Inventory and Supply Chain Management:

Inventory and Supply Chain Management: Coca-Cola's Approach to Collaborative, Planning, Forecasting & Replenishment Strategies

The significant accomplishments of the Coca-Cola Bottling Co. Consolidated in Charlotte, N.C. (CCBCC) clearly illustrates best practices in the areas of demand management, demand planning, strong sales & operations planning (S&OP) and collaborative planning, forecasting and replenishment (CPFR). The results are anchored in measurable results, further illustrating the accuracy, profitability and process gains the company has been able to achieve. In conjunction with these accomplishments, the CCBCC has also successfully developed a Demand Driven Supply Network (DDSN) that is capable of responding to unique order requirements in a fraction of the time possible with more traditionally designed systems and workflows. A DDSN is capable of working in conjunction with CPFR systems to further accelerate order accuracy, profitability and on-time, or perfect order performance (Crampton-Thomas, 2006).

Analysis of CCBCC Performance

The supply chain operations throughout the CCBCC are comparable in scale to those of smaller bottlers and beverage retailers as this regional bottler of Coca-Cola distributes 13,000 stocking units (SKUs) to over 200,000 customers across 11 Southeastern states. Annually CCBCC delivers up to 125 million cases of products each year through 60 different distribution centers. The scope of the operations had grown so large that scalability of existing operations was beginning to slow down growth. With 60 warehouses and continued growth occurring, the supply chain management team had the decision of whether to add between 10 to 15 additional warehouses at a price of approximately $5M each. The lack of scalability in existing operations signaled that the existing demand management, forecasting and supply chain management processes were not exponentially increasing due to greater collaboration. The CCBCC operations needed an entirely new framework for scaling beyond traditional distributed order management and supply chain processes, a point inferred from the article on CCBCC.

Instead what was needed was a more collaborative planning and forecasting approach to provided for greater demand management workflows, greater precision of the distributed order management, pricing, sourcing and supply chain processes, which are all components of a DDSN framework (Crampton-Thomas, 2006). With the greater level of collaboration, communication and demand management with suppliers and distributors companies can often exponentially increase their performance on the perfect order metric (Novack, Thomas, 2004). The CCBCC is successfully doing this today through the combination of core components of their CPFR strategy, implemented through a series of enterprise software applications and major shifts in processes and programs internally. The result continues to an acceleration of the company's performance based on the core foundation of the CPFR Model (Barratt, Oliveira, 2001). As is shown in the case, CCBCC begins with an intensive commitment to the initial collaborative planning phases of ensuring front end alignment with their distribution channel partners. Joint business plans ensure the company has the ability to effectively plan for spikes in demand more effectively than traditional, and less flexible means allow for. The collaborative planning phase of the CPFR Model is essential for ensuring a high degree of logistics coordination and collaboration has been achieved (Bonet, 2005). The collaborative forecasting process including sales forecasting, exception management and resolving expectations, all essential for making a strategic commitment to CPFR function correctly, are also evidence in the CCBCC implementation (Ireland, 2005). Finally the steps of creating and fine-tuning order forecasts, defining identifying exceptions and resolving exceptions to drive orders are also evidence in how CCBCC creates demand management workflows with the applications installed. It is very important to realize that all the benefits of CPFR, the perfect order or the development of entirely new business workflows is not entirely dependent on enterprise software' the software is the enabler, the CPFR workflow the catalyst of the majority of change.