Supply Chain Management is possibly, the only key channel Coca-Cola needs to handle as a truly global organization. Coke has adopted distributed supply chain model in order to supply to the local markets with rapid turnaround times. The parent Coke Company, based out of North Atlanta, the focus is purely on manufacturing the highly secretive concentrate which it supplies to the distributed manufacturing facilities across the globe.
A rather clever innovation adopted by Coke is to have created cleverly positioned multiple manufacturing facilities, in each of the markets where people guzzle this beverage. Each of the manufacturing facilities has its own set of suppliers and logistic service providers, individual billing and collection systems, as well as people who supply a variety of inputs required for the production of this world famous beverage. Several innovations have been done for each of the manufacturing and supply locations, in order to create a perfect locking intimacy with the consumer at each location.
The amazing factor is that, the parent company has allowed each of the local manufacturing facilities to function as autonomous partners in creating that perfect solution, in order to ensure mass availability of the world’s favorite beverage. It would have been an amazingly humungous task, if a central manufacturing concept was driven by the parent Coca-Cola Company. The originality and uniformity of taste is still maintained by the central supply of the concentrate. This ensures that Coke tastes the same anywhere in the world. This is possibly the first and the greatest innovation in the supply chain of Coke. This paper will specifically look at how palating has been innovated and also a complete look at some of the philosophies of the supply chain at Coke, among others.
Coca-Cola refreshments, USA, at their corporate facility in Atlanta, use a VoIP system. There is a well-designed voice application that is hosted on a server bank ranging from the data center, PABX, and in over 100 facilities using the voice system. The primary technology behind this is the speech recognition and the text-to-speech application. This application translates voice XML created earlier into voice-based instructions for workers to execute. The beginning of this entire system is the order that gets generated centrally, and confirmed at the ERP system and then passed on to the application to generate an order in voice XML format. These pages are then routed to the PABX system and are ready to be routed to the personnel who call-in to the system. At the warehouse, an order selector logs in and first prints a paper pick-list and then selects a VoIP telephone and headset. Each phone has an individual IP address. On logging-in to the system, the selector receives instructions in English, Spanish, or French.
After proper authentication, and selector’s profile, the system selects the order to be picked. The selector is then directed to a slot for picking the order, who drives on a fork-lift to the slot, and on verification of the slot number, the picker is instructed to pick the right product and quantity. After this, the selector is directed to a printer, for generating a palate label. After confirming, the system asks the selector to stretch wrap and stage for delivery. This entire system is based on VoIP, and is an amazingly fast and accurate method for picking and packing orders and is virtually error-free.
All the manufacturing partners of Coke are aware of how critical supply chain management is for business, and individually they use either SAP or Oracle for an ERP solution to ensure rigorously correct servicing of the received orders. This ensures that the person on the field, who picks orders from retailers, is always delivering correct orders and thus keeping the retailer happy, who forms a critical point in the entire supply chain. In almost all the partner facilities, the automation is complete and is invariably packed by sophisticated ERP systems.
Coca-Cola Shanduka beverages used the parent company’s Coke One Foundation Solution to deliver better to its customers. The fundamental premise of this particular model is elimination of non-value addition activities, using human intelligence to focus on analysis than on transactional issues, while also focusing in future and present, rather than reconciliation and reporting of the past, eventually improving customer service consistently. This provides direction and business transformation framework, rather than mere IT-enabling of processes across the organization. The outcomes of this particular process is to enable relevant information availability in real-time, ensuring visibility of processes, creating a common solution platform, and enhanced customer satisfaction due to developed processes and procedures at all times.
Each manufacturer, on an average, supplies, millions of cases on a daily basis and there is a need for creation of standardization of processes, and this became part of the vision 2020 business strategy adopted by Coca-Cola. Towards this end, the Coca-Cola vision 2020 business strategy, clearly mentions reduction in inventory as well as yearly incremental sales. To achieve these objectives, the Coca-Cola has adopted Oracle transport management, to manage inbound and outbound transportation. Carriers are integrated on both sides.
One of the highlights of the above system is that the Coca-Cola’s finance team would be empowered to audit all the invoices without an exception and as well approve them rapidly. The transportation management system ensures that status messages are generated whenever there is a pick-up and delivery. This, in addition, also helps in tracking the carrier. This system, moreover, ensures easy enhancement in efficiency and freight-cost management.
Coca-Cola SCMC, China, which has 17 plants, is using Digi-TRACC technology. The implementation of Digi-TRACC technology has enhanced mechanical efficiency, by 10, 16, and 20% in the pilot lines in three production lines respectively, in the first year of operations. There was a reduction in the consumption of electricity by 35% per liter of beverage, and fuel consumption also reduced by 41% per liter of beverage. Simultaneously, water consumption per liter of beverage improved by 49%. All this happened, despite, challenges of language, skill shortage, attrition, and erratic machine performance. Furthermore, the unplanned down-time reduced by more than 50% and order fulfillment percentage has increased to 98%.
The European Coca-Cola Enterprise uses SAP to meet its supply chain challenges. Despite operating in a very sophisticated market, Coca-Cola Enterprises faces its own set of challenges in being on-time at the market. With the implementation of SAP, majority of the process at Coca-Cola Enterprises, including order processing, financial transactions, and procurement have been integrated and today deliver seamlessly to the end customer.
The SAP solution replaced Coca-Cola Enterprise’s legacy systems in a variety of processes, including order-to-cash, requisition to payment, and record to report, among others. The major objective of IT-enablement here is to reduce cycle times and make the processes more effective, while bringing in visibility and enhancing decision-making processes.
Being a self-replenishment company, it is critical for Coca-Cola Enterprises to integrate completely, their manufacturing process into the replenishment of shelves in the retail outlets, thereby rightly integrating manufacturing and supply of the products.
The parent Coca-Cola created a vision document and allowed all its manufacturing and supply partners, to best innovate and meet the objectives set forth in the vision document. Each of the partners have innovated differently, in order to deliver better to the end consumer and increase efficiency and effectiveness as well as visibility in all their processes. A complete range of ERP solutions, VoIP solutions, cutting-edge technologies have been used at individual levels, to innovatively meet the strategic objectives that have been set out in the vision document. As the saying goes, necessity is the mother of all inventions, Coke seems to have adopted the mantra of – Innovation is the key to enhance customer service as well as profitability for itself and its partners. Coca-Cola’s approach to decentralize and allow the freedom to innovate has yielded rich dividends to itself and all its partners and stakeholders.
Bibliography
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Hochfleder Barry Things Go Better With Coke’s Supply Chain [Online] // Supply-Demand-Chain Exclusive. - Supply-Demand-Chain Exclusive, September 02, 2011. - June 16, 2014. - http://www.sdcexec.com/article/10325447/things-go-better-with-cokes-supply-chain.
