Global Supply Chain Strategy: Coca-Cola 1

GLOBAL SUPPLY CHAIN STRATEGY: COCA-COLA

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 Global Supply Chain Strategy: Coca-Cola 2

Global Supply Chain Strategy: Coca-Cola

Introduction

In this report, Coca-Cola one of the known multinational companies is analyzed. The

company is commonly known for producing soft drinks that are distributed around the world.

The products are sold almost in every country and the brand is known in every corner of the

world. Coca-Cola does not only engage in manufacturing and selling Coca-Cola itself, the

company also engages a wide range of products such as energy drinks, juices, Sprite, Fanta, and

water. It is through selling these products that the Coca-Cola has gained much success in the

world of beverages. According to Octotutor (2014), the company success is primarily linked to

the products as well as the iconic marketing campaigns used that position the brand to be

perceived as active lifestyle and fun. This analysis mainly looks at global strategy used by Coca-

Cola based on international, standardization, localization or transnational strategy. In addition,

the supply chain strategy at Coca-Cola is discusses from the perspective of cost vs

responsiveness trade off. More so, the report presents the strategic fit between Coca-Cola’s

global business strategy and its supply chain strategy to determine any possible gaps. Also,

supply chain elements like facilities, sourcing/procurement, inventory,

transportation/distribution, and information sharing are examined showing how they are

connected within the international supply chain of the company. Lastly, recommendations for

improving the global supply chain of Coca-Cola are suggested.

Coca-Cola’s International Business Strategy

Notably, many management teams from multinational corporations highlight

globalization as the most challenging aspect today. McKelvey (2006) posit that these

corporations have become much aware that determining international business strategies has
 Global Supply Chain Strategy: Coca-Cola 3

become tougher in the past decade and the same applies to whom to do business with. According

to ( ), venturing into a foreign market is similar to discovering a new territory for business

owners. It should be noted that foreign countries have varying economies, currency, laws, and

business strategies. In the same way, differences in cultural can impede the company’s success in

a certain country. It implies that multinational companies are required to put in a lot of effort

when determining strategies that best suit their products in a particular market.

Coca-Cola has been able to make over 400 sales of different product brands in over 200

nations. This international success has made the company to be recognized worldwide. The

company has managed to expand internationally and positioned itself better than any other firm

in the beverage business. Considering the international perspective, Coca-Cola try as much as

possible to leverage major competencies globally especially in the areas where there is low

pressure for global integration and local responsiveness. The company ensures to replicate the

home based competencies and include design skills, production expertise, as well as brand power

in the new markets. Since the headquarters are the main drivers of this international strategy, the

approach prove to be effective as the company maintains its production standards even in the

new markets.

On the side of standardization Coca-Cola ensures that it operates in a way that meets the

needs of the people in that particular area. To achieve this, the company gives out the decision-

making authority to units in the particular market to create services and products optimized for

the local customers. This strategy greatly relies on the levels of competition existing in every

country. It also maximizes the responsiveness from the locals thus enabling Cocal-Cola to

maintain its standards. Octotutor (2014) highlights that using such strategy helps the company to

adapt its products to meet the preferences and needs of domestic consumers. Consequently, the
 Global Supply Chain Strategy: Coca-Cola 4

corporation can compete and perform more effectively in every regional market in a manner that

increases its market position.

Localization or transnational strategy is crucial in every business and the same applies to

Coca-Cola. Notably, global supply chain management has become a vital pillar for most

businesses as a result of globalization. This trend is being driven by an analysis of global supply

chain, elements and distribution network design. Organizations may, for example, construct

factories in other countries to take advantage of low labor costs, trade concessions tariff, capital

subsidies, and lower logistical expenses on the global market. With the access to international

markets and being close to customers is considered to boost the company operations.

Conversely, better relationships with suppliers can lead to increased reliability. There are a few

things to bear in mind when operating supply chain internationally. Coca-Cola must first choose

its general outsourcing strategy. Markedly, for many reasons, several firms many decide to keep

some parts of their supply chain closer to home. Besides, supplier selection is very crucial when

managing international supply chain. Comparing quotes from a range of international providers

might be difficult. Companies frequently place a premium on the lowest price rather than

examining all of the other aspects. On the other hand, because of multifaceted criteria character

of this decision, a range of factors influence the selection of appropriate suppliers. As a result,

choosing a supplier will be even more challenging.

Cost Vs Responsiveness Trade Off

Vendor Managed Inventory is a technique that was developed in the mid-1980s

and has since been adopted by a variety of businesses in a variety of industries (Dou & Sarkis,

2010). The fundamental problem with Vendor Managed Inventory is “the lack of visibility across

the supply chain; POS and backroom inventory levels are ignored, and the replenishment process
 Global Supply Chain Strategy: Coca-Cola 5

(and inventory policy) is predicated on stock level variation in the customer's main warehouse or

distribution center” (Dou & Sarkis, 2010). As a result, people are looking for better solutions. In

1992, Kurt Salmon Associates produced a study called Efficient Consumer Response, which was

the first serious attempt to integrate the food supply chain. Promotional efficiency, replenishment

efficiency, shop assortment efficiency, and product introduction efficiency are four essential

methods that could contribute to supply chain gains. For the first time, the report recommended

"building a trust-based connection between manufacturers and retailers (including suppliers and

customers in general) with strategic information exchange to maximize overall supply chain

performance." Following the creation of these requirements, a variety of industries established a

variety of methods to realize the ECR promise. Supplier selection is the second issue that must

be addressed in a global supply chain management strategy. Considering research from a range

of international providers might be difficult. Rather of taking into account all of the other

aspects, businesses frequently choose for the cheapest option.

The logistical branch of effective customer response advances ahead of Vendor

Managed Inventory by indicating levels of stock in merchants' outlets and delivering a sales

estimate using POS data. These automatic replacement systems depend on:

a) The sales forecast, which is based on historical demand data rather than just

inventory levels at the customer's primary stocking location.

b) Frequent deliveries with short lead times.

c) Efficient Cross docking is a replenishment solution that reduces product storage

in warehouses and allows products to be turned around for transportation to retail locations in as

little as 24 hours.

Strategic Fit between Coca-Cola’s Global Business Strategy and Its Supply Chain Strategy
 Global Supply Chain Strategy: Coca-Cola 6

The company engages in collaborative production which is the second area where

numerous supply chain management solutions have been implemented. Because of the cheap

cost of customer-order driven supply chains, flexible and efficient production methods are in

high demand. Product standardization, relocating production and storage facilities, sharing the

capacity of a single facility, outsourcing production volume, and contacting or partnerships with

suppliers are all options. Production capacity is frequently limited, particularly in the food

business, which must account for supply seasonality and perishable commodities. Manufacturers

from several industries are in the process of interacting and agree on using a single plant increase

manufacturing flexibility and share knowledge. As a result, manufacturers from various

industries have started to work in team and under one roof in order to pool resources and

enhance manufacturing flexibility. Customers can give directions for the configuration of their

products; Cars are built to order from a pool of about 50 modules, with lead times in the weeks.

Smart centers can place orders directly at the facility, bypassing the supply chain's distributors

and importers. Suppliers have made investments in the manufacturing plant and are now more

involved in the final assembly process.

Supply Chain Elements

For the last decade, companies have done a variety of supply chain collaboration

evaluations to see how they might use their suppliers' and customers' procedures, information,

technology and capabilities to obtain a competitive advantage. The bulk of projects were

completed at the point where a retailer and a manufacturer interact in supply chains. Several

companies have improved the interface between manufacturers and suppliers. Besides this, third

parties have also been improved. The following categories can be used to categorize practical

experiences, which we will go through in greater detail in the following sections: Retailers and
 Global Supply Chain Strategy: Coca-Cola 7

manufacturers work to decide on the optimal supply management and restoration strategy to

meet the demand of the customer. However, the interface between manufacturers and suppliers,

as well as third parties, has significantly improved. The following categories can be used to

categorize practical experiences, which we will go through in greater depth in the following

sections: However, there has been a tremendous improvement in the interface between

manufacturers and suppliers, as well as third parties. Practical experiences can be classified using

the following categories, which we will go through in greater detail in the following sections:

despite substantial research and hands-on experience with SCM issues, few companies have fully

developed a management environment that supports the integration required for effective SCM.

Many supply chains, on the other hand, are functionally focused, and supply chain companies

lack trust and reputation. We'll look at companies and activities that have thrived in SCM in the

sections ahead.

Outstandingly, numerous supervisory groups from worldwide enterprises feature

globalization as the most difficult angle today. Octotutor (2014) set that these enterprises have

become a lot of mindful that deciding global business techniques has become harder in the

previous ten years and a similar applies to whom to work with. As indicated by McKelvey

(2006), wandering into an unfamiliar market is like finding another domain for entrepreneurs. It

ought to be noticed that far off nations have fluctuating economies, cash, laws, and business

systems. Similarly, contrasts in social can block the organization's achievement in a specific

country. It infers that worldwide organizations are needed to invest some parcel of energy while

deciding methodologies that best suit their items in a specific market.

Coca-Cola has had the option to make more than 400 deals of various item marks in north

of 200 countries. This global achievement has made the organization to be perceived around the
 Global Supply Chain Strategy: Coca-Cola 8

world. The organization has figured out how to grow globally and situated itself better than some

other firm in the drink business. Considering the worldwide viewpoint, Coca-Cola attempt

however much as could be expected to use significant capabilities universally particularly in the

areas where there is low strain for worldwide mix and neighborhood responsiveness. The

organization guarantees to reproduce the locally situated abilities and incorporate plan abilities,

creation aptitude, just as brand power in the new business sectors. Since the central command are

the principle drivers of this worldwide procedure, the methodology end up being powerful as the

organization keeps up with its creation guidelines even in the new business sectors.

In favor of normalization Coca-Cola guarantees that it works such that addresses the

issues of individuals in that specific region. To accomplish this, the organization gives out the

dynamic power to units in the specific market to make administrations and items advanced for

the nearby clients. This system enormously depends on the degrees of contest existing in each

country. It likewise augments the responsiveness from local people consequently empowering

Cocal-Cola to keep up with its guidelines. McKelvey (2006) feature that utilizing such system

assists the organization with adjusting its items to meet the inclinations and necessities of

homegrown buyers. Therefore, the company can contend and perform all the more viably in each

local market in a way that expands its market position.

Confinement or transnational procedure is critical in each business and a similar applies

to Coca-Cola. Eminently, worldwide inventory network the executives has turned into an

imperative point of support for most organizations because of globalization. This pattern is being

driven by an examination of worldwide inventory network, components and circulation network

plan. Associations may, for instance, develop processing plants in different nations to exploit low

work costs, exchange concessions tax, capital appropriations, and lower calculated costs on the
 Global Supply Chain Strategy: Coca-Cola 9

worldwide market. With the admittance to global business sectors and being near clients is

considered to support the organization activities. Then again, better associations with providers

can prompt expanded unwavering quality. There are a couple of things to remember when

working inventory network universally. Coca-Cola should initially pick its general rethinking

procedure. Especially, for some reasons, a few firms many choose to keep a few pieces of their

inventory network nearer to home. Plus, provider choice is extremely pivotal while overseeing

global store network. Contrasting statements from a scope of worldwide suppliers may be

troublesome. Organizations as often as possible spot a premium on the most minimal cost rather

than inspecting different perspectives in general. Then again, due to multi-layered measures

character of this choice, a scope of variables impact the determination of fitting providers.

Accordingly, picking a provider will be considerably seriously testing.

Recommendations

Coca-Cola needs to consider strategic off shoring when conducting business. There has

been a significant increase in offshore outsourcing activities as a result of economic globalization

and the expansion of organizations resulting from interrelationships between firms. As a result,

multinational corporations with global operations are increasingly relying on their offshore

strategy. Outsourcing is a vital strategic choice in enterprises, according to Helmold & Terry

(2016), in order to streamline processes and focus on the firm's core competencies. off shoring is

a type of outsourcing in which work is sent to a separate country (offshore outsourcing). Off

shoring as refers to the transfer of process specialization to lower-cost countries." Before making

an offshore option, it's vital to research the various international sourcing models accessible.

Managers should be aware of three choices when considering off shoring and outsourcing,

according to Helmold &Terry (2016), it better to outsource most of the activities in the domestic
 Global Supply Chain Strategy: Coca-Cola 10

market. In addition, off shoring activities in foreign countries is crucial. In an event, that involves

off shoring it is noticed that several advantages are obtained such as low start-up capital, cheap

labor, as well as low cost of facilities.

The other thing to consider is investing more in research and development. Notably,

around the world, many businesses' success is determined by their research and development

strategy. Research and development must be linked to a company's long-term success. On the

other hand, investing in conduct of or sale of research or new technologies that aid in the survival

and growth of businesses is very important. Research and development is the process of going

from inputs to outputs (Zhao, 2014) research and development input entails the creativity,

knowledge, investment, raw materials, expertise, and equipment together with services. Research

and development result into new inventions, technologies, knowledge, as well as the capacity to

identify and apply this new knowledge to help the company grow its sales. In most cases, the

goal for research and development is based on maintaining and safeguarding the existing

position in the market. This ensures that the company products do not remain viable in the

market. In other words, research and development is implemented in present business operations.

Besides, the objective of research and development in the situation of Coca-Cola is to ensure that

the brand attains extension in its product lifespan, while developing new products and reducing

the production costs. Conversely, Coca-Cola requires research and development to create new

business operations that enable establishment of new services and products.

The company needs depend on its supply chain risk management (SCRM). It should be

noted that supply chain risk management means the management of supply, cost, and demand of

insecurities. Risk management in the supply chain, according to Park, et al. (2013), includes all

activities related to the management and recognition of financial, environmental, and community
 Global Supply Chain Strategy: Coca-Cola 11

risks, as well as the acceptance of possibility forecasting and a resilient and agile approach to

supply chain management. According to a study by Cazurra & Un (2007), supply chain risk is

managed by collaboration among partners to ensure continuity as well as profitability of the

business. Coca-Cola needs to consider approaches of mitigating the problem such as supply,

product, demand, and information management. There is also a need to determine possible

threats and analyze them. More so, assessing these threats is also important including

monitoring. Such mitigation process ensures that the company is not highly affected in case of

potential risks towards its business operations. Therefore, management at Coca-Cola need to

consider the three significant processes during risk management in the global supply chain:

detect, analyze, and mitigate.

Conclusion

To sum up, the company under review is Coca-Cola and it is well recognized in the

beverage industry. Products from this firm are sold almost in every country and the brand is

known in every corner of the world. The report indicates that the company not only engage in

manufacturing and selling Coca-Cola itself, the company also engages a wide range of products

such as energy drinks, juices, Sprite, Fanta, and water. It is through selling these products that

the Coca-Cola has gained much success in the world of beverages. Coca-Cola’s success is

primarily linked to the products as well as the iconic marketing campaigns used that position the

brand to be perceived as active lifestyle and fun. This report discussed the global strategy used

by Coca-Cola based on international, standardization, localization or transnational strategy. In

addition, the supply chain strategy at Coca-Cola is presented from the perspective of cost vs

responsiveness trade off. In addition, the report presented the strategic fit between Coca-Cola’s

global business strategy and its supply chain strategy to determine any possible gaps. Also,
 Global Supply Chain Strategy: Coca-Cola 12

supply chain elements like facilities, sourcing/procurement, inventory,

transportation/distribution, and information sharing are examined showing how they are

connected within the international supply chain of the company. Lastly, recommendations for

improving the global supply chain of Coca-Cola are suggested.

 Global Supply Chain Strategy: Coca-Cola 13

Reference List

Cuervo-Cazurra, A. and Un, C.A., 2007. Regional economic integration and R&D

investment. Research Policy, 36(2), pp.227-246.

Dou, Y. and Sarkis, J., 2010. A joint location and outsourcing sustainability analysis for a

strategic offshoring decision. International Journal of Production Research, 48(2),

pp.567-592.

Helmold, M. and Terry, B., 2016. Global sourcing and supply management excellence in

China. Singapur: Springer Verlag.

McKelvey, M., S., 2006. Coca-Cola vs. PepsiCo — A "Super'' Battleground for the Cola Wars?.

Sport Marketing Quarterly, (15), 114-123.

Octotutor. 2014. The Market Structure of the Coca-Cola Company. Retrieved from

https://octotutor.com/the-market-structure-of-the-coca-cola-company/

Park, A., Nayyar, G. and Low, P., 2013. Supply chain perspectives and issues: A literature

review.

Zhao, S., 2014. Analyzing and Evaluating Critically Tesco's Current Operations Management. J.

Mgmt. & Sustainability, 4, p.184.