Supply Chain Bottlers Nepal

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Supply Chain Management of Coca-Cola

Prepared By: Shubham Aggarwal

LBU ID: 77297418

BUSI781: Operation and Logistic Management

Leeds Beckett University

10th January, 2022


Table of Contents
1. Introduction:....................................................................................................................................3
2. Methodology:..................................................................................................................................4
3. Company Information.....................................................................................................................4
4. Product Information:.......................................................................................................................5
5. Process Design................................................................................................................................7
8. Recommendations.........................................................................................................................18
9. Conclusion.....................................................................................................................................19

References................................................................................................................................................20
1. Introduction:

1.1. Objective of the Project:

This project consist of analyzing the general goal of learning, analyzing, and then presenting in paper
the actual process flow in a real-world company (i.e. Bottlers Nepal ltd) with respect to the ideas of
operation management. In the more limited points, however, we have specified the following as our
objectives:
 Gaining practical knowledge and familiarizing myself with the industrial sector by seeing
and gaining a complete overview of the production line at Bottlers Nepal Ltd.
 To examine Bottlers Nepal ltd's operations (the real Coca-Cola production process)
through the lens of several of Supply Chain Management .
 To match our grasp of OM principles with the logic behind the various operations
strategies employed during the on-site interview with the operation manager.
 To assess the data gathered, comprehend the success of the concepts employed, as well as
the issues, drawbacks, and worries that may arise.
 Finally, if we believe any improvements to the process are necessary, we will make
recommendations with a detailed description.

1.2. Scope of the Project:

In terms of the Nepalese industrial sector, Bottlers Nepal Ltd is a significant firm. As stated
previously in the introduction. As with bureaucratic bigger companies, the entire plant is
organized into distinct managerial departments:

• Supply chain management (includes Production and Quality Control)

In this case, because we were monitoring the key manufacturing and quality control processes,
our analysis and description were confined to the supply chain department. Other non-core
procedures in other departments were not included in our research. With this narrow focus, this
paper aims to present an in-depth overview and analysis of the activities within the supply chain
division of the company, as well as recommendations for any needed improvements.
1.3. Limitations of the Project:
The limitations of this project can be listed out as:

 The scope limited within the study of supply-chain Department of organization (i.e.
Production and quality control)

2. Methodology:

2.1. Data Collection Procedures: The following is a list of the methods and techniques utilized
to collect the data for the study.

Primary Method: The primary way is for the researcher of the paper to acquire data
directly from the source. To make our article more trustworthy and precise, we have relied
heavily on the primary data collecting technique in this study.

Secondary Method: Apart from main sources of information, finishing the assignment
necessitated the usage of secondary sources such as online searches for the introductory
section and downloading portions of Coca-Cola’s layout.

3. Company Information

3.1. Brief Introduction of The Coca Cola Company:

The Coca-Cola Company, based in Atlanta, Georgia, is an American multinational beverage firm
that manufactures, retails, and markets nonalcoholic beverage concentrates and syrups. Coca-
Cola, the company's signature beverage, was created in 1886 in Columbus, Georgia, by
pharmacist John Stith Pemberton. Except for the two nations Cuba and North Korea, the Coca-
Cola Company maintains a franchised distribution system that dates back to 1889[ CITATION
Fos14 \l 1033 ]. The Coca-Cola Company only makes syrup concentrate, which is then
distributed to numerous bottlers across the world who possess an exclusive area.

3.2. Introduction to The Bottlers Nepal ltd:

The Bottlers Nepal Ltd, as mentioned in the introductory section of The Coca-Cola Company, is
a franchised distribution system with the unique legal right to bottle and distribute The Coca-
Cola Company's iconic products such as Coke, Sprite, and Fanta inside Nepal. In truth, Bottlers
Nepal Ltd is a subsidiary of Coca-Cola Sabco, a big Coca-Cola bottler that received bottling
rights from The Coca-Cola Company for Nepal in 2004. Local manufacture has already begun
with the founding of Bottlers Nepal Ltd in 1979[ CITATION Tam19 \l 1033 ].

Bottlers Nepal Limited (BNL) was founded in 1979 and is located in the Balaju Industrial
District (BID) of Kathmandu, 7 kilometers from the city center. The company is a public
corporation with a total area of 23.6 Ropani, with the plant covering virtually the entire territory.
Bottlers Nepal Limited (BNL) is Nepal's only Coca-Cola bottler, with two bottling operations in
Kathmandu (Bottlers Nepal Limited-BNL) and Bharatpur (Bottlers Nepal (Terai) limited), both
located 160 kilometers from Kathmandu, the country's capital. As of now, the firm is one of the
most important industries in Nepal's beverage sector, with a high-end production plant and
procedure that meets Coca-standards. Coca-Cola's Salman Latif Rawn, the country manager, is
now in charge of this factory[ CITATION Pra93 \l 1033 ].

For appropriate administration and operation of the BNL plant in Balaju (our project is based on
this specific plant, not that of Nawalparasi, but comparable arrangements exist), the plant has
been separated into distinct sectors. Despite the fact that the plant is separated into several
sectors, all of them are interconnected and strive to produce high-quality beverages while also
making a profit.

3.3. Company's Vision, Mission and Purpose:

Bottlers Nepal Ltd is a subsidiary of Coca-Cola Sabco, one of the world's largest bottlers of the Coca-
Cola brand. It shares the company's vision, mission, and objectives, which have been adapted to meet
the needs of our nation.

Vision: To assist Coca-Cola Sabco in becoming the greatest Coca-Cola bottler in the world in terms of
both return on capital invested and sales volume.

Purpose: To add value to everyone who is impacted by our business by offering the appropriate
refreshment, at the right price, in the right location, with passion and concentration.

Values: To foster an environment in which our employees are enthusiastic about their work.

4. Product Information:
4.1. Product History:

The Coke or Coca-Cola itself is the main topic of this paper, with minor allusions to other
flavors of this carbonated beverage brand, such as Fanta, Sprite, and Kinley soda manufactured
by Bottlers Nepal Ltd in Nepal.

Coca-Cola was bought out by businessman as Griggs Candler, whose marketing tactics propelled
Coke to dominance of the world soft-drink market throughout the twentieth century. Coca-Cola
was originally intended as a patent medicine when it was invented by John Pemberton in the late
nineteenth century[ CITATION Fri92 \l 1033 ]. As an alternative to harmful opiates The original
Coca-Cola recipe was created as a coca wine at Pemberton's Eagle Drug and Chemical House, a
drugstore in Columbus, Georgia. As a result, the product's origins may be traced back to 1886.
Since then, the main concentrate has been a result of a secret recipe distributed by The Coca-
Cola Company all over the world.
Though the core feature of the product, the secret formula, has remained intact, other aspects of the
product have evolved, such as bottling and the addition of new tastes. Since the beginning of bottling in
1891, the bottle design has evolved continuously, as may be seen in the image linked below[ CITATION
Fos14 \l 1033 ]. Furthermore, Coke has created a variety of different coke tastes, such as Diet Coke,
Cola Lime, and others, as well as other product lines, such as Fanta and Sprite. In this regard, BNL
offers a product with a long and illustrious history.

4.2. Product Design Specification:

As previously stated, the industry's offering is non-alcoholic carbonated beverages. There are
four distinct tastes to choose from. Coca-cola, Fanta, Sprite, and Kinley Club Soda are the
brands.
5. Process Design

5.1. Supply chain Strategy: The bottlers Nepal ltd limited has a solid supply chain management
since it is sponsored by the parent bottler CocaCola Sabco. Every provider of raw materials
is a foreigner. The raw materials for the production come from a variety of countries,
including Egypt, India, and Thailand. Packing Materials, such as perfomance, are acquired
from India, Bhutan, and Pakistan; returnable glass bottle (RGB) from India; and cardboard
boxes and containers, which are secondary packaging, are purchased from Pokhara (Nepal)
and India, respectively[ CITATION Sod16 \l 1033 ]. They don't have any backward
integration with their vendors. The problem here is that importing raw materials such as
sugar from outside (for the reason that they require the Coca-Cola standard) would not avoid
any impediments from local prospective suppliers once sufficiently sponsored by the
government.

5.2. Cycle View of the Supply Chain:

Cycle view: A supply chain's processes are separated into a number of cycles, each of which is carried out at
the interfaces between two levels of the supply chain.

Each cycle takes place at the intersection of two stages:

 Customer order cycle (customer-retailer)


 Replenishment cycle (retailer-distributor)
 Manufacturing cycle (distributor-manufacturer)
 Procurement cycle (manufacturer-supplier)

The cycle view clearly outlines the processes involved as well as the process owners. Describes each
member's tasks and responsibilities, as well as the anticipated outcome of each procedure.
5.3. PUSH-PULL VIEW

Each Coca-Cola supply chain is in charge of implementing the supply chain's "push strategy." In the
supply chain, each zone has a district leader who is accountable for his zone's efficiency as well as
increasing per capita use. Each zone is subdivided into several routes, with different territories allotted
to each vehicle on each route[ CITATION Jan12 \l 1033 ].

5.4. SUPPLY CHAIN FLOWS

The channel flows that occur along the supply chain, from suppliers to production plants to distributors
to retailers, and ultimately to end customers, are shown here.
• Suppliers
•Manufacturer
•Distributor
•Retailer
• Consumer
• Financing
Financing, Each stage of the chain puts physical possession and ownership transfer at risk. Orders are
taken and payments are made backwards, from the customer to the merchant, who makes an order with
the wholesaler. Flow of information both ways, with the Company disseminating product information
to each entity in the supply chain and requiring information from the end customer in the form of
criticism.

5.5. Mixing And Bottling:

The first two production processes were crucial to the final mixing and bottling procedure. It
paves the way for the last step of mixing and manufacturing the final syrup, as well as bottling,
by providing the key inputs of treated water and the Simple Syrup. As required by Coca-Cola
regulations, the simple syrup is blended with the primary concentration in a predetermined
proportion. The finished syrup is referred to as a Base or Beverage. The flowchart below depicts
the fundamental steps involved in the mixing and bottling stages of the production process.
concentrate Simple syrup

Final syrup
Treated water
proportioning

Final beverage

filler

filling

Crowning / Closure application


Data Coding

Final Inspection

Casing/Crater Warehousing

Fig: flow sheet of mixing and filling

Final syrup is obtained within the 1500-litre mixing tank by mixing the main concentrate directly
delivered by The Coca-Cola Company with the simple syrup generated according to the
aforesaid technique. The next process is to proportionally combine treated water and final syrup
to create the finished beverage, which is then packed into bottles using two different
manufacturing lines: RGB and PET. The closing application, such as date coding, final
inspection, and casing, is then completed. Finally, the finished product is sent to the warehouse
for storage.

5.6. COCA-COLA SUPPLY CHAIN DESIGN:


Syrup:

The syrup is manufactured by the Coca-Cola Corporation in Atlanta and sold to one of its bottling partners,
such as Coca-Cola Enterprises (CCE), which is responsible for transferring the product in North America and
Canada. Coca-Cola Enterprises manufactures and packages the beverage by combining the product
concentrate with other components, and then sells it to retail customers and consumers.

The Coca-Cola Export Corporation (TCCEC) is in charge of marketing the concentrate to bottlers all over the
world. TCCEC, in collaboration with its regional offices throughout the world, forms agreements with local
bottlers who make the beverage using Coca-Cola Company syrup and then distributes it to their various
markets.

Fountain syrups in the United States are one significant exception to the normal connection between Tnb and
bottlers, since TCCC bypasses bottlers and is responsible for the manufacturing and distribution of fountain
syrups directly to approved fountain distributors and select sparkling merchants.
Simple Syrup Manufacturing:

Coca-Cola syrup is a sucrose solution that has been concentrated. Sugar, water, activated carbon, and dicalite
are mixed and processed to produce it. The concentration of the syrup varies according on the finished
product, such as Coca-Cola, Fanta, or Sprite, but the general procedure remains the same. First, the filter is
prepared, and then the syrup is made.
Process flow sheet of simple syrup manufacture:

Calculated amount of treated water ( From Water Treatment Plant)

Syrup tank Steam

Maintain temperature at 75oC

Add half of the calculated amount of sugar

Add calculated amount of activated carbon and


dicalite

Add remaining amount of sugar

Maintain and hold temperature at 85oC for half an hour

Filter the syrup tank with continuous circulation until clear solution is
obtained

Syrup analysis for carbon residue

Lowering syrup temperature (if carbon is absent)

Syrup transfer to mixing tanks


Fig: process flow chart of simple syrup manufacturing

Calculation for sugar, water, activated carbon and dicalite:

Water: During the creation of simple syrup, the volume of water and sugar is determined per
unit of beverage, while carbon and dicalite are added as a proportion of the sugar in the simple
syrup tank. The amount of water used to make syrup is 100 times the amount used to make a unit
of beverage.
Sugar: The amount of sugar added to simple syrup varies on the kind of beverage. Sugar is
added at a rate of 204kg/unit for Coke and Sprite flavors, and 270kg/unit for Fanta orange
flavors.
Carbon and dicalite: Carbon and dicalite are added at a rate proportional to the amount of sugar
added. Carbon should indeed be introduced at a rate of 0.25 percent of total sugar by weight.
Similarly, the amount of dicalite used during syrup manufacture should be 0.21 percent of total
sugar. In a tank, carbon is dissolved and transferred to a syrup tank. The technique is repeated for
dicalite when it is completed.

Bottling:

The Coca-Cola Company develops fundamental operational principles for all of its bottling partners and
suppliers, so most of their operations are standardized, and most of their strategic choices are centralized to
some extent.

Each bottling partner has a main office that oversees the majority of operations and serves as a center for
many supply chain organizations. The Coca-Cola Export Corporation oversees the bottler's central office,
which works closely with a regional office. To build a full supply chain, the bottler's head office connects the
production facility with several distribution and sales locations, as well as diverse trade zones.

A. Mixing And Bottling:

The first two production processes were crucial to the final mixing and bottling procedure. It
paves the way for the last step of mixing and manufacturing the final syrup, as well as bottling,
by providing the key inputs of treated water and the Simple Syrup. As required by Coca-Cola
regulations, the simple syrup is blended with the primary concentration in a predetermined
proportion. The finished syrup is referred to as a Base or Beverage. The flowchart below depicts
the fundamental steps involved in the mixing and bottling stages of the production process.

concentrate Simple syrup

Final syrup
Treated water
proportioning

Final beverage

filler

filling

Data Coding

Final Inspection

Casing/Crater
Warehousing
Crowning/Closure application

Fig: flow sheet of mixing and filling

Final syrup is obtained within the 1500-litre mixing tank by mixing the main concentrate directly
delivered by The Coca-Cola Company with the simple syrup generated according to the
aforesaid technique. The next process is to proportionally combine treated water and final syrup
to create the finished beverage, which is then packed into bottles using two different
manufacturing lines: RGB and PET. The closing application, such as date coding, final
inspection, and casing, is then completed. Eventually, the finished product is sent to the
warehouse for storage.
5.7. ACHIEVING STRATEGIC FIT IN SUPPLY CHAIN MANAGEMENT:

Coca Cola Supply Chain Strategic Fit:

A strategic fit is primarily concerned with a company's resources and competencies being aligned with
available environment and conditions. Any company's supply chain capabilities must be matched with the
features of consumer demand in supply chain management[ CITATION Moh15 \l 1033 ]. Below, we'll look at
how Coca-supply Cola's chain is strategically aligned, taking into account the company's resources and
competencies, as well as external opportunities and circumstances.

Coca-Cola Supply Chain Capabilities:

According to John Gattorna, Coca-Cola has used a variety of distribution channels to make its goods more
accessible to a wider range of customers. Coca-Cola employs a mass-market and brand-focused business
strategy known as the omnipresent approach to ensure that its goods are widely available. In the case of Coca-
Cola, the implementation of these supply chain strategies will need the creation of a supply chain that is both
efficient and effective[ CITATION Sáe14 \l 1033 ]. In terms of physical distribution issues, the distribution
system is divided into five primary components: order processing, warehousing management, material flow,
inventory control, and transportation. To maintain supply efficiency and cost management, the firm has
invested in a physical distribution infrastructure and a software control system.

5.8. Inventory Management/Warehouse strategy:

As previously noted, inventory is provided by international vendors. Raw materials/Inventory are not
kept for lengthy periods of time and are sent to the industry as need dictates. The marketing
department's projection determines the demand in this case. The raw materials are adequately
maintained in a clean and sterilized environment, with an average storage time of roughly 60 days
before processing. There is a distinct store division with five different sorts of stores, one of which is
for raw materials and is managed by a different shop manager. The stock rotation method is based on
the First in First Out (FIFO) principle[ CITATION Ber07 \l 1033 ]. Batch numbers, dates, and other
information are manually entered into the inventory for FIFO. The same FIFO process is used at the
warehouse.

6. Literature Review

Supply Chain Management refers to a network of facilities that create raw materials, turn them into
intermediate items, and then distribute finished products to clients via a distribution system. The main
goal of supply chain management is to "optimize chain performance to provide as much value as
feasible at the least cost possible"[ CITATION Lee95 \l 1033 ]. It encompasses procurement,
production, and distribution. In other words, it strives to connect all supply chain agents inside the
organization in order to enhance supply chain productivity and give the maximum advantages to all
parties involved[ CITATION Lie06 \l 1033 ]. Since the 1980s, industry use of supply chain
management strategies has gradually expanded. A variety of definitions are offered, and the subject is
addressed from a variety of angles.[ CITATION Sah13 \l 1033 ], on the other hand, offered a thorough
overview of the supply chain management literature. These articles clarify the idea, principles, nature,
and evolution of SCM and show that there is a lot of research being done in this topic all over the
world. They also critically reviewed advancements in supply management theory and practice.

According to [ CITATION Gun04 \l 1033 ]expanded the scope of SCM to include aspects such as
managerial commitment, organizational structure, training, and behavioural difficulties, in addition to
material leadership, partnerships, and information systems. Because a firm's sustainability depends on
its ability to integrate, a thorough grasp of the integration process is essential in SCM. [ CITATION
Ram04 \l 1033 ]demonstrated that the basic notion "the more integration (wider the scope) – the better
the chain management" is not always accurate, and that it is highly dependent on the supply chain's
"environment" and power dynamics between the members. To examine effective SCM methods, the
authors presented a set of management methodologies and tools.

It's also worth noting that study in SCM isn't restricted to hypothesis testing and data analysis;
advanced features like simulation, Artificial Neural Networks, and Fuzzy logic are employed for
optimization and decision-making. According to [ CITATION Koh06 \l 1033 ]applied fuzzy logic
fundamentals to analyze and monitor performance outcomes based on product quality and delivery
time, whereas [ CITATION Chi04 \l 1033 ]demonstrated how collaborative agents and artificial neural
networks (ANNs) can be combined to enable collaborative supply chain planning (SCP). According to
the literature review, supply chain management has been researched from a system viewpoint, or the
systemic natures of interactions between supply chain actors have been noticed. Despite the fact that
many studies look at SCM from various angles, this research provides a deeper knowledge of supply
chain operations.

7. Key Performance Indicator (KPI)

7.1. Continued Learning

Coca-Cola focuses on staff training and development in order to improve quality standards and reduce
costs in its operations. Coca-Cola staff are always working to increase the value and quality of the
company's goods by utilizing innovative technologies[ CITATION Glo12 \l 1033 ]. To maintain the
quality requirements of its drinks, the company purchases raw ingredients and converts them into
finished items. The Coca-Cola Company's success depends on effective operations management.

Total Quality Management (TQM) and Just-in-Time are two essential principles in Coca-operations
Cola's management (JIT). TQM is linked to supply chain management since it increases a company's
worldwide effectiveness and adaptability. Coca-TQM Cola's is offered as a way to encourage and
distinguish real-world implementations of the environmental management system (Umar, 2014). The
Coca-Cola Quality Management System, the company's TQM program, was responsible for this
success[ CITATION Dur14 \l 1033 ].

7.2. Quality Measure

The TQM technique is used by Coca-operations Cola's management. At Coca-Cola, quality assurance
administration is defined as a management system that prioritizes consumers, workers, production
processes, and innovation. Coke integrates the high ground into company culture and operations
through effective strategy, data, and communication[ CITATION Dur14 \l 1033 ]. Coca-products
Cola's must all exceed stringent quality requirements to ensure that they are all similar. This is critical
since the organization wants to satisfy the needs and expectations of its customers. From the bottle to
the syrup, this high quality is followed constantly throughout the firm and product.
TQM and JIT operations help managers be more productive and efficient. By minimizing waste, Just-in-Time
operations aim to create the correct items in the right amounts at the right time[ CITATION Gol91 \l 1033 ].
The Coca-Cola Company's major priorities are continuous improvement and adaptability, which enable it
achieve its aim successfully and efficiently. Coca-JIT Cola's manufacturing approach results in high-quality,
low-cost, and flexible production with short lead times[ CITATION Dur14 \l 1033 ]. In JIT, TQM is critical to
avoid poor or uneven quality, which might result in the organization losing money and making mistakes. To
achieve efficiency and effectiveness, quality improvements minimize setup times, lot sizes, lead times, and
execute layout modifications[ CITATION Gol91 \l 1033 ].
8. Recommendations

However, based on our research of previous operational methods and decisions, there are a few things
that BNL plant should focus on improving. The following is a list of them:
 First and foremost, having a distinct Product Development Department within the BNL is
ideal. Given their aim of promoting their brand's beverage in every section of the
Nepalese market, and the fact that the product is now mature, limiting themselves to
tastes like Fanta, Coke, and Sprite may prove insufficient in the coming days.
 The second, and perhaps most essential, suggestion relates to supply chain management.
With every vendor being a foreigner, it's quite possible that BNL will face any number of
challenges from local potential suppliers, such as sugar farmers. The same thing
happened at KFC recently. It's logical that BNL needs raw resources that meets the
stipulated coke standard, but the Nepalese farmer/supplier is unable to do so. However,
investing in distribution channels will benefit both them and local suppliers in the long
run, despite the high initial fixed cost.
 The third suggestion pertains to warehouse and inventory management. The FIFO
approach is now utilized for inventory and warehouse management. It necessitates
manual registration of batch no., lot no., date, and so on. This takes time and might not be
correct at times. As a result, it is recommended that the BNL facility use RFID
technology to automate this system. Again, the cost will be prohibitively expensive, but
considering the amount of money they have invested in this factory, it is preferable to
improve this element as well.
9. Conclusion

The technique of spreading happiness through the Coca-Cola brand isn't easy. This article may
conclude that Bottlers Nepal Ltd has a lot to cover in terms of operations after analyzing and
explaining the important aspect of any company, i.e. Operations of BNL. In terms of general Nepalese
production lines, the way BNL has controlled every area of operations from layout to location, quality
to process, and inventory to warehouse is well ahead. Apart from a few minor flaws, the BNL plant is
unquestionably one of the highest-quality, well-managed facilities that consistently fulfills The Coca-
Cola Company's standards.

With such a large investment, it has not only kept its value, but has also retained its position as a benchmark
and industry leader. The role of operations is critical in this respect, as the problems that must be handled on
numerous operations processes are quite complicated. Management has been a key component of their entire
strategy for preserving the brand and its history with customers. Having said that, it is strongly recommended
that Coke and BNL, in particular, continue to look for any type of improvement they can, as indicated above
in the suggestions, in order to acquire a competitive edge over Pepsi.
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