The global supply chain of coca-cola

Content:
1. Introduction
2. Brief presentation of the structure of the global supply
chain- participants, roles
3. Strategic management of the global supply chain:
strategy, outsourcing of activities, relationships with
suppliers and customers, core business processes
(sourcing, production, distribution, return, logistics
operations), information management, risk management
and sustainable aspects
4. Tactical management of the global supply chain:
product demand forecast, inventory management, sales
and operations planning
5. Operational management of the global supply chain:
processing of a customer’s order
6. Conclusion
Introduction
Coca-Cola, or Coke, is a carbonated soft drink
manufactured by The Coca-Cola Company. The Coca-
Cola Company, American corporation founded in 1892
and today engaged primarily in the manufacture and sale
of syrup and concentrate for Coca-Cola was invented by
John Stith Pemberton and was bought out by businessman
Asa Griggs Candler, whose marketing tactics led Coca-
Cola to its dominance of the world soft-drink market
throughout the 20th century. The drink's name refers to
two of its original ingredients: coca leaves, and cola nuts
(a source of caffeine). The current formula of Coca-Cola
remains a trade secret. With more than 2,800 products
available in more than 200 countries, Coca-Cola is the
largest beverage manufacturer and distributor in the world
and one of the largest corporations in the United States.
Headquarters are in Atlanta, Georgia.
Brief presentation of the structure of the
global supply chain
The Coca-Cola supply chain is one of the most wide-
reaching, seamless operations in the world. Coca Cola’s
VP of Customer Logistics Wendy Manning once said the
company is able to deliver a drink from a factory to a local
store within 48 hours. The secret behind this impressive
figure is local sourcing, meaning that most of the drinks
are manufactured directly in the country where they are
sold. The supply chain begins with the procurement of
raw materials, which in the case of Coca-Cola also
includes agricultural products (e.g. sugar cane or fruit) and
water. The most important ingredients such as water and
sugar are sourced locally, with the partners being able to
choose only the type of sugar used. In order for a Coca-
Cola to be sold, four different agents in the supply chain
must become involved: the syrup producer, the bottler, the
distributor and the merchandiser. Firstly, syrup producers
process raw materials together and add sweeteners
depending on whether they want to produce a diet or non-
diet beverage. Afterwards, bottlers receive the syrup
concentrate, add more ingredients respectively (more
water, more sugar, carbonate), package and ship. This is
the key in order to understand why Coca-Cola in the
United States tastes differently than Coca-Cola in
Bulgaria. Finally, these bottling companies decide
whether to ship to a distributor or directly to a
merchandiser. The distributor is also in charge of
repackaging and distributing product to retailers.
Generally, bottling companies are also in charge of the
distribution process for the final sales to take place. All
bottling partners work closely with suppliers- grocery
stores, restaurants, convenience stores, amongst many
others- to execute localized strategies developed in
partnership with Coca-Cola.
Strategic management of the global supply
chain
The history of Coca-Cola’s supply chain goes back to the
last decades of the 19th century when Coca-Cola, initially
a pharmaceutical product sold in drugstore soda fountains,
started gaining popularity. Although the initial recipe was
ideated by John Pemberton, Asa Candler had become the
chairman of the company. In 1899, Coca-Cola’s chairman
Candler received a proposal: he could maintain the rights
on the syrup (which today is the world’s most popular
secret recipe) and hand over bottling rights or take charge
of the full process. Coca-Cola at the time was sold as
syrup that retailers could mix with water but Candler
knew bottling could help the product become more
commercial, thus boost sales. He agreed on the deal to
manufacture Coca-Cola in bottles and maintaining the
rights on the syrup. This marked the beginning of what we
know today as the Coca-Cola System: a conglomerate of
different partnerships with 900 bottling companies that
allowed the company to establish a worldwide distribution
network and presence with local expertise. Because of its
partnership with more than 275 independent international
bottling companies of different sizes, The Coca-Cola
Company, which is the parent company, has become an
empire. In 2013 The Coca-Cola Company decides to take
over most of the production assets of North American
bottling companies, regaining control of its business and
at the same time remaining local. Many bottling
companies have merged or have been acquired in the last
years. This is because this sector requires a lot of
investments in fixed assets and it has high competition.
Merging also improves functionality by splitting costs,
enlarging the network and enabling knowledge sharing.
The acquisition of smaller bottling companies has also
improved the efficiency of the so-called Coca-Cola
system. Outsourcing or developing bottling expertise
within the supply chain both have various advantages and
disadvantages. On the one hand, developing a big network
of franchises and distributors also provides the
opportunity to perform excellently and focusing in one
key strength of the company, which is the production of
syrup. Moreover, outsourcing such a process creates more
competition between bottling companies, pushing bottling
costs down as a result and promoting more efficiency for
them to maintain and improve operating margins. By
relying on a worldwide network of Coca-Cola bottlers and
distributors, The Coca-Cola Company is able to also adapt
locally and rely on those that have developed over time a
local expertise. This also provides greater flexibility and
adaptability to changing environments as well as market
demands. Local expertise allows the parent company not
to develop a local distribution network and the outsourced
company can perform larger economies of learning. On
the other hand, outsourcing for the parent company would
entail less control and more efforts to keep track of
suppliers’ operations so that the “Coca-Cola” brand name
continuously builds reputation. Stemming from the aspect
of control, other major concerns regarding the outsourcing
of the bottling process include potential issues of
communication and delegation between Coca-Cola and its
partners. Generally, through this system, Coca-Cola has
less control on the processes within its supply chain and
how the product arrives to the market. Since the fixed
costs of starting up a bottling company are so high, it
would promote a point where the parent company would
not be able to reach the demand if it had to take charge of
all these operations.

Coca-Cola's bottlers and canners are concerned with a
range of processes involved in transforming resources into
the bottles and cans of drink that we are familiar with. The
transforming resources are the managers, employees,
machinery and equipment used by The Coca-Cola
Company and its franchisees. The transformed resources
are the materials (the cans, bottles, liquids, etc.) and the
information which are processed to create the finished
product. Primarily, Coca-Cola is manufactured by
franchisees who are the world's leading bottling and
canning companies. This franchise business is strictly
controlled by The Coca-Cola Company. Soft drinks
manufacture is a competitive business. Manufacturing
techniques are continually improved. This helps to meet
the highest quality standards for its products using the
most cost effective production techniques. For example,
very small changes in the shape of the can could save a
canning factory millions of dollars in production costs.
The production of Coca-Cola involves two major
operations:
 creating the packaging material
 bottling and canning the finished drink.
Advanced bottling and canning technology makes Coca-
Cola cans and bottles very light but extremely strong. The
Company has invested a lot of time and money in research
and development to ensure the most effective life cycle
impact of its packaging. By using the minimum quantities
of materials in packaging, the cans and plastic bottles are
simple to crush or to reprocess at the end of the initial life
cycle. The packaging and the finished drink are combined
by a rapid filling process. Every minute hundreds of cans
pass along an automated production line and are filled
with a precise amount of Coca-Cola. The manufacture of
Coca-Cola is carried out by a set of processes called
continuous flow production. On a production line, a
process is continually repeated and identical products go
through the same sequence of operations. Continuous flow
production takes this one step further by using computer-
controlled automatic equipment to produce goods 24
hours a day. The Company and its franchisees use Total
Quality Management procedures that encourage everyone
in the plant to think about quality in everything they do.
Every employee sets out to satisfy customers and places
them at the heart of the production process. By continually
seeking to improve every aspect of production, employees
are able to eliminate problems. The canners then prepare
the cans for distribution to retailers such as supermarkets,
shops and garages. A machine called a case former creates
the casing that protects the cans as they are sorted onto
pallets. The cans are stored temporarily in a warehouse
before they are collected by large distribution trucks. The
bottling process, whether in glass or PET (plastic), is very
similar. Each plastic bottle starts as test-tube size and is
blown up like a balloon into the final bottle shape.
Whereas franchisees receive cans that already have the
logo and any promotional details on them, bottlers apply
the labels from large reels once the bottles have been
formed. Canners and bottlers process vast quantities of
materials each week. Receiving the raw materials and
delivering the finished products involves a complex
sequence of actions. The ideal solution is to make sure
that the inputs for the process arrive 'just-in-time' so they
can be transformed into a finished product ready for
transportation 'just-in-time' to meet the needs of the
retailers. The packagers are involved in sophisticated
supply chain networks with the supermarket chains and
other outlets to ensure that this process runs smoothly.
Canners and bottlers must ensure that they do not build up
large stockpiles of cans waiting to be sold but they must
also make sure that deliveries are not late. This is where
they benefit from advanced information technology that
rapidly relays figures about the demand for Coca-Cola.
For example, this demand usually rises in periods of hotter
weather so the packagers need to plan increased
production. Canners and bottlers work closely with The
Coca-Cola Company and other suppliers to provide a
smooth running supply chain so that consumers are
always within 'an arm's reach of desire' and can always
buy a drink when they want one. Total Quality
Management lies at the heart of the process involving a
continuous emphasis on getting quality standards right
every time and on continually seeking new ways to
improve performance. Although Coca-Cola is a global
company, its products never have to travel far to reach the
final consumer, making the product local to the market
where it is sold. Their business is a local business,
typically products aren’t shipped more than a few hundred
miles; it’s all about being responsive to the customers’
needs and the local tastes of the consumers in every
market. The Coca-Cola Company sells its products to
bottling and canning operations, distributers, fountain
wholesalers and some fountain retailers. They then
distribute them to retail outlets, corner stores, restaurants,
petrol stations and many more. The firms distribution
system is one of the most well planned and executed
compared to all other drinks of the same category. It has
such an impact on consumers and is so successful that
even wholesalers and distributers need the product for
their business’ success. Coke’s position on consumer’s
mind makes it essential to retailers and wholesalers. They
have achieved their goal due to this high visibility, and to
the availability of their products all over the world, even
remote places.
Arrays of points of sales that Coca-Cola products can
roughly be categorized into are:
 Wholesalers/ distributers
 Retail/ corner stores/ super markets
  Restaurants/ cafes/ night clubs
 Petrol stations
 Automated teller machines


Coca Cola has adopted a comprehensive enterprise risk
management framework to manage risks and leverage
opportunities across the Group. The dynamic management
of risk and opportunity is at the heart of the business
planning and value creation processes. The enterprise risk
management is a strategic advantage for the company –
selectively seize opportunities because of the enhanced
opportunity to exploit risks. Coca-Cola continuously
identifies, assesses, manages and escalates risks and
opportunities, following a rigorous cyclical process that
they evaluate against the risk universe in which they
operate. They seek to minimize their exposure to
unforeseen events and identified risks and create a stable
environment for delivering on their strategic objectives.
Their robust risk framework is both top down and bottom
up, ensuring that they identify, review and escalate, where
appropriate, any risks arising from their business
activities. The Board is ultimately responsible for the
Group’s risk management and internal control systems,
and for reviewing their effectiveness. The Board defines
the Group’s risk appetite and monitors risk exposure to
ensure that the nature and extent of the significant risks
facing the company are managed in alignment with the
goals and objectives. While responsibility for overseeing
these processes rests with the Audit & Risk Committee,
the Board as a whole is informed of outcomes and all
significant issues. The Group Risk and Compliance
Committee is their risk think tank and independent risk
review mechanism. Its members, recruited from the most
senior business leaders across all functions, contribute
their experience and insight to the evaluation of the
company’s risk and opportunities. Their strategic pillars -
Leverage company’s unique 24/7 portfolio, Win in the
marketplace, Fuel Growth through competitiveness and
investment, Cultivate the potential of the people, Earn
their license to operate- provide the context for guiding in
the management of the risks faced by their business.

Coca Cola is one of most successful and iconic brands in
the world, and in recent years sustainability has become
increasingly embedded in the brand. In many ways The
Coca Cola Company’s definitions of sustainable
development and sustainability consistently emphasize
business continuity as much as the preservation and
enhancement of natural and social capital in a potential
‘win-win’ scenario as epitomized by the concept of shared
value. Many of the company’s reported initiatives and
achievements, for example, have been focused around
business efficiency and cost savings and driven largely by
business imperatives. Thus, while some of environmental
agendas addressed by the company in an attempt to reduce
carbon dioxide emissions into the atmosphere, they also
increase energy efficiency and reduce operating costs. In a
similar way, commitments to employees, for example,
through human and workplace rights initiatives and
empowering women, help to encourage security, loyalty
and efficiency within the workplace. The Coca Cola
Company have pursued many other sustainability issues
including climate protection, water stewardship,
packaging and waste management and sustainable
agriculture.

Tactical management of the global supply

chain
The demand planning solution is designed to help
companies generate and track forecasts for multiple
business needs, including sales, marketing, logistics and
financials, to produce an accurate picture of the market
and its impact on operations. The solution helps improve
margins by keeping detailed product forecasts aligned
with high-level business plans. Additionally users are
automatically alerted to changes in the market through
exception management and can readjust the forecast ahead
of changes in demand. Coca-Cola’s guiding principle is
the understanding for demand, operations and inventory
planning. Demand involves daily interaction with
marketing and sales. Operations focus on the financial
implications of optimizing production and distribution.
Inventory planning assesses the impact of striking the
right inventory levels. All three areas are synchronized
through the company's sales and operations planning
effort, the forum for making and sharing key decisions.

The inventory of Coca Cola consists of finished goods and
raw materials that it uses in making its products. Coca-
Cola has various inventory characteristics that are mostly
association with bulk ordering, supplier information, lead
times and cost of products, unit of measures about the
products of the company products among other
characteristics. Coca Cola buys material in bulk to prevent
cost inflation and any rise or fall in prices as a result. As
such, the operations of the company are not affected much
as the employees in the organization have enough
inventory to continue production. Customers are satisfied
since there is a sufficient amount of the products into the
market. Shortages may only be caused by transportation
difficulties, but not production challenges as the company
is geared towards constant production.  

Operational management of the global supply

chain
Coca-Cola has always put effort towards maintaining a
good customer to company relationship. They want their
brand and products to be a part of people’s daily lives, to
be somewhat of a ritual attached to specific or special
moments, and they use social media in order to create
emotions and feelings of affiliation towards customers.
Since Coca-Cola is a world-wide company, they have
representatives around the world. These representatives
reach the customers and create awareness among them
about a new product or service and sell the products to the
customers. These representatives build relationships with
the customer, and promote the product to different
customers within the regions they work.

Conclusion
Coca-Cola has long been a global player. Accordingly, the
company is continuously optimizing and modernizing its
supply chain. Due to the high sales of the soft drink, the
supply chain focuses on the management of partner
companies. Here, smooth communication with the
partners and the subsequent smooth distribution to the
points of sale play a major role. Coca-Cola has an efficient
supply chain despite facing issues relating to supply,
operations, information, integration, and sustainability. Its
supply chain incorporates the dynamic alignment model
which first focuses on developing a strategy to establish
the overall direction of the firm, then empowering the
employees, the managers then create an enthusiastic
workforce and lead the organization according to its
values and culture.
References:
1. https://en.wikipedia.org/wiki/Coca-Cola
2. https://businesscasestudies.co.uk/making-the-worlds-
best-known-product-a-coca-col/#:~:text=Primarily%2C
%20Coca%2DCola%20is%20manufactured,leading
%20bottling%20and%20canning
%20companies.&text=The%20production%20of%20Coca
%2DCola,and%20canning%20the%20finished%20drink
3.https://operationsmanagementblog.home.blog/2019/05/2
7/is-outsourcing-a-good-strategy-for-coca-cola/
4. https://www.ukessays.com/essays/business/coca-colas-
integration-of-information-systems-business-essay.php
5. https://www.coca-colahellenic.com/en/about-
us/corporate-governance/risk-management
6. https://www.ukessays.com/essays/marketing/coca-cola-
supply-chain-analysis-marketing-essay.php#:~:text=The
%20Coca%2DCola%20Company%20follows,name%20of
%20Coca%2DCola%20Refreshments.
7. https://www.allthingssupplychain.com/amazing-supply-
chain-of-coca-cola/#:~:text=Coca%2DCola%20is%20a
%20global,cane%20or%20fruit)%20and%20water.
8. https://www.coca-colahellenic.com/en/about-us/what-
we-do/supply-chain
9. https://www.dynamicinventory.net/coca-cola-supply-
chain/
10. https://uniquewritersbay.com/blog/inventory-
management-coca-cola-pepsi/
11. https://www.supplychainbrain.com/blogs/1-think-
tank/post/20951-demand-planning-at-coca-cola-whats-
the-secret-formula
12. https://www.worldofcoca-cola.com/about-
us/environmental-commitment/