Planning And Logistics Methods Used By Coca-Cola

Coca-Cola background

Investigate and identify the planning and the logistics method used by an organization.

The order processing is concerned with the logistics system and includes various operations. The logistics management is a component of supply chain management which is used to meet the demand of customers. The supply chain management is the management of all processes which transforms raw materials into the final products. It enables a company to better manage demand and carry the right amount of inventory in order to meet the demand in the most efficient manner. The logistics system is helpful to companies in reducing expenses and improving customer services.  A company is required to maintain logistics management software to take full advantage of benefits. The logistic system has advantages in the form of capital reduction, reducing the cost of production and helps to improve service level. The logistics system includes mainly three activities, order processing, inventory management and freight transportation. The logistics focus on moving products in the most efficient way so that it arrives at the right place at right time. It includes activities such as packaging, transport, distribution, warehousing, and delivery. The benefits of logistics can be achieved by implementing appropriate strategies to manage growing complexity of supply chains. The example of Coca-Cola has been taken in this report to identify an approach for planning and application of logistics and supply chain activities. The approach further includes the techniques used and focus of investment for execution. The concerns have been defined which impacts the decision to implement, the basis for execution and the specific strategies employed. The benefits and limits have been explained of the application of the logistics system. Finally, the future trends and the direction of the organization have been defined in order to see it moving forward.

The Coca-Cola is an American beverage corporation and it's headquartered is in Atlanta, Georgia. The mission of the company is to become prominent supply chain function in the industry by efficient customer service and cost competence. Such supply chain creates value and makes difference. The vision is to become the best place to work for people. The company is listed on the NYSE. Coca-Cola has over 146,000 employees around the world. It has more than 500 brands in over 200 countries. It obliges more than 1.9 billion servings each day. As per the report of 2016, the company had 100,300 associates worldwide (Coca-Cola, 2017). The company has a major market share of around 50%. The values of the company rely on leadership, collaboration, integrity, accountability, passion, diversity, and quality.  

The supply chain plays important role in the business. It also ensures that the process minimizes the impact on the environment and certifies the sustainability in the value chain. The company yields and distributes more than two billion unit cases of products annually. The supply chain is accountable for the obtaining, scheduling, manufacturing, and engineering. The process considers sustainability in the supply chain. The companies which have a prominent presence in the soft drink industry other than Coca-Cola are PepsiCo and Cadbury Schweppes. The entry and exit of soft drink companies do not put pressure on the established company like Coca-Cola. It is going to be very difficult for the new companies to compete with the established brands like Coca-Cola because the new companies will not be able to compete with the company and it’s distribution process.

Approach identified for planning and implementation of supply chain activities

Coca-Cola has large portfolio of products.  The company is committed to evolve beverages and portfolio selections through on-going innovations. Some of it’s products are given below:

Portfolio of Coca-Cola products

Coca-Cola

Fanta

Sprite

Limca

Thumps up

Aquarius

Minute maid apple

Kinley water

Minute maid mango

Zico

The logistics management is the process of incorporating movement and upkeep of goods in and out whereas supply chain management is the coordination and administration of supply chain activities. The first step of accomplishing a task in the logistics management is planning. The company needs to advance a plan in order to discourse how products and services are going to meet the demand of customers. It includes procuring goods, storage facilities and distribution of products at the exact location. The parameters focused on the supply chain are time, transportation and costs. The company has attained competitive advantage through the improved supply chain. The strategies of the company are focused on excellence in logistics, sourcing material management, and physical distribution. The planning process of logistics of Coca-Cola initiates with the supplier and it takes into account the logistical chain (Aivazidou, Tsolakis, Iakovou & Vlachos, 2016). All of this process is done in direction to hand over the final product to the customer.

 

(Source: Emaze, 2018)

The company needs to identify suppliers to deliver the items required to develop products. It also identifies the planning approaches for transport, distribution, and payment of products. The managers are also required to set pricing, delivery and payment process with suppliers. The material flow and the flow of data are scheduled in the logistics process. In the planning process of logistics, genius is capable of covering and planning the range of services and measures of the whole chain. The challenges are constantly faced in the logistics process (Marshall, McCarthy, McGrath & Harrigan, 2016). So Coca-Cola first aims to gain a summary of complication and then improve efficient logistics processes which can meet the necessities. The comprehensive spectrum of services supports a range of services. The genius also helps Coca-Cola to acquire an overview of the overall chain along with the various strengths and weaknesses.

The supply chain management includes manufacturing of products which are demanded by the customers. The company designs products, tests, packs and synchronizes for delivery. The supply chain manager is responsible to fix plans for the activities requisite for manufacturing, packing, and provision for delivery. This phase is the most metric- intensive unit of the supply chain where the quality level, manufacture output, and worker efficiency is evaluated (Zhang, 2017).

 

(Source: Key Differences, 2015)

After planning, development, and manufacturing, the products are distributed to the customer at the final site by suppliers like vendors and retailers. It is also known as logistics phase. Here the orders are acknowledged and the delivery of goods is scheduled. The firms also cooperate for the recipient of orders from consumers and then the system of warehouses are established and the transporters are picked to deliver final products to the consumers.

The Coca-Cola is able to generate universal reach because of the strength of it’s business which compromises more than 250 bottling partners globally. The structure also has various legal and managerial departments; all are self-regulating and does not own control. Coca-Cola runs it’s operations globally which is made possible through various local channels (Taleizadeh, Soleimanfar & Sicilia, 2017). The company produces and sales concentrates and syrups to the bottling partners. The company possesses the brand but it is still accountable for the consumer brand advertising initiative. The bottling partners are responsible to produce, package and allocate the final beverages to the customers who sell products to the consumers (Lee & Vachon, 2016). The bottling partners work diligently with suppliers like grocery stores, cafeterias, convenience stores to implement localized approaches, advanced in corporation with Coca-Cola. The company is a universal company and the products are made available locally to the market where it is retailed.

In the local business of the company, the products are not transported more than a few 100 miles. The company is more reactive to the needs of customers and the local taste of consumers. Coca-Cola sells products to the bottling and canning procedures, distributors and wholesalers (Qiu, Shi & Shi, 2015). Then they are responsible to distribute products at retail channels, stores, eateries, petrol stations etc. 

Coca-Cola implements supply chain activities through the distribution strategies given below:

• Increasing bottling facilities
• Distribution to the rural market
• Improving logistics

There are some subsidiaries of Coca-Cola in other countries which produce and sell essence and beverage bases and powder mixes. The subsidiaries are certified to prepare, package and sell beverages under identified trademarks. The complete beverages are packed in the sanctioned containers bearing trademarks like cans, glass bottles, and tetra packs. The beverages are made available to the customers through the involvement of grocers, small retailers, stores, restaurants and convenience stores. The factors considered in the distribution system are margins, stock-outs, wastages, credit systems, promotions, logistics and channel partners (Linnander, et. al. 2017).

The company faces challenges as it has not maintained a standard process for managing transportation. Coca-Cola needs to have a better indulgent of the freight costs to make judgments which will support company’s vision 2020 business strategy goals comprising dropping inventory and growing volume of sales. To face the challenge of the standard process, the company has brought Oracle partner to support implementation (Wang, You & Li, 2017). The company is recommended to implement a fully cohesive system comprising electronic data interchange and freight payment. Coca-Cola is continually making efforts to convey inbound and outbound carriers online. The oracle transportation management has been arrayed to manage inbound transportation between supplier network and plants. Coca-Cola has integrated five carriers on the system and it is recommended to have fifteen of it’s thirty inbound carriers online. The company is working to arrange the solution for all the outbound transportation providers (Bhardwaj, 2016). The oracle transportation system improves visibility into cargo locations by the generation of status messages. These messages are generated when the products are picking up and delivered. The company has also initiated to track transporter performance containing on-time deliveries and pickups. It enables Coca-Cola to make more cognizant decisions in order to develop competence and reducing merchandise costs which are supporting vision 2020 goals.

Coca-Cola uses proprietary software is some unambiguous modules of SAP to accomplish operations in the all over the world. The software executes the ERP functions for the whole company and it’s global processes. The information such as geographical sales, ingestion trends, sales conjecturing, seasonal disparities, customer relationship data and more can be managed by using this software. The query management and the customer complications are also controlled by this software (Mohamed & Omwenga, 2015).

The company is not having a customary approach for handling transportation. A major understanding of the company’s freight costs is required to make decisions which supports it’s goals along with sinking inventory and growing sales volume (Sodhi & Tang, 2014). Coca-Cola selected Oracle transportation management and organized to cope up with inbound transportation.

As per Supply Chain Digital, 2015, the biggest issue is the sustainability issue is faced by the suppliers of Coca-Cola. The sustainability tracking, community and resource insufficiency are the main 3 issues influence the strategies of the company. The supplier faces difficulty to build sustainability. In order to understand sustainability, suppliers are provided an opportunity to build sustainable future together (Sanders, 2016). The company ensures that the targets are remaining in line with the expectation of stakeholders. The issues which are faced by the company regarding suppliers are sustainability sourcing, community and resource scarcity (Lambert & Enz, 2017). Coca-Cola is working with sellers to certify that it sustainably sources hundred percent of agricultural constituents by 2020. In order to overcome the issue of community, it supports skills improvement and learning skills of 25,000 young people each year. The company also maintenances the expansion of a circular economy by using reprocessed and renewable materials and recycling more packing material than it uses (Jackson & Singh, 2015). The sustainability issues also include the environmental pollution and social enactment of the company. The company focuses on mainly supply chain sustainability activities such as water stewardship, climate defence, sustainable packaging, and energy management. The water stewardship program was designed in order to overcome issues of water. The programme has been designed for the community to support healthy living of animals and people. The company is also committed to ensuring conversation and protection of natural sources such as soil, water and air (Ramos, Gomes & Barbosa-Póvoa, 2014).

The company faces some challenges in the distribution field. It has improbable delivery problems, lack of internal communication, higher cost of delivery process and the customer loyalty glitches. The company can solve the incredible issues by establishing a sophisticated distribution system. It involves various functions such as inventory supervision, orders for consignment, order status, automated map, customer’s administration and more. These functions are helpful to the organisation for the order locality to design the direct route for delivering products. The real-time update functions are also required to be maintained for the manager’s control and communication (Fernie, 2014). In order to resolve issues of customer loyalty, the company should embrace the exhaustive distribution strategy. The company should establish stores at the popular places such as shopping center and some convenience stores. The retail stores should be settled at the place which is easy for the customers to visit. The company can also use pull strategy to promote it’s production. For instance, the company can offer some discount for the particular period. It can also provide loyalty points. The company can also provide free sample to the customers and promote products through the advertisement. Thus, the pull strategy is helpful to improve customer’s loyalty and relationship with Coca-Cola (Dobos, Pishchulov & Gössinger, 2018).

 

(Source: World Finance, 2014)

The company has made a number of changes in it’s logistics to condense carbon discharges and mend distribution service. The producers and distributors gave an indication of the changes and it impacts on the carbon footprint. The overview of backhauling is a practice in which trucks, delivery to the shops are allowed to fill up at the nearby site instead of returning empty to the warehouse. The backhauling assisted to condense carbon dioxide discharges. The company faces issues the manufacturing products more frequently and in the modification of production lines. These issues are put in place on the daily fixed journeys between the main sites (Gattorna, 2017). These issues are resolved by weekly conferences between European teams and locals to antedate production and journey needs.

Coca-Cola faced transportation challenge with wind turbine blades. A few months ago, competition was launched to improve maritime transportation of wind turbine blades. These blades are manufactured somewhere but required to be moved for the final installations at wind farms. The company had challenge to find the best solution from volume and handling point of view. The transportation volume was very less compared to the blades. So, the company launched a project known as ESSO and used innovation team to redesign the packaging. A new system was developed by the dutch innovation agency which does not require individual handling of bottles. The company also faced challenges in it’s logistics system such as inventory accuracy and warehouse space. There should be accuracy of inventory in order to ensure numbers are reliable and accurate. So, the company faced the issue of inventory accuracy. It also faced issue to maintain regular inventory and it was not easy to trace differences. The warehouse staff was not also aware and update from the inventory stock. The company faced problem in identifying monthly requirements and the historical data. There was less coordination to maintain good warehouse management. It also highlighted that stock was slow and had an early disposition which makes space congestion in the area.

The company assured zero tolerance for land grabs in the sugar supply chain. Coca-Cola assured that it does not buy from the plantations which are assembled using land garb strategies. It disclosed company’s top sugar suppliers in order to take actions on urging human rights. The company conducted an assessment of sugar supplying countries. This step was taken to ensure that the land acquired by suppliers with the free and prior approval of communities that had tradition use of the property.

Coca-Cola leads it’s functions successfully due to it’s efficient supply chain management. It can make remarkable change for the organization and enables an organization to achieve long term profitability. Usually the supply chain management is divided into three basic glows, product, information and finances flow. The profits realized from the supply chain management are:

Higher efficiency rate: Coca-Cola is in a great position to incorporate supply chains, integrated logistics, and product innovation strategies. It not only helps the company to predict demand but to act accordingly. The higher efficiency is one of the greatest benefits of supply chain management. The company can adjust vigorously to the inconsistent economy and the shorter product life cycles (Adamczak, Domanski,  Hadas & Cyplik, 2016).

Decrease cost effects: It is also one of the benefits of supply chain management to decrease costs in the diverse areas. These are an improvement in the inventory system, adjustment in the storage space for the finished goods. It also eliminates the damaged resources of the company. The decreased costs improve the system responsiveness to the actual requirement of customers. It is also helpful in improving the relationship with distributors and vendors.

Increases output: The biggest benefit of supply chain management is communication improvement. It has a role in the harmonization and association with shipping and conveyance companies, suppliers and retailers.

Increases business profit level: Coca-Cola has used new technologies in it’s supply chain management to improve collaboration with different areas. It ultimately benefits to the company in increasing business profit level.

Boost cooperation level: The logistics/supply chain management benefits the company by a well-formed communication. The lack of communication leads to the obstacles between vendors and distributors. The technology used in the supply chain embraces the true communication without sharing the same space. The communication enables faster access to forecast, reporting and quotation among other plans in the real-time (Eskandarpour & Hasani, 2015).

No delay in the processes: The communication in the supply chain management leads to lower any delay in the process. Since everyone is known of each other tasks, it moderates any late shipments from vendors, logistics errors in the distribution system. It also hold-ups on the production lines of the company.

Enhanced supply chain network: It is not easy to uphold a sustainable supply chain management. The use of lean practices in the supply chain management enhances the network (Parmigiani & Rivera-Santos, 2015). The information gathered in the different sectors of business allows enhancing supply chain network.

The limitations faced by Coca-Cola in the supply chain management can be known by the following points:

• The changes in weather are the biggest limitation for the company particularly the calamities which took place in the different times all over the year.
• There is no room for creating brand level strategies regarding the beverage Coca-Cola.
• The increasing number of applicants is also increasing company to survive in the market (Freidberg, 2017).
• There is the dominance of substitute beverage products like an energy drink and fruit juices.
• Rivalry firms, the company faced denunciation in the past due to the water management issues. Various groups upraised lawsuits against Coca-Cola because of vast intake of water even in the water-scarce provinces. The company also faced criticism for mixing insecticides in the water in order to clear toxins. It is the biggest need for the company water management. So, it needs to be clear (Ghosh & Shah, 2015).
• Coca-Cola operates in various countries. So, the political issues are a barrier for the company as it has to adhere rules and regulations of various countries (Chalikias & Skordoulis, 2017).
• The company also faces limitation due to it’s over-dependency on the universal authority of company.
• There is lack of control over time frame as rely on the suppliers for the orders put risk of delaying customer’s recipient of goods. If the business does not meet expectation of customers on time then it puts huge impact on the business.
• The optimization strategies of lead time are not well defined in the supply chain management.
• Beyond the supply chain management, the company has various risks. Coca-Cola has moved from local suppliers in the favor of local costs which faces risks from delays in quality control, fails to meet guidelines as per working situations and the environmental guidelines in the other countries (Scott, Lundgren & Thompson, 2018).

Coca-Cola leads in the supply chain functions in the industry in terms of customer service and cost efficiency. To attain this, the company focuses on the efforts to keep people involved, surpassing in sustainability, reducing costs and developing best customer service and approachability. The company has made changes in the plastic bottles (Wang, et. al. 2015). Coca-Cola has introduced biodegradable PET plastic beverage bottle which is made moderately from plants. It has a lighter impression on the planet. The company is looking to develop better bottle packaging. The company has also emerged categories such as juices and plants to enable a stronger portfolio (Gregory, et. al. 2015). The company has been working on it’s portfolio by expanding it’s offerings such as coconut water, zero-sugar fizzy drink, cold tea and more.

The company has also set out a vision for sustainable manufacturing. The company has planned emerging technology, big data and innovations such as smart labels and kitchens to transform the industry for a sustainable future. The technology will control the flow of nutrients, assure quality and address productivity of resources (Labinas & Araujo, 2016). The sustainable manufacturing minimizes the negative impacts on the environment while preserving energy and natural resources. It will also make possible the part of supply chain operations without the intervention of humans in the future. There will be smart tags on the products and smart kitchens to manage availability of food and drinks and reduce wastage. Such technology will monitor in the real-time and keep the supply chain operating to maximize productivity.

The sort of greenness in supply chain management denotes to the accountability of members to certify coordination for the environmental, societal and moral acquiescence from the upstream to downstream associates (Bag, Anand & Pandey, 2017). The green commitment entails a considerable obligation of resources and organizational competences. The company is going to be benefitted from the green creativities in the future. The investment in the advanced technology for the future is going to optimize infrastructure. It will also transform existing plans into effective mega-plants that can efficiently serve the company in various regions. The supply chain management deploys a measurement to enable safety focused cultures to the next level. It is going to minimize the occurrence of quality issues. If the issues occur when there are robust processes and systems to deal with them efficiently.

Conclusion

Coca-Cola is serving over 200 countries and is the leading beverage company. The logistics management of Coca-Cola is one of the most deliberate and executed when it is compared to other drinks of the same kind. It has such influence on the customers that even wholesalers and distributors like to purchase the products in order to ensure their success. The position of Coca-Cola in the consumer’s mind makes it vital for the retailers and traders to maintain sales. The company has largest supply chain and due to the capacity, there are convinced extents which are needed to be resolved. The company is required to make manufacturing plant in every division of the countries to make supply chain management more active. Coca-Cola has achieved goal due to it’s high perceptibility and obtainability of products all over the world. Several integration efforts have been made to maximize the efficiency of the supply chain.

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