems show Coke managers exactly what’s selling in each
market; they can even estimate the effects of promotions as they plan inventories and deliveries. And Coke products move efficiently through the channel.
In Cincinnati, for example, Coke built the beverage
industry’s first fully automated distribution center.
And when Coke’s truck drivers get to the retail store,
they knowingly stock the shelves with the correct
mix of products.
Coke’s strategies in international markets rely on
many of the same ideas. But the stage of market development varies in different countries, so Coke’s emphasis varies as well. To increase sales in France,
for example, Coke installed thousands of soft-drink
coolers in French supermarkets. In Great Britain,
Coke emphasizes multipacks because it wants to
have more inventory at the point of consumption—in
consumers’ homes. In Japan, by contrast, Coke relies
heavily on an army of truck drivers to constantly restock 1 million Coke vending machines, more per capita than anywhere else in the world. And, in Australia, some Coke vending machines have built-in cell phone systems; a press of a button makes a call so
customers can charge the Coke to their cell phone
accounts. Most U.S. firms face sanctions from doing
business in Iran, but there is a loophole for foodstuffs.
So for several years Coke’s Irish subsidiary has been
shipping thousands of gallons of concentrate into
Iran. Coke has quickly grabbed a large share of the
nation’s soft-drink market.
Fortune magazine recently put the spotlight on
Coca-Cola’s commitment to sustainability, and decisions in the logistics area can have big environmental effects. For example, Coca-Cola is helping to develop vending machines that are HFC-free and 40 to 50 percent more energy efficient than conventional
beverage equipment. Similarly, in the U.S. Coca-Cola
is adding diesel hybrid delivery trucks that cut emissions and fuel consumption by a third; in Uruguay, Coca-Cola’s Montevideo Refrescos subsidiary is
using electric trucks for deliveries in congested
urban areas. In spite of positive steps like these,
Coca-Cola still faces some challenges concerning sustainability and logistics. For example, critics argue that in a society where there is
already a safe supply of tap water it doesn’t make
sense to bottle water, transport it in trucks that consume fuel and contribute to pollution, and then add worry about how best to dispose of the empty bottles
and bottle tops.
In less-developed areas, the focus may be on different challenges—especially if the limitations of the Place system can make Coke products hard to...
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