A
REPORT
ON
1 | Page
CERTIFICATE
This is to certify that the work on the project report titled Supply Chain of
Coco-Cola. has been carried out by Sagar Suryavanshi (BTM846) who is
a bonafide student of Sardar Patel College of Engineering, Mumbai, in
partial fulfilment of the term work for the subject Supply Chain
Management in the 8th semester in the academic year 2016-17.
Principal: _________________
Table of Contents
2 | Page
Sr. No Topic Page
1 Supply Chain Of Coco-Cola 4
3 Distribution 9
4 Forecasting 13
5 Transportation 15
3 | Page
1. Supply Chain of Coco-Cola
1.1 Strategy
4 | Page
1.2 Planning
1.3 Operation
5 | Page
Coco-Cola Sales order and processing: The Shipping Manager receives
sales order from Sales Team, distributors through telephone, fax &
email one day before dispatch. The sales are made to base distributors
on advance payment against orders then shipping manager plans
according to the demand of distributors on daily basis.
6 | Page
Coco-Colas overall mission is to increase the value of shareholder's
investment. They do this through sales growth, cost controls and wise
investment of resources. They believe their commercial success
depends upon offering quality and value to their consumers and
customers; providing products that are safe, wholesome, economically
efficient and environmentally sound; and providing a fair return to their
investors while adhering to the highest standards of integrity. A
customer while purchasing a bottle of Coco-Cola will consider product
quality, price and availability of the product. Thus, Coco-Cola
particularly focuses its competitive strategy as to producing sufficient
variety, reasonable prices, and the availability of the product.
7 | Page
Demand for Coco-Cola varies by product. For example there is a
greater demand for Coco-Cola as compared to Fanta Apple, which
is new. Hence, Coco-Cola has a low demand uncertainty as compared
to Fanta Apple. The product Coco-Cola is approaching its maturity
stage in the PLC whereas Fanta Apple is in the introductory stage.
8 | Page
Step 3: Achieving the Strategic Fit
Making one stage more responsive allows the other stage to focus on
being more efficient. The Coco-Cola supply chain assign different roles
to its different stages, the company has to decide either to transfer the
responsiveness to the manufacture stage or to the retailer stage. While
discussing the Coco-Colas supply capability it is seen that Coco-Cola
tends to be more responsive in the cities and a bit less in towns.
Therefore, transferring the responsiveness to the retailer and
distributor, allowing them to face the higher implied demand
uncertainty. This in return allows the manufacturer and supplier to be
more efficient. At the same time, multiple beverage types contribute to
a broader product portfolio causing Coco-Cola to adjust its strategies
accordingly; tailoring the supply chain to best meet the needs of each
beverage demand.
9 | Page
3. Distribution
Direct distribution:
2. Export Parties
Indirect distribution:
Coco-Cola uses light and heavy vehicles for safe delivery of goods to
the distributors for timely delivery. It follows the just in time concept
which is applicable in Non-seasonal period and not applicable in the
seasonal period.
10 | P a g e
3.2 Review and Revise Distribution
This is usually done through taking over key revenue areas. If the
distributor does not achieve its sales target, the distribution is taken
back and an addition of new distributor is done. Therefore Coco-Colas
supply is low supply uncertainty. Some of its supply source capabilities
are:
Less breakdowns
High quality
The customer needs that are met influence the companys revenues,
which along with cost decide the profitability of the delivery network.
While customer service consists of many components we will consider
those measures that are influenced by the structure of the distribution
network for Coco-Cola.
11 | P a g e
the product variety includes beverages ranging from the water
Aquafina to Mountain Dew, Pepsi, Coco-Cola Max, Minute Maid, Fanta,
Fanta Apple & Fountain Fresh, Coco-Cola diet , Coco-Cola light.
12 | P a g e
Real-time visibility between customers and warehouse is needed
whereas visibility between customer and manufacturer is not required.
Response time is also reduced. Customer convenience is high and
order visibility with manufacturer storage becomes easier. Distributor
storage is well suited for medium to fast moving goods and it can also
handle higher level of variety than retail stores.
Storage
Distribution
13 | P a g e
of the product. The storage facilities are designed to contain the
maximum possible inventory items that are needed at any given time.
4. Forecasting
Importance
Ease of Forecasting
14 | P a g e
having multiple product lines and daily planning procedures do
decrease risk of error by high responsiveness.
1. Time-Series Method
2. Qualitative Method
3. Causal Method
15 | P a g e
5. Transportation
16 | P a g e
Land: Truck offers advantage of door to door shipment, a shorter
delivery time and no transfer between pick up and delivery. Coco-Cola
uses the TL (truck load) approach. This approach provides paves the
way for economies of scale and is able to meet service requirements
while minimizing both trucks idle and empty travel time. Truck loads
are more suited Coco-Cola because of the use of warehouses and
larger shipments therefore making it cheap. Raw materials from the
suppliers are brought using trucks; finished products are transported to
distributors and then retailers using trucks as well. Coco-Cola have its
own fleet of small and large trucks and vehicles for carrying goods and
raw material, while the distributors also use their own vehicles.
Water: This mode forms only a very small part of the total transport
network. It is used for shipping of empty cans .
Retailer
Retailer
17 | P a g e Retailer
D.C Retailer
Retailer
Direct Shipping: This method is used for transporting products to key
account holders such as KFC and Pizza Hut.
6.1 Outsourcing
18 | P a g e
For Coco-Cola, outsourcing results in the supply chain function being
performed by a third party. It is in fact one of the most important
factors facing the firm. Raw material for production and packaging is
being outsourced through contracts. Inbound and outbound
transportation of products from the manufacturing place to the
distribution center and then to the final customer is also being
outsourced to a third party. The basic considerations are:
19 | P a g e
When comparing suppliers, Coco-Cola does not only focus on the
quoted price but also other dimensions that may affect the total cost of
the supplier. The following factors other than quoted price are being
considered: replenishment lead time, supply flexibility, supply quality,
pricing terms, exchange rates, duties and supplier viability. For Coco-
Cola the supplier scoring and assessment is based on the feature that
the supplier performance, in terms of replenishment lead time and on
time performance, distinguish them amongst their competitors. Soon
after the tender notice for the procurement of raw materials is
advertised, the suppliers are asked to send sample of the products. For
example, for the manufacture of Coco-Cola, concentrate and sugar are
demanded of high quality which is the forte of the company. These
samples are tested in the total quality laboratories. If the samples
match with the standard set then the sales department selects that
particular supplier. Coco-Cola being an ISO-9001 certified company
cannot sell low quality products, therefore it has strict standards set for
the purchase of raw materials from suppliers.
20 | P a g e
7. Other Activities In Relation With Supply Chain
21 | P a g e
and specifications of bottles differ with different products. General
items have more specific use as compared to bulk items. Sugar may
rightly be placed under the category of bulk items. Maximum efficiency
has been ensured while buying sugar and its related products in bulk.
Bulk items are used invariably in all products of Coco-Cola with slightly
variations of proportion.
22 | P a g e
7.4 Revenue Management
C r i ti c a li ty
High Critic al Item s
Stra te gic Item s
Ensure long term
Ensure av ailability relationship
Gas CO2
Drink Formula
Bulk P urcha se
Ge nera l Item s Item s
Ensure low c ost Ensure low c ost
Low Cans and bottle s Sugar
Low High
Val u e/ Co st
26
Seasonal
peaks of demand are common every year. In Coco-Cola the seasonal
demand varies as it increases considerably in summer than in winters.
Off-peak discounting can shift demand from peak to non-peak periods.
This is exactly what Coco-Cola does as it reduces its prices on litre
bottles and comes up with new saving schemes just to attract
customers. Coco-Cola charges higher price during peak periods and a
lower price during off-peak periods.
Using In Practice
23 | P a g e
preferences are being used to estimate the benefits. Coco-Cola
differentiates between the customers who truly need the supply chain
asset during peak period and those who will benefit from moving their
order to the off-peak period. This approach increases profits for the
firm while also satisfying the customers creating a double impact.
Revenue management tactics have brought in huge profits to the
company.
24 | P a g e