As a person
who is new to the field of supply chain management, I was particularly amazed
by the process in which a product is being made and delivered to their
customers in a timely and efficient manner, and is curious to find out what are
the practices and solutions in supply chain systems that make the picky
customers happy while bringing in revenue for the companies. I started to think
about one of the most common and popular products we often see on the store
shelves – Coca Cola, a drink that appears everywhere and always bought by some
of the customers in stores. How can the supply chain systems of Coca Cola be so
successful in stocking up its products at everyplace and always making sure
there are people going to buy it, while being efficient enough to generate
large revenues that allow Coca Cola to be one of the largest international
enterprises of the world?
Coca
Cola is in the forefront of integrating suppliers into their business model. According
to Supply Management magazine, Coca
Cola Company is training 40,000 African farmers for juice production. The
company is investing $11.5 million over four years to train and support mango
and passion fruit farmers in Uganda and Kenya.
This enables the Company increases security for supplies of fruit juices and allows
them to lower the costs and increase supply chain flexibility by procuring
locally produced fruit. Coca Cola Company not only recruited and trained the
local farmers, but seeks to play a role in the local community. It supports sustainability
of the local agriculture by setting up sustainable agriculture guiding
principles, which aim at increasing the efficiency of water and energy usage as
well as decreasing climate impacts associated with their vending machines,
coolers and fountain dispensers. In the meanwhile, the Company employed 17,000
women out of 40,000 local farmers to support women to have their own
businesses. Coca Cola Company is not only building up a good relationship with its
suppliers, but becoming an essential economic partner to the community in which
their suppliers live.
To me, this
strategic supply chain management is very smart because it seeks to find a
win-win situation for the suppliers and the Company. Incorporating suppliers
into the business allows the company to have more control over the costs and
quality of the products, and a more integrated supply chain system means a more
flexible and seamless production line due to higher information flows in the
organizational network. Coca Cola takes a further step in the relationship with
their suppliers by finding a way to connect and contribute to the region where
there suppliers live, enabling the Company to build a trusting and long-term relationship
with the suppliers. A solid and lasting relationship with the good suppliers is
particularly important because it allows companies to achieve consistent
quality, the right amount of volume production, product customization and fast delivery in their supply chain system.
However,
it is always expensive and time-consuming when a company wants to build a good
and long-term relationship with their suppliers. A question we can think about
is how to select good partners for the businesses? And what are the good
strategies that can minimize the risks of suppliers making mistakes?
References:
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