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Operations management Case study: CCHBC Amina Halilovi Razi 11.12.2013.

1. How do CCHBCs supply chain management practices help them to achieve their four major strategic aims? CCHBC's aim is to provide each customer with the right refreshment, at the right price and in the right place. o achieve this they produce a wide variety of

products with over !"" different com#inations of pac$ages and flavors, so their supply chain must #e focused on ma$ing the manufacturing process fle%i#le enough to accommodate this variety and still stay efficient with low costs. hey

also must focus their distri#ution channels to achieve the #est delivery routes in order to $eep costs under control since the products must #e profita#le, #ut also afforda#le for customers. CCHBC also puts a lot of effort into integrating sales and consumer information and coordinating demand forecasting with the production planning in order to achieve highest levels of efficiency. hese efforts have gone to such e%tent that CCHBC has a &orecasting manager who produces demand plans on wee$ly #asis which are then adjusted in consultation with the Commercial manager in order to satisfy re'uirements of achieving sales targets. Besides wor$ing on improving the efficiency of their manufacturing, CCHBC also wor$s with their customers, supermar$et chains and other retailers in order to minimi(e costs wherever possi#le and produce added value for everyone in the supply chain. his cooperation is a valua#le source of information for CCHBC

a#out consumer #ehavior, preferences and future demand. CCHBC has created a centrali(ed data#ase containing #est practices collected from the entire group which enhance possi#ilities of analysis and utili(ation of many different e%periences that lead to improved chances of success of new mar$eting campaigns. CCHBCs operations management must provide coordination of all

levels of supply chain, constant 'uality control, optimi(ation of production planning with minimum costs and efficient distri#ution channels which will ensure full availa#ility of their products in the mar$et, all the while #uilding lasting and supportive relationships with their customers. ). How does CCHBC use * performance? CCHBC uses a +,-.#ased ,dvanced -lanning /ptimi(er 0,-/1 to coordinate operations within their whole networ$ and across the #orders. *nformation gathered through the +,- system ena#les the ,-/ to align production, demand planning and distri#ution 0the whole supply chain1 in order to achieve sales and operations planning efficiency. *n order to ma$e sure products are in stoc$, to improve its supply chain management

availa#le to retailers and accessi#le to final customers, CCHBC managers are provided scheduled reports, produced periodically to monitor and control manufacturing processes, distri#ution and delivery. 2ith current information availa#le from the customers, CCHBC also can monitor demand levels and follow the sales regularly. *nformation provided #y the * system helps CCHBC achieve

its goals of 'uality and cost control #y providing insight into daily activities and operations in the company, current information a#out sales and production levels, which ena#les managers to control operations, plan demand and organi(e productions more effectively and more efficiently. *nformation systems help CCHBC #uild their competitive advantage in the mar$et #ecause with all the information and reports availa#le to their managers they are a#le to react to every new challenge, #e it opportunity or a threat, 'uic$ly, effectively and efficiently. 3. 2hat actions should CCHBC ta$e to improve integration internally and e%ternally within its supply chain?

,s the information technologies are improving every day, CCHBC should continue to develop and improve their information system and continue to #uild their competitive advantage on all the information availa#le to them. hey should

focus on gathering as much as data as possi#le on their customers 0retailers1 and well as end.#uyers who are ma$ing the final decision which product to #uy. ,naly(ing this data will help them identify meaningful patterns in #ehavior and decision ma$ing process of #uyers, which will help them focus their mar$eting strategies and #etter predict the demand. 4athering information a#out all availa#le suppliers of inputs and service will ma$e CCHBC a#le to negotiate with the #est providers in order to achieve #est value in terms of 'uality and cost of ingredients, pac$aging materials, e'uipment for production and display of products, transportation and delivery service as well as end customer service. he 5data mining6 process will ena#le #etter forecasting of demand, improve production processes, improve delivery and availa#ility of product, #etter target mar$eting efforts, identify potential ris$s and improve customer service, all leading to saving on costs and improving 'uality in all stages of supply chain, from selection of inputs, through manufacturing process, distri#ution channel to formulating campaigns that will target the right audience and deliver the most appropriate message in the #est way. *nformation gathered through *C is also crucial for decision regarding large

investments in e%pansion of production plants. ,lso, sophisticated computer models should #e used to calculate profita#ility of these investments. ,nother issue that should #e paid attention, #esides the *C , is the relationships #etween the managers involved in the continuous demand planning process. +ince these managers are re'uired to wor$ very closely, it is very important for the success of this process and the whole #usiness strategy that they have good relationships and company should wor$ on #uilding communication and team

spirit.

*t is e%tremely important

that

all

the

managers

have

e%cellent

communication s$ills and that team mem#ers understand that companys strategic goals are more important than individual goals of different

departments. 7. How would you characteri(e the nature of the relationship #etween CCHBC and its suppliers? CCHBC aims to have fair and mutually #eneficial relationships with all of its many suppliers. +upplier relationships are managed on country and group level and some of the $ey issues are controlled #y he Coca.Cola Company itself, for

e%ample ingredients and primary pac$aging materials which #ear the trademar$. ,ll the re'uirements e%pected from the suppliers are specified in the 4uiding -rinciples for +uppliers and CCHBC e%pects high levels of 'uality, efficiency, service and innovation from their suppliers. Besides this, suppliers are re'uired to follow strict standards of #usiness ethics, human rights, fair la#or practices and environmental responsi#ility. +uppliers are independently audited and their compliance is verified every two years. *n spite of these strict rules, many companies are eager to wor$ with CCHBC and they have many thousands of local and international companies that supply them with ingredients, pac$aging, e'uipment and services. &ollowing the companys e%pansion into 8astern 8urope, some of their international suppliers have e%tended their #usinesses and esta#lished production near the CCHBC, which further contri#utes to #etter integration of CCHBC supply channel and assures the 'uality of inputs. heir

suppliers are also important #ecause their constant wor$ and improvement of their own products which they supply to CCHBC improves the 'uality, afforda#ility and availa#ility of CCHBCs final products.