Operations

Management-I

Report on

Coca Cola Operations Management

Prof. Vijaya Dixit

Section C
MBA (2021-23)

Team Members:
Animesh Yadav M226-21
Aroshi Panwar M233-21
Atul Meshram M234-21

Group - 03 Chhavi Jain

Ishita Kamat
Jaishri Budaraju
M237-21
M244-21
M245-21
Monali Daburkar M260-21
Prashant Kumar M274-21
Shradha Bijarnia M295-21
Srishti M301-21
 TABLE OF CONTENTS

Sr No. Topics Page No.

1 Introduction 2

2 The Coca Cola System 4

3 Product Profile 5

4 Plant Layout and Process Flow 7

5 Supply Chain and Logistics 11

6 Project Management 12

7 Quality Management 14

8 Inventory Management 15

9 Work Ethics 16

10 Issue Analysis 17

11 Recommendations 18

12 Conclusion 19

13 References 20

1
 INTRODUCTION

The Coca-Cola Company is an American global beverage firm that manufactures, retails,
and markets non-alcoholic beverage products. Its headquarters are in Atlanta, Georgia.
The corporation is best known for its main product Coca-Cola, which was created in 1886
in Columbus, Georgia by pharmacist John S Pemberton. The Coca-Cola Company now
boasts a 129-year history, directly employs over 25,000 people, and sells 1.6 billion drinks
every day in more than 200 countries. Coca-Cola is a soft drink trademark that was first
registered in the United States in 1893.

Coca-Cola made its debut in India in 1950 when Pure Drinks, Ltd opened the first bottling
facility in New Delhi. Due to the introduction of India's Foreign Exchange Act, the firm left
the country in 1977. Coca-Cola returned to India at the end of 1992, following the opening
of the Indian economy to foreign investment in 1991.

Many local channels make up the organization's structure. The company controls the
brands and is in charge of consumer brand marketing campaigns, as well as producing
and selling concentrates, beverage bases, and syrups to bottling plants. Their bottling
partners create, package, market, and deliver finished branded drinks to customers and
vending partners, who then sell them to consumers. Customers — grocery shops,
restaurants, street sellers, convenience stores, movie theatres, and amusement parks, to
name a few — work closely with bottling partners to implement localized strategies
created in collaboration with the Company.

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3
 THE COCA-COLA SYSTEM

Coca-Cola System is the combination of Coca-Cola Company and its bottling partners.
Most local bottling companies are not owned, governed, or regulated by the Coca-Cola
Company. In concentrate operations, the Coca-Cola Company generates net operating
revenues by selling concentrates and syrups to permitted bottling partners. Bottling
partners produce, bottle, sell, and distribute finished beverages by combining
concentrates with still and/or sparkling water, and/or sugars, depending on the product.
Coca-Cola’s end product operations consist primarily of company-owned or controlled
bottling, sales and distribution operations.

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 PRODUCT PROFILE

Volume
The quantity of a product produced and sold by a business is referred to as volume. Coca-
Cola has a large production volume since it produces and sells millions of products every
day. This is due to the fact that the corporation caters to a global market, necessitating
the production of a large number of units to match the high demand. This attribute has
ramifications for production in terms of procedure repetition and standardization in order
to increase efficiency. Additionally, in order to enhance output, the company concentrates
on capital-intensive production. The cheap cost per unit is a result of the enormous
volume. More than 20,000 beverages in plastic bottles are purchased every second
throughout the world. This equates to approximately 500 billion bottles every year and
more than 1 million bottles per minute. It's no wonder, however, that Coca-Cola, the
world's largest beverage company, reportedly produced more than 110 billion plastic
bottles in 2016.

Variety
The company's variety refers to the numerous kinds of items it produces. The company
makes a wide range of soft drinks. The corporation had a product range of over 2000
distinct varieties of soft drinks as of December 30, 2010. As a result, it has a wide range
of products. This has had two effects on the industrial process. To begin, the organization
employs a flexible method to ensure that consumer demands are taken into account
throughout product development. Second, when new items are launched, the
manufacturing process has gotten increasingly complicated.

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Variety in Demand
Coca-Cola’s products have a wide range of popularity. This is due to the fact that soft
drink consumption is influenced by the weather or seasons. For example, throughout the
summer and holiday seasons, sales are often strong. The sales, on the other hand, tend
to be lower in the winter. The following are the production implications of this trend.
First, in order to respond adequately to variations in demand, the organization has
implemented a flexible production capacity. Second, the company is continually in contact
with the market in order to keep up with demand fluctuations.

Visibility
The degree to which consumers can track their orders from the time they are placed until
they are delivered is referred to as visibility. Coca-Cola's goods have a lot of visibility.
This is due to the fact that they are often supplied in the lowest amount of time feasible
thanks to an effective distribution system. The major effect of the increased exposure is
a greater focus on the demands of consumers as the basis for assessing satisfaction.
Coca-Cola Company's advertising expense (in billion U.S. dollars).

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 PLANT LAYOUT AND PROCESS FLOW STRUCTURE

As a bottling company, Coca-Cola uses the Product focus (continuous flow) method of
manufacturing. Here, the products are made continuously and tend to be highly
standardized and automated with very high production volumes. Coca-Cola's flow
process entails a consistent flow of sub-assemblies/parts from one stage of production to
the next. Each stage adds to the products, which is often the case in bottling plants. Coke
adopted this approach since the company's offerings come in a wide range of flavors and
are sold in large quantities. Bottled products such as Coke, Diet Coke, an assortment of
different flavored soft drinks, and bottled water are among the items distributed. As Coca-
Cola has such a wide range of products, continuous flow is the best way to produce them.

Washing Mixing and

Ingredients
and Rinsing Blending

Labeling Capping Filling

Packaging &
Coding Inspection Warehouse
delivery

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 Following is the Coca-Cola’s detailed process flow and plant layout for bottling Coke

1. Ingredients are delivered to the factory

Essential ingredients used are: Sweetener, Secret Formula, CO2 Formula, Water,
Materials

2. The pieces of plastic called 'resin' are converted into the preform of a bottle
The PET resin is duly dried to attain the optimum utility with the aesthetic appearance of
the bottle.

3. Preform is blown into the required size of the bottle

The blow molding machine is used in this step of the process. The preforms are heated
in this machine to make them pliable and then blown in a mold with high-pressure air to
give them the proper shape.

4. Filling (Bottle is filled with the beverage)

When all the essential ingredients have been mixed and appropriately blended, and the
bottles have been cleaned and sanitized, everything is ready to start filling.

5. Capping (Bottle is sealed with the closure)

After filling, bottle capping is done.
Coca-Cola uses various caps for different bottles. The glass bottles are capped with a
metal crown - "PET BOTTLES".

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6. Labelling (Label is pasted)
A particular machine dispenses labels from large rollers, cuts them, and places them on
the bottles.

7. Inspection (Laser inspects for over or under filling of cola in bottle)

Coca-Cola examines the bottles at various points during the process, viz; when they are
first brought into the plant, they are washed and again after they are filled. After filling,
each plant sample bottle is analyzed in its lab to ensure quality is up to standards.

8. Coding (Bottle is encoded)

The bottle is now set to be coded. Each one of Coke's beverages is marked with a unique
code that identifies specific information about it. These codes show the time, date, batch
no. and the MRP

9. Grouping (Bottles are grouped in the form of cases)

10. Plastic sheet is wrapped around the bottles

11. A whole bundle of cases is packed together

12. Cases are moved to the warehouse

13. Distributors collect the order from the warehouse

The channels distribute them to other retailers, such as gas stations, convenience stores,
supermarkets, and restaurants.

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10
 SUPPLY CHAIN AND LOGISTICS AT COCA COLA

Local Sourcing: Coca-Cola drink arrives at partner plants where soft drink is then
prepared. The finished product is packaged and sent to client outlets after all of the local
operations are completed.

Real Time Visibility: Delivery trucks were outfitted with GPS-enabled gadgets to help
the company's warehouses, planning department, and manufacturing divisions perform
more efficiently.

Route Optimization Technology: Implements a route optimization model assigning all

retail outlets to trips (including their sequence of visiting), all trips to existing truck fleets
and available drivers in a way to minimize the overall cost.

Direct to Store Delivery: Delivers directly to retail stores from their production facilities,
without going through a regional distributor. Cutting out secondary or tertiary distribution
centers, minimizing the possibility of damage, since the items are touched by fewer
intermediaries.

Warehouse Automation: Uses an Automated Storage and Retrieval System in many

factories. Nearly 30,000 pallets can be held and mechanically moved through the
warehouse thanks to the warehouse's design. Robotics and automation are also used.

Performance Monitoring: Utilize a route optimizer with reporting and analytics feature
where all the critical data to monitor team’s performance, enabling teams to make timely
inventory and transport adjustments based on real-time data.

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 PROJECT MANAGEMENT AT COCA COLA

Planning: The company's top management is working on long-term goals for the next
five years as well as short-term plans for the upcoming years. The goal of this style of
planning is to have a long-term strategic vision as well as a flexible and adaptable strategy
that may evolve in response to the demands of its external environment. Apart from
strategic planning, Coca-top Cola's management also engages in tactical planning in
cooperation with middle management, which then acts on feedback from field
salespeople. An example of the aim for the managers to raise sales by 20% over last
year's target while also increasing total client base by 10% is an illustration of how Coca
Cola’s planning works. This is micro level planning, which is accompanied by macro level
planning, as seen by the middle management's aim of expanding market share from 5 to
30% in the markets in which it operates. There are also operational goals defined for
salespeople on the ground, which deal with point-of-sale and other front-end supply chain
interface tasks in order to increase collaboration and cooperation among partners,
bottlers, vendors, and distributors.

Organizing: Coca-Cola organizes itself using a decentralization approach inside of the

centralization approach. This means that the corporation is separated into areas and
geographical territories in which it works, yet the global headquarters retains overarching
decision-making authority. These geographical divisions are subsequently divided into
functional departments, which in this case include the departments of Production,
Industrial Relations, Sales and Marketing, and Human Resources. Employees with similar
skills and common work functions are grouped together at Coca-Cola. This helps them
minimize redundancies in problem-solving processes while at the same time giving
everyone a sense of functional autonomy. Furthermore, Coca Cola's organizing function
adheres to a rule of no more than five direct reports, which indicates that no employee
has more than five direct reports. Having said that, it should be emphasized that there is
cross-functional reporting as well, with managers and functional heads reporting to other
divisional heads as well as the country leaders. Furthermore, managers at all levels are
given a significant degree of autonomy, allowing them to make decisions based on local
needs. Finally, the organizational structure is such that unnecessary layers in the
hierarchy are eliminated, and layers of direct and dotted line reporting ensure that
information flows freely across the organization without becoming clogged by
bureaucratic mindsets or communication gaps. The country or regional head has overall
responsibility for each country or region, and the functional heads who report to him or
her also report to the global functional heads. Similarly, the roles are well stated, implying
that accountability and transparency are both addressed.

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Leading: Coca-Cola believes in transformative leadership at both the global and local
levels, despite the fact that the corporation is organized around geographical areas and
then multiple divisions within each region. This means that managers and country heads
in the many regions where the company works, are free to choose the best strategy for
their territory as long as they adhere to the global standards and culture that pervades
the company. The Local method, as mentioned in the thesis, is characterized by
decentralization inside of the centralization approach. Apart from that, Coca Cola's
leadership believes in a democratic and laissez-faire approach to leadership, which is
important given the company's business, which is strongly reliant on both macro and
micro level visions and missions that must be translated into micro level execution. These
managers' management methods are similarly centered on an incentive-based strategy
for achieving peak performance from salespeople. In this approach, salespeople are
given monetary and non-monetary incentives to inspire them to accomplish or even
surpass their sales targets. Pay raises, bonuses, and commissions based on sales are
monetary incentives, whereas non-monetary incentives include vacation vouchers, travel,
and reduced holiday packages for the employee and his or her immediate family.

Controlling: Coca Cola's regulating function is carried out by reviewing the performance
of managers and salespeople on a regular basis. To this purpose, the backbone of the
company's controlling role is an appraisal system based on objective evaluation of
whether the individual being appraised has accomplished his or her targets. The
salespersons are evaluated based on the Sales Person's reporting system and the Sales
Person's evaluation system, even though managerial performance goes beyond
evaluating targets and their compliance because managers perform other roles like
strategic planning and people management. The former keeps track of the salesperson's
activity on a daily basis, whereas the latter follows an appraisal cycle, with the results
used to determine promotions, bonuses, and other incentives. For sales managers, the
assessment time is normally a year, while for market development roles, it is a quarterly
cycle, and for salespeople, it is a monthly cycle. Apart from these metrics, personnel are
evaluated based on their contribution to the achievement of the organization's overall
goals, as well as their soft skills, such as communication, people management,
coordination, and service quality. Furthermore, the controlling function ensures that a
performance development plan is produced that considers the salesperson's
achievement of goals such as sales growth, market expansion, and completion of
customer and partner contacts, including cold calling conversion, attendance, and
timeliness. The important thing to remember about Coca Cola's controlling function is that
it uses a Local strategy, which means that the performance measurements vary
depending on the local conditions in the markets where it operates

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 QUALITY MANAGEMENT

The attempts to assure maximum quality control in Coca Cola date back to 1995, beat
competitors, satisfy the local markets and be consistent in the company’s goods. The
Coca Cola Quality System (TCCQS), the quality assurance policy, is involved in the
production of quality products that satisfy consumer needs and the protection of
organizational environment and safety standards. The company has strict requirements
for their goods, and only those that meet those regulations are considered marketable;
the remainder is thrown away, and the plastic is recycled. Their quality control section
inspects the quality of both incoming supplies and the end product before it is distributed.

Coca Cola has also invested considerable sums in constructing its facilities and
integrating quality management technologies into its manufacturing lines. Every layer that
is made into a bottle is tested using a succession of lasers, and any bottles that fail are
scrapped and recycled. Additionally, after being filled with cola, the bottles are subjected
to a variety of quality control tests. The company aims at improving the efficiency of its
products which ensures safety standards in manufacturing and sanitizing processes.
Coke manufacturing and distribution facilities adhere to the British Standard Occupational
Health and Safety Assessment Series 18001, a globally recognized framework for
effective health and safety at work to improve quality and safety.

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 INVENTORY MANAGEMENT

Coca-Cola has a large number of vending machines, both new and reconditioned, located
at numerous manufacturing plants across the countries. They have adapted to Barcode
Software since inventories on previous machinery was done manually, which was a time-
consuming and labor-intensive operation to begin with.

Company’s mainframe computer system already included information on each vending

machine, such as its location, status of repair, etc. Furthermore, Barcode Software was
able to develop an inventory system that operated with their mainframe database without
creating any changes by utilizing the existing data.

Every machine, old and new, has printed barcode labels placed on them. Coca-Cola has
assigned each machine a distinct unique number, which is indicated by the barcode.
Track It is a software that takes information on existing inventory from Coca Cola’s
mainframe when it's used for a physical inventory. On each piece of machinery, this
process creates a record with all necessary information.

The information is then sent in its entirety from the PC to each handheld scanning terminal
using a customized software. Throughout Coca Cola’s manufacturing plants, many
terminals are used to scan the barcodes on each machine at the same time. When each
vending machine barcode is scanned, it is compared to numbers on the Track It list. The
handheld terminal's display would show a report listing of numbers that are found and not
found and this fresh data is sent back to Track It from all of the terminals, instantly
updating the database on the PC.

Because the new method is automated, physical inventory time has been reduced. It also
saves time and resources.

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 WORK ETHICS

Coca cola has been associated with several unethical practices, including product safety,
anti-competitiveness, racial discrimination, channel stuffing, distributor conflicts,
intimidation of union workers, pollution, depletion of natural resources, and health
concerns.

In the year 2006, the company saw itself in trouble with the distributors. It had deliveries
of Powerade sent to Wal-Mart during a small Texas test area. Once they tried to expand
the delivery of Powerade to Wal-Mart warehouses everywhere in the US, fifty-four of their
bottlers filed lawsuits. Coca-Cola had an agreement regarding Powerade bottlers which
had been a breach of the agreement to supply warehouse delivery to Wal-Mart, even with
the utilization of a subsidiary agent for warehouse delivery. The subsidiary agent, CCE,
and Coca-Cola claim that they were trying to satisfy an invitation from Wal-Mart for
warehouse delivery, just how PepsiCo distributes Gatorade. CCE proposed making
payments to other bottlers reciprocally for taking up the distribution of Powerade. The
bottlers raised the question that the proposed arrangement would violate antitrust laws.
Additionally, they believed that moving forward with their warehouse delivery would
deteriorate the worth of the bottlers’ businesses. This led to a negative impact on the
company. Coca cola produces plastic packaging of over 2.9 million tons amounting to
over 108 billion bottles per year.

Coca cola displayed unethical behavior towards trade workers union workers. Coca-Cola
was seriously accused as eight workers were killed at a bottling plant in Colombia. Around
50 workers hid and 65 others were threatened with physical violence.
A Coca cola bottling plant in Kaladera, Rajasthan exploited groundwater resources and
continued its operations even after being aware of the scarcity. In an assessment, it was
found that of the six plants surveyed, the company’s no plant met the Coca-Cola company
standards for waste management, known as the TCCC standards. The company stated
that "its bottlers are in compliance with the standards of relevant India government and
regulatory agencies." But an assessment found that the treated effluent discharge at all
the six plants surveyed did not meet the standards of the relevant Indian government and
regulatory agencies. The company had misrepresented the facts on various occasions
regarding TERI assessment while reaching to the media and the public.

The company now has taken certain initiatives such as 100% recycling of plastic and
focusing on the highest-priority sustainability and environmental, social, and governance
(ESG) issue

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 ISSUE ANALYSIS

Coca Cola has made several moves that have secured its huge success not just in India
but around the world. Managing quality, layout planning, supply chain management, and
inventory management are four of the 10 important choices for Coca Cola Operations
Management. Because the manufacturing is so reliant on automated technology, it is
critical for management to have a competent maintenance standard and team in place to
guarantee that the machines are constantly operating effectively and without defects. Any
flaw or defect in the machinery is corrected and addressed as soon as feasible in the
event of a production interruption. There is minimal space for delays since the entire
production line is shut down to guarantee a successful clean-up and compliance with
Coca Cola Quality management standards. Producing multiple flavors on separate lines
at the same time might cut down on lag time and assure continuous output. This will also
shorten the factory's overall production time by allowing for simultaneous manufacturing
on numerous assembly lines rather than one after the other on the same assembly line.
Supply chain management is the most important aspect of the plant's operations because
it runs 24 hours a day and outsources many of its procedures. Because Coke's inventory
management is based on Just-In-Schedule, and Deliveries of preforms, raw materials for
preforms, syrup, and other components must arrive on schedule and without disruption
because the manufacturing factory only maintains raw materials for 4-5 days' worth of
output. There isn't much space for error in forecasting, manufacturing, or supply chain
management as a result of this. This necessitates continuously revising predictions in
response to changing needs and ensuring that projections are completed on time and
accurately.

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 RECOMMENDATIONS

Activity Scheduling
The three components of activity scheduling are loading, sequencing, and scheduling.

Loading: Finite loading is the most effective method for determining capacity and
production volumes. It will help to foresee customer demand in advance by taking into
account projected shelf lifetimes and predicting based on prior performance.

Sequencing (Dispatching): Coca Cola’s most important sequencing consideration is

delivery reliability, which is critical in assuring product availability to wholesalers, retailers,
and restaurants, who make up the majority of the product's purchasers. For larger or more
important clients, a mix of Due Date Sequencing (DDS) and Priority Sequencing would
be the most appropriate sequencing rules to use.

Scheduling: Mass Process scheduling would be preferable to batch process scheduling

because, while the Coca-Cola product design may vary, the manufacturing process will
be mostly the same for all of the products.

Coca-Cola is a popular beverage that comes in a variety of flavors, including Original

Coke, Diet Coke, Coke Zero, Cherry Coke, and Vanilla Coke, to name a few. Because of
the huge volume of Coca-Cola and the relatively minimal changes in raw material input
for the various varieties, mass process type scheduling is cost-effective when using
specialized people and equipment to generate the product. Coca-Cola will be able to meet
client deadlines while keeping inventory costs low thanks to the use of customer demand
forecasts. In the event of a material scarcity, a large-volume client order change,
equipment failure, or a labor shortage, expediting may be required.

To avoid raw material shortages due to unforeseen circumstances, a global company like
Coca-Cola should maintain raw material reserve inventory, require mandatory
preventative maintenance of plants and machinery to reduce plant downtime, and have
sufficient staffing to schedule the necessary human capital for production. Finally, while
client order changes may be difficult to foresee with precision, they should be possible to
anticipate based on previous company practices.

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 CONCLUSION

In general, Coca-Cola can help better manage human resources or technical functions of
a company organization, particularly those relating to development, production, and
production, because management operations have many areas. Active management is
the field concerned with the management and direction of a company. Strategic
manufacturing policy, systems analysis, analysis, productivity, and cost management aid
in calculating the precise purchasing materials to reduce material cost hazards.

Analyzing the product's profitability can assist organizations in anticipating the benefits
and drawbacks in order to prevent, more broadly, management operations that would
boost the content value-added activities in any given process. For optimal enterprise
success, value-adding creative activities should be linked to market opportunities. Assist
the Coca-Cola Company in determining the exact profit. Furthermore, the statistics
established a flawless production to attain the highest quality organizations in order to
grow more powerfully.

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 REFERENCES

1. The Coca-Cola System

https://investors.coca-colacompany.com/about/coca-cola-system
2. https://www.mbaknol.com/management-case-studies/case-study-analysis-of-the-
ethical-behavior-of-coca-cola/
3. https://www.ukessays.com/essays/business/project-report-operation-
management-in-coca-cola-company-business-essay.php
4. https://blog.route4me.com/makes-coca-colas-supply-chain-logistics-great/

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