Analyzing The Cases Of High Costs In The Distribution Of Coca Cola's Products, An Essay.

The Importance of distribution channels and accurate delivery of products and services

Discuss about the Communications and Strategic Regionalism.

In the present times, the ideas that concentrate on production of products in most companies are not enough. There is need for every marketer of company to ensure that their products along with services are delivered to the appropriate marketer and customers at the right time to right people at the proper costs. The idea of accurate delivery of products and services at the right price remains to be the importance of distribution channels in the present day operations of businesses (Williams 2015, p. 465). While taking into consideration the above aspects in the process of measuring and improving supply chain, this report emphasizes on analyzing the cases of high costs in the distribution of products that Coca Cola Company experiences when supplying its products to different marketers, distributors, and customers. High cost of delivery in the company is always witnessed when the company has to supply its beverages bases and syrups to Amatil of Coca Cola that remains to be one of greatest bottlers of different beverages that are non-alcoholic within Asia as well as Pacific regions. The cases of high cost in the distribution strategy under efficient management of supply chain by the Coca Cola Company often open doors for attaining competitive advantage and strong equity of its brands in the global markets (Linnander et al., 2017, p. 12). Therefore, principal objective of this research paperwork is to analyze instances of high cost in the distribution of Coca Cola Company’s products and services as the current operational management problem in relation to measuring together with improving supply chain.

Coca Cola Company is known to be the leading manufacturer, retailer, and marketer of different drinks that are non-alcoholic in international markets. It offers at least 500 brands in at least 200 countries globally. The products of this organization are distributed and vend to various international organizations such as Sub-Way, Dunkin Donuts, McDonald, as well as maintaining focus on improving the market base (Krapp et al., 2013, p. 1002). Besides, Coca Cola Corporation remains to be the chief organization dealing with beverage that are non-alcoholic as well as Food Company and has remained in the operation from early days of 1994. Moreover, Coca-Cola industry’s operations are fully dependent on the greater order for its produce in global marketplaces. Furthermore, this organization experiences instance of problem of managing its operations of distributing its products due to high costs charged by different departments that include government taxations in different countries and methods used to sip the products among other factors (Desai and Waller 2010, p. 1457). Addition to the problem of managing issue on costs of distribution, Coca Cola Company remain to operate by having the significant foundation within Atlanta a city in Georgia with dream of becoming extremely successful corporation allowing different people to toil appropriately while aiming at principal target of exploiting revenue while refreshing global society. High cost in distribution in relation to measuring and improving supply chain make the company to have a diverse effect on its mission on creation of worth that creates the disparity by stimulating global society through stimulation of happiness.

Coca Cola- Leading Manufacturer, Retailer, and Marketer of Different Drinks

Coca Cola Company has the particular distribution method of its products due to the fact that its ingredients remain to be a trade secret. The needs to distribute and supply these products have been an issue of concern as the costs of distribution to reach targeted markets keep on rising. The effective process used to sell products by distribution has been a headache making the management of the company to focus on different strategies that allow them to measure and improve supply chain of their products globally (Arvidsson et al 2013, p. 119). Some of the reasons that make the rise in cost of distribution remain to be the need to comply by high taxation rates, need to observe preservation process for the beverages products, and improved vehicles used to transport the bottles. High cost of the distribution of products by Coca Cola Company results due to lack of internal communication and customer loyal issues that make company to incur extra in transporting their products to reach consumers on time.

One of the most significant challenges that Coca Cola Company faces in its management of operation is the high cost of the distribution of its products. The problem has remained to be the significant result of Coca Cola Company’s lack of presence in the global markets and its heavy reliance on outsourced distribution (Blanchard 2016, p. 29). Different gaps in demand exist in the supply chain management when the company fails to meet the demand of different marketers and consumers through distribution. High cost of delivery of various services and products offered by the company produces such gaps. Gaps in supply chain exist due to the channel members’ lack of appropriate understanding on how to reduce the costs of distribution process of products and services. Therefore, efficient management and improving supply chain has been widely advocated in the literature that deals with channels of marketing and logistics. Therefore, Coca Cola Company greatly owes its success in operations and improving its supply chain to its capability to adapt to completely different markets and distribution techniques (Hampp 2012, p. 22).  The company has concentrated on reducing high costs in the distribution of its products and services by working in two types of selling. These techniques used by Coca Cola Company to reduce distribution cost include direct as well as indirect selling technique. Direct selling technique allows the company to supply their products in different shops by using their own transportation techniques. They employee at least five hindered and fifty vehicles that are used to supply their bottle allow it to have more profit margin. Besides, technique of indirect selling as a way of reducing high cost of supply chain by Coca Cola Company involve the process of having whole sellers and agencies to cover entire area of operations (Nelson 2012, p. 55). It is evident that it is tough for the management of Coca Cola Company to cover all regions in the entire global markets by their own, so the company operates by having many whole sellers along with agencies with the purpose of assuring the company’s customers and marketers for availability of products of Coke.

Challenges due to High Cost of Distribution of Coca Cola’s Products

Presently the management of Coca Cola Company recognizes the need of measuring and improving supply chain in the high cost in the distribution to be integration of key in processes of conducting the company’s business across the supply chain. The company has focused on implementing different distribution processes within the firm that they need to integrate to improve the process of distribution while reducing the high cost involved (Sarkar 2017, p. 37). The idea of streamlining the process of distribution has been the primary focus of most employers at Coca Cola Company for lowering costs while enhancing quality and speeding the operations during the process of delivery. The concentration on the need to measuring as well as improving supply chain as a way of reducing the ever-increasing cost in the distribution of the company’s products and services serve as the integration of important strategies (Okyay et al., 2015, p. 489). These strategies help in improving distribution process and reducing the cost for the product to be utilized by the end user through original supplier that offers services, products, along with data that add value for different clients and other company’s stakeholders.

The idea that deals with the process of structuring the supply chain need to be aware of the patterns of demand, desires for service level, distance deliberation, elements of costs, along with related elements that determines the cost of distribution moving of Coca Cola Company’s products and services inwards is upstream, and outwards is downward. The upwards activities are always dividend into different tiers of suppliers. Dealing with different suppliers has made it possible for the high cost of distribution process as different suppliers come from different regions that might be far away from company’s headquarter (Wilken and Sinclair 2011, p. 3). Some suppliers are also coming from the regions that have government that imposes huge taxation on Coca Cola Company’s products making it hard and expensive to distribute products to such areas. Currently, Coca Cola Company has remained to be the advocate of strategic process of distributing its products at affordable costs that help in improving wellbeing of company. The company management has been on the forefront in ensuring that distribution of its raw materials are only obtained from established suppliers to ensure that the costs incurred during distribution remain to be constant and to improve with time.  Coca Cola Company competes with other companies in the global markets on the basis of the relative merits of their respective chains of supply (Brandi 2014, p. 158). The competition helps in improving their management accounting and distributions of products that increase their operations. The idea of measuring as well as improving supply chain management is being recognized to be key business process that deals with high costs in the distribution process by Coca Cola Company.

Reducing high cost by using direct and indirect selling Methods

The use of improved supply chain has enabled Coca Cola Company to launch ideal process of distribution of their products such as Zycus that work as source to pay software suite. The database system of managing process of distribution by gathering data from all suppliers in the organization to ensure that costs of operations are well maintained at lower level of operations (Ormond 2015, p. 433). The major consideration that the company has put into consideration remains to be strategic sourcing approach that focuses on life cycle along with the reliability of products along with the company’s services (Tornhill 2016, p. 534). Through the use of such software, Coca Cola Company has been able to establish its reliable suppliers as a way of reducing costs of distribution that have been affecting its operations. Besides, Coca Cola Company has also engaged in various activities that ensure sustainability on process of distributing its products to different products globally. Te use of integration of sustainability within distribution processes of Coca Cola Company remains to be the top priority of management in ensuring that they control cases of high costs. The company has currently ensured that they control costs of distribution by ensuring that it establishes firm connections with other business partners that deal with same products as a way of benchmarking on costs that they incur on distribution (Crawford 2015, p. 36). The idea as helped the management to ensure that they work in accordance with the valuations that their rivals are using in the markets to improve their operations as well as supply chain for different beverages.

Cases of efficient management of inventory as presently helped Coca Cola Company to improve its distribution processes by lowering the costs. The operational managers have ensured that every raw material that the company uses are counted fro so that to help in ensuring that the costs of distribution are well maintained. However, instances of overproduction have made the company to experience cases of increase in cost of distribution when they need to supply huge amount of products to different markets globally (Ladas et al., 2013, p. 171). The company also integrates their activities of production in the ERP systems. The current system of ERP remains to be insufficient for the appropriate measuring and improving supply chain leading to high costs during distributions of products. The high costs result because the company lacks the real-time inventory capabilities (Rad and Lewis 2014, p. 13). Therefore, there is intense need by Coca Cola Company to drill vital information and generate reports as specified by the operational management.

Need for Measuring and Improving Supply Chain in Reducing High Costs of Distribution

For the incredible issue that deals with high cost of distribution, Coca Cola Company needs to establish the sophisticated systems of distribution its products and services to reach every market. The system may involve various fundamental functions that can help in improving the supply chain for different products that the company produces (Van Bosstraeten 2011, p. 17). For instance, the management of Coca Cola Company needs to focus on usage of inventory management to help in planning for distribution as a way of ensuring that the company only distributes its products in different markets as per the demand. The company can also reduce the costs of distribution by focusing on ideas of shipping their products as per the request from different customers. The idea will help in reducing cases where the company has to spend huge sum of money on transporting their products to market then fails to be sold out to targeted customers (de Chaves et al., 2017, p. 66). The company and its management can measure and improve their supply chain as a way of reducing the high cost of distribution by ensuring that the establish electronic map that allows the management to understand the shortest and cheapest route possible that they can use to reach different targeted clients in the global markets. Additionally, management of Coca Cola Company can manage the instances of high cost in the distribution of the products by ensuring that every distributor has to provide the proof of the amount that they have used to distribute different products by providing the official receipt. The use of receipt during the delivery can help management in ensuring that they test different distributors on the amount that they use in the process, as most workers always hike cost that they incur in distribution process (Harris 2014, p. 93). The establishment of efficient plan and electronic product can help Coca Cola Company to improve in its supply chain of distributing products. It make the management to understand the destination of their products and designing the shortest route that will require less money over the other long routes to deliver their production. Moreover, distribution department of the Coca Cola Company needs to have a real-time update function since it remains essential for company’s management control along with communication (Sidorick 2016, p. 951).  The company should adopt the intensive strategy of distribution as a way of reducing cost in the distribution.

Patterns of Demand and Elements that Determine Cost of Distribution

The effective way to reduce the ever-increasing prices of distributing the Coca Cola Company’s products and services remains to be idea of reducing the existing gap and demands can help in reducing the cost. Therefore, management of Coca Cola Company needs to tailor its distribution to help in meeting the demands of different consumers so as to ensure that the company only cater for the products as per the request rather than distributing the goods in bulk that might require high costs for transportation during distribution process. The company can segment their markets by ensuring that they understand the demand from various regions globally (Kent 2010, p. 119). The company should ensure that there is no disparity in what they supply along with what the customer or markets demand. The idea will help in attaining the effective supply chain from managers that will ensure that costs of distribution are well maintained. The reduction in the gap will also help in attaining effective supply chain management to be highly essential for the major function of balancing logistical costs factors together with other factors that affect customer services that can increase costs in the process of distribution (Ehsan et al., 2016, p. 159). Coca Cola Company as an international company that has the mission of refreshing the entire global society can reduce their cost of distribution in relation to measuring and improving supply chain management. The management needs to consider the approaches of bringing in expatriate managers of supply chain that are fully committed to and deeply involved in operations of marketing and distribution of products (Hafezalkotob and Ghezavati 2015, p. 809). The need of employing these managers can help in ensuring that there are no instances of forgery of documents among workers when the company requests for receipts for fuel purchase during the process of distribution.

These strategies for improving networks of distribution can involve the idea of ensuring every channel that is involved in the process work efficiently. There is a need to improve internal communication process within the company as a way of ensuring that distributors and marketers are able to take note of their products during shipping process (Smith 20912, p. 27). Effective channel of communication can help in reducing the time that different customers and marketers of Coca Cola Company’s products need to take when they want items to reach them at every specified time. It also saves on the costs of making inquiries when an individual need to visit the company in person so that they can make order for different products to be delivered to their places. The innovations are implemented in such a way that it gives the company major benefits among its chief competitors such as Pepsi. The idea can help Coca Cola Company to introduce the new techniques in its distribution of different products at lower prices that will in turn increases revenues that the company earns during its operations in international markets (Goodier2015, p. 16). There is the need for the management of Coca Cola Company to have differentiated connections of supply chain to reduce cost in the process of their distribution. The achievement of a differentiated supply chain improvement can be attained by getting in the company to be treated as different entities right from the process of transactions that involve distribution of products to the customers.

Strategic Process of Distribution

Financial year Jan-Dec all values incurred during distributions in USD millions	2013	2014	2015	2016	2017
Revenue/Sales	1.64B	1.75B	2.3B	3.6B	4.32
Costs of Distributing goods including Data & Analytic	982M	1.04B	1.83B	1.94B	2.70B
Costs of Distributing goods including Data & Analytic	923M	980M	1.32B	1.83B	2.60B

(Taken from Coca-Cola Trend Chart flow) Table above illustrates how operations of Coca Cola Company have been increasing as a result of increase in prices it incurs in distribution. The higher the revenue the company is able to collect the greater the rate of distribution. Therefore, Coca Cola Company has to incur huge charges on distributing its products globally so as to get huge profits as shown above.

The graphical presentation above illustrates changes in rates of distribution in different years. It is clear that the rates where high from early days of its operations until early months of 2012 where the management were able to start reducing the rates (Adopted from ADVFN.COM)

Year ended Dec. 31	2015	2016	2017
Capital Expenditure	$937	$878	$800
US (figures in percent)	30	32	23
Africa(figures in percent)	2	3	1
Great Europe(figures in percent)	45	42	51
Latin America(figures in percent)	10	16	19
Middle & Far East and Canada(figures in percent)	10	7	6

Table shows how Coca cola Company spends different rates on distributing products in different rates in the span of three years. Regions with high consumption rates require huge rates of distribution.

The weighted average cost during transportation = Value of Entity of Market (E) / {Value of Entity of Market + Book worth of Debt (D)} * Charge of Equity plus D / (D / (E+D) * Charge of Debt * (1 minus Rate of Tax)

Weights:
it is clear that, assets of Coke are financed by debt along with equity. Therefore, there is a need of calculating the equity’s weight together with debt’s weight.
The charge of market of equity (E) referred to as Cap of Marketplace (M)

Presently, Coke Company's capitalization of marketplace (E) remains to be $180465.680 Million. The value of debt of marketplace is always tough to compute, thus, Guru Focus utilizes book assessment of debt (D) to perform simple arithmetic on high rates of distribution. It seems to be simple technique since it comprise the idea of simplified by addition of past 2-year mean in terms of present share of debt of lasting along with Obligation of leased Capital. By 2018, the company’s past 2-year mean o present share of lasting period debit was about $16264 Million while its past 2-year mean Capital value of that is for Lease compulsion plus lasting debit was $30433 Million. The sum valuation of Book of Debt (D) is $46697 Million

Equity’s Weight = E divided by (E plus D) equals 180465.680 / (180465.680 + 46697) = 0.7944

Debt’s Weight = D divided by (E plus D) equal 46697 / (180465.680 + 46697) equal 0.2056

The comparison between Weight of Equity along with Weight of Debt help in showing differences that exist in distribution rates.

Conclusion

From the discussion in this research paperwork, it is evident that measuring and improving supply chain by Coca Cola Company remains to be an efficient way of dealing with problems in operational management such as high costs in the distribution of products and services. Improving supply during distribution process remains to act as gatekeepers as well as essential assets for the success along with effectiveness of distribution of products at affordable costs by Coca Cola Company. Therefore, for Coca Cola Company to gain competitive advantage in market at distributing its products and services at low costs, it needs to invest further in ideas that deal with measuring and improving its supply chain management. With the ever-growing interests on Coke’s products in expanding overseas into foreign markets, Coca Cola Company management has the mandate to measuring and improving management of supply chain. The company needs to incorporate these concepts along with supply management tools into its strategy of marketing in order to enable efficiency in management of chain supply. There is need to reduce costs in the distribution but by focusing on the needs to be on customer satisfaction in the marketplace and cost efficiency along with strategy of leadership that takes into account different gaps that affect costs of distributions.  Therefore, Coca Cola Company need to ensure effective inventory management practices as well as integration of system of ERP to reduce costs of distribution.

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