Coca-Cola Companys Supply Chain

Table of Contents

Introduction
Distribution Network
Forecasting Practices
Planning Inventories
Transportation and Logistics
Conclusion
Works Cited

Introduction

A supply chain is one of the most important systems for any company. It includes organizations, specialists, information, and resources that are involved in transferring a final product from a supplier to a customer. There are different supply chain activities that are closely interrelated. The example of the multinational corporation Coca-Cola allows demonstrating such processes. The main goal of this paper is to analyze the supply chain practices of the Coca-Cola Company.

Distribution Network

The Coca-Cola Company has one of the largest distribution networks. Statistics show that approximately 2 billion Coca-Cola products are sold throughout the world daily (Coca-Cola Company Statistics). The company is multinational and has various bottling partners in different countries. Its distribution network includes numerous independent legal and managerial divisions, but they operate without supervision or control by the company.

This beverage corporation runs its operations globally by means of different local channels. As the brand belongs to Coca-Cola, the company designs customer marketing initiatives. However, its partners manufacture the final products and distribute them to their partners who cooperate with grocery stores and foodservice companies. Therefore, they implement marketing strategies created in partnership with The Coca-Cola Company. Although it is a multinational corporation, all its products are produced by local firms. Normally, Coca-Cola beverages travel no more than a few hundred kilometers to reach their customers.

Forecasting Practices

The Coca-Cola Company utilizes the entrepreneurship Collaborative Planning, Forecasting, and Replenishment (CPFR) concept. CPFR mixes the accomplishments of different trading partners and enhances the effectiveness of supply chains in order to meet the demands of the general public. Forecasting is a crucial challenge for manufacturing, and it influences the companys sales and promotion policies. Its main forecasting principles include planning, predicting, and restocking. All planning initiatives and strategies are based on the analysis of the global market (Coca-Cola). Therefore, all companys forecasting practices start with determining its customers needs.

The forecasting, scheduling, and restocking systems are designed and controlled by a centralized planning team. This system is based on an interactive platform that ensures simultaneous work in all distribution areas. Forecasting processes are mostly focused on the largest companys clients. After collecting all pertinent information, the planning team designs a customer demand model and tests it using out-of-sample data. Such testing allows improving the model and reveals possible negative scenarios. Finally, the team links the customer demand forecast to the supply chain.

Planning Inventories

Inventory planning is necessary to determine the optimal quantity and timing. These plans enhance the companys capacity and increase sales. The company utilizes the latest technologies that include accounting and business software that allows managing all inventory (Coca-Cola). It includes several important aspects. First, inventory planning helps to calculate the companys cash flow. A specially designed inventory system is the main tool for managing all spending. It allows the company to save much money and produce products at a lower cost than its competitors. Therefore, inventory planning leads to higher profits.

The control of inventory allows the Coca-Cola Company to increase its operational efficiency and, thus, profitability. The companys inventory planning includes the production, purchase, and sales. In addition, it allows controlling products at all these stages. The companys inventory initiatives deter employees from stealing. Usually, people in a lenient work environment tend to abuse their position. However, the Coca-Cola Companys policies are very strict and prevent such violations.

Transportation and Logistics

Although transportation is one of the less significant aspects of The Coca-Cola Company, it receives particular attention. It focuses on several major areas: optimization of the logistics network in order to reduce transportation distances, eliminating the carbon pollution by enhancing the efficiency of vehicles, and maximization of local manufacturing. The companys transportation includes long Eco-Combis that replace traditional diesel trucks (Zumerle 1). Such vehicles are more capacious and emit less amount of carbon dioxide. Also, the company promotes the use of alternative fuels that meet the requirements of the Euro 6 standard.

For short journeys, for example, within cities, Coca-Cola starts employing electric vans. For long-distance delivery, the company uses multi-modal transport that involves railways. The logistics in Coca-Cola is based on a franchise system. The company produces and distributes concentrates to bottling operators. Therefore, this corporation is not a single entity. Specialists who work in headquarters in the United States are responsible for the brand and overall marketing, but the final product is produced by an independent manufacturer in each country. The same model works when it comes to the distribution of Coca-Cola beverages. Distribution centers have similar relationships with bottlers as they do not directly depend on local manufacturers.

Conclusion

A supply chain is a complex system that ensures moving products between manufacturers and customers. The example of the Coca-Cola Company demonstrates the main principles of such a system: distribution, forecasting, planning, and logistics. The company has chosen a franchising business model that allows reducing the distance between suppliers and consumers. Although manufacturers are independent, Coca-Cola is still responsible for the brand. This model has stood the test of time and proved to be highly profitable.