Global Logistics and Supply Chain Management for Coca-Cola Company

This study aims at illustrating how Coca-Cola strategizes and maintains a proper supply of its products to make sure the products are always available on the shelves of local retailers and accessible to consumers. The study explores a detailed account of Coca-Cola Company, the structure of Supply Chain the company uses, the developments it has achieved and challenged the company faces in the process.

Global Logistics and Supply Chain Management1
GLOBAL LOGISTICS AND SUPPLY MANAGEMENT
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Global Logistics and Supply Chain Management2
Global Logistics and Supply Management
Abstract
Companies that operate far from the targeted customers are forced to invest a lot of resources
in making the product available for consumers. Multinational companies like Coca-Cola
Company use various strategies to carry out and manage their supply chain. The approach
employed by the case in this study is unique in that the parent company, Coca-Cola Company
formulates the syrup used by other contracted bottlers to manufacture the final product. This
study aims at illustrating how one of such multinational companies strategizes and maintains
a a proper supply of its products to make sure the products are always available on the
shelves of local retailers and accessible to consumers. In this study, we explore a detailed
account of Coca-Cola Company, the structure of Supply Chain the company uses, the
developments it has achieved and challenged the company faces in the process. Coca-Cola
Company was established in the 1880s in Atlanta Georgia, United States. The company has
grown and developed over the years to become one of the world's leading producers of non-
alcoholic drinks that supply the entire world population with their products. Coca-Cola is
currently the world's most popular soft drink producer and boasts of having the largest
customer base in the industry

Global Logistics and Supply Chain Management3
Table of Contents
Abstract....................................................................................................................................2
Introduction..............................................................................................................................3
Analysis of Coca-Cola Supply Chain..........................................................................................5
Levels of Coca-Cola Supply Chain..............................................................................................6
Upstream Activities...............................................................................................................6
Downstream Activities..........................................................................................................7
Operations............................................................................................................................9
Consumer Responsiveness...................................................................................................9
Emerging Trends and Supply Chain Challenges......................................................................12
A Changing Marketplace.....................................................................................................12
Recommendations..................................................................................................................14
Conclusion..............................................................................................................................16
List of Reference.....................................................................................................................17

Global Logistics and Supply Chain Management4
Introduction
The main aim of companies and any other business enterprise is to satisfy the demands of
their customers. This process includes gathering information about the needs and desires of
customers, gathering of the necessary resources to produce the product demanded by
customers than the actual production process(Hoffman 2016). It is after the production of the
products that the manufacturer finds ways of making the goods and services offered available
to consumers. It should be noted that not all customers of a company are located near the
production center. Some of the consumers are found far away from the production site and
therefore need some well-organized chain of distribution to make the products available for
the customers. Multinational companies that produce products consumed worldwide invest a
lot of resources in making sure that their products reach the final consumers (Hou, Wei, Li,
Huang, & Ashley 2017).The success of a supply chain depends on the ability of the process to
meet its goals efficiently, using as minimum resources as possible and delivering the product within
the required time.
For instance, Coca-Cola which is currently considered the largest soft drink producer global
invests billions of dollars in making sure all the consumers in any part of the world can
access the product irrespective of the distance from the nearest production plant.

Global Logistics and Supply Chain Management5
Hoewe and Hatemi(2017) explain that supply chain refers to the organization of resources
and people to make sure that the products and services are moved from the producer or
supplier to the final consumer. It should be noted that customer loyalty mostly relies on the
company's ability to maintain a stable and reliablesupply of its products such that the
consumers never lack the products in the nearby stores and shops (Macchion, Fornasiero, &
Vinelli 2017). Excellent product quality and well-maintained supply and proper
advertisement make consumers feel safe and confident in always getting the product
whenever they need them. As mentioned earlier, multinational companies spend much of
their resources in making sure the products they produce are available to their consumers
whenever they need them. Such corporations go-ahead to establish their production plants in
areas they feel have a more significant population of the product's consumers.
This study aims at illustrating how one of such multinational companies strategizes and
maintains a proper supply of its products to make sure the products are always available on

Global Logistics and Supply Chain Management6
the shelves of local retailers and accessible to consumers (Powell & Gard 2015). In this
study, we explore a detailed account of Coca-Cola Company, the structure of Supply Chain
the company uses, the developments it has achieved and challenged the company faces in the
process. Coca-Cola Company was established in the 1880s in Atlanta Georgia, United States.
The company has grown and developed over the years to become one of the world's leading
producers of non-alcoholic drinks that supply the entire world population with their products
(Macchion, Fornasiero, & Vinelli 2017). Coca-Cola is currently the world’s most popular soft
drink producer and boasts of having the largest customer base in the industry.
It should be noted that it is not an easy task maintaining a steady supply of products to satisfy
the ever-changing needs of the consumers and effectively competing for the other companies
that manufacture other brands considered as substitutes. So far this goal has been achieved
through a well-maintained supply chain that thrives through a well-established feedback
channel and taking proper and fast actions on the feedback from the consumers. Coca-Cola
counts on the company's well-coordinated and robust production, marketing, distribution, and
customer feedback efficiency (Prajogo, Mena, & Nair 2018). The products of the company
are consumed in over 200 countries in the world with about 500 brands and totaling to 4,100
products. The various brands that Coca-Cola products include minute maid, sports drink,
coke, Fanta, diet coke, sprite, and Dasani drinking water(Yang& Fan 2016). The Coca-Cola
Company management works hard and comes up with innovations to increase the company's
market share in non-alcoholic drinks industry globally through effective marketing and
distribution as well as maintain the high quality of their products to make consumers feel the
value of their money.

Global Logistics and Supply Chain Management7
Analysis of Coca-Cola Supply Chain
With a broad customer base in almost all parts of the world, the company has to formulate a
method of making sure all the customers are satisfied, and their needs are met (Rushiun &
Lamb 2018). To achieve this goal in a most simple, effective and efficient way, the Coca-
Cola Company has adopted a scarce means of distribution where the parent company only
produces a syrup concentrate which is then sold to various bottling companies located in
different parts of the world.
These bottling companies are located in areas where Coca-Cola customers are, and the
companies are assigned trading territories to avoid overlapping and unnecessary competition
among themselves(Yang& Fan 2016). In this type of supply and distribution system, the
mother company owns only one bottling company by the name Coca-Cola Refreshments,
located in North America and is only serving consumers in that territory. All other consumers
of Coca-Cola products are served by the bottlers, who buy production right from Coca-Cola,
produce the finished product from the syrup with the use of water and other sweeteners. After
the production process, the bottling companies package the products in cans and bottles,

Global Logistics and Supply Chain Management8
distribute, merchandise, and sell the products to final retailers such as food service
distributors, restaurants, vending machines, and retail stores (Yang & Fan 2016). This supply
chain is divided into two levels.
Levels of Coca-Cola Supply Chain
Upstream Activities
This report will mainly be focusing on the downstream activities of the product which entails
partnerships with different bottlers, distributors, and channels used to reach different retailers.
Upstream Activities
The activities at this level of the companies supply chain are within the tightly held secrets
surrounding the formula used in the production of the syrup concentrate that the company
sells to the various bottlers (Yang& Fan 2016). The ingredients and the recipe used in the
manufacture of the syrup are tightly held in the main vault of Sun Trust Bank located in
Atlanta; this is to safeguard the information about the cost of producing the syrup and elude
other competitors who may want to copy the formula. Some reports have indicated that the
company spent over 100 million dollars in the year 2009 to produce the products sold. Many
believed that sugar, sucrose or high-fructose corn syrup, is the main ingredient used in the
manufacture of the syrup Coca-Cola sells to other bottles and the company is said to spend a
lot of its resources to tack the prices of the ingredients used. The tracking helps the company
to purchase the raw materials from the cheapest market with the highest possible quality.
Other components believed to be carbonated water, caffeine, phosphoric acid, and some
natural flavoring. Coca-Cola Company is supposed to have some other different supply
chains for the raw materials and their identities are withheld. The events happening at this
stage rely on the concepts of some theories.

Global Logistics and Supply Chain Management9
Strategic Choice Theory
According to this theory, leaders in play important roles in our society; family, community,
company, or in industry setup (Tokman, Richey, & Deit 2016). Even though the decisions made
in a company are influenced by external environment, there are company rules and decisions
that are reserved to the management and such decisions serve the interests of the
management. In this case, the Coca-Cola Company manufactures the syrup concrete on their
own and keeps the formula secret. This decision servers the company and helps in managing
the production of their brands.
Downstream Activities
This part of Coca-Cola Company chain of supply mainly deals with the franchise distribution
where Coca-Cola Company is believed to produce a syrup concentrate. The company then
sells the syrup to other bottling companies worldwide who have exclusive territorial rights to
provide final product base on the guidelines from Coca-Cola (Uzsoy, Fowler, & Mönch

Global Logistics and Supply Chain Management10
2018). The parent Coca-Cola Company owns North America's Coca-Cola Refreshments
plant but also has minority shares in most of the bottling companies that produce Coca-Cola
products.Such bottlers includeCoca-Cola FEMSA, Coca-Cola Hellenic Bottling Company
(CCHBC), Coca-Cola Enterprises, Coca-Cola Amatil, and Coca-Cola FEMSA.These bottlers
operate independently and are allowed to sweeten the product according to the tastes and
demands of local customers. All these are done within the policies set by Coca-Cola
Company which develops the product details, comes up with marketing strategies, and sells
the syrup (Kim, Lee, &Minjung, 2017).It is the work of the parent company to set the basic
structures of businesses involving its products in regards to operational procedures, customer
relationship, and feedback management.
To understand the whole process of supply chain management better, a review of a small
channel flow is necessary. The parent Coca-Cola Company located in Atlanta uses its
secretly guarded formula to come up with the syrup concentrate which the company then sells
to the Bottlers with the territorial rights such as Coca-Cola Enterprises. In this case, the Coca-
Cola Enterprise manufactures the beverage by producing the syrup with other ingredients,
does packaging, markets, and sells it to the retail customers and consumers within its
territory; North America and Canada in this case. The branch of the mother company
entrusted with selling the syrup to bottlers is referred to as The Coca-Cola Export
Corporation (TCCEC) (Sodhi & Tang 2014). This branch coordinates with the regional
offices located in different parts of the world to come up with partnerships with local bottlers
who use the syrup to produce Coca-Cola products and sell to their respective local markets.It
is only in the United States whereThe Coca-Cola Export Corporation bypasses the local
bottlers and goes ahead to produce fountain syrup and sell to some authorized wholesalers
and retailer.

Global Logistics and Supply Chain Management11
Operations
This study uses this section to analyze how the bottlers manufacture, market, distribute, and
sell the Coca-Cola brand to the final consumers in their local territories. Sawik(2017)
explains that it should be noted thatthe parent company, Coca-Cola is responsible for setting
the policies and guidelines for operations that are carried out by the bottlers, and in this
regard most of the bottlers' operations are standardized and most decision-making processes
are done centrally (Sanders 2016). The bottlers serve their respective geographical territories
under a head office that aligns all the operations of other players in the chain.
The bottlers ship the syrup from the Coca-Cola Company (Atlanta) with the help of The
Coca-Cola Export Corporation; they then manufacture the drink by mixing the syrup with
other ingredients as instructed by the parent company and packages them in bottles and cans
(Maehle & Supphellen 2015). The bottlers then market, distribute, and sell the final product
to the consumers.
Channel coordination theory
This theory gives helps in management of the supply chain by aligning the operations of
other players in the system to a common policy. The use of this theory has helped coca-Cola
company in putting the operations of the bottling companies in control (Lian & Ke 2018).

Global Logistics and Supply Chain Management12
The company gives the directives on how the bottling companies should manufacture,
market, and sells the Coca-Cola branded products. This theory is also referred to as Supply
Chain Coordination Theory.
Consumer Responsiveness
Coca-Cola Company takes every measure to make sure customer satisfaction is maximized,
and that is the reason behind the formulation of the policies and operational guidelines for the
bottlers. The company acknowledges the fact that the consumer demands are continually
changing and there are also other emerging trends to handle like competition from other
related companies(Laihonen & Pekkola 2016). The explains that to serve customers with the
highest possible level of satisfaction; it must be open to, appreciate and accept the new
developing cultures and ideologies. Other basics that control how the company responds to
customers include the following
a) Consumers love products produced locally by people and producers who support local
events in the community.
b) There is a resurgence in the traditional cultures and rituals that bring back past
tastes of the traditional foods and drinks.
c) Consumers like feeling being identified by a brand that is stable and ever
available
d) Consumers now try to manage their health by controlling what they consume
hence the need for higher quality foodstuffs.
e) Consumers expect to engage with the brand on matters to do with quality and
the changing needs.

Global Logistics and Supply Chain Management13
Coca-Cola Company tries to follow and incorporate the above trends when coming up with
new products and when handling any emerging issue that may arise between the company
and the public (Ivanov, Mason, & Hartl 2016). The company puts the customers at the heart
of its operations to be very sensitive to changes that may occur in the side of consumer
demands and needs. Coca-cola operates under the umbrella of the consumer is part of the
solution not necessarily the source of the challenges the company faces.
Customer-relationship management Theory
This is a theory that tends to improve the relationship between the company and customers.
According to Debnath, Datta, and Mukhopadhyay (20160 the company uses the data on
customer history with the company to help improve the relationship. Coca-Cola Company
has used this theory for long by identifying some few customers whose grievances affected
the company’s image, contact them and find engage them in resolving any standoff. The use
of this theory has improved customer loyalty to the company.

Global Logistics and Supply Chain Management14
Emerging Trends and Supply Chain Challenges
A Changing Marketplace
Over the last few decades, the company has experienced changes in their marketplaces with
consumers moving towards the use of technology in doing their purchases. Currently, the
company serves more than four generations whose behaviors shape how to interact with the
next generation (Rushiun & Lamb 2018). There have been significant changes that started
with the emergence of larger store format. In the recent past, there have emerged online
markets that concentrate on proving speed, convenience, and ubiquity when handling
customers. Consumers improve their knowledge about products one of the ways the retail
shall improve beyond the current point is the use of technology (Hendricks, Connor, Lambert,

Global Logistics and Supply Chain Management15
Brown, Burger, Mc Fie, Readhead, & Viljoen 2015). These general changes in marketplaces
in the industry have also influenced the type of innovations that the company comes up with
in regards to satisfying the consumer needs. The previous survey done on the company
indicate that the sustainability issues the company focuses on are the sourcing, community,
and the scarcity of the resources the company uses in its production process.
Gouda and Saranga (2018) illustrate that the findings of the survey and further discussions on
the same, Coca-Cola Enterprise have updated its sustainability plan to make sure that its
targets remain with the expectations of the stakeholders. The updates were done in line with
the feedbacks the suppliers got from the consumers as follows.
Sustainable sourcing: the company intends to work closely with the suppliers to make sure
its sustainability sources are mostly agricultural by the year 2020.
Community: the company intends to improve its corporate social relations by increasing its
participation in community activities and events and help developing talents of a target
250,000 youths annually.
Resource scarcity: based on this increased risk, the company plans to develop a circular
economy where it grows the use of renewable and recycled materials in its production.
Some of the challenges Coca-Cola Company faces in its production include accusation from
environmental lobby groups claiming that the company uses too much water in its operations
starting from production process to the supply chain management (Freeman, Kelly, Baur,
Chapman, Chapman, Gill & King 2014). The company has responded to this claim by
promising to find a way of reintroducing every drop it uses. The management of the company
works hard to come up with a recycling process that helps them recycle as much water as
possible.

Global Logistics and Supply Chain Management16
Another environmental challenge is the dumping of the packaging materials used to store
Coca-Cola products. Most of the packaging materials are the no biodegradable plastics and
bottles. The company has launched a policy of recycling the bottles, and at some point, the
company pays for the packaging material to be brought back for use.
There have been cases of discrimination based on religion, gender, and race in some
production plants related to Coca-Cola Company. The company has come out openly to
explain to the public about the nature of contracts that exist between the company and the
bottlers (Das 2018). The management of those Bottlers does some operations like the hiring
of staff. However, Coca-Cola Company promised to review the terms of contracts to have
influenced the hiring and firing processes in the bottlers; given that all the mess negatively
affect the brand name of Coca-Cola.
Another challenge has been the issue of property rights and some competitors colluding with
some of the bottlers to steal the formula and ingredient combinations of the Coca-Cola
products. In the recent past, some bottlers have betrayed the contractual agreements with the
company and sold out some syrup to competitors in the industry. According to Edeling and
Himme (2018), the immediate reaction from Coca-Cola has been the termination of such
contacts and lodging lawsuits against the bottlers for breach of contract. The general response
to this trend was the introduction of the Coca-Cola Export Corporation to monitor the
movements of the syrup up to when it is used for production.
Recommendations
Perkins(2014) states that when the company realizes that they have caused any harm to the
public through the operation of the leading company or the bottlers operating under the
brand, Coca-Cola commits should commit to participating in the remedial process. The

Global Logistics and Supply Chain Management17
company should come up with numerous channels the public can use to raise their grievances
to the company when their rights are infringed (Cheng-Ju & Chien-Wei 2018). The company
should allow the trade unions at the global level to act whenever there are complaints from
the public concerning the operations of the company. Trade Unions and civil rights groups
are always the voice blowers when it comes to multinationals breaching their contractual
responsibilities and have adverse impacts on the rights of the members of the public.
The company should direct the businesses that trade with the company’s brand at the local
level to engage the public on the issues concerning their grievances on the operations of the
traders. The problems that cannot be solved at the local level need to be escalated to the
global level to capture the company attention (Challagalla, Murtha, & Jaworski 2014). The
Coca-Cola Company on several occasions has gone without realizing that some of their
subsidiary producers harm human rights and go free since some victims fear to challenge
them in court due to the brand's financial muscle. The company should do due diligence
study on the conducts of the bottlers and other traders who use the company brand. Such
business entities take advantage of the respect and loyalty the public has for the brand and
mistreat the public knowing that the victims would not raise any alarm (Bakan 2016). This
needs to stop as the public lose respect and loyalty for the brand as the mistreats continue.
In a bid to address the challenges affecting the workers employed by the bottlers, Coca-Cola
Company needs to direct their associates to provide workers with the mechanisms of
expressing their grievances. In cases where there are gross misconducts by the bottlers, the
mother company needs to take actions.
Additionally, the company needs to carry out frequent audits on the local bottlers to limit
misuse of resources (Bakan 2016). Close monitoring of the subsidiaries would go ahead to
reduces cases of bottlers selling the syrup concentrate to competitors who try to imitate Coca-

Global Logistics and Supply Chain Management18
Cola products. Any misconducts and non-compliance to the set policies and guidelines
should lead to severe actions taken against the culprits.
Conclusion
From the above illustrations, we realize that companies that operate far from the targeted
customers are forced to invest a lot of resources in making the product available for
consumers. Multinational companies like Coca-Cola Company use various strategies to carry
out and manage their supply chain. The approach employed by the case in this study is
unique in that the parent company, Coca-Cola Company formulates the syrup used by other
contracted bottlers to manufacture the final product (Grewal, Saini, Kumar, Dwyer, &
Dahlstrom 2018). The main aim of companies and any other business enterprise is to satisfy
the demands of their customers. This process includes gathering information about the needs
and desires of customers, gathering of the necessary resources to produce the product
demanded by customers than the actual production process.

Global Logistics and Supply Chain Management19
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