Tuesday, January 21, 2014
Coca Cola and its Supply Chain System
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?