Coca-Cola Company: Supply Chain Analysis and Recommendations

This article provides an analysis of Coca-Cola Company's supply chain and recommendations for improvement. It includes a discussion on the cost of each part of the supply chain, what went wrong and right, and recommendations for an integrated supply chain. It also covers the distribution network design and how to overcome the large variation in weekly demand.

Running head: COCA-COLA COMPANY
Coca-Cola Company
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COCA-COLA COMPANY
Part One –Group Work (10%)
a) Show the $ cost for each part of the supply chain and include the weekly record kept
during the playing of the game. [5marks]
b) Comment on what went wrong, and what went right for the whole supply chain
represented in the game.[5 marks]
Firstly, the system we applied to the process was out of control, and we unknowingly slid
into a push framework. Every part of the supply chain behaved independently and focused
distinctly on immediate short term requirements rather than collaborating to comprehend the
demand.The information flow from all fragments of the supply chain was not deliberated and
put into a planning matrix but reacted to safekeeping.
As the customer demand is unpredictable, production and overstocking were not under
control.In the event, the retailer reduces its order; all parts of the supply chain gets affected.
The factory reacted immediately to reduce production.The after-effects of immediate reaction
surfaced at a later stage of the supply chain, creating an imbalance in the system either over-
accumulation of goods or shortage of supply.
Problems increased when the members of the team independently preempted the demand.
We observed two outcomes in the distribution centre,
1.The backlog which was higher than the customer demand.
2.The delays due to non-availability of stock when the demand increased.
At times, we realised the warehouse had stock out of proportion and running out of place.

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We are leading to increasing in the cost of additional warehousing.Here we realised
the importance of forecasting.Analysig the problems which surfaced, we tried to forecast the
demand by observing the overload and the unavailability of goods pattern and tried to work
on the goods available at the distribution centre to satisfy the demands, This helped to reduce
the backlog and to reduce overstock to a certain extent
In the process, we observed that the production was trying to be safe to supply for the
demand. Hence, we started producing and kept the inventory always high, leading to
overproduction. In the process cycle, the chain was imbalanced due to at any point of time,
one of the areas was under severe pressure due to non-availability of stock. These were the
clear signs that the supply chain was not able to envisage the demand and transform into
production.
Overall, we observed that information flow and forecasting is the key in the supply
chain to strike a balance in all the areas of the cycle.It is important to understand consumer
behaviour and demand highs and lows to translate into production.
Part Two–Group Report(30%)
a) In the case of Coca Cola’s factory, discuss how it can overcome the large variation in
weekly demand.[10marks]
Coca Cola's inventory network fundamentally has production and bottling capabilities
across many countries with a capacity of approximately 742 Production facilities and 650
distribution centres. The thumb rule of coordinated interest and supply works on demand,

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operations and inventory planning. The market requirement data includes everyday
cooperation and coordination of the central planning along with the marketing and sales,
while the operation focus on efficiency to service the orders centring around monetary
ramifications of resource optimisation. The planning team has detailed information about the
inventory and controls the inventory.Information flow of the forecast and demand is upstream
and downstream for transparency.
The supplies which are ready to dispatch is waiting for the trigger from the channels
backed up with a strong logistics network.The trucks are custom made to coca cola
specifications, network ability to adapt and flex for unexpected demands of the market. Coca-
cola adopted technology to be highly sensitive to market needs.
The central office had designed the system for real-time response throughout the network
including the truck and workload scheduling to the point of sale distribution.Primarily, Coca-
cola supply concept is based on customer demand.In the event of an unexpected spike in
demand, they are equipped with independently operated distribution centres to handle the
situation.
Reference:https://www.supplychainbrain.com/blogs/1-think-tank/post/20951-demand-
planning-at-coca-cola-whats-the-secret-formula
Coca-cola has adopted Robotic process automation technology to identify hurdles in
the supply chain.Ensures a regular, strong communication and maintains a healthy
relationship with retailers for feedback mechanism and first-hand information about
consumer behaviour. Additionally, the company, localise the distribution centres to respond
quickly to specific demands with in 48 hours.

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Reference (Coca-Cola,
2018):https://coca-colahellenic.com/Campaigns/AnnualReport2018/assets/pdf/Coca-
Cola%20HBC%202018_IAR_Strategic%20Report_15Mar2019.pdf
b) What are your recommendations for an integrated supply chain for Coca Cola? [10marks]
Coca-cola has a capability and capacity of 24 hours lead time for production. Hence it is
suggested that the company improvise steps towards sophisticated distribution system such as
technology-driven inventory management, ship based on orders, order status review across
facilities,key account channel distribution, electronic mapping and direct customer
management channels.
With a strong brand name and capabilities, Coca-cola should venture into company-
owned outlets and franchisee outlets to entice loyalty and market share.These outlets can be
situated in major commercial hubs, high populated areas and increase the presence. Also
these outlets can be a launching pad for their new products.
Coca-cola can work on a pull strategy.
Coca-cola can introduce live processing units at restaurants and bars, allowing
customers to choose flavours, which encourages customers to try different flavours increasing
loyalty.

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Installing microchips to vending machines to trigger replenishing levels so that the
customers are never disappointed due to nonavailability
The company can set-up extra distribution channels to cover rural areas and invest more
in optimising their distribution facilities with refrigerated trucks, in which their competitors
have already started doing.
c) Discuss the distribution network design for Coca Cola. [10marks]
The Coca-Cola Company is a worldwide business that has operation on local scale. The
competitive strategy of the company is to operate on the local scale with a backup of bottling
partners across the globe. The company has maintained the confidentiality of the recipe of the
syrup and recipe, these concentrates; beverage bases are sold to manufacturers and bottling
partners who in turn sell the products to consumers. These manufacturers work in close
coordination with the point of sales connections, hence the consumer base gets a feeling of
direct touch base with the company's manufacturers.
Coca-Cola works on the philosophy of “Think Global, act local and strategically design
the network of distribution and bottling ensuring to meet the local demand needs. Figures
show that Coca-Cola products sold around the world everyday reach 1.9 billion. The global
reach of the company, has been strengthened by their well-planned system comprising of
more than 250 bottling partners worldwide. The system has multiple departments of
management and legalities which are independent of each other.
The perception that Coca Cola Company runs their operations globally is not true since
the system uses the available local channels. The only thing that is supplied to the bottling
companies is the concentrates, bases of the different beverages and syrups. The brand is

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owned exclusively by the Coca-Cola Company and all marketing initiatives are their
responsibility. The work done by the bottling partners include manufacturing, packaging and
distributing the final beverages branded as Coca-Cola products to buyers and other smaller
supplying partners who sell the beverages to customer.
Nonetheless, Coca-Cola’s products are not shipped in a distance of more than 100 miles
therefore the distribution design is quite more responsive to the needs of the customers in
each market around the world. Categorising these points of sales in no particular order is as
follows; Wholesalers/distributors; retail/supermarkets; restaurants/nightclubs/ cafes; petrol
stations; AMTs (Automated teller machines); small kiosks. This form of distribution that
Coca-Cola applies is one of the most well executed comparing to other beverage companies
and this is a boost since the wholesalers and distributers are comfortable working with the
company for the success of their businesses.