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Logistics Process In Coca-Cola: Supply Chain

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Question:

Discuss about the Logistics Process in Coca-Cola for Supply Chain.

 

Answer:

Introduction

In today’s modern business environment, supply chain and logistics process is the most important part for the business. There are many top companies who are adopting logistics process in their business process. This provides the insight of the importance of logistics areas in the business and its impact on the various business operations in a company. For the discussion, the famous beverage company Coca-Cola has taken. It is well known that the Coca-Cola Company is famous beverage retailer and marketer of non-alcoholic beverage concentrates. The company is well known among the customers for its flagship Coca-Cola. The company was started its operations in 1892 and now the company is offering more than 500 brands in over 200 countries. The company is the world’s largest company, largest distributor, manufacturer and marketer of non-alcoholic beverage products.  The company has adopted franchised distribution system in which company produces the syrup concentrate and sold it in various bottles in all over the world.

 

Taking Global Local-

The operations of the Coca-Cola Company are technically global, but it is well known that the demand is a local proposition in every market. The company is serving around 16 million retail outlets across the world. The company has found that to meet the demand, it is important to operate locally. That is the reason; it always operates locally in every market. The company operates with the local bottling plant having focus on the needs of the customers in the specific market. Coca-Cola always uses its local approach to the international market fir effective logistic management. It is well known that the formulas for the soft drink are similar everywhere, so it is not difficult for the company to satisfy the customers by production, logistics and the taste in every market. This report describes the overview of the famous beverage company Coca-Cola and its effective logistics in the market (Frazelle, 2002).

Logistics System

Logistics is one of the crucial part is most of the companies. Logistics is the important part of the business to ensure that the company is meeting the needs of the customers in the operating market. So, it is essential to choose correct management process for the business such as effective inventory management, supply chain and application of advanced technological and CRM system to implement effective logistics management in any company. In every company, there is the requirement of the combined effort for the effective logistics management in the business organization. Each company has the aim to improve its business position in the operating market. Along with this, there are many companies which are adopting various principles of inventory and logistics management to offer best quality of products to the customers. The operations of the logistics and inventory management are related to the management of the products in the business such as distribution of raw material to end users (Sanchez?Rodrigues, 2010).

Logistics can be described as the management of the goods and products between the point of production and the point of use to meet the needs and requirements of the customers. Basically, logistics includes transportation, warehousing, inventory packaging and sometimes security. Proper logistics process is the important part of the business for the long term success in the market (Christopher, 2011). In the highly competitive industry like soft drinks, logistics process plays an important role in the business operations. There are many competitors in the industry which are trying to increase their market share. For them, it is important to place the right product in the right place at the right time. Coca-Cola is one of the famous beverage companies in the world. The company basically uses both inbound as well as outbound logistics. In the inbound logistics, the company is focused on the movement of the materials from the vendors and suppliers into the storage (Rushton, Croucher & Baker, 2010). On the other hand, in the outbound logistics company is focused on the movement of materials and the storage of the products to the end user. The logistics management of the company Coca-Cola is shown in the figure:  Logistics in Coca-Cola

Figure 1: Logistics in Coca-Cola

(Source: Rushton, Croucher & Baker, 2011)

To manage the distribution system efficiently, Coca-Cola has adopted advanced logistics system in the business. Coca-Cola basically sells its beverage concentrates in the bottles adding carbon dioxide, water and sweetener to produce beverage and beverage syrup. The syrups are either sold directly to the fountain accounts or are combined with the carbonated water for bottling. In the logistics operations of Coca-Cola, there are two phase i.e. giving syrup to the bottlers and distribution of those bottles to various outlets. Along with this, product quality and the standard are also maintained by the company. By the logistics management, the aim of the company is to timely dispatch the goods, full capacity utilization and quicker inventory replenishment (Rushton, Croucher & Baker, 2011). Company basically operates with the network of around 12,000 suppliers who are covering products and various services such as capital equipments, ingredients, packaging, building and facilities, fleet and logistics services, IT and telecoms, and sales and marketing services. The suppliers are critical patterns for the business of the company. In the Company Coca-Cola, the finished product is stored and then delivered them by the logistics co-coordinating team. The aim of the company is to deliver the products at the right time and right place with the cost-effective way. The dispatch, warehouse, distribution, buyer logistics and the fleet team are responsible to meet the targets (Albright, 2013).

 

Areas of Logistics in the Organization 

Procurement

Procurement is the other name of purchasing the important product such as raw material and component in manufacturing etc. It is the main part of the company as it depends on the cost of the products. If the company made wrong procurement then the cost of the product will increase which is not good for the business. So, it is the activity of acquiring various goods to complete the objective of the company is called procurement (Hussey, 2007). In the company Coca-Cola, there are main six functions in the procurement process i.e. creation, finance, personnel, supply, conversion, and distribution. There are number of organizational units that are accountable for executing these six functions. The procurement department of the Coca-Cola is the accountable for implementing and managing the majority of the external spend of the company. The procurement team is organized into some areas of proficiency i.e. commodity risk management, direct and indirect procurement and business process (Lysons & Gullingham, 2003).

The company Coca-Cola always creates value for the consumers through providing stability and managing risk at the time of various business operations in the sustainable way. The company basically believes in the innovation and collaboration in the overall logistics management and process which h is most important for the sustainable growth. The objective of the company is to inspire and motivate for the sustainable change so, company has improved sustainability in the procurement process and relationship with the suppliers. There are many steps in the procurement process of the company (Farmer & Weele, 2000).

Terms and conditions- First of all, there are purchasing terms and conditions for the suppliers in the company. The purchase order policies and conditions are included with every purchase order given by the Coca-Cola Company. Further, all the documents are always attached with the purchase order. If the buyer agrees for purchasing and the seller agrees to sell the specific product then terms and conditions related to goods and services are described in the purchase orders (Baily et al, 2008).  

Delivery: Labeling- the purchase order including goods, materials, suppliers or specified equipment in the order will be delivered to the provided address. In the purchasing process of the company, the seller will note the order number of buyer and the point of shipment on all the bills for the package of goods. Along with this, seller will place the labeling on the goods that are specified by the buyers. If the package of goods are not delivered on the time, then  the buyers have right to either accept the delayed delivery and can charge on the seller with the losses or damage of the buyer or buyer can cancel the purchase order or charge on the seller.     

Quantity- There must be exact quantity of the goods at the time of delivery of the purchase order. Buyer assumes that there is no accountability for over-shipment and there is no requirement to pay the seller for the excess quantities in the purchase order.

Payment- The priced in the purchase order includes boxing, packing, loading, storing, drying and shipping the ordered goods and services. It is the policy that buyer will to the seller for the ordered goods within 30 days after the delivery of purchase order. Buyer may hold the payment in some conditions i.e. the goods will not fulfill the requirements under the purchase order or seller is in the break any provision of the purchase order (Brent & Travis, 2008).

Transportation

Transporting the product is one of the main elements in the supply chain process of the company. Coca-Cola drives more than 106 million kilometers in a yarn to transport the products to the customers. The aim of the company is to grow the business but not carbon. It is important to deliver the product effectively and efficiently to achieve the objective (Tseng, 2005). For delivering the products, Coca-Cola uses number of transportation in the business operations as those are as follows:

 

Electric Vehicles-

There are many benefits provided by electric vehicles. For the regular and shorter journey, electric vehicle can carry limited weight. By the electric vehicles, the company is able to complete more than 1100 order in a year. Along with this, company also electric vans for the inner city to deliver the products. Coca-Cola also uses electric vehicles in the company car fleet. There is the backhauling program implemented by customer logistic and routing team in the company. This program is helpful in reducing road kilometers to expand and develop new routes as the opportunities for the company. Although it is complex but there is the need of close collaboration with the suppliers and the customers.

Small Trucks and Company Cars-

The company Coca-cola is focused on reducing emission from the environment. So, company is using car and van fleet by the variety of measures i.e. introducing caps on CO2 per kilometer to trailing electric and dual-fuel cars. The company has more than 200,000 red delivery trucks which represent the system of the company. The company wants to represent sustainable-oriented transport as well. So, the company is powering the fleet with the various efficient fuels i.e. natural gas, electricity, biodiesel, diesel electric hybrids and conventional fuels. In the North America, company is operating with the largest electric fleet. The company has more than 700 trucks using 30% less fuel as compared to conventional diesel and reduces greenhouse gas emissions (Coca-Cola, 2017).

Warehousing

In the warehousing of products in Coca-Cola, products are stored under the most favorable conditions according to the product specification. There are some factors which are considered at the time of storing of the products i.e. humidity, temperature, controlled atmosphere and exposure to the light. Warehouse management includes warehouse design and the process design which is helpful in minimizing the material movement, and integrates warehouse activities with the transportation planning. For the warehousing system, the Company Coca-Cola has Electric Monorail System which monitor over the 3000 available pallet locations. There is strong and empty pallet handling system. The company has total storage capacity having total 36,000 pallets. Those pallets have the output capacity to process up to 280,000 cases every day. The warehousing in the Coca-Cola is built related to the retailers to reduce the transportation cost. In present time, Warehouse in the company are built with high racks so that distribution become much effective.

Packaging and Handling

The finished products are transferred into bottles and cans including high flow rates. As the soft drinks are cooled at the time of manufacturing process, so they are brought to the room temperature before labeling on the products. Labels are fixed on the bottles to provide information related to the brand, shelf life, ingredients and the safe use of the soft drink. Labels are made from the paper and some of them are made by the plastic film. Further cans are pre-printed during the production including the product information. At last, containers are packed in to the trays of cartons and shipped to the larger pallets and create to the distributors. Quality controls are also done by the company for the interest of the public health.

 

Analysis

The role of the logistics areas i.e. customer relationship management, procurement and transportation is very effective for the company Coca-Cola. The logistics areas are effective in improving the productivity of the company in the market. By the analysis, it can be observed that Coca-Cola is the famous soft drink and beverage company in the market. The bottling g plants of the Coca-Cola are on the number one position in terms of soft drink selling more than nine million bottles per day (Green, Whitten & Imman, 2008). Logistics plays an important role in the business process of Coca-Cola. If the product is not delivered to the consumers on time then they will switch to the other brands and company will not be able to gain more market share. So, the effective logistics management id the need of the company to satisfy the customers based on their needs and requirements (Bowersox, Closs & Cooper, 2007). By the effective logistics areas, company is able to deal with the demands of the customers. By applying logistics management strategy, company is able to take ‘continuous move’ to ensure that it will maximize economic benefit and reduce the cost of transportation. By the transportation planning, Coca-Cola is able to optimize the routs and capacity.

Conclusion

This report has discussed the role and importance of the logistics process in the company Coca-Cola. It is well known that Coca-Cola is the famous soft drink and beverage company in the market. From the above discussion, it is observed that company basically uses both inbound as well as outbound logistics. Further, by adopting the process of the logistics, company is able to deliver the products to the customers at the right place and at the right time in the market. it is also observed that If the product is not delivered to the consumers on time then they will switch to the other brands and company will not be able to gain more market share. 

 

References

Coca-Cola. (2017). A Greener Fleet: Reducing Our Transport Emissions. Retrieved on 11th May 2017 from https://www.coca-cola.co.uk/stories/a-greener-fleet

Albright, B. (2013). Coca-Cola's Winning Fleet Management Formula. Retrieved on 11th May 2017 from https://www.fieldtechnologiesonline.com/doc/coca-cola-s-winning-fleet-management-formula-0001

Hussey, D.E., (2007). Strategic Management: From Theory to Implementation. UK: Taylor & Francis

Sanchez?Rodrigues, V., (2010). Evaluating the causes of uncertainty in logistics operations: The International Journal of Logistics Management. 21(1), pp.45-64

Trebilcock, B. (2011). Coke’s new take on voice technology. Retrieved on 11th May 2017 from https://www.logisticsmgmt.com/article/cokes_new_take_on_voice_technology

Christopher, M. (2011). Logistics & Supply Chain Management. (4th). UK: Pearson

Rushton, A. Croucher P. & Baker, P. (2010). The Handbook of Logistics & Distribution Management. Taschenbuch – Kogan Page. pp. 62-79.

Coca-Cola. (2017). Supplier and Customer Partnerships. Retrieved on 11th May 2017 from https://www.coca-colacompany.com/our-company/suppliers/supplier-and-customer-partnerships

Tseng, Y. (2005). THE ROLE OF TRANSPORTATION IN LOGISTICS CHAIN: Proceedings of the Eastern Asia Society for Transportation Studies. 5. pp. 1657 – 1672

Rushton, A., Croucher, P., & Baker, A. P. (2011). The handbook of logistics and Distribution management. London: Kogan page ltd.

Baily, P., Farmer, D., Barry, C., Jessop, D., & David, J. (2008). Procurement principles and management. Harlow: Pearson Education

Bowersox, J., Closs, D., & Cooper, B. (2007). Supply chain logistics management. New York: McGraw-Hill/Irwin.

Brent, D. W., & Travis, T. (2008). A review of inventory management research in major logistics journals: Themes and future directions: International journal of logistics management. 19. 212-232

Farmer, D. & Weele, V. (2000). Handbook of Purchasing Management. (2nd). Hampshire: Gower

Lysons, K. & Gullingham, M. (2003). Purchasing and Supply Chain Management. (6th). London: Pearsons Hall

Green, K.W., Whitten, D. & Imman, R.A. (2008). The Impact of Logistics Performance on Organizational Performance in a Supply Chain Context: Supply Chain Management: An International Journal. 13. 317-327

Fugate, B. S., Mentzer, J. T. & Stank, T. P. (2010). Logistics Performance: Efficiency, Effectiveness and Differentiation: Journal of Business Logistics. 31. 43-61

Frazelle, E. (2002). Supply Chain Strategy: The Logistics of Supply Chain Management. NY: MC-Graw Hill Companies

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