Global Supply Chain Management: Coca Cola - Essay Example

Global Supply Chain Management: Coca Cola QUESTION 1 Introduction Coca Cola Company is one of the companies with the largest supply chain globally. It is a manufacturer, retailer and marketer of non-alcoholic beverage concentrates syrup. The company is headquartered in Georgia; Atlanta, United States with many branches and clients worldwide. We shall use the Britain Coca Cola Company as a local company to explore its global supply chain management systems including its relation to other Coca Cola companies in the world. The company operates in over 200 countries with more than 500 brands of beverages. Its flagship brand named Coca Cola is one of the best known brands of sodas in the world. The company produces top five most sparkling brands of beverages that include Coke, Sprite, and Fanta. It also manufactures juice drinks, coffee, tea, drinking water, sports, and energy drinks. All these products are produced using large supply chain management. Due to the vast operations of the company globally, uses global supply chain management effectively to produce and market its products worldwide (Senker and Foy, 2012). The company uses unique global supply chain management systems to manufacture syrup concentrates that are supplied to different bottling companies worldwide. The bottling companies establish and develop their brands locally due to the popular brands of Coca Cola products. The bottling companies are given exclusive contracts to follow the supply chain initiated by the Coca Cola Company. They produce the finished Coca Cola products by combining the concentrate syrups with sweeteners and filtered water. The products are then distributed and sold in wholesale and retail in the countries hosting the bottling companies (Senker and Foy, 2012). Global Procurement Change The success of the Coca Cola Company is facilitated by the drivers for supply chain improvement. One driver for supply chain improvement used by Coca Cola Company is the facilities used by the company. The company offers contracts to bottling companies in countries where it does not have manufacturing subsidiaries. The company is able to market its brands in these countries by supplying concentrate syrups to the bottling companies. The bottling companies produce and market the Coca Cola products local while promoting the global brands of Coca Cola. Another supply chain improvement driver is inventories. The company provides some raw materials for the bottling companies located in over 200 countries. The bottling companies use the raw materials to produce the end product that is highly marketable local because of the reputation of the international brand of Coca Cola (Reichhart and Holweg, 2007). Other drivers of supply chain improvement used by the Coca Cola Company include information and sourcing. To improve its supply chain, the Coca Cola Company uses effective information management systems to coordinate its operations globally. For instance, the company collaborated with SAP to develop supply chain management software systems. The systems are aimed at enhancing the information processing and dissemination among the Coca Cola Company’s subsidiaries and affiliated bottling companies worldwide (Elmore, 2013). It also makes good sourcing of services and goods locally and internationally. For example, the Britain Coca Cola Company outsources its bottling services to bottling companies in the United Kingdom (Schoenherr, 2009). There are several obstacles to achieving strategic fit experienced by the Coca Cola Company. The obstacles include a strategy to increase the variety of its products. The company has established popular brands of beverages but the introductions of other brands face limitations in the market. For example, the company introduced the Novida non-alcoholic beverage brand to compete with other brands with similar characteristics but the product did not gain enormous market recognition like most of its brands. Another obstacle to the companies attempt to achieve the strategic fit includes the difficulties of executing new strategies. For instance, Coca Cola Company customers are used to the classic products supplied by the company. Therefore, the company’s attempts to introduce new products or enhancements of its products may not be successful. The introduction of new brands of the Coca Cola beverages is not supported massively by its customers (Reichhart and Holweg, 2007). The Coca Cola Company uses international strategy to market its products locally and globally using its unique supply chain. For instance, the products manufactured by the British Coca Cola Company are not customized to attract the local market. Instead, the brands are meant to attract both local and international customers. The strategy makes the products global since they cannot be associated with particular countries of production. The company is thus able to transfer core beverage manufacturing competencies to local markets of different companies globally. The only threat to this strategy is that local competitors may customize their products thus attracting the local markets. However, the company has not faced these threats intensively. To minimize these threats the company uses localization strategies though minimally. For example, the company introduces competitions and promotions in different countries to create a sense of customizations of the products. Such promotions and competitions include using numbers inscribed in bottle tops of the beverages to subscribe local competitions and promotions (Branch, 2009). Transnational strategies have improved the supply chain of the Coca Cola Company for many years. The company uses the competencies associated with its products to market its products globally. For example, during major sporting events including FIFA World Cup and The Olympics, the company advertises its products globally through the events. The strategy gives the company a global look. By advertising its products during such global events, the company is bale to exploit cost economics of advertisements. Transnational strategies are used by the Coca Cola Company to improve its local responsiveness. It is able to associate global events with local customers in many countries (Roh and Hong, 2011). Recommendations. The Coca Cola Company has established local and global recognition of its brands through its effective and efficient supply chain management system. However, further improvement of some of its brands is still needed. For instance, soda brands of the company are very popular globally, but its tea, coffee, water, sports, and energy drinks. The company should thus improve the supply chain of the less popular brands using the strategies used to promote the popular brands. Work Cited Elmore, B. (2013). Citizen Coke: An Environmental and Political History of the Coca-Cola Company. Enterprise and Society, 14(4), pp.717-731. Reichhart, A. and Holweg, M. (2007). Lean distribution: concepts, contributions, conflicts. International Journal of Production Research, Vol. 45, No. 16, pp. 3699-3722 Rice, B. F. and Caniato (2003). Building a secure and resilient supply network. Supply Chain Management Review, Vol. 7, No. 5, pp 22-30 Rosič, H.; Bauer, G. and Jammernegg, W. (2009). A Framework for Economic and Environmental Sustainability and Resilience of Supply Chains. In Rapid Modelling for Increasing Competitiveness, Reiner, G., pp. 91-104, Springer, New York Roh, J, Min, H, and Hong, P (2011). A co-ordination theory approach to restructuring the supply chain: an empirical study from the focal company perspective. International Journal for Production Research, 49, 15, pp. 4517-4541 Senker, C. and Foy, D. (2012). Coca Cola. London: Wayland. Steinfield, C, Markus, M, and Wigand, R (2011).Through a Glass Clearly: Standards, Architecture, and Process Transparency in Global Supply Chains. Journal Of Management Information Systems, 28, 2, pp. 75-108 Wee, H, Peng, S, and Wee, P (2010). Modelling of outsourcing decisions in global supply chains. An empirical study on supplier management performance with different outsourcing strategies. International Journal Of Production Research, 48, 7, pp. 2081-2094 Schoenherr, T (2009). LOGISTICS AND SUPPLY CHAIN MANAGEMENT APPLICATIONS WITHIN A GLOBAL CONTEXT: AN OVERVIEW. Journal Of Business Logistics, 30, 2, pp. 1-25, Branch, A. E, (2009). Global Supply Chain Management And International Logistics. New York: Routledge, Discovery eBooks, QUESTION 2 Introduction The Coca Cola Company should improve the supply chain of its less popular products by improving its international supply chain design. The international supply chain of the company can be made more effective by improving the distribution of its products. The selection of international suppliers should be conducted by following effective distribution chains. The distribution chain of the Coca Cola Company products should be enhanced to meet the needs of its customers at minimal costs. For example, the company should select good international suppliers to promote its products based on the reputation of the suppliers. This is because customers are interested in the quality of the products as well the price of the products. The company can choose international suppliers who operate globally so that it can connect its operations with the supplier globally. If both the company and the supplier are located in the same country, then the costs of supplying materials are lower (Manuj and Mentzer, 2008). The Coca Cola Company manufactures its products in at a lower cost in countries where both the bottling and manufacturing facilities are located in the same country. For instance, in the United Kingdom the company makes higher profits since the Britain Coca Cola Company manufactures concentrates syrup. Therefore, bottling companies in the country do not incur the costs of importing the concentrates syrup. In other countries including African countries, the bottling companies import the concentrates syrup. The companies produce the Coca Cola products at higher costs since they use raw materials exported by the Coca Cola concentrates syrup manufacturing companies (Senker and Foy, 2012). For this reason, the company should establish industries in these regions to make the cost of production lower. However, the bottling companies do not incur high costs of exporting products since they use indirect channels to export raw materials. The bottling companies do not use direct distribution channels. Most of the Coca Cola beverages are consumed locally since the company has many bottling companies. Global Network Management The Coca Cola Company uses exclusive contacts as its tools for international sourcing. Prospective bottling companies acquire exclusive contracts to produce Coca Cola brands of products after setting up their industries. The Coca Cola Company then awards a contract to the companies after certifying that the companies meet the standards of the company. The bottling companies produce the products using raw materials provided by the Coca Cola Company. However, the distribution channel of the raw materials is not very effective. This is because some bottling companies are located in countries that are far from the raw materials. Therefore, the cost of importing the raw materials is higher. The Coca Cola Company should distribute its industries so that it can be nearer to the bottling companies. Moreover, by distributing its operations globally, the company will be able to manage its global network easily (Gonzalez-Loureiro, Dabic and Puig, 2014). The global supply chain that should be adopted by the Coca Cola Company should have good objectives. The objectives include responsiveness of the global supply chain. The responsiveness of the global supply chain of the company is defined by its ability to perform its operations within the shortest time possible. Responsiveness of the company is also determined by its flexibility. For example, the company should have the capabilities of introducing new manufacturing methods to develop new beverages. At the same time, the company should meet the needs of customers. The Coca Cola Company can meet the requirements of its customers through customization of its products to meet the needs of the local customers. For example, the company can introduce different capacities of selling its beverages depending on the demands of the local customers (Li and Chan, 2012). The reliability of the Coca Cola Company beverages has increased its profitability. The reliability of its products can be improved by the quality of the ingredients and the manufacturing methods used. For example, a customer is likely to request Coca Cola beverages while in a foreign country because of the reliability associated with the company globally. The company should thus maintain or even improve the reliability of its standards. Another objective of supply chain performance of the company is the relationship between the company and its subsidiaries as well as the bottling companies. The relationship between the Coca Cola Company and the bottling companies is determined by the terms and conditions of the exclusive contracts. Resilience is another objective of supply chain improvement. The company is designed to handle pressures that emerge locally and internationally. The disturbances include occurrences that might defame the Coca Cola brands. The company’s resilience enables it to handle such occurrences and maintain its productivity. Changes in economies of different countries and regions should not affect the company’s productivity adversely. Moreover, the company should not be affected too much by moves of its competitors. Evaluating the Coca Cola Company on its Performance in Coordinating its International Supply Chains The performance of the Coca Cola Company is dependent on its ability to integrate and coordinate its subsidiaries and operations globally. The global supply chain of the company is coordinated by the strategies used to run the operations of the company globally. Integration of new bottling companies into the supply chain is dependent on their compliance the international standards of the Coca Cola Company. The Company uses an independent entity known as the Export Corporation to supply concentrates syrup to all bottling companies in the world. The Export Corporation uses supply chain strategies to sell the raw materials to the bottling companies. The process of supplying concentrates syrup is conducted as an independent business between the corporation and the bottling companies. In countries with Coca Cola subsidiaries such as the Britain, the corporation handles the supply chain of raw materials in the same manner as where the raw materials are exported. The concentrates syrup is produced and sold to the bottling companies locally. The only difference is that the local bottling companies do not incur the high costs of importing the raw materials (Wahl and Bull, 2014). The Coca Cola Company uses software systems to coordinate and monitor its operations globally. A software system known as BASES is used together with SAP systems to coordinate the operations. The computerized system performs Enterprise Resource Plan operations for the company to manage the global operations of the company. Different companies under the Coca Cola brand are integrated into one company through the supply chain management systems. It enables the company to monitor the production lines of different manufacturing subsidiaries and bottling companies in different global locations. It also enables the bottling companies to follow the correct procedures of the supply chain while mixing the ingredients of different beverages. The supply chain management system also coordinates the marketing and distribution of the end products (Garry, 2009). After production of the beverages, the process of distributing the beverages is controlled by the head of the distribution services of particular zones. The distribution heads are responsible for increasing the per capita consumption of the beverages in their designated zones. The zones are further segmented into different routes that make the market further localized to the needs of the customers. The zones and routes develop their localized strategies to increase local competitiveness. The strategies make the company’s operations highly localized in different countries despite their conformity to the international standards of supply chain management (Malik, Niemeyer and Ruwadi, 2011). Strategic supply chain is essential in integrating Coca Cola Company’s subsidiaries and bottling companies. Some strategies include vertical linkage and horizontal linkage. Vertical linkage ensures that companies in different positions and locations of the supply chain are integrated into the supply chain. Horizontal linkage ensures that functional areas of a Coca Cola firm are coordinated and integrated to the global supply chain. Partnership between the buying and selling companies within the Coca Cola brand is enhanced by the exclusive contracts that ensure that a mutual, on-going, and long term relationship is developed and maintained. The partnership is coordinated by the company through the terms and conditions outlined by the global Coca Cola brand. Since the buying and selling companies are committed to developing the same products, they work together in ensuring the quality of the products. They also devise strategies to reduce costs for both companies. Close customer relationships are enhanced through many strategies to involve the customers in the supply chain. The company uses one brand to create a connection between the manufacturing and bottling companies of the company. The strategy ensures promotion of the brand globally (Garry, 2009). The purpose of integrating the supply chain operations of the Coca Cola Company is to synchronize the process needed to deliver a quality final product to the customer. The synchronization of the processes of the Coca Cola Company supply chain ensures that information and materials needed for the production of its beverages are used effectively and efficiently. It also enables the company to strike a balance between the needs of its customers and the cost of production. Involving all stakeholders comprehensively in the supply chain by providing relevant information is recommended. Customer service is an element of the Coca Cola Company that should be considered as an intermediate outcome of the supply chain. The financial performance the Coca Cola Company should be the final outcome if its supply chain. Therefore, customer service strategies should be incorporated at every stage of the company’s supply chain. All in all, quality standards should be implemented in all stages of the supply chain (Wang, Chan and Pauleen, 2010). Conclusion There are several key factors that affect strategic supply. The factors include global decision making. The Coca Cola Company should use effective global decision making strategies. For example, rebranding of its products should be performed with consideration of the consequences of the decisions globally. Some company’s decisions can be made at the top level offices of the company and communicated to all stakeholders of the Coca Cola Company. Critical decisions should involve all the stakeholders (Garry, 2009). A key factor affecting the Coca Cola Strategic supply is the proximity of many countries to its research and development centres. Many countries especially in Africa and Middle East are not close to the company’s research and development centres. The company should set up research and development centres in these regions to involve the countries in the development of the company’s products. Most customers will appreciate the research and development centres since they give them a sense of customization. It will also enable the company to monitor supply performance in these countries. The countries will add their contributions to the company and thus improve the marketing opportunities for the company. Customization of local needs of customers is also easier when research and development centres are closer to customers. Work Cited Garry, M (2009). Recession Impacts Wal-Mart's Supply Operations. SN: Supermarket News, 57, 23, p. 8 Gonzalez-Loureiro, M, Dabic, M, and Puig, F (2014). Global organizations and supply chain', International Journal Of Physical Distribution & Logistics Management, 44, 8/9, pp. 689-712, Li, J, and Chan, F (2012). The impact of collaborative transportation management on demand disruption of manufacturing supply chains. International Journal Of Production Research, 50, 19, pp. 5635-5650 Malik, Y, Niemeyer, A, and Ruwadi, B (2011). Building the supply chain of the future. Mckinsey Quarterly, 1, pp. 62-71, Business Manuj, I, and Mentzer, J (2008). GLOBAL SUPPLY CHAIN RISK MANAGEMENT. Journal Of Business Logistics, 29, 1, pp. 133-155, Vikulov, V, and Butrin, A (2014). RISK ASSESSMENT AND MANAGEMENT LOGISTICS CHAINS. Logforum, 10, 1, pp. 43-49 Wang, W, Chan, H, and Pauleen, D (2010). Aligning business process reengineering in implementing global supply chain systems by the SCOR model. International Journal Of Production Research, 48, 19, pp. 5647-5669 Wahl, A, and Bull, G (2014). Mapping Research Topics and Theories in Private Regulation for Sustainability in Global Value Chains. Journal Of Business Ethics, 124, 4, pp. 585-608, Read More