Coca-Cola supply chain management and SAP implementation

Coca-Cola Supply Chain Management-A

Coca cola supply chain management

The first section of this paper touches on the Coca-Cola Company's historical background detailing the time of its inception and the brains that were behind its formation and growth. This section also touches on the advertisements that have since been used from its inception. This section finally illuminates its mission statement.

The second section talks about the challenges that Coca-cola has faced. These challenges include competition its products faces from its competitors like PepsiCo. Another challenge that has been highlighted is that of an incidence at the bottling plant in Shanxi Province. Other challenges faced include advertisement flops and changes in the taste of consumers with regard to carbonated soft drinks and their subsequent switch to other brands like juice products. Another challenge that has been highlighted is brand extensions.

The third section of this paper highlights financial implications the implementation of SAP has had on the Coca-Cola supply chain management. Some of the implications here are customer satisfaction, cut in costs, and enhancement of partner collaboration. The fourth section of the paper covers how implementation of SAP by the Coca-Cola has impacted its business/technical approach, its business process, and technology. The fifth paragraph touches on Coca-Cola's SAP implantation plan. The final section talks about the conclusions and recommendations.

Coca-Cola historical background and Mission Statement

The Coca-Cola history begun in 1886 when an Atlanta pharmacist Dr. John Pemberton created a distinctive tasting soft drink that was later sold at soda fountains. Pemberton created flavored syrup that he took to a neighborhood pharmacy from where it was mixed with carbonated water. The resulting product was then deemed excellent by those who tasted it. Frank M. Robinson, who was Pemberton's partner, named the beverage "Coca-Cola." He is also credited with having designed the trademark that Coca-Cola uses to date. Before he died in 1888, Dr., Pemberton sold portions of his business to various parties (The Coca-Cola Company, 2012).

Majority of the business interest was sold to an Atlanta businessman Asa G. Candler, whose leadership prowess made Coca-Cola distribution to expand beyond Atlanta. Joseph Biedenham, in 1894, because of growing demand for Coca-Cola, installed bottling machinery in the rear of his Mississippi soda fountain. He was the first person to put Coca-Cola in bottles. In 1899, three other businessmen, Benjamin Thomas, Joseph Whitehead, and John Lupton secured exclusive rights to bottle and sell Coca-Cola. The three secured the bottling rights from Asa Chandler for $1 (The Coca-Cola Company, 2012). They are credited with having developed what is now Coca-Cola worldwide bottling system.

Early bottlers faced myriad challenges notable among them being imitation of the beverage by competitors and lack of packaging consistency. That was the reason behind approval of a unique contour bottle to make the beverage distinctive. This set the brand apart from its competitors. The contoured Coca-Cola bottle was trademarked in 1977. In a bid to embark on marketing, Coca-Cola, in 1887, dished out coupons that promoted free samples of the beverage (The Coca-Cola Company, 2012). This was considered as an innovative tactic. After couponing, another marketing strategy was newspaper advertising and distribution of promotional items that bore Coca-Cola script in participating pharmacies.

In 1970, Coca-Cola advertising reflected a brand connected with fun, friends, and good times as envisaged in Hilltop Singers who performed "I'd like to buy the World a Coke." In 1980s coke used memorable slogans like "Coke is It," "Catch the Wave," and, "Can't Beat the Feeling." Coke first experimented with computer animation in 1993 as was seen in a popular advertisement "Always Coca-Cola." This ad featured animated polar bears which embodied characteristics like innocence, mischief, and fun. The open happiness campaign was globally unveiled in 2009. It was then followed by "Open the Games. Open Happiness" that prominently featured during the 2010 Vancouver Winter Games (The Coca-Cola Company, 2012).

At Coca-Cola, we believe that the world is rapidly changing and for our business to thrive within the next ten years and beyond, we have to be forward looking as to understand the trends and forces that shape our business in the future. In this way we can move swiftly to prepare for what is to come. In anticipation for what may come tomorrow we have to get ready today. This is the foundation of our 2020 vision. We at Coca-Cola have an enduring mission that declares our purpose as a company and serves as the standard against which we weigh our actions and decisions. We endeavor to always refresh the world, inspire moments of optimism and happiness, and create value and make difference. We always focus on the needs of our customers and franchise partners and are ever ready to get out into the market and listen (The Coca-Cola Company, 2010).

Financial implications of SAP and Coca-Cola collaboration to manage supply chain networks

SAP provides business software solutions that meet demands of companies of all sizes ranging from small and medium sized business to multinational corporations. It is powered by SAP NetWeaverTM open integration and application platform. The SAP reduces complexity and total cost of ownership By empowering business change and innovation.

The SAPTM business suit solutions helps enterprises to improve customer relationships, enhance partner collaboration, and create efficiency across supply chains and business operations (SAP, 2004). When Coca-Cola implements Systems Application Process, SAP, it stands to eliminate unnecessary paperwork, ensuring that there are proper cash settlement hence minimize waste on cargo space in delivery lorries. Embracing the Direct Store Delivery by Coca-Cola would ensure that delivery productivity is improved hence reduced costs. Coca-Cola Enterprises announced that they would partner with SAP AG in February 12, 2004 (SAP, 2004).

The partnership was a strategic development initiative that was expected to generate solutions for improving direct store delivery, full service vending, and equipment service for the beverage and other consumer products. This was supposed to integrate mobile solutions that were meant to enhance and support these lines of businesses. The software was to leverage the integrated solutions of mySAPTM business suite. With this software, there was to be some sort of interaction between field sales and inside sales and logistics functions. The software was also to reduce associated costs and enhance customer service.

Coca-Cola decided to implement SAP to get more information at the store and account level to help it improve its retail customer relationships. With the software, cash settlements were to be made promptly and properly. Implementation of the System Application Process was also intended to reduce the potential for unwanted deliveries and initiate time and cost savings to drive up revenues by replacing sold out stock faster (SAP, 2004).

SAP with regards to Business/Technical Approach, Business Process Changes, and Technology

Coca-Cola is with no doubt the world's largest seller of non-alcoholic beverages. Decision by Coca-Cola to implement System Application Process will make it leverage its best-in-class processes that it has acquired from decades of engaging in Direct Store Delivery Services (Ianev, 2009). This will help coke improve its execution of merchandising. It will also improve its price and promotion strategies. This will consequently make it grow its market share and customer satisfaction. All these will remarkably reduce its logistical costs.

With the seamless integration of mobile and back-end activities, Coca-Cola Enterprises has significantly enhanced the support it provides to its associates in the marketplace and its customers because they can engage with the consumers. Because of SAP, Coca-Cola can now improve the services that it gives to its customers save for information gleaned from their daily operations. We have also improved execution efficiency and remarkably expanded our business. Besides, we have also registered some significant returns due to the implementation of Systems Application Process especially the mySAP Business Suite Solutions (Ianev, 2009).

Coca-cola Hellenic became one the first company within the coca-cola bottling system to implement SAP end-to-end process support. It moved from a decentralized IT system to a centralized system by introducing SAP advanced planning and optimization component that assisted its management with all aspects of business planning. Coca-Cola Hellenics wanted to realign its business approach from functional areas to cross functional, end-to-end processes. It had to review the processes developed during previous SAP projects (Ianev, 2009). This impacted market to cash, forecast to deploy, procure to pay, finance management, and its human resources. The review was supposed to be in line with its new business strategic initiative called "Excellence across the Board."

Some of the SAP products that were used included SAP NetWeaver Mobile component, SAP Customer relationship management application, SAP Mobile Asset Management Application, SAP Mobile Direct Store Delivery application, and other services from SAP Consulting Organization and the SAP Active Global Support organization (Ianev, 2009).

Implementation of SAP has visited a number of changes on Coca-Cola's business processes. With the SA, all a person is required to do is to enter information once in a place and it will become available everywhere. Those employees charged with doing business analytical work can then go to a given location and find the piece of information they need. The SAP has also improved production scheduling and forecasting leading to a drop in inventory levels. This has reduced our need for working capital. This has off set the cost of solution. Its benefits can also be seen in terms of process standardization. Implementation of Systems Application Process has also enabled us to pull sales data from a single point of control on a daily basis. This has enabled us to get faster and consistent business information.

Because of the implementation of SAP, we have registered improvements in Advance account management, customer asset management, trade promotion management, distribution and order management, and overall field sales management. By being, SAP-centric Coca-Cola has managed to leverage SAP solutions worldwide. Coca-cola has managed to have a strong synergy between its transactions, consolidation, and planning solutions save for the implementation of SAP SEM solutions drill down reporting features, its web-enabled access, and ease of use (Ianev, 2009).

The SAP implementation plan

Coca-cola sought to implement SAP to allow for better communication and distribution capabilities between the Coca-Cola company and its bottling companies spread across the world. Before implementation of the SAP, Coca-Cola legacy system used to incur high costs, was difficult to maintain, and was not user friendly. The management could not quickly create a report of consolidated results while consolidation was taking place. There existed no standard planning tool.

The company perfected the use of Microsoft Excel Spreadsheets that required manual re-entry from general ledger data. It was practically impossible to consolidate information and keep that information up-to-date. This prompted Coca-Cola company's resolve to implement SAP utilizing aspects of Strategic Enterprise Management (SAP SEM) in 2000. This project went live in February 2001. The two SAP SEM solutions: mySAP financials and mySAP business intelligence literally ran the coca-cola global business. Coca-Cola Hellenic Bottling Company, Swire Pacific, Coca-Cola Co.

Consolidated, and Coca-Cola Bottling Company United subsequently took cue from the Coca-Cola Company. In 2003, Coca-Cola Hellenic implemented SAP R/3, SAP BW, and SAP SCM with a view to managing business as an entity. This led to the development of Enterprise IS Association that split responsibility into two areas (Ianev, 2009). Swire Pacific on the other hand implemented GL, AP, AR, Assets, CO, Manufacturing, Distribution and Maintenance. These transformed the way Swire conducted its business by streamlining their existing operations for maximized efficiency. In August 2008, Coca-Cola enterprises decided to upgrade their business intelligence technology by implementing terradata systems.

Conclusions and overall recommendations

Before Coca-Cola enterprises decided to implement changes, there system was a mumbo jumbo of ERP and Supply chain management systems like SAP's R/3. Coca-Cola's direct store delivery was not at its best. Different parts of the logistic system could not therefore efficiently operate. Coca-Cola Enterprises' undertaking to standardize its business practices by using SAP software was a step towards ensuring that its logistics system was efficient enough. With the implementation of SAP, valuable data could then be shared between different departments of the Coca-Cola enterprise (SAP, 2004).

Implementation of SAP enabled Coca-Cola enterprise to combine operation functions of Coca-Cola North America, Minute Maid, and Fountain in a single operation model. With the implementation of SAP, Coca-Cola Enterprises was now capable of delivering better services to their customers, share data throughout their systems, and cut costs. Capabilities were put into the hands of the account managers, delivery drivers, and in-store merchandisers. All these kept Coca-Cola products moving through the retail chain. The SAP actually improved customer service and customer satisfaction as seen in the case of mySAP Business Suite that enhances interaction between inside sales, logistics functions, and field sales. This has drastically reduced costs that are incurred in these areas.

The SAP NetWeaver open integration and application platform has enabled for improvement in support efficiency to sales associates and consumers of Coca-Cola products. With regard to Direct Store Delivery, SAP has helped in improving efficiency and logistical operations of the coca-cola bottling companies. It has also enabled us to better monitor, analyze, and integrate data in real time. This has helped eliminate unnecessary paperwork and wastage of cargo. It has made us cut on some obscene and unnecessary costs we used to incur before the system was implemented. The rolling out of this program to other bottling companies like Coca-Cola Hellenic Bottling Company, Swire Pacific, Coca-Cola Co. Consolidated, and Coca-Cola Bottling Company Consolidated has made them realize the benefits that Coca-Cola Enterprises accrued in its business process (SAP, 2004).

As exemplified in Coca-Cola Hellenic story any company that wants to promote sustainable development and create value for its business and society has to embark on utilizing IT and software solutions that supports a range of business processes. This it can do by creating a central IT environment that provides wide range of services. Linkages can be done to the data centers by WAN and VPN. Companies have to embrace the use of SAP infrastructure to enhance their Supply Chain. Business enterprises that intend to dramatically reduce occurrence of unscheduled downtimes have to embrace the use of Oracle RAC that prevents SAP database from creating problems as a potential single point of failure. Oracle RAC has a potential for allowing maintenance activities to be completed more effectively. Taking queue from Coca-Cola Hellenics, companies that intend to eliminate the single point of failure in the SAP central instance can consider instituting SAP Enqueue Replication Service.

Consumer and customer satisfaction is vital to survival and growth of any company. It is therefore imperative that the consumer products that companies make meet demands and service requirements on time. Individuals who want to venture into such businesses have to implement the use of SAP software to enhance customer service, improve pricing and promotion, grow its market share, and reduce logistics costs. Implementation of SAP can also enable manufacturing companies to better manage repair parts, and engage in periodic maintenance and refurbishment. It can also help in addressing purchasing and configuration issues.