Supply Chain Management

The Coca-Cola Company

By

Zeeshan Ahmad Ch.

(Reg. 152153105)
__________________________
Dr. Ishtiaq Ishaq
(Project Supervisor)

A project submitted to the Department of Management Sciences, National

college of Business Administration & Economics, East Canal Campus,
Lahore in partial fulfillment of the requirements for the M.Sc. Management
Sciences.

DEPARTMENT OF MANAGEMENT SCIENCES

NATIONAL COLLEGE OF BUSINESS ADMINISTRATION &
ECONOMICS
EAST CANAL CAMPUS
LAHORE
SEPTEMBER, 2017

-1-
 Supply Chain Management
The Coca-Cola Company
By

Zeeshan Ahmad Ch.

(Reg. 152153105)

__________________________
Dr. Ishtiaq Ishaq
(Project Supervisor)

__________________________
Mr. Ghazanfar Ali Shahzad
(Head, Faculty of Management Sciences)

DEPARTMENT OF MANAGEMENT SCIENCES

NATIONAL COLLEGE OF BUSINESS ADMINISTRATION &
ECONOMICS
EAST CANAL CAMPUS
LAHORE
September, 2017

-2-
ACKNOWLEDGEMENT

In the name of Allah, the most beneficent and merciful, who gave me strength
and knowledge to complete this report. This report is a mandatory part of my
degree of MSc. This has proved to be a great experience. I would like to express
my gratitude to my instructor, Sir Dr. Ishtiaq Ishaq, who gave me this opportunity
to fulfill this report and guided me through every hindrance. I would also like to
thank my colleagues/fellows/friends, who gave many valuable suggestions, which
helped me a lot in preparing this report. Nothing valuable would have been
possible without "The Gracious Allah", my instructor and friends. I thank you all
for making me what I am today.

-3-
 Table of Contents

Sr Contents Pag
. e
N
o
1 Executive Summary 5
2 Introduction of Organization 5,6,
7
3 Organizational Structure 7,8
4 What is the Supply Chain Management 9,
5 Supply Chain Management Today 9,10
6 Supply Chain Process 11
7 Process view of the Supply Chain 11,1
2
8 Push-Pull view of Supply Chain 12
9 Supply Chain Flows 13
1 Decision Phases in a Supply Chain 14
0
1 Supply chain strategy or design 14,15,
1 16
1 Supply chain planning 14
2
1 Supply Chain Obstacles/Challenges 17
3
1 Supply Chain Drivers 17,18
4
1 Warehouse Management System 19,20
5
1 Achieving strategic fit in Supply Chain Management 20
6
1 Fit Between Competitive and Functional Strategies 20
7
1 The Bull Whip Effect 21,22
8
1 Supply Chain and IT 22,23
9
Enterprise Resource Planning (ERP) 23
2 Issues in Current Strategies 23,24
1
2 Proposed Recommendations 24
2

-4-
2 Conclusions 24
3

-5-
EXECUTIVESUMMARY:

TheCocaColaCompanyisselectedforthisprojectbecauseithasoneofthelargest
supply chain systems in the world. The CocaCola Company is a beverage retailer,
manufacturer andmarketer ofnonalcoholic beverageconcentrates andsyrups.Coca
Colacurrentlyoffersmorethan3,500beveragesand500brandsinover200countriesor
territoriesandserves1.6billionservingseachday.Thecompanyisbestknownforits
flagshipproductCocaCola.TheCocaColaCompanyheadquarteredinAtlanta,Georgia
is the world's largest beverage company. Along with CocaCola, recognized as the
world'smostvaluablebrand,theCompanymarkets fouroftheworld'stopfivenon
alcoholicsparklingbrands,includingDietCoke,FantaandSprite,andawiderangeof
otherbeverages,includingdietandlightbeverages,waters,juicesandjuicedrinks,teas,
coffees, energy and sports drinks. CocaCola is the bestselling soft drink in most
countries.TheMiddleEastisoneoftheonlyregionsintheworldwhereCocaColaisnot
thenumberonesoda

INTRODUCTIONOFORGANIZATION:

TheCocaColaCompanyistheworld'slargestbeveragecompany,largestmanufacturer,
distributorandmarketerofnonalcoholicbeverageconcentratesandsyrupsintheworld
andisoneofthelargestcorporationsintheUnitedStates.Thecompanyisbestknown
foritsflagshipproductCocaCola,inventedbypharmacistJohnStithPembertonin1886.
TheCocaColaformulaandbrandwasboughtin1889byAsaCandlerwhoincorporated
TheCocaColaCompanyin1892.BesidesitsnamesakeCocaColabeverage,CocaCola
currently offers nearly 500brands inover200countries orterritories andserves 1.6
billionservingseachday.

CocaColaisacarbonatedsoftdrinksoldinstores,restaurantsandvendingmachines
internationally.

The company operates a franchised distribution system dating from 1889where The
CocaCola Company only produces syrup concentrate which is then sold to various
bottlersthroughouttheworldwhoholdanexclusiveterritory.TheCocaColaCompany
owns its anchor bottler in North America, CocaCola Refreshments.
TheCocaColaCompanyisheadquarteredinAtlanta,Georgia.Itsstockislistedonthe
NYSEandispartofDJIA,S&P500Index,theRussell1000IndexandtheRussell1000
GrowthStockIndex.
Globalbusinessisorganizedintosixgeographicalregions:
Africa
Pacific
Europe
LatinAmerica

-6-
NorthAmerica
Asia
HISTORYOFCOCACOLACOMPANY:

CocaColahistorybeganin1886whenthecuriosityofanAtlantapharmacist,Dr.JohnS.
Pemberton,ledhimtocreateadistinctivetastingsoftdrinkthatcouldbesoldatsoda
fountains.Hecreatedaflavoredsyrup,tookittohisneighborhoodpharmacy,whereit
wasmixedwithcarbonatedwateranddeemedexcellentbythosewhosampledit.Dr.
Pembertonspartnerandbookkeeper,FrankM.Robinson,iscreditedwithnamingthe
beverageCocaColaaswellasdesigningthetrademarked,distinctscript,stillused
today.
ThefirstservingsofCocaColaweresoldfor5centsperglass.Duringthefirstyear,
salesaveragedamodestnineservingsperdayinAtlanta.Today,dailyservingsofCoca
Colabeveragesareestimatedat1.9billionglobally.

Priortohisdeathin1888,justtwoyearsaftercreatingwhatwastobecometheworlds
#1sellingsparklingbeverage,Dr.Pembertonsoldportionsofhisbusinesstovarious
parties,withthemajorityoftheinterestsoldtoAtlantabusinessman,AsaG.Candler.
UnderMr.Candlersleadership,distributionofCocaColaexpandedtosodafountains
beyondAtlanta.In1894,impressedbythegrowingdemandforCocaColaandthedesire
tomakethebeverageportable,JosephBiedenharninstalledbottlingmachineryintherear
ofhisMississippisodafountain,becomingthefirsttoputCocaColainbottles.Large
scalebottlingwasmadepossiblejustfiveyearslater,whenin1899,threeenterprising
businessmeninChattanooga,TennesseesecuredexclusiverightstobottleandsellCoca
Cola.ThethreeentrepreneurspurchasedthebottlingrightsfromAsaCandlerforjust$1.
Benjamin Thomas, Joseph Whitehead and John Lupton developed what became the
CocaColaworldwidebottlingsystem.

EVOLUTIONOFTHECOCACOLABOTTLE:

Among the biggest challenges for early bottlers, were imitations of the beverage by
competitors coupled with a lack of packaging consistency among the 1,000 bottling
plantsatthetime.Thebottlersagreedthatadistinctivebeverageneededastandardand
distinctivebottle,andin1916,thebottlersapprovedtheuniquecontourbottle.Thenew
CocaColabottlewassodistinctiveitcouldberecognizedinthedarkanditeffectively
setthebrandapartfromcompetition.ThecontouredCocaColabottlewastrademarked
in1977.Overtheyears,theCocaColabottlehasbeeninspirationforartistsacrossthe
globeasamplingofwhichcanbeviewedatWorldofCocaColainAtlanta.

The first marketing efforts in CocaCola history were executed through coupons
promotingfreesamplesofthebeverage.Consideredaninnovativetacticbackin1887,
couponingwasfollowedbynewspaperadvertisingandthedistributionofpromotional
itemsbearingtheCocaColascripttoparticipatingpharmacies.

-7-
Fast forward to the 1970s when CocaColas advertising started to reflect a brand
connectedwithfun,friendsandgoodtimes.Manyfondlyrememberthe1971Hilltop
SingersperformingIdLiketoBuytheWorldaCoke,orthe1979HaveaCokeanda
SmilecommercialfeaturingayoungfangivingPittsburghSteeler,MeanJoeGreene,
a refreshing bottle of CocaCola. You can enjoy these and many more advertising
campaignsfromaroundtheworldinthePerfectPausesTheateratWorldofCocaCola.

The1980sfeaturedsuchmemorableslogansasCokeisIt!,CatchtheWaveand
CantBeattheFeeling.In1993,CocaColaexperimentedwithcomputeranimation,
andthepopularAlwaysCocaColacampaignwaslaunchedinaseriesofadsfeaturing
animatedpolarbears.EachanimatedadintheAlwaysCocaColaseriestook12weeks
to produce from beginning to end. The bears were, and still are, a huge hit with
consumersbecauseoftheirembodimentofcharacteristicslikeinnocence,mischiefand
fun.AfavoritefeatureatWorldofCocaColaistheabilitytohaveyourphototakenwith
thebeloved7tallCocaColaPolarBear.

One of the most famous advertising slogans in CocaCola history The Pause That
RefreshesfirstappearedintheSaturdayEveningPostin1929.Thethemeofpausing
with CocaCola refreshment is still echoed in todays marketing.history."open
happiness".

In2009,theOpenHappinesscampaignwasunveiledglobally.Thecentralmessageof
OpenHappinessisaninvitationtobillionsaroundtheworldtopause,refreshwitha
CocaCola,andcontinuetoenjoyoneoflifessimplepleasures.TheOpenHappiness
messagewasseeninstores,onbillboards,inTVspotsandprintedadvertisingalongwith
digitalandmusiccomponentsincludingasinglefeaturingJanelleMonaecoveringthe
1980song,AreYouGettingEnoughHappiness?Thehappinessthemecontinuedwith
OpentheGames.OpenHappinessfeaturedduringthe2010WinterOlympicGamesin
Vancouver,followedbya2010socialmediaextension,Expedition206aninitiative
whereby three happiness ambassadors travel to 206 countries in 365 days with one
mission:determiningwhatmakespeoplehappy.Theinspirationalyearlongjourneyis
beingrecordedandcommunicatedviablogposts,tweets,videosandpictures.
Expertshavelongbelievedintheconnectionbetweenhappinessandwellness,andCoca
Colaisproudtohaveplayedapartinhappyoccasionsaroundtheglobe.

-8-
ORGANIZATIONALSTRUCTUREOFCOCACOLACOMPANY:

WHATISTHESUPPLYCHAINMANAGEMENT:

Supplychainmanagement(SCM)istheoversightofmaterials,information,andfinances
astheymoveinaprocessfromsuppliertomanufacturertowholesalertoretailerto
consumer.Supplychainmanagementinvolvescoordinatingandintegratingtheseflows
bothwithinandamongcompanies.Itissaidthattheultimategoalofanyeffectivesupply
chainmanagementsystemistoreduceinventory(withtheassumptionthatproductsare
availablewhenneeded).Asasolutionforsuccessfulsupplychainmanagement,
sophisticatedsoftwaresystemswithWebinterfacesarecompetingwithWebbased
applicationserviceproviders(ASP)whopromisetoprovidepartoralloftheSCM
serviceforcompanieswhorenttheirservice.

Supplychainmanagementflowscanbedividedintothreemainflows:

TheProductFlow
TheInformationFlow
TheFinancesFlow

-9-
TheProductFlow:

Theproductflowincludesthemovementofgoodsfromasuppliertoacustomer,aswell
asanycustomerreturnsorserviceneeds.
TheInformationFlow:

Theinformationflowinvolvestransmittingordersandupdatingthestatusofdelivery.

TheFinancesFlow:

Thefinancialflowconsistsofcreditterms,paymentschedules,andconsignmentandtitle
ownershiparrangements.

TherearetwomaintypesofSCMsoftware:

PlanningApplications:

Planningapplicationsuseadvancedalgorithmstodeterminethebestwaytofillanorder.

ExecutionApplications:

Executionapplicationstrackthephysicalstatusofgoods,themanagementofmaterials,
andfinancialinformationinvolvingallparties.

SomeSCMapplicationsarebasedonopendatamodelsthatsupportthesharingofdata
bothinsideandoutsidetheenterprise(thisiscalledtheextendedenterprise,andincludes
keysuppliers,manufacturers,andendcustomersofaspecificcompany).Thisshareddata
mayresideindiversedatabasesystems,ordatawarehouses,atseveraldifferentsitesand
companies.

SUPPLYCHAINMANAGEMENTTODAY:

Ascompanies increasinglyusetheirsupplychaintocompete andgainmarketshare,

spendingandactivityinthisareaarenotablyontheupswing.Technologyandprocess
upgrades at forwardthinking companies clearly show that supply chain excellence is
morewidelyaccepted asanelement ofoverall businessstrategy,andthatincreasing
valuetocustomersisnotjustmanagement's,buteveryone's,business.

Theshiftinhowcompaniesviewtheirsupplychainistakinghold.Examinehowyour
companyviewsitssupplychainandconsideryouranswerstothesebasicquestions.
Doesleadershipviewyoursupplychainasastrategiccompetitiveadvantage?If
not,areyouconsideringoutsourcingyoursupplychain?

- 10 -
 Arethecapacitystrengthsofyoursupplychaincommonlyknownandunderstood
bycompanyleadership?Ifso,howdotheymanageimpactgrowth,profitability
andcustomerservice?

- 11 -
Thefollowingaresixkeytrendscausingsignificantimpactandchangetosupply
chaindesignandperformance:

Trend1DemandPlanningBeginsattheEndoftheCycle:

Assourcesandcapacitiesformanufacturinghaveincreased,morecompanieshave
moved away from focusing efforts on plantlevel production planning and are
adoptingmoreofademanddrivenfocusoftryingtoinfluenceandmanagedemand
moreefficiently. Rationalizing whatyourcompanyis bestatselling,making and
delivering,andaligningthesalesforcewiththatmindset,iscriticaltoadoptinga
demanddrivenmodel.Thedemanddrivenapproachcanhelpacompanycreatea
more customerfocused mindset, without sacrificing operational efficiency.
Ultimately, a demandfocused approach to planning can significantly improve
demandplanningandmanagementeffortsandhelpoverallcostsandcustomerservice
efforts.

Trend2Globalization:

Therightsupplychaindesigniscriticaltomanagingthechangesbroughtaboutby
rapidglobalization.Awellthoughtoutsupplychainnetworkdesigncanoptimizethe
supplychainnetworkandtheflowofmaterialsthroughthenetwork.

Indoingso,networkdesigncapturesthecostsofthesupplychainwitha"totallanded
cost" perspective and applies advanced mathematical technology to determine
optimalanswerstobothstrategicandtacticalquestions.Thefollowingarestrategic
questionsansweredbyawellthoughtoutnetworkdesign:
Whereshouldfacilitiesbelocated?
HowmanyfacilitiesshouldIhave,andwhatcapabilitiesshouldtheyhave?
Whatkindofcapacityshouldtheyhave?
Whosemanufacturinganddistributionorbitshouldtheysource?

Trend3IncreasedCompetitionandPricePressures:

Cost improvements around inventory management, logistics operations, material

management and manufacturing costs, including raw material and component
acquisitioncanbefoundwith:
Salesandoperationsplanning.
Transportation/distributionmanagement.
Improvedproductlifecyclemanagement.
Improvedstrategicsourcingandprocurement.

- 12 -
 Hereareanumberofwayssupplierscandifferentiatethemselvesandprovidevalue
andadditionalservicesandcapabilitiestotheircustomers.Hereareafew:
Vendormanagedinventory(VMI).
Radiofrequencyidentification(RFID).
Labeling,packaging.
Dropshipping.
Collaboration.

Trend4Outsourcing:

Theoptimallyoutsourcedsupplychain,eitherinitsentiretyorjustacomponent,
reliesheavilyon:
Superiorsupplychainnetworkdesign.
Inclusionofthatoutsourcepartnerintheinformationchain.
Establishment of control mechanisms to proactively monitor the various
componentsofthesupplychain.
Informationsystemstoconnectandcoordinatethesupplychainasseamlessly
aspossible.
Afailuretoexcelatanyoneofthesecomponentscanresultinbreakdowns
affectingtheentiresupplychain.

Trend5ShortenedandMoreComplexProductLifeCycles:

Todaymanycompaniesareunderpressuretodevelopinnovativeproductsandbring
themtomarketmorerapidlywhileminimizingcannibalizationofexistingproducts,
whicharestillinhighdemand.Inordertomeettheneedsofbothcustomersand
consumers,companiesneedmoreefficientproductlifecyclemanagementprocesses.
This includes heavy emphasis on managing new product introduction, product
discontinuation, design for manufacturability and leveraging across their entire
productandinfrastructurecharacteristics.
Trend 6 - Collaboration Between Stakeholders in the Extended Supply Chain.

SUPPLYCHAINPROCESS:

SupplyChainManagementprocessplaysahugesignificanceinrunningkeyoperations
foralmosteveryorganization.Withoutasuccessfulsupplychain,processescouldhaltat
thefloorlevelandultimatelybringdowntheresults.Forsomanydecades,supplychains
havegonethroughajourneyoftheirownfrombeingsosimpletorecentlydeveloped
algorithmbasedones.Witheverevolvingsupplychainconcepts,supplychain
managementprocesshasbecomeadedicatedfunction.Supplychainmanagersaregiven
theresponsibilitytoensurethatsupplychain,beitexternalorinternal,isefficientand
costeffectiveboth.Butanotherquestionthatcomesupishowtheydoit?The

- 13 -
mechanismtobefollowedforeffectivesupplychainmanagementprocessinvolvesfive
basicstagesexplainedhere:

- 14 -
 Plan:

Planningisthestrategicpartofsupplychainmanagementprocess,tofindoutabest
possibleblueprintofhowtofulfilltheendrequirement.SCMmanagersshould
identifyalistofkeycomponentslikeplantlocation&size,warehousedesigning,
deliverymodels,ITsolutionsselectionetc.Notonlythis,supplychainmanagement
processwouldbeincompleteifkeymatricesliketransportationcostmodeling,
warehouseefficiencymodelsetc.arenotdeveloped.

Source:

Atthisstageofsupplychainmanagement,theemphasisisontoascertainthemost
reliableofsuppliersforrawmaterialssothatproductionprocesswouldnever
jeopardize.Butchallengingconditionsdoariseduringoperations,supplychain
managersmustensurekeypainpointsofsupplycyclearealwaysbeingtrackedto
keeptheenginerunning.Holisolbelievesthatcontractualframeworkaswellas
selectionofacapablesupplierisonething,butthereshouldbeatangiblesystemin
placeforthecontinuousdevelopmentofsupplierswhichwouldboosttheirefficiency
aswell.

Execute:
Thisisthestagewherewelldesignedprocessesareimplementedsothataperceivable
shapeisgiventoexistingplansintheformofmanufacturedproductswhichareready
fortesting,packaging,anddelivery.Notonlythis,resultsatthisstagearequantified
sothatmaximumpossibleefficiencyisachieved.Holisolsspecialistsdesigncost
effectiveITsolutionswhichenablecustomersinbuildingexcellenceandimproving
efficiencyattheexecutionstageofthesupplychainmanagementprocess.

Deliver:
Supplychainwhenreachesthisstage,themanagershaveataskathandtodeliverthe
product/serviceintherightquantity,attherightplaceandrighttimebyemploying
suitablecarriers.SupplychainmanagersshouldbefullyequippedwithmodernIT
toolstokeepatrackonwarehousingnetworks,inventorymodelsaswellasinvoicing
andpaymentreceipts.

Return:
Returnshandlingisthelaststepofsupplychainmanagementprocess.Itnotonly
involvesreviewingreturnedproductsforqualitypurposesbutalsomanagingtheir
inventory.Atthegroundlevel,supplychainmanagersshoulddeploytheirresources
supportingthemwithtechnologyforfasterpickups,quickerreplacementsetc.
Returnsmanagementshouldbeavalueenhancementmeasureintheeyesofsupply
chainmanagersandtheymustensureeverydesirablemeasureistakenformaximum
possibleefficiency.

- 15 -
Cocacolaadoptsthesameprocess.
PROCESSVIEWOFTHESUPPLYCHAIN:

Cycle View of the Supply Chain:

Cycleview:processesinasupplychainaredividedintoaseriesofcycles,each
performedattheinterfacesbetweentwosuccessivesupplychainstages.

Eachcycleoccursattheinterfacebetweentwosuccessivestages:

Customerordercycle(customerretailer)
Replenishmentcycle(retailerdistributor)
Manufacturingcycle(distributormanufacturer)
Procurementcycle(manufacturersupplier)

Cycleviewclearlydefinesprocessesinvolvedandtheownersofeachprocess.
Specifiestherolesandresponsibilitiesofeachmemberandthedesiredoutcomeof
eachprocess.

Push-Pull View of Supply Chain:

Push/Pullviewofsupplychainisveryusefulwhenconsideringstrategicdecisions
relatingtosupplychaindesign.
PullProcessdependsonthecustomerdemandwhereasPushprocessesarethe
predictions,i.e.manufacturerproducesgooodsandservicesthinkingthattherewillbe
demandorrequirementfortheproductorserviceproduced.
Pullprocessesdependonthereactionsofthecustomer.Ontheotherhandpushprocesses
arenotactualdemand.

Supplychainprocessesfallintooneoftwocategoriesdependingonthetimingoftheir
executionrelativetocustomerdemand.

Pull:executionisinitiatedinresponsetoacustomerorder(reactive).

Push:executionisinitiatedinanticipationofcustomerorders(speculative).

Push/pullboundaryseparatespushprocessesfrompullprocesses.
Usefulinconsideringstrategicdecisionsrelatingtosupplychaindesignmore
globalviewofhowsupplychainprocessesrelatetocustomerorders.
Cancombinethepush/pullandcycleviews.
Therelativeproportionofpushandpullprocessescanhaveanimpactonsupply
chainperformance.

- 16 -
- 17 -
PUSHPULLVIEW:

Customer Order
Cycle
Customerorderarrives

Repl & Mfrg Cycle

Procurement cycle

ForCocaColaeachdistributioncenterisresponsiblefortheimplementing the"push
strategy"inthesupplychain.Eachzoneinthedistributionchannelhasazonehead,who
isresponsiblefortheperformanceofhiszoneandtoincreasethepercapitaconsumption
ofhiszone.Eachzoneisfurtherdividedintodifferentroutesandeachroutehasdifferent
territoriesassignedtoeachvehicle.

SUPPLYCHAINFLOWS:

Following are the channel flows that occur throughout the supply chain from the
suppliers tothemanufacturing plants tothedistributors toretailer andthus thefinal
consumers.

Suppliers

Manufacturer

Distributor

Retailer

Consumer

Financing

- 18 -
Financing,Riskingphysicalpossessionandownershiptransferateachstepofthechain.
Ordertakingandpaymenttravelsbackwardsfromconsumerwhodemandstheproduct
fromtheretailerwhoplacesanorderatthedistributor.Informationtravelsbothways
wheretheCompanydisseminates informationabouttheproducttoeachentityinthe
supplychainandneedsinformationintheformoffeedbackfromtheendconsumer.

DECISIONPHASESINSUPPLYCHAINOFCOCACOLA:

Step1:TheCustomerandSupplyChainUncertainty:

a) IdentifyingCustomerNeeds:

CocaColaneedstounderstandthecustomerneedsforeachtargetedsegmentandthe
uncertaintythesupplychainfacesinsatisfyingtheseneeds.Astheydealwithbeverages,
which are a fastmoving consumer good, they know the requirements of consumers.
CocaCola is considered as a drink, which is refreshing during summer, and taken
regularlyduringwinter,withdemandhikingaroundfestivalssuchasEidandoccasions
suchasweddings. CocaColacaterstobothcitiesandruralareas. Itunderstandsthe
needsofboth.Asdemandforbeveragesisseasonal,thequantityofproductneededfor
eachlotistakencareofwithpastdemandinmind.Consumersgenerallyrequireasmall
responsetime,highservicelevel,reasonablepriceandsomevariety(forexamplehealth
consciouspeoplefavordietversionsofsodas).

b) DemandUncertaintyAndImpliedDemandUncertainty:

DemandforCocaColavariesbyproduct. Forexamplethereisagreaterdemandfor
CocaColaascomparedtoFanta,whichisnew.Hence,CocaColahasalowdemand
uncertaintyascomparedtoFanta.TheproductCocaColaisapproachingitsmaturity
stageinthePLC,whereasFantaisintheintroductorystage. CocaColasimplied
demanduncertaintyvarieswiththeproducttypeaswellasthecustomerneeds.

- 19 -
Duetodecreasedleadtime(thecustomermaypurchaseitscompetitorsproduct,ifCoca
Colaisnotavailableatthattime),needforgreatervarietyandhigherlevelofservice,
implieddemanduncertaintyincreases. Thisistrueforcitieswhereunmetdemandby
CocaColaismetbyPepsi,RCandothersuchcompetitors.Supplyuncertaintyisalso
affectedbynewproducts.Newproductshavehighersupplyuncertainty.

c) UncertaintyForTheCapabilitiesOfTheSupplyChain:

Afterdeterminingthedemanduncertainty,itisimportanttotakealookattheuncertainty
resultingformthesupplychain.CocaColaisnotanewproductanditsmarketisgoing
towards maturation. The company does not have many difficulties in delivering a
productandhasafixeddeliveryschedule(ondailybasis). CocaColahencehasa
predictablesupplyandsomewhatuncertaindemanddependingonmarketconditions.

Step2:UnderstandingtheSupplyChainCapabilities:

The efficiency and responsiveness varies according to the consumer needs, implied
demanduncertainty,producttypeandmarketsegments. Inremoteareasthecompany
focuses onbeing somewhat efficient as other modes oftransportation could turn the
producttobehighlyexpensive.

Accordingtothecompanyitdoesnotdealwithdistributors,whodonothave20to
25vehicles, therefore as the company has focus on cost reduction, uses slow and
inexpensivemodesoftransportation,thedemandiscertain,anduseseconomiesofscale
inproduction,theproductCocaColaismoreinclinedtowardsbeingsomewhatefficient.
Incities,thecompanyfocusesitsattentiononbeinghighlyresponsiveasCocaColahas
tomeetshortleadtime,meetahighservicelevel,handlealargevarietyofproductsand
respondtowiderangesofquantitydemandedespeciallyattheretailstage.

Step3:AchievingtheStrategicFit:

Making one stage more responsive allows the other stage to focus on being more
efficient.TheCocaColasupplychainassignsdifferentrolestoitsdifferentstages,the
company has to decide either "Highly eficient", "Highly Responsive", "Somewhat
Efficient""SomewhatResponse"intowns?

Itfollowsthejustintimeconcept,whichisapplicableinnonseasonalperiodandnot
applicableintheseasonalperiod.

- 20 -
SUPPLYCHAINSTRATEGYORDESIGN:

Foryears,researchersandpractitionershaveprimarilyinvestigatedthevariousprocesses
within manufacturing supply chains individually. Recently, however, there has been
increasingattentionplacedontheperformance,design,andanalysisofthesupplychain
asawhole.Thisattentionislargelyaresultoftherisingcostsofmanufacturing,the
shrinkingresourcesofmanufacturingbases,shortenedproductlifecycles,thelevelingof
theplayingfieldwithinmanufacturing,andtheglobalizationofmarketeconomies.This
involvesconstructionandevaluationofmultistagesupplychainmodeling.

Supply chain design is the process bywhich a company structures and manages the
supplychaininordertoidentifytherightbalancebetweeninventory,transportation,and
manufacturingcost.

WhyUseSupplyChainDesign?

SupplyChainDesignisbeingusedtomatchthesupplyanddemandunderuncertaintyby
positioningandmanaginginventoryeffectively.Inaddition,usesresourceseffectivelyin
adynamicenvironment.

HowtoBenefitfromSupplyChainDesign?

Asophisticateddesignprovidessolutionsandconsultingforsupplychainplanningfrom
strategictooperationallevel.SupplyChainDesignsolutiondeliversanswersonvarious
whatif scenario's at a strategic level, including the modeling of inbound flows,
productionandinventoryandoutbounddelivery.Theuniquecapabilityofthesolutionis
theabilitytomodelyourstrategicbusinessdecisionmakingrequirements.

TherearethreeseparatestepswhiledeterminingaSupplyChainDesign:

Thefirststepisthestrategicnetworkdesigntomakedecisionsonthenumberof
locations,sizeofplants,andgeographicalsourcingstrategies.

Thenextstepidentifies inventorystockingpoints,whichconsidersconstraints
such as demand and supply uncertainties, leadtimes, cost and other complex
constraints.

Lastlyistheresourceallocationtoidentifywhenandhowmuchtoproduceor
purchaseaswellaswhereandwhentostockinventory.

- 21 -
WhataretheResultsofOptimizingSupplyChainDesign?

OptimizingSupplyChainDesignresultsin:

A strategic network design and decisions onthe number of locations, size of

plants,andgeographicalsourcingstrategies.

Answersonvariouswhatifscenario'satastrategiclevel.

Theabilitytomodelyourstrategicbusinessdecisionmakingrequirements.

COCACOLASUPPLYCHAINDESIGN:

Syrup:

TheCocaColaCompanyheadquarteredinAtlantamanufacturesthesyrupandsellsitto
oneofitsbottlingpartnerslikeCocaColaEnterprises(CCE)whichisresponsiblefor
sellingtheproductinNorthAmericaandCanada.CocaColaEnterprisescombinesthe
productconcentratewithotheringredientstomanufactureandpackagethebeverageand
thenmarketsitsproductstoretailcustomersandconsumers.

The CocaCola Export Corporation (TCCEC)is the entity responsible forselling the
concentratetootherbottlersaroundtheglobe.TCCECalongwithitsregionaloffices
locatedthroughouttheglobeestablishespartnershipswithlocalbottlerswhomanufacture
thebeverageusingthesyrupprovidedbyCocaColaCompanyandthendistributeitto
theirrespectivemarkets.

OnenotableexceptiontothisgeneralrelationshipbetweenTCCCandbottlersisfountain
syrupsintheUnitedStates,whereTCCCbypassesbottlersandisresponsibleforthe
manufactureandsaleoffountainsyrupsdirectlytoauthorizedfountainwholesalersand
somefountainretailers.

Bottling:

The CocaCola Company establishes the basic guidelines of operations for all of its
bottlingpartnersandsupplierssomostoftheoperationsarestandardizedandthereisa
certaindegreeofcentralizationtomostoftheirstrategicdecisions.

Eachbottlingpartnerservicestheassignedgeographicalareathroughaheadofficewhich
controlsmostoftheoperationsanditservesasthehubfordifferententitiesinthesupply
chain.Thebottler'sheadofficeisworkinginclosecollaborationwitharegionaloffice
whichisunderthedirectsupervisionofTheCocaColaExportCorporation.Thebottler's

- 22 -
headofficelinkstheproductionplantwithdifferentdistributionandsalescentersand
multipletradezonestogethertoformacompletesupplychain.

AfterreceivingtheconcentratefromTheCocaColaCompany(Atlanta)throughoneof
the regional offices underthesupervision ofTheCocaColaExport Corporation, the
bottlershipsittooneofitsmanufacturingfacilities.Thefacilityproducesthefinaldrink
bymixingthesyrupwithfilteredwaterandsweeteners,andthencarbonatingitbefore
puttingitincansandbottles,whichthebottlersthensellanddistributetoretailstores,
vendingmachines,restaurantsandfoodservicedistributors.

Advantagesofeffectivesupplychainmanagement.

Availabilityoftheproduct.

Effectiveandefficientprocess.

Helpstobuildstrongrelationswithconsumer.

SUPPLYCHAINPLANNING:

Astheaboveconfigurationshavebeenset,planningmustbedonewithintheabovestated
constraints. Thegoalofplanningistomaximizethesupplychainsurplus. Planning
establishesparameterswithinwhichasupplychainwillfunctionoveraperiodoftime.
Companies start the planning phase with a forecast for the coming year of demand.
CocaColacarriesoutsalesforecastingforlocaldemandaswellasforexportpurposesto
countries suchasPakistan. Theannualsales target isconveyed tothesupplychain
department.Planningiscarriedoutonamonthly,weeklyanddailybasisatCocaCola.

SUPPLYCHAINOBSTACLES/CHALLENGES:

CocaCocaexecutivesfacemanychallengesinroutine,someofthemajorchallengesare
asdescribed:
Naturaldisasters.
Governmentinvolvement.
Rivalrywithcompetitors.
Needformorespeedandagility.
Deeperunderstandingofconsumers.
Radicalchangetoinnovation.
Hugeportfolio.
Tokeepbalanceinwholeorganizationspreadover200countries,sothatone
decisionmadeforonebusinessunitdoesnothumiliateorannoytheother.
Tomakesurethatnecessary(HumanResources,Technicalinfrastructure,Time
andProjectBudget)areprioritizedanddedicatedtoproject.

- 23 -
 Accurateforecasts.

- 24 -
SUPPLYCHAINDRIVERS:

Inventory:

CocaColahasestablishedacomprehensiveplantoensurethesufficientinventorylevels
tokeepupwiththemarketdemandeffectively. Forthispurposethemaininventory
storagehasbeenestablishedwithinthemainplantarea.Ithasthestoragecapacityof
200,000 Sq Ft and the area is being utilized both horizontally and vertically. The
shippingdepartmentisinchargeforstorageandsubsequentdisplacementoftheproduct
orders.Theinventorycapacityisbeingutilizedandmaintainedincoordinationwiththe
productiondepartmentandisbasedonthetermproductionestimates.Apartfromthe
mainstoragehouse,CocaColahasestablishedmorethan30storagefacilitiesnearerto
the market in Lahore and Karachi. Increasing inventory makes the supply more
responsive to the customers. At CocaCola, managers bear ahigh inventory costto
ensuremaximum levels ofinventoryandtoreducetheproduction andtransportation
costs.

Transportation:

TheCocaColaCompanyistheworldslargestbeveragecompany,servingconsumers
in more than 200 countries. CocaColas Commercial Products Supply group
processesmorethan400dailyshipmentsandisresponsibleformillionsofcasesin
addition to more than 1,000 points of delivery, 4,000 finished goods, and 5,000
ingredientsandpackagingmaterialsworldwide.

Transporting our product is one of the smallest elements of our value chain carbon
footprint,accountingforsevenpercentofthetotal.However,wedrivemorethan106
millionkilometersayear,whichmakesitimportanttocontinuetoreduceourkilometers
andfindnew,lesscarbonintensivewaysofdistributingourproducts.Ouraimistogrow
ourbusinessbutnotourcarbon.Deliveringproductseffectivelyandefficientlyiscentral
tohowweoperateandachievethisobjective.

MODESofTRANSPORTATION:

Smallertrucksandcompanycars.

Electricvehicles.

Rail.

Ships.

- 25 -
Facilities:

Inordertoensuretheresponsivestrategyimplementation,theroleoffacilitiesisofprime
importanceinthesupplychainofCocaCola.CocaColahasestablishedaflexibleanda
productfocusedproductionfacilityinordertorespondeffectivelytothevariabilityin
demand. The storage facilities are designed in order to provide maximum possible
capacityfortheinventory.Thelargeamountofexcesscapacityallowsthefacilitytobe
veryflexibleandtorespondtowidesurgesindemandsplacedonit.Inalignmentwith
theresponsivesupplychainstrategythefacilitieshavebeengeographicallylocatedclose
tothemarket.

Warehousing/Storage:

Automationhasprovidedaneasiermethodofgettingourproductstoourcustomers,
saysKarenMathews,seniorprogrammanagerofwarehouseautomationatTheCoca
ColaCo.sGrandRapid,Mich.warehouse.Inanautomatedworld,buildingapalletis
lessdemandingphysicallyfortheemployeessincetheyplaceproductsonabeltthatisat
thesameheightwitheverypick,eliminatingthebendingandreachingthatamanual
buildrequires.Theautomatedsystemalsousesanautomatedstretchwrapperthatbetter
securestheloadtoeachpalletcomparedtoanemployeemanuallywrappingapallet,
ensuringourproductisdeliveredsecurelytoourcustomers.

MaterialHandling:

Afleetof35CrownFC4500Seriescounterbalanced,fuelcellpoweredforkliftswere
delivered to CocaCola Bottling Co. Consolidated, the nations largest independent
bottler for CocaCola. The trucks were installed at the companys Charlotte, N.C.
productioncenter.TheCrownFC4500Seriesisdesignedtomeetthedemandsofheavy
dutyapplications,suchashighvolumewarehouseenvironments.Thefuelcellmodelof
theFC4500maintainsthesamefeaturesandbenefitspresentedbythestandardmodel.It
isoneofmorethan20modelsCrownhasqualifiedtooperatewithvariousfuelcellsas
part of its fuel cell qualification program. Crowns fuel cell initiative is a critical
componentofitscommitmenttoenvironmentalsustainabilitythroughoutitsbusiness.
ThiscommitmentplayedanimportantroleintheCocaColabottlersdecisiontodeploy
Crownlifttruckswithfuelcells.

Also to to revitalize its distribution processes, CocaCola Refreshments U.S.A.

implementedaVoIPbasedvoicetechnologythatenables3,000warehouseassociatesin
100facilities.

- 26 -
Packaging:

Formanyyears,CocaColawasproducedinglassbottles.Becauseofthehighcostof
distributingbulkybottles,theyhadtobemanufacturedclosetowherethebottlingtook
place. Today, this is no longer so important since new packaging methods have
revolutionisedtheprocess.

AdvancedbottlingandcanningtechnologymakesCocaColacansandbottlesverylight
butextremelystrong.TheCompanyhasinvestedalotoftimeandmoneyinresearchand
developmenttoensurethemosteffectivelifecycleimpactofitspackaging.

Byusingtheminimumquantitiesofmaterialsinpackaging,thecansandplasticbottles
aresimpletocrushortoreprocess.

Information:

Studyingtheinformationflowsystemofthecompany.

Detectingandidentifyingtheproblemsandareasofimprovement.

Ending up the final information flow system, which will be solution for our
problemwithnumerical.

TheinformationmodeldealswiththeintegratIonofthesupplychainmembers
andconcentratesontheflowofinformationamongthesupplychainmembers.

ITplaysavitalroleforincreasingcollaborationamongsupplychainmembers.
Fromtheinformationpointofview,theeffectivesupplychainmanagementmust
providetherightamountofrelevantinformationtotherightpersonattheright
time.

Informationisakeytosuccessofsupplychainmanagementbecausenoproduct
flowsuntilinformationflows.

WAREHOUSEMANAGEMENTSYSTEM:

Inward&OutwardProcessing:

CocaColafocusesitseffortsonthreekeyareas:

Drivingfewerkilometersbyoptimizingtheirlogisticsnetwork.

Working in collaboration with our customers and suppliers to remove road

kilometersthroughtechniquessuchasbackhauling.

- 27 -
 Reducingthecarbonemissionsofeverykilometerdrivenbyimprovingvehicle
efficiencyandbyencouragingtheadoptionofalternativetechnologies.

- 28 -
OrderProcessing:

In "CocaCola," system operates through multiple local channels. Company

manufacturesandsellsconcentrates,beveragebasesandsyrupstobottlingoperations,
ownsthebrandsandisresponsibleforconsumerbrandmarketinginitiatives. Bottling
partnersmanufacture,package,merchandiseanddistributethefinalbrandedbeveragesto
customersandvendingpartners,whothensellCocaColaproductstoconsumers.

Allbottlingpartnersworkcloselywithcustomersgrocerystores,restaurants,street
vendors,conveniencestores,movietheatersandamusementparks,amongmanyothers
toexecutelocalizedstrategiesdevelopedinpartnershipwithCompany.Customersthen
sellCocaColaproductstoconsumersatarateofmorethan1.9billionservingsaday.

OrderFulfillment:

Today,theCocaColaproductionanddistributionnetworkconsistsof742facilities,and
morethan650distributioncenters.Thecompanyisstillworkingto"cleanup"thesystem
sothatindividualunitshavemorecontiguousterritory.

Theirguidingprincipleistheneedforintegratingdemandandsupply,assummedupby
theacronymDOIP,fordemand,operationsandinventoryplanning.Demandinvolves
daily interaction with marketing and sales. Operations focuses on the financial
implicationsofoptimizingproductionanddistribution.Inventoryplanningassessesthe
impactofstrikingtherightinventorylevels.Allthreeareasaresynchronizedthroughthe
company's sales and operations planning (S&OP) effort, the forum for making and
sharingkeydecisions.

InventoryManagement:

ABCclassification.

Studyingthedemandandfindingthebestmethodsforforecasting.

Studyingtheinventoryproblem.

Buildingthedynamicinventorymodel.

Determinationofstocklevel.

Determinationofsafetystock.

Selectingthepropersystemoforderingforinventory.

- 29 -
 Endingupthefinalinventorymodel,whichwillbesolutionforourproblemwith
numerical.

- 30 -
SupplierManagement:

Underaunifiedprocurementframework,wesegmentoursupplybaseuniverseofaround
35,000suppliersintodirectandindirectspendsuppliers.

DirectSpendSuppliersincludeingredientsandpackagingsuppliers.

Indirect Spend Suppliers include categories such as IT, production equipment, spare
parts, maintenance services, logistics providers, fleet vehicles, utilities, real estate,
facilities management, professional and other consultancy services, personnel and
temporarylabor.

CocaColaHBCalsosegmentssuppliersintothreecategoriesbasedoncriticalityand
potentialopportunities:

Group Critical Suppliers are those that fulfil any of the following criteria: high
percentage of spend, critical components (Sweeteners, Juices, Resin, Cans, Glass,
Preforms,Closures,AsepticPackaging),limitedalternativesandpartnershipsupporting
ourbusinessstrategies.

Country Strategic Suppliers are those which have strategic importance at a local or
regionallevel.

BothGroupCritical&CountryStrategicsuppliersareconsideredcriticaltotheoverall
competitivenessandsuccessofCocaColaHBC.

CustomerSupport:

RemarkableServiceisOurFocus:"StephanieLittle"

CocaColafindjoyinpayingattentiontothesmallestofdetailsinregardstowhatits
customersneed;theyappreciatethat.HereatCocaColaConsolidated,givingremarkable
customerservicetoourcustomersistheirfocus.Theircommitmenttodeliveringthebest
customerserviceexperiencehasalwaysbeen,andremainsthestandard. Theyhavea
provenmarkofquality,withfriendlyandprofessionalconsultants allofwhomare
determinedtomeetthecustomer'sneedwithaCokeandasmile!

- 31 -
ACHIEVINGSTRATEGICFITINSUPPLYCHAINMANAGEMENT:

CocaColaSupplyChainStrategicFit:

A strategic fit majorly deals with the coordination between a company matching its
resourcesandcapabilitieswiththeopportunitiesandconditionsexternally.Inthesupply
chainmanagement,itisnecessaryforanycompanytomatchthesupplychaincapabilities
withthecustomerdemandcharacteristics.Inbelowwewillseeintothestrategicfitin
supplychaininCocaColawithreferencetotheresourcesandcapabilitiesofCocaCola
withtheopportunitiesandconditionsexternally.

FITBETWEENCOMPETITIVEANDFUNCTIONALSTRATEGIES:

CompetitiveStrategy:

Thelongtermplanofaparticularcompanyinordertogaincompetitiveadvantageover
itscompetitorsintheindustry.Itisaimedatcreatingdefensivepositioninanindustry
andgeneratingasuperiorROI(ReturnonInvestment).
FunctionalStrategy:

Anareaofoperationalmanagementbasedonaspecificdepartmentordisciplinewithin
anorganization,suchashumanresources,financeormarketing.Tosaythatabusiness
hasafunctionallevelstrategyforproductdevelopment,forinstance,meansthatthe
companyhasdevelopedastrategyforsellingitsgoodsandservicestocustomers.
Functionalbusinessstrategyispartofanorganization'swiderstrategicplan.

FITBETWEENCOMPETITIVEANDFUNCTIONALSTRATEGIESOFCOCA
COLA:

CompetitiveStrategies:

Cocacolafocusonaggressivemarketinghasbeenthecornerstoneoftheculture
andstrategyofitsbusiness.

Cocacolaalwaysmadeexpansionefforts.

Cocacolanotonlyproducessoftdrinksbutalsoservesenergydrinks,tea,juice
drinksandwater.

Acquisitionforgainingcompetitiveadvantage.

Themostimportantfactorforthecocacolacompanyisitsemployees.

- 32 -
 Cocacola is selling its products to the multinational organizations like
McDonalds,KFC,Subway,DunkinDonuts,andalsokeepinglocalmarketsin
focus.

Cocacolaisfocusingonpeoplebycharitablecontributions.

Itisoperatingthroughpushstrategyofsupplychainworldwideinthebeverages
industry.

CocaColaSupplyChainCapabilities:

TheCocaColahasadoptedamixofdistributionchanneltoexpandtheavailabilityofthe
productstomorecustomers,accordingtoJohnGattorna.CocaColaisusingamass
marketandbrandfocusedcorporatestrategywhichisknownasomnipresentstrategyto
makesurethatthereishighavailabilityoftheproducts.Theapplicationofthesesupply
chainstrategiesinthecaseofCocaColawillrequirethesupplychaintobedesignedto
run in high efficiency and effectiveness. And regarding the physical distribution
problems, there are five major part of the distribution system: order processing,
warehousing management, material flow, inventory control and transportation. The
companyhasinvestedinthephysicaldistributionsystemandsoftwarecontrolsystemto
ensuretheefficiencyandcostcontrolofthesupplychain.

WHATISBULLWHIPEFFECT?:

Anunmanagedsupplychainisnotinherentlystable.Demandvariabilityincreasesasone
movesupthesupplychainawayfromtheretailcustomer,andsmallchangesinconsumer
demandcanresultinlargevariationsinordersplacedupstream.Eventually,thenetwork
canoscillateinverylargeswingsaseachorganizationinthesupplychainseekstosolve
theproblemfromitsownperspective.Thisphenomenonisknownasthebullwhipeffect
andhasbeenobservedacrossmostindustries,resultinginincreasedcostandpoorer
service.

CausesoftheBullwhipEffect:

Sourcesofvariabilitycanbedemandvariability,qualityproblems,strikes,plantfires,
etc.Variabilitycoupledwithtimedelaysinthetransmissionofinformationupthesupply
chainandtimedelaysinmanufacturingandshippinggoodsdownthesupplychaincreate
thebullwhipeffect.Thefollowingallcancontributetothebullwhipeffect:

Overreactiontobacklogs.

Neglectingtoorderinanattempttoreduceinventory.

- 33 -
 Nocommunicationupanddownthesupplychain.

Nocoordinationupanddownthesupplychain.

Delaytimesforinformationandmaterialflow.

Orderbatching:largerordersresultinmorevariance.Orderbatchingoccursinan
efforttoreduceorderingcosts,totakeadvantageoftransportationeconomics
suchasfulltruckloadeconomies,andtobenefitfromsalesincentives.
Promotionsoftenresultinforwardbuyingtobenefitmorefromthelowerprices.

Shortagegaming:customersordermorethantheyneedduringaperiodofshort
supply,hopingthatthepartialshipmentstheyreceivewillbesufficient.

Demandforecastinaccuracies:everybodyinthechainaddsacertainpercentage
tothedemandestimates.Theresultisnovisibilityoftruecustomerdemand.

Freereturnpolicies.

HowtoCounteracttheBullwhipEffect?:

Whilethebullwhipeffectisacommonproblem,manyleadingcompanieshavebeenable
toapplycountermeasurestoovercomeit.Herearesomeofthesesolutions:

CountermeasurestoOrderBatchingHighordercostiscounteredwith
ElectronicDataInterchange(EDI)andcomputeraidedordering(CAO).Full
truckloadeconomicsarecounteredwiththirdpartylogisticsandassorted
truckloads.Randomorcorrelatedorderingiscounteredwithregulardelivery
appointments.Morefrequentorderingresultsinsmallerordersandsmaller
variance.However,whenanentityordersmoreoften,itwillnotseeareductionin
itsowndemandvariancethereductionisseenbytheupstreamentities.Also,
whenanentityordersmorefrequently,itsrequiredsafetystockmayincreaseor
decrease;seethestandardlossfunctionintheInventoryManagementsection.

CountermeasurestoShortageGamingProportionalrationingschemesare
counteredbyallocatingunitsbasedonpastsales.Ignoranceofsupplychain
conditionscanbeaddressedbysharingcapacityandsupplyinformation.
Unrestrictedorderingcapabilitycanbeaddressedbyreducingtheordersize
flexibilityandimplementingcapacityreservations.Forexample,onecanreserve
afixedquantityforagivenyearandspecifythequantityofeachordershortly
beforeitisneeded,aslongasthesumoftheorderquantitiesequalstothe
reservedquantity.

CountermeasurestoFluctuatingPricesHighlowpricingcanbereplacedwith
everydaylowprices(EDLP).Specialpurchasecontractscanbeimplementedin

- 34 -
 ordertospecifyorderingatregularintervalstobettersynchronizedeliveryand
purchase.

CountermeasurestoDemandForecastInaccuraciesLackofdemand
visibilitycanbeaddressedbyprovidingaccesstopointofsale(POS)data.Single
controlofreplenishmentorVendorManagedInventory(VMI)canovercome
exaggerateddemandforecasts.Longleadtimesshouldbereducedwhere
economicallyadvantageous.

FreeReturnPoliciesarenotaddressedeasily.Often,suchpoliciessimplymust
beprohibitedorlimited.
HowtoReducetheBullwhipEffect?:

Improvetheflowofinformationalongthesupplychain.Improving
communicationandforecastingenduserneedsgreatlyassistsinreducingthe
bullwhipeffect,statesForio.com.Inaddition,looktodaytodayoperationsalong
thesupplychaintoobservetrendsandbetterpredictcustomerdemands.Supply
chainmanagersshoulddevelopaforecastingsystemconsistingofcustomer
demandsandsupplierinventory,inconcertwithmarketfluctuations.
Reducedelaysinthesupplychain.Itisrecommendedthatsmallbusinessesuse
computeraidedorderingtobettertrackproductsalongthesupplychain.Cutting
ordertodeliverytimealsogreatlydecreasesfluctuationsalongwithleasing
inventorylevelsandoperatingcosts.
Paycloserattentiontopointofsalepurchasesmadebycustomers.Usingyour
pointofsalesystemtocreatereportsthattrackcustomerpreferencesandordering
behavior.Thishelpstoidentifyfuturetrendsaswellasbetteringcommunication
alongthesupplychain.
Reduceyourordersizes.Intheretailindustry,thisreferstotheeconomicorder
quantitywhatInvestopediacallsthe"optimumorderquantity"meaningthe
purchaserofgoodsfromasuppliergetsabetterpricefororderingmoreofa
particularproduct.Whilethisprovidesadiscountedprice,itunnecessarily
increasesinventorylevelsandtiesupmoreinventorypurchasemoney.Ordering
accordingtocustomerneedinsteadoforderingforpromotionaldiscountsalso
assistsinattenuatingthebullwhipeffect.
Maintainpriceconsistency.Anotherusefulmethodforreducingthebullwhip
effectistomaintainpricesduringmarketfluctuationstohaveanimmediate
impactoncustomerpurchases.Thisgoestotheverynatureofthebullwhipeffect
causationwhenpricesareloweredduetomarketconditions,customersorder
more.Maintainingaconsistentpriceevenduringmarketfluctuationsdecreases
thebullwhipeffect.

- 35 -
SUPPLYCHAINANDIT:
CocaColaisworkingwithSAPtodevelopsoftwaretoimproveefficiencyinthedrinks
firm'ssupplychain.Technologyproducedbythecollaborationcouldbeusedacrossthe
beverageindustry,analystshavepredicted.

TheaimoftheimplementationistogiveCocaColamoreinformationatthestoreand
accountleveltoimproveitsretailcustomerrelationships.

MargaretCarton,CocaCola'schiefinformationofficer,saidthenewsoftwareshouldcut
paperwork, ensure cash settlements are made properly and reduce wasted space in
deliverylorries.

CocaCola already runs various ERP and supply chain management applications,
including SAP's R/3 material and production planning applications. However, these
systemsdonotconnectstoredeliverieswithbackendsystems,Cartonsaid.

TonyHart,managinganalystatresearchfirmDatamonitor,saidtheagreementreflected
thedesireofmanufacturersandretailerstoimprovesupplychainvisibility,allowingfor
improvedplanningandreducingthepotentialforunwanteddeliveries.

"The agreement between CocaCola and SAP will try to eliminate inefficiencies and
automate more of the extended processes from manufacturer to retailer," Hart said.
"Therewillbetimeandcostsavingsandtheopportunitytodriverevenues,forexample,
replacingsoldoutstockfaster".

Mobileintegrationinaprojectofthissizewillhaveitsproblems,butasCocaColais
headtotoeSAP,thereislesspotentialfordifficulties.

Thedataintegrationissuestheprojectwilltackleincludeprovidingfunctionalitytothe
mobileworkersothatthedataenteredintothemobiledeviceiseitherautomatically
transferredorsynchronizedtobackendapplications,saidHart.

Thenewapplicationshouldhelpimprovevendingmachinemanagement,withsupport
fordirectuploadanddownloadofsalesinformationusingahandhelddevice.Thiscould
be improved further with the use of electronic tracking technologies, such as radio
frequencyidentificationtagging,Hartsaid.

- 36 -
BENEFITSofIT:

Highervisibility.

Reducetransportationcost.

Immediateavailabilityofinformation.

Greateraccuracy.

Moreeconomic.

Bettercustomerservice.

Higherproductivity.

Reducedpaperwork.

Fasterprocessing.

Increaseontimedeliveries

Improvedcapacityutilization.

EnterpriseResourcePlanning(ERP):

ERP is business process management software that allows an organization to use a

systemofintegratedapplicationstomanagethebusinessandautomatemanybackoffice
functionsrelatedtotechnology,servicesandhumanresources.

EnterpriseResourceManagementSoftwareUsedbytheCocaColaCompany:

CocaCola Company uses proprietary software known as BASES and some specific
modulesofSAPtomanagealltheiroperationsintheworld.Thissoftwareperformsthe
functionsoftheentireERPforthecompanyanditsworldwideoperations.Information
relatedtogeographicalsales,percapitaconsumptiontrends,responsefromnewproduct
introduction, sales forecasting, seasonal variations, customer relationship management
data, fleet management data and all other related information is managed using this
software.AllentitiesaffiliatedwithordoingbusinesswiththeCocaColaCompanyuse
thissoftwaretocommunicatewiththecompany.Allquerymanagementandcustomer
problemsarehandledusingthissoftware.

- 37 -
EDI(ElectronicDataInterchange):

EDI(ElectronicDataInterchange)isthetransferofdatafromonecomputersystemto
anotherbystandardizedmessageformatting,withouttheneedforhumanintervention.
EDI permits multiple companies possibly in different countries to exchange
documentselectronically.

EDI(ElectronicDataInterchange)SoftwareUsedbytheCocaColaCompany:

Therewasatimewhenallofthebuildingblocksofbusiness,fromproductorderingto
invoicing, were handled over the phone and with paper documents. But today's
technologyallowsbusinessestoreplacethatcumbersomemanualmethodwithasleeker,
moreefficientway:electrinicdatainterchange.EDIleveragesdigitalprocessestoenable
fileexchanging,therebyreducingtime,errorandtheneedformostpaperdocuments.

Jeff Toeppner, director of eBusiness Solutions for "CocaCola" Consumer Business

Solutions (CBS), explains that his group supports four main EDI processes: product
ordering,deliveryofproducttocustomers,invoicingandbilling."Systemscanprocess
thedatasothatnopersonhastobeinvolvedwithtranslatingorkeyinginthedata,"
Toeppnersays."AnordersentviaEDIinstandardformatgoestoCokenightly.Weroute
ittotherightbottlerorcompanysotheycanprocessitandscheduledeliveryofthe
product.It'samuchmoreefficientwaytoreceiveorders."

"Don'twastetimeandmoneywithtasksthatcanbeeasilyautomated."JeffToeppner.

StandardsKeepEfficienciesRolling:

AllcompaniesthatuseEDIsendtheirdataaccordingtogroceryindustrystandards.By
keepingeveryoneonthesameplayingfield,EDIismoreefficient.Withoutstandards,
"everyonewouldbesendingadifferentExcelspreadsheet,faxormakingphonecalls,"
Toeppnersays.

WhenitcomestodecidingwhethertoleverageEDI,thebiggesthurdleforourpartnersis
cost."CocaCola"businesspartnershavetodecidehowmuchmoneytheywanttoinvest
inasystem thatwillprocess orcreate thedataneeded. TherearealsoEDIsolution
providersthatenableEDIwithouthavingtoimplementsystems.Thelargerthechain,the
greatertheefficiencies,butToeppnersaysevenasinglestorecanbenefitfromEDI.

Overtime,EDIyieldsquantifiablesavings,yetanindustryaverageishardtodefine.
"Eachcustomer'ssavingsisbasedonwhathis/hercurrentcostis,"Toeppnersays."If
youvegoteightpeopleprocessinginvoices,withEDI,theycouldbedoingotherthings
tobenefitthecompanyininnovativeways."

- 38 -
OnBoardWithEDI:

EDI enablement is a relatively simple task, and most customers who already have
softwarepackagesforinventoryandaccountingcaninstalladditionalsoftwaretomake
themEDIcompliant,Toeppnersays.Forthosevendorswhoareinterested,CBScan
providerecommendationsandconsultonthebestpracticeswithEDIatnochargeto
partners."Wewantthemtobeefficient.Wewanttohelpthembuildtheirbusinesses,"
Toeppnersays."Don'twastetimeandmoneywithtasksthatcanbeeasilyautomated."

ISSUESINCURRENTSTRATEGIES:

CompetitionwithPepsiPepsiisathorninthefleshforCocacola.Cocacola
would have been the clear market leader had it not been for Pepsi. The
competitioninthesetwobrandsisimmenseandwedontthinkPepsiwillgiveup
soeasily.
Product Diversification is low where Pepsi has made a smart move and
diversifiedintothesnackssegmentwithproductslikeLaysandKurkure,Coca
colaismissingfromthatsegment.Thesegmentisalsoagoodrevenuedriverfor
PepsiandhadCocaColabeenpresentinthissegment,theseproductswouldhave
beenanadditionalrevenuedriverforthecompany.
Absence in health beverages If you watch the news, you would know that
obesityisamajorproblemaffectingpeoplenowadays.Thebusinessenvironment
ischangingandpeoplearetakingmeasurestoensurethattheyarenotobese.
CarbonatedbeveragesareoneofthemajorreasonsforfatintakeandCocaColais
the largest manufacturer of carbonated beverages. The inference is that the
consumptionofbeveragesindevelopedcountriesmightgodownaspeoplewill
preferahealthyalternative.
Water management CocaCola has faced flak in the past due to its water
managementissues. SeveralgroupshaveraisedlawsuitsinthenameofCoca
Colabecauseoftheirvastconsumptionofwatereveninwaterscarceregions.At
thesametime,peoplehavealsoblamedCocaColaformixingpesticidesinthe
watertoclearcontaminants.ThuswatermanagementneedstobebetterforCoca
Cola.

PROPOSEDRECOMMENDATIONS:

TheissuethatcouldaffectCocaCola'scapabilitiesororganizationalstructureis
theeverchangingrealmoftechnology.Specialconsiderationshouldbemadein
regardstokeepingwiththetimesandimplementingallofthelatesttechnologies
sothattheycancontinuetoproducetheproductseffectively.
Communications is another area, where issues could arise. All of CocaCola
departments need to maintain open lines of communications because for the
ConnectandDevelopStrategytofunctioncorrectly,communicationsmustalways
beestablished.

- 39 -
 Alwaysplanaccordinglyforanyrisksthatcouldoccur.
DevelopinganewbusinessmodelisthebeststepforCocaColainregardstothe
futureofthecompany.
TheConnectandDevelopStrategywillhelptosetthemapartandlaunchthemto
thetopoftheindustry.Thisisespeciallygreatforthefutureoutlook,assalesand
revenuewillincrease.

CONCLUSIONS:

TheCocaColaCompanyhasoneofthelargestsupplychainmanagementsystemsinthe
worldandduetoitsvolumetherearecertainproblemsandimprovementareasthatneed
toberectified.TCCCistakingnecessarystepstoconstantlyimproveitsevergrowing
supply chain by partnering with different suppliers and bottlers. Several integration
efforts are under way to maximize TCCC supply chain efficiency. TCCC made
considerablechangestotheirsupplychainin2004bycombiningitsthreebusinessunits
inNorthAmericainanattempttoconsolidatethemintoonemoreefficientlyintegrated
unit.AnevidenceofTCCC'scontinuedeffortscanbeseenbytheir2006decisionwhen
TCCCdecidedtobypassmostofitsbottlingpartnersandtodeliveritsproductsdirectly
toWalMarttoreduceleadtimes.Bymakingthischangeanddeliveringdirectlytothe
warehouses,TCCCchangeda100yearoldoperationalpractice.

Another recommendation that TCCC could use is that it could try and create some
transparencyinitsbottlingpartners.Requiringtransparencyfromitsbottlingpartners
could remove domain conflict problems that arise when one bottler tries to sell its
merchandiseitanotherbottler'sterritorytomeetitssalesquotas(thisproblemhasbeen
seeninCocaCola'sAsiaPacificmarket).

- 40 -