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This same dynamic occurred with bottle and can suppliers, where the FTC also stepped in and forbid CSD manufacturers from purchasing additional businesses to become vertically integrated. Ultimately the FTC has said that the suppliers of ingredients to CPD manufacturers are in a commodity business, and therefore must be protected from becoming entirely replaced by vertical integration strategies on the part of their buyers. The gross margins and profitability on syrup specifically are low and as this is a process good, the impact of workflow design and re-engineering are critical. Suppliers are forming best practices teams to assist one another in becoming more cost-efficient and more capable of sustaining price points relative to the bargaining power of CSD manufacturers. The role of suppliers then in the CSD industry is one of being relatively weak relative to buyers, who are intent on creating more vertically integrated supply chains to attain higher economies of scale.
References
Baker, Jonathan B. And Bresnahan, Timothy E (1984) Estimating the Elasticity of Demand Facing a Single...
54 (Stanford Workshop on Factor Markets, Department of Economics, Stanford University, Stanford, CA). Retrieved April 16, 2008
Elliot Leschen, M Eric Johnson. (1999). Sourcing optimization tool for distribution-intensive industries. Production and Inventory Management Journal, 40(4), 49-54. Retrieved April 19, 2008, from ABI/INFORM Global database. (Document ID: 48260705).
Alberto Petroni, Marcello Braglia. (2000). Vendor selection using principal component analysis. Journal of Supply Chain Management, 36(2), 63-69. Retrieved April 19, 2008, from ABI/INFORM Global database. (Document ID: 54131862).
Michael E. Porter (2008). The FIVE COMPETITIVE FORCES THAT SHAPE STRATEGY. Harvard Business Review: Special HBS Centennial Issue, 86(1), 78-93. Retrieved April 18, 2008, from ABI/INFORM Global database. (Document ID: 1406854351).
Saltzman, H, Levy, R, & Hilke, John Transformation and Continuity: The U.S. Carbonated Soft Drink Bottling Industry and Antitrust Policy Since 1980. Bureau of…
References
Baker, Jonathan B. And Bresnahan, Timothy E (1984) Estimating the Elasticity of Demand Facing a Single Firm: Evidence on Three Brewing Firms, Research Paper No. 54 (Stanford Workshop on Factor Markets, Department of Economics, Stanford University, Stanford, CA). Retrieved April 16, 2008
Elliot Leschen, M Eric Johnson. (1999). Sourcing optimization tool for distribution-intensive industries. Production and Inventory Management Journal, 40(4), 49-54. Retrieved April 19, 2008, from ABI/INFORM Global database. (Document ID: 48260705).
Alberto Petroni, Marcello Braglia. (2000). Vendor selection using principal component analysis. Journal of Supply Chain Management, 36(2), 63-69. Retrieved April 19, 2008, from ABI/INFORM Global database. (Document ID: 54131862).
Michael E. Porter (2008). The FIVE COMPETITIVE FORCES THAT SHAPE STRATEGY. Harvard Business Review: Special HBS Centennial Issue, 86(1), 78-93. Retrieved April 18, 2008, from ABI/INFORM Global database. (Document ID: 1406854351).
Saltzman, H, Levy, R, & Hilke, John Transformation and Continuity: The U.S. Carbonated Soft Drink Bottling Industry and Antitrust Policy Since 1980. Bureau of Economics Staff Report, 1, Retrieved April 18, 2008, at http://www.ftc.gov/reports/softdrink/softdrink.pdf.
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