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7 Amazing Things of Coca-cola Supply Chain Management

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Table of Contents

(Last Updated On: February 15, 2021)

The Coca-Cola Company was founded on May 8, 1886, with its headquarters in Atlanta, Georgia.
It is the largest beverage company globally. With 48% of the global market share and two of the world’s top three beverages. Coca-cola is number one, Pepsi is number two, and low-calorie coca-cola is number three.
Coca-cola has 160 beverage brands in 200 countries. These include soft drinks, sports drinks, dairy drinks, fruit juices, tea, and coffee.
It is also the world’s largest juice drink distributor (including the Minute Maid brand).
Coca-cola, number one in the United States, has a market share of more than 40 per cent.
Sprite is the fastest-growing drink, with others including Barq’s root beer.

modernize your beverage supply chain

01.

Supply chain model

DOIP, short for Demand, Operations, and Inventory Planning. It is Coca-Cola’s innovative supply chain management model. Which is more flexible than the traditional SOP model and has four main advantages:

1. Increase production through quality service
2. Forecasting current and future sales volume
3. Identify complementary promotions and potential sales volumes
4. Reduce operating costs by balancing the scale of supply and demand

coca cola supply chain management
beverage supply chain management 5

02.

Supply Chain Structure

supply chain structure

03.

Current state of procurement management

Coca-Cola plays a leading role in selecting suppliers of critical raw materials. Including sugar and packaging. Coca-Cola chooses a group of approved suppliers based on these standards. Including their location, size, equipment level, management level, supply and demand for raw materials. The bottling plant can only buy raw materials from these approved suppliers. The primary basis for Coca-Cola to select these suppliers is the quality of raw materials. Based on this, other factors are considered. These factors are controlled to reduce costs.
Coca-Cola enforces service and monitoring at all levels through a strict supply chain management system and service specifications. These links include bottlers, distributors, and retailers. Through regular reviews of each distributor and retailer, product information is collected. Their operational services are guided based on the review results and feedback. Realize the advantages of cooperative competition. The Coca-Cola Company passes on production costs to partners and consumers through the supply chain reasonably. These include concentrate manufacturers, bottlers, distributors, retailers, and consumers. The resources of all parties were well utilized to seize the market opportunity.

04.

Current status of production planning and control

Inventory management - ABC management method

Minimum inventory of A products: 5 days (6 weeks rolling average daily sales * 5)
Minimum inventory of B products: 12 days (6 weeks rolling average daily sales * 12)
Minimum stock of product C: 20 days (6-week rolling average daily sales * 20)
Order quantity = minimum inventory * adjustment factor – current inventory
(Adjustment factor is generally 1.1/1.0)

The channel system

Coca-Cola’s channel system includes four channels:
Wholesale channel, ka channel, 101 channel, and direct channel.

  • The Coca-Cola Key Account Department is responsible for the operation of the ka channel;
  • The sales department is responsible for the operation of the 101 channel and the wholesale channel.
    The difference between the 101 channel and the wholesale channel is that Coca-Cola salesmen directly control the terminals under the 101 channel. They cannot control the network of terminals under the wholesale channel.
  • The direct channel includes Coca-Cola’s direct restaurant channel, school channel, tourist attractions, etc.

05.

Logistics Status

Production logistics

Receiving material inspection receiving process

beverage production logistics

Flowchart of material receiving operation.

beverage supply chain management 1

Product warehousing process.

  • Fill out the finished product delivery inspection form;
  • Finished product inspection;
  • Send to warehouse;
  • The warehouse manager counts and signs the receipt;
  • Warehouse clerk into the warehouse;
  • Make accounts and clear the documents.

Notice of shipping operation

beverage supply chain management 2

Sales Logistics

beverage supply chain management 3

After-sales logistics

1. Whether it is cans or bottles, whenever and wherever customers need goods, Coca-Cola’s local branch can always send the goods out from the warehouse quickly.
2. The loading structure designed by Coca-Cola is also suitable for transfer and placement, which meets the needs of many customers, and the importance of both volume and storage is reflected here. Each transaction has a detailed list, so there is no need to worry about the deviation of the transaction.

06.

Partners

Coca-Cola has three major partners in China: Kerry Group, Swire Group and COFCO Group, with a total of 33 bottling plants located in different regions of the country.

Concentrate Plant

The basic ingredients (excluding sugar and high fructose grain syrup) are mixed together, packaged in plastic bottles, and transported to the bottling plant. The biggest costs are in advertising, marketing and relations with the bottling plant. Machinery, production costs and labor represent only a small portion of the investment.

Bottling plant

We purchase concentrates, add carbonated water and syrups, bottle and can these beverages, and deliver them to customers everywhere, including a “direct-to-home” delivery service in which salespeople are directly involved and manage the placement of beverages in stores.

Distributors

Coca-Cola products are large-volume, low-priced consumer goods, usually sold through a large number of street retail stores, large and small supermarkets, stores and other places, so its supply chain distributors include a variety of food wholesalers, and mega supermarkets, large supermarket chains, etc.

07.

Performance Evaluation

Aspects affecting Coca-Cola's performance management.

  • Developing Performance Plans
  • Performance Implementation and Management
  • Performance Appraisal and Evaluation
  • Performance Feedback

Principles for designing a performance appraisal index system.

  • Scientific Principle
  • Systematization Principle
  • Generalization principle
  • Practicality principle
  • Goal-oriented principle
  • Personality principle
beverage supply chain management 4

08.

Summary

From the Coca-Cola supply chain, it can be seen that for a company’s supply chain to be successful, it has to.
Companies must have core competencies and secret weapons, otherwise the management and influence on the supply chain will pale in comparison. Coca-Cola’s core competitiveness lies in its secret formula, well-known brands and management resources are different.
Supply chain management should always be adjusted around the “user-centered”.
Cooperation and competition is the main theme of supply chain management, cooperation is the essence of supply chain management, is to achieve a win-win situation and the foundation. In the supply chain, different companies have to play different roles and establish long-term partnership with each other.

09.

Reference

Please click below to watch the production process of bottled water production.

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