A MODERN SUPPLY CHAIN FOR A

CLASSIC BEVERAGE

By Group 6:

O AdwaitDeshpande (16P182)

O Himanshu Arora (16P202)

O GurleenKaur (16P200)

O Siddharth Mishra (16P230)

O SarthakDhama (16P219)

O Yadvendra Kishore (16P235)

Coca Cola Innovation sparks supply chain revolution
Introduction

When it comes to the world‟s most powerful brands, Coca-Cola is still number one. The iconic
beverage maker, which has dominated the global soft drink market for more than a century,
continued its 12-year reign at the top in 2011, according to Interbrand‟s latest global rankings.

CCE is one of the world‟s largest marketers, producers and distributors of Coca-Cola products.
CCE buys concentrate from The Coca-Cola Company and combines it with other ingredients to
create some of the most popular beverages in Belgium, Great Britain, France, Luxembourg, the
Netherlands, Norway and Sweden.

In 2010, CCE completed a significant transaction with The Coca-Cola Company, selling its
North American operations, while retaining its European territories and acquired new bottling
rights for Sweden and Norway.

CCE‟s executives recognized that establishing a uniform IT program across all of its business
units would be critical for expanding CCE‟s footprint in Europe.

It is very important for Coca-Cola to have a set of consistent standards and processes, so that
when it acquires and integrates new territories into its business it can easily put those practices
in place in a short time.

Supply chain overview

Coca-Cola produces and distributes more than 2 billion unit cases of its products annually
across territories. Its supply chain organization, which is responsible for the company's
procurement, planning, manufacturing and engineering, and sustainability, plays a central role in
managing this responsibly, making sure that in all the processes it minimizes its environmental
impact and consider sustainability in its value chain - from sourcing raw materials
and manufacturing the end product to distributing it to the customers.

The success of CCE lies with its people's expertise, its absolute focus on quality and its
continuous investment in advanced technologies.
Top-in-class quality assurance
In its own business, it is developing a culture where quality is a core value across the entire
organization. It has re-stated its zero tolerance for failure to meet standards and deployed a
maturity continuum measurement to enable it to move its quality and food safety-focused culture
to the next level.

This approach extends to its suppliers, too. Coca-Cola HBC requires tier 1 suppliers to gain
certification to the following standards: ISO 9001 (quality), ISO 14001 (environment) and
OHSAS 18001 (health and safety). Ingredient and packaging suppliers must also achieve
certification to FSSC 22000 for food safety and the Global Food Safety Initiative (GFSI).

Quality and food safety remain its top priorities, to make sure it meets customer and consumer
expectations while delivering against its cost leadership commitments.

CCE has stringent processes in place to minimize the occurrence of quality issues. However,
when they do arise, it has robust processes and systems in place so it can deal with them
quickly and efficiently, ensuring that the customers and consumers retain confidence in their
products.

Investing in advanced technology to optimize infrastructure

CCE operates in a vast territory that stretches from County Kerry, Ireland, to Russia‟s Pacific
coast and from the Arctic Circle to the tropics of Nigeria. While providing it with great
opportunity, this footprint also challenges CCE to constantly optimize its operational
infrastructure.

The company‟s aim is to build a borderless supply chain than will supply its territory at optimum
cost and have the capability to imbed innovative technologies, fast.

Coca Cola is investing in advanced technology to optimize its infrastructure, aiming to build or
transform its existing plants into efficient mega-plants that can effectively serve a country or an
entire region. Optimization like this takes into consideration the Group supply chain as a whole,
from the number of plants and the number and nature of its filling lines to how many distribution
centres and warehouses it has.

CCE sources ingredients, packaging, equipment and services from around 45,000 suppliers,
ranging from small independent firms to large international companies.
 It works with its suppliers to build a sustainable supply chain. It invests in joint value creation
programmes, ranging from developing climate-friendly cold drink equipment to increasing local
beet sugar production. In its own business, it is creating a 100 percent quality culture with zero
tolerance for failure to meet standards. This approach extends to its suppliers, too.

Engaging with suppliers

CCE engages with its suppliers through its joint value creation initiatives, supplier award events,
industry associations, workshops on sustainable supply, Annual Stakeholder Forum, materiality
survey and SEDEX (a platform for ethical and sustainable supply chains).

Supplier awards
As part of its supplier relationship management performance assessment, it recognizes its best
company suppliers in a bi-annual awards ceremony.

It also assesses suppliers on whether they have established and consistently maintained
exceptional performance in all areas and achieved top scores during the cross-functional
evaluation process.

Coca Cola presents awards in the following categories:

 Corporate Account Management & Reliability

 Commercial Performance

 Quality Performance & Compliance

 Strategic Alignment & Innovation

 Sustainability

 Most Improved Supplier of the Year

 Best Supplier of the Year

 Becoming a Coca-Cola HBC supplier
Coca-Cola HBC requires tier 1 suppliers to gain certification to the following standards:

 ISO 9001 (quality)

 ISO 14001 (environment)

 OHSAS 18001 (health and safety).

Ingredient and packaging suppliers must also achieve certification to FSSC 22000 certification
for food safety and the Global Food Safety Initiative (GFSI).

A prerequisite to become listed as a Coca-Cola HBC supplier is to commit to the Coca-Cola

HBC Supplier Guiding Principles. These Principles make clear the values and behavior Coca-
Cola expect, and audit, in its value chain.

By following theSupplier Guiding Principles, the suppliers are expected to comply as a minimum
with applicable environment and local labour laws and core international conventions. CCE
works collaboratively with its suppliers on the journey to meet the expectations of its customers
and consumers and enable its continued mutual growth.

As per Coca-Cola HBC Procurement Guidelines, it targets for 100% of its suppliers to comply
with the Supplier Guiding Principles (SGP) by utilising its "SGP Coverage Triangle" with three
checkpoints throughout the procure-to-pay process.
The Coca-Cola supply chain is responsible for delivering more than 1.8 billion servings a day to
customers all over the globe. While the recipe for the soft drink remains the same no matter
where it‟s served up, Coca-Cola actually uses multiple formulations to ensure supply chain
success. Its multi-pronged methodology has been carefully measured to deliver fresh products,
stocked shelves and happy customers whether a sale is made at a mom-and-pop store in the
United States or a retailer in Singapore.

Taking Global Local

The Coca-Cola supply chain is technically global, but meeting the demand is a distinctly local
proposition. Serving some 16 million retail outlets around the world, 10 million of those requiring
direct delivery, the company has found meeting demand is best left in local hands. That‟s why it
operates locally in each market it serves with local bottling plants serving the needs of the
specific market. Coke products typically aren‟t shipped more than a few hundred miles as a
result, enabling the company to be responsive to local market needs and the tastes of local
consumers.
Coca-Cola calls its local approach to international business a customer-driven supply chain.
While the formulas for drink products are the same everywhere, the responsibility for production
and supply fulfillment is flexible enough to satisfy the tastes in each unique market.

There Isn‟t Just One Coca-Cola Supply Chain

While consumers can count on a Coke tasting like a Coke no matter where they buy it, the
method for supply delivery is often quite different. Coke uses segmentation in its supply chain
structure to ensure fulfillment to meet local needs. Some areas, for example, require
refrigerated distribution, but others want an ambient product. The company modifies its supply
chain structure to meet the varying needs its clients. That means some customers are served
directly by Coca-Cola, but others might rely on their own distribution channels or third-party
distribution partners. It all comes down to what‟s the best practice for the market and/or
customer in question.

Technology Drives Success for the Coca-Cola Supply Chain

The distribution side of the Coca-Cola supply chain isn‟t the only area where this soft drink giant
has innovated. The company also takes a unique approach to creating its supply forecasts by
using technology to assist in its demand input.

Rather than solely relying on incoming retail orders and historical sales data to determine supply
needs, Coca-Cola uses a data warehouse to increase its intelligence about customer behavior
and market needs in nearly real time, cutting the time to generate reports from weeks to days.
The end result is a demand-driven supply chain that takes production cues more closely from
the source, reducing the whipsaw effect so common in manufacturing.

Coca-Cola‟s data track not only historical sales data, but also point-of-sale data at retail
locations when possible. The end result is cleaner, more accurate data that can be used faster
to predict production needs in real time, enabling the company to focus on forecasting and
demand planning. It‟s paying off with increased sales and reduced out-of-stocks.
Serving nearly 2 billion Cokes a day calls for innovation in the supply chain. While Coca-Cola‟s
drink recipe works globally, the company has discovered that the best formulation for supply
chain success is diversification.

Although The Coca-Cola Company‟s drink offerings grew from sparkling to sports drinks,
waters, juices and more, the choices in its fountains were limited. With the need to offer a
greater number of beverage choices from a fountain dispenser, Coca-Cola was challenged to
reinvent the fountain business.

Engineers and scientists at Coca-Cola realized that micro-dosing technology (typically used to
measure precise amounts of medication) might be able to dispense “recipes” of different
beverages to increase the amount of choices in a single machine. Thus, Coca-Cola Freestyle
was born.

Ground-Breaking Innovation
Coca-Cola Freestyle changes the fountain model from eight choices in a standard fountain to
more than 100. Coca-Cola Freestyle also provides valuable data collection to customers. On a
daily basis, each dispenser can gather data related to machine performance, micro-dose
cartridge usage and beverage consumption.
While the technology for the dispensing machine is unique and ground-breaking, what is
revealing is how the data is now being leveraged, particularly for rapid replenishment. Coca-
Cola Freestyle fountains are connected to the Coca-Cola network and are constantly reporting
sales data – by brand, location, and day part.

In the era of Big Data, the machine is also providing game-changing insights. By innovatively
using the data in its SAP Supply Network Collaboration (SNC) module it can react for the first
time in a pure demand driven Supply Chain ecosystem to keep the brand cartridges in stock.

In order to ensure replenishment occurs reliably and efficiently, The Coca-Cola Freestyle
Replenishment System captures detailed data on every pour, plus data on the remaining
quantities in each of the cartridges. Consumption data for each machine is received into SAP‟s
enhanced SNC module where it is consolidated by outlet and combined with past historical
consumption history, future forecasted demand, and any promotional uplift forecasts for the
specific time period to calculate a replenishment order.
The system also determines and plans shipments to outlets for full micro-dose cartridge case
quantities, so in the event a full case cannot be built, the SNC module will forecast future
demand and fill the case.

The enhanced SNC technology completes the Supply Chain ecosystem for Coca-Cola
Freestyle. By dispenser, consumption data by micro-dosed component is automatically received
and then utilized to drive automated order replenishment as well as production planning and
scheduling of materials and logistics.

Beyond Basic Visibility

Coca-Cola Refreshments is working to complete a connected supply chain ecosystem for Coca-
Cola Freestyle through automated rapid replenishment of the dispensers. By processing the
data received each night, the company can calculate and create replenishment orders for any
machine that requires it, then automatically process the orders and send them to the distribution
center for shipping to the outlets.

This „ideal‟ Supply Chain ecosystem creates a win for its consumers, its customers and the
company. This system will also help to facilitate the continued roll-out of Coca-Cola Freestyle in
the years to come.

Breaking Ground
Currently, there are more than 9,000 Coca-Cola Freestyle dispensers in use across the United
States, with tests being conducted in Canada, Great Britain and Japan.

Using Information technology to sparkle up the operations: The Genesys

program
For Coca-Cola, achievements like this are byproducts of a vision and an operating framework
that is built on excellence. At Coca-Cola Enterprises (CCE), the exclusive Coca-Cola bottler for
its territories in Western Europe, the company‟s goal is to be the number 1 or strong number 2
choice in every category it competes in.

But on the road to long-term, sustainable growth, CCE faces similar challenges to many other
manufacturing and logistics businesses. A top priority is replacing dated systems with a
modernized platform across markets to create a cohesive view of metrics and streamlined
processes.

As part of its Genesys program, CCE set out to deploy a new supply chain management
solution at all 17 of its European plants. The new system would replace and automate many of
CCE‟s supply chain processes and required new skill sets to ensure the required speed of
deployment.

CCE needed a partner to help deliver this new SAP-enabled business transformation. This
would involve not only delivering a technology solution, but also training users on the new
processes to ensure the full benefits were realized.

CSC was selected because it has combined a strong „front office‟ business transformation and
change management consulting capability with a „back office‟ technology delivery capability for
CCE since 2008. Prior to Genesys, CSC had already been supporting CCE‟s applications with
SAP, including order processing, manufacturing, financial transactions, human resources,
procurement and other related processes.

CCE started Project Genesys not as an IT project, but as a business transformation project to
enable CCE‟s day-to-day business to work in a harmonized way. Since CSC knew Coca Cola‟s
processes, people and solutions, it thought that would carry over very well into the deployment
process, and especially from an acceleration perspective, because the learning curve would be
relatively short.

Beyond that, CSC has very experienced and capable people from an implementation
perspective. And, Coca Cola needed to make sure the cost-quality equation worked for it. CSC
met its criteria and satisfied it from that perspective as well.”

Filling the gap between Demand and Supply

The Genesys program was an integrated SAP Enterprise Resource Planning (ERP) solution
that replaced CCE‟s legacy systems in the processes of “order to cash,” “requisition to
payment,” and “record to report.”

Genesysallowed CCE to shorten cycle time in these processes and be more productive. It also
helped bring more visibility into the business and improve decision making.

CCE is a shelf-replenishment company, a supply chain company, a sales and customer

services company and it was very important for them to integrate its manufacturing plants all the
way up to the replenishment of shelves in the retail outlets. Through the information side of the
equation, it was basically tying those two ends of the business process together: the
manufacturing side, which drives the supply of the product, and the shelf-replenishment side,
which drives the demand part of its product.

CSC played a major role in expediting the delivery of Genesys across CCE‟s operations,
allowing CCE to deploy Genesys at multiple-country locations at a much faster pace than if CCE
had forged ahead alone.

There were a lot of technology areas that required some capacity that CCE might not have or
some technology areas that it might not have the knowledge about. So whenever CCE had
those knowledge gaps, it turned to its strategic partner CSC to fill in. Whenever an accelerated
deployment need arose, it leverage CSC, and it could generate value much more quickly.