Supply Chain of Coca-Cola
Category : Coca Cola Case Studies, Softdrink Industry, Supply Chain Management and Logistics, Supply Chain Process
Supply Chain of Coca-Cola
Background of the Company
The Coca-Cola Company is the world's number one maker of soft drinks, selling 1.3 billion beverage servings every day. Coca-Cola's red and white trademark is probably the best-known brand symbol in the world. Headquartered since its founding in Atlanta, Coca-Cola makes four of the top five soft drinks in the world, Coca-Cola at number one and Diet Coke, Fanta, and Sprite at numbers three through five. The company also operates one of the world's most pervasive distribution systems, offering its nearly 400 beverage products in more than 200 countries worldwide. Nearly 70 percent of sales are generated outside North America, with revenues breaking down as follows: North America, 30 percent; Europe, Eurasia, and the Middle East, 31 percent; Asia, 24 percent; Latin America (including Mexico), 10 percent; and Africa, 4 percent. Among the company's products are a variety of carbonated beverages (including the aforementioned brands and many others, such as Fresca, Barq's, and Cherry and Vanilla Coke); sports drinks (POWERade and Aquarius); juices and juice drinks (Minute Maid, Fruitopia, Hi-C, Five Alive, Qoo, Maaza, and Bibo); teas (Sokenbicha and Marocha); coffees (Georgia); and bottled waters (Ciel, Dasani, and Bonaqua). Moreover, the company holds the rights to the Schweppes, Canada Dry, Dr Pepper, and Crush brands outside of North America, Europe, and Australia. Coca-Cola's development into one of the most powerful and admired firms in the world has been credited to proficiency in four basic areas: consumer marketing, infrastructure (production and distribution), product packaging, and customer (or vendor) marketing (http://www.fundinguniverse.com/company-histories/The-CocaCola-Company-Company-History.html).
Supply chain is considered as one of the most important aspect of any business or organization. It is define as the flow of the different products, services, information, together with the money from one important unit to another. It also serve as an important aspect that connects the different units that are working as a team for them to meet the different opportunity, desires, demands, tastes and inclinations of the customers. Furthermore, it is considered as an important infrastructure that holds the different important processes inside and outside the company such as production, distribution as well as consumption of products and services from the suppliers to the manufacturers, from the distributors to the retailers up to the customers. All of the said units are considered as connected and interrelated in the demand market (Nagumey 2006, p. 3).
Supply chain management is the systematic and strategic coordination between the traditional business functions and the tactics that are used in order to implement across the different functions of the business in a given company in a supply chain in order to improve the long-term performance of every company and the supply chain as a whole (cited in Hugos, 2006, p. 4-5).
Supply chain can be considered as one of the most important sources of competitive advantage by means of excelling in the reduction of cost as well as focusing on the different back-end processes such as purchasing, manufacturing as well as the physical distribution. Therefore is considered as a great help in improving as well as developing the general or overall strategy of the company that will help them to maintain their position in the market (Cohen & Roussel, 2005 p. 36).
Supply Chain Management of Coca-Cola
The Coca-Cola system produce the concentrates and bottling partners manufacture, package and distribute the product. The raw materials that are used are sugar, citrus, coffee and other flavors, together with water (Coca-Cola, 2008).
For the past few years, the company focuses on changing some important aspect of its supply chain in order to meet the changing demands and needs of the environment and the customers. Coca Cola’s fourth quarter earnings soared, and the Wall Street Journal report attributed some of the results to the acquisition of North America bottling operations. Sales volumes in North America rose 3%, excluding the impact of acquisitions, and unit shipment volumes are increasing. Quarterly profit nearly quadrupled and total worldwide revenues were up 40 percent. Current opinion in the Wall Street analyst community is that growth has come at market share expense of competitors. Coca Cola was not immune to higher inbound commodity costs and anticipates overall costs to be up $400 million in 2011. More importantly, increases in juice, aluminum, plastic and energy will be more impactful since Coke now controls major portions of bottling and distribution, and the company has already embarked on incremental price increases among products, which may extend through the remainder of 2011 (http://www.theferrarigroup.com/supply-chain-matters/tag/coca-cola-supply-chain/).
Coke has now announced its intention to acquire the North America operations of Coca-Cola Enterprises Inc. for roughly $15 billion., At the close of the transaction it will have direct control of over 90 percent of the total North America volume. Coca-Cola Enterprises will be re-structured to eventually gain control of European production and distribution (http://www.theferrarigroup.com/supply-chain-matters/tag/coca-cola-supply-chain/).
Cohen, S & Roussel, J 2005, Strategic Supply Chain Management: The Five Disciplines for Top Performance, McGraw-Hill Professional.
Hugos, M 2006, Essentials of Supply Chain Management, John Wiley and Sons.
Nagumey, A 2006, Supply Chain Network Economics: Dynamics of Prices, Flows and Profits, Edward Elgar Publishing.