Coca-Cola is a globally recognized brand, and the company consistently delivers its products. Their scale is huge and the territories they cover vary from congested urban settings to remote rural areas. Clearly, this company knows a thing or two about supply chain management. Not only do they respond to the times and maintain flexibility in their operations, they also work toward recyclable packaging and water sustainability. How do they do it all?
This company stays on top of technology. In 2003, Coca-Cola enterprises began a five year, $200 million IT plan called Project Pinnacle. As part of this effort, they combined their logistics with the retail expertise of SAP software. The purpose was to streamline the supply chain by providing the latest technology to managers, delivery drivers and merchandisers. When faced with the dilemma of decreasing sales, they knew that profitability depended on maximizing production and distribution.
Getting More Flexible
Coca-Cola confronted significant challenges during the last ten years as consumers found new interests in flavored waters and juices. Though the company had benefited from equity interests in franchised bottling groups, the need to make more from less prompted Coca-Cola to buy out their main North American distribution groups. With these acquisitions, Coca-Cola was able to better control supply chain operations. The result was improved flexibility of production, as well as better inventory and asset management. After these changes, during the fourth quarter, North American sales rose 3% while the quarterly profit almost quadrupled. They tightened a few belts along the supply chain and the outcome was a success.
Setting a Good Example
While aiming for profits, Coca-Cola has devoted some energy to sustainable packaging. In order to take their bottle from 30% renewable to completely renewable, the company partnered with Gevo, Virent and Avantium in order to develop a route to the biobased para-xylene which would fulfill their goals. A scalable version of para-xylene has eluded chemists, but Coca-Cola is determined to perfect a completely renewable supply chain. This may become a reality as soon as 2015, and they are providing global aid in other unexpected places.
Taking Advantage, in a Positive Way
In even the most rural parts of Tanzania, you can find a bottle of coke. Unfortunately, access to antiretroviral drugs is far less reliable. About 1.3 million people in Tanzania have HIV/AIDS out of the total population of 45 million. Interestingly, the original push for profit has caused Coca-Cola to become an excellent resource in medical distribution. The company uses vehicles that vary from large trucks, to pushcarts, to donkeys. This indomitable supply chain innovation is now being put to use for the delivery of much-needed medications.
“Watered Down” Coca-Cola
Water is an essential resource in Coca-Cola’s supply chain. In the U.S., Coca-Cola uses 2.36 liters of water per liter of soda, and the ratio is 4:1 in India. This simple resource has numerous variables including depletions of water supplies due to population growth, climate change and old water infrastructures. Though the company has taken some criticism in the past for reducing water supplies in some communities, Coca-Cola has researched climate change and committed to four sustainable strategies: reduce, recycle, replenish and risk management. Looking into the future, Coca-Cola’s prominent interest in water supplies could fund productive research in methods of protecting this essential resource.
Even though the company achieved success with development of IT and partnership with SAP, there were still some gaps in the supply chain as of 2010. To further streamline their approach, Coca-Cola partnered with ITC Infotech, a global leader in supply chain consulting. Coke’s main desires in terms of supply chain improvement included metrics with no manual intervention, industry standards that are not Coke specific and an even more vigorous system for reporting hierarchies. Ultimately, Coca-Cola is planning on new global initiatives that will monitor supply chain strategies.
Obviously, Coca-Cola does not sit back and let the world go by. The company has fascinating and proactive strategies in supply chain management which keep it at the top of the business sector. Next time you pick up a coke bottle, look at it more carefully, from a manufacturing point of view, and you might feel refreshed in a less obvious way.
This article was submitted by University alliance, in partnership with the University of San Francisco’s online program, which offers a variety of advanced professional certificates. A supply chain management certification provides up to date information about the industry, best practices, and focuses on sustainability factors. For more information on the courses offered please visit http://www.usanfranonline.com.