TOPIC COCA COLA’S GLOBAL SUPPLY CHAIN ANALYSIS

Global Supply Chain of Coca Cola In their journey, Coca-Cola beverages go through the following destinations: Figure 1: Coca-Cola journey The typical workflow within Coca-Cola supply cha

NATIONAL ECONOMICS UNIVERSITY

SCHOOL OF ADVANCED EDUCATION PROGRAMS

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-GROUP PROJECT: -GROUP 1 TOPIC: COCA-COLA’S GLOBAL SUPPLY CHAIN

ANALYSIS

Lecturer: Dr Nguyen Bich Ngoc

Class: International Business Administration 60A

Course: Supply Chain Management

Member: Nguyễn Ngọc Quỳnh

Nghiêm Thị Như Ý

Nguyễn Hương Thảo

Lê Anh Tú

Tạ Thanh Diệu

I Overview about Coca-Cola Company

1 Introduction about Coca-Cola Company

1.1 Overview

The Coca-Cola Company was formed in Atlanta in 1892 and has its headquartersthere The Coca-Cola Company is the world's largest beverage company It controlled

48 percent of the worldwide market share, and the Franchise is responsible for over

160 distinct beverages over 200 countries Coke, Sprite, Dasani, and a variety of otherbeverages are among their offerings Sports Beverages, Juices, Tea, Coffee, and Waterare among its offerings

- Leadership: “The courage to shape a better future”

- Collaboration: “Leverage Collective Genius”

- Integrity: “Be real”

- Accountability: “If it is to be, It is up to me”

- Passion: “Committed in Heart and Mind”

- Diversity: “As inclusive as our Brands”

- Quality: “What we do, We do well”

1.2 Mission

The Coca Cola Franchise Mission statement: “To refresh the world - To inspire

moments of optimism and Happiness - To create value and Make a difference”

1.3 Vision

What Their Vision and Objectives are:

- “Be a great place to work where people are inspired to be the best they can be.” -

“Bring to the world a portfolio of quality beverage brands that anticipate and satisfy people’s desires and needs.”

- “Nurture a winning network of customers and suppliers, together we create mutual, enduring value.”

- “Be a responsible citizen that makes a difference by helping build and support

sustainable communities.”

- “Maximize long-term return to shareowners while being mindful of our overall

responsibilities.”

- “Be a highly effective, lean and fast-moving organization.”

2 Organizational Structure

The Board of Directors occupies the first level of the hierarchy Muhtar Kent is thecompany's Chairman of the Board of Directors and Chief Executive Officer TheOperations Leadership executives are at the second level of the hierarchy Presidents

of international division structures such as Latin America Group, Europe Group, NorthAmerica Group, Eurasia and Africa Group, and Asia Pacific Group are represented inthis sector In the Coca-Cola Company's organizational chart, the Marketing job is atthe third level of hierarchy The Coca-Cola Company's Executive Vice President andChief Marketing and Commercial Officer The Vice President is responsible for globalmarketing, customer management, and commercial leadership, as well as leading theCompany's efforts to satisfy the requirements of consumers and customers across theworld

3 SWOT analysis

To understand more about the company, we make a SWOT analysis to understand the external and internal factors which are affecting Coca-Cola

3.1 Strengths

- Strong brand identity: Coca-Cola is a well-known brand with a distinct identity Its soft

drinks are the most widely consumed beverages in history

- Extended global reach: Its products are sold in more than 200 countries, with 9 billion

servings each day It has launched over 500 new goods throughout the world Some of theseare Coca-Cola beverage variants, such as Coco Cola Vanilla and Cherry Coca-Cola Itsbrands are recognized to appeal to people from all walks of life and demographics

- Dominant Market Share: Coca-Cola has the greatest market share among the only two

largest soft drink producers in the beverage category, Coca-Cola and Pepsi Coca-top Cola’sgrowth drivers include Coke, Sprite, Diet Coke, Fanta, Limca, and Maaza

3.2 Weaknesses

- Competitive rivalry with Pepsi: Coca Cola’s main competitor is Pepsi Coca-Cola would

have been the obvious market leader in the beverage if it hadn’t been for Pepsi

- Product diversification: Coca-Cola has a limited range of products Coca-Cola is trailing

in this category, while Pepsi has launched several snacks such as Lays and Kurkure It offersPepsi a competitive advantage over Coca-Cola

- Health concerns: Carbonated beverages are a major source of sugar consumption.

Obesity and diabetes are two serious health problems as a result Coca-Cola is the world’slargest carbonated beverage producer Many health professionals advise

against drinking these soft drinks For the firm, it is a contentious subject Coca-Cola,

on the other hand, has yet to come up with a health alternative or answer to thisproblem

3.3 Opportunities

- Product innovation and diversification: Coca-Cola, like Pepsi, has the chance to launch

new offerings in the health and food categories It can help them increase income anddiversify their product line beyond fizzy beverages

- Expanding presence in emerging countries: Cold drink consumption is higher in many

places with hot climates As a result, expanding one’s presence in such places may bebeneficial – Middle Eastern and African countries are prime examples

- Advanced supply chain: Coca-business Cola’s relies totally on logistics and supply chain

management Transportation and gasoline expenses are constantly rising As a result, coming

up with some sophisticated and enhanced distribution methods might be an opportunity

3.4 Threats

- Water management dispute: Coca-Cola has been chastised for its water management

practices Many social and environmental organizations allege that the firm consumes a lot ofwater in water-scarce areas Furthermore, it has been claimed that Coca-Cola pollutes waterand mixes pesticides with water to remove pollutants

- Packaging issue: In a 2017 report, Greenpeace chastised Coca-Cola for using single-use

plastic bottles It’s also been chastised for its recycling and use of renewable energy sources

- Direct and indirect competition: Although Pepsi is a direct competitor in the market,

there are several other firms who compete with Coca-Cola indirectly Starbucks, CostaCoffee, Tropicana, Lipton juices, and Nescafe are Coca-indirect Cola’s competitors who maypose a danger to the company’s market share

4 Coca Cola’s business current situation

The Coca-Cola Company today announced excellent second-quarter and year-to date results for 2021 “Our results in the second quarter illustrate how our company is

rebounding quicker than the broader economic recovery, powered by our rapid

transformation”, said James Quincey, Chairman and CEO of The Coca-Cola

Company

- Revenues: Net sales increased by 42% to $10.1 billion

- Margin: Operating margin was 29.8% vs 27.7% in the preceding year, while comparableoperating margin (non-GAAP) was 31.7 percent versus 30.0 percent in the previous year

- Cashflow: Strong business performance, five more days in the first quarter, and workingcapital measures drove year-to-date cash flow from operations to $5.5 billion, up $2.7 billionover the prior year.

- The business anticipates organic sales growth of 12 percent to 14 percent (non GAAP)

II Global Supply Chain of Coca Cola

In their journey, Coca-Cola beverages go through the following destinations:

Figure 1: Coca-Cola journey

The typical workflow within Coca-Cola supply chain:

- The concentrated syrup is manufactured at the Coca-Cola Company headquarters in Atlanta and sold to Coca-Cola Enterprises (CCE) or another bottling partner, who is

responsible for distributing the product across North America and Canada

- The syrup is sent to a manufacturing facility, where it is combined with additionalcomponents including purified water and sweeteners The bottler then packages and deliversthe finished product to retail partners.

- The Coca-Cola Export Corporation (TCCEC) works with local bottlers all over the world

to supply the beverage to the appropriate markets

They're also dedicated to working together with the rest of the industry and supportingreputable third-party standards to make assurance and certification easier for farmersthroughout the supply chain They also work directly with farmers in key sourcingareas to address material concerns in the agricultural supply chain Here is a list ofsuppliers:

Figure 2: List of suppliers

2 Operation

Coca-Cola is a multinational corporation with a local presence As a result, there arepresently about 225 bottling partners across the world The supply chain starts with theacquisition of raw materials, which include agricultural goods (sugar cane or fruit) andwater in the case of Coca-Cola The most crucial elements (water and sugar), are

supplied locally, with the partners having just the sort of sugar to select from Beetsugar is utilized mostly in Europe, cane sugar in Asia, and corn syrup sugar inAmerica.

The manufacturing of the concentrate, which is combined with water, sugar, andcarbon dioxide by the bottling plant, is one of the initial phases in Coca-supply Cola’schain Other plants generate the concentrate themselves The secret recipe is said to bestored in a safe in Atlanta According to the tale, only two people should have access

to it and know the specific recipe The completed beverages are subsequentlypackaged, marketed, and distributed to grocery shops, restaurants, and movie theaters,among other places As a result, the firm places a high value on supplier relationshipmanagement and regular supplier monitoring

3 Logistics

Any supply chain relies on logistics, and Coca-logistics Cola's expertise is critical tothe company's supply chain performance Coca-Cola has established a number oflogistical best practices, including:

- Producing items on a more regular basis

- Organizing weekly meetings amongst teams all across the world

- Bringing the manufacturing plants closer to the customers

- Interaction between the primary sites on a daily basis is being introduced

- Introducing a set of processes that are shared by all players in the supply chain

4 Market channel:

The company has the greatest distribution system in the globe Through a powerfuldistribution infrastructure, the firm continues to increase its market in emerging,developing, and developed markets Direct selling and indirect selling are the twotypes of product distribution techniques used by the company Restaurants, cinemahalls, retail stores, and other businesses get items straight from the corporation.Furthermore, Coca

Cola has developed an indirect sales strategy, partnering with distribution agencies,wholesalers, and independent bottling partners, who then make the goods available toretailers and consumers The company sends its products to distributors, whosubsequently convey them to smaller distributors and retailers via the indirectapproach When items are to be delivered in locations with fewer people or in ruralareas, smaller distributors are provided The company has contracts with the majority

of the independent bottlers To reach clients in different parts of the world, thecompany employs a variety of distribution strategies (pre-sale system, conventionalroute system, telemarketing system)

III Global Business Strategy

Coca cola has implemented a Transnational business strategy to create high localresponsiveness and high global integration By cost leadership strategy, costs arereduced to fit in local market pricing By differentiation , branding, marketdevelopment strategy, Coca cola can remain high quality products, adapt to foreignmarkets demand.

On the official website of Coca Cola, they stated that “We are a global business that operates on a local scale, in every community where we do business”

- Besides, Coca cola also takes advantages in the brand logo to set the foundation in differentiation

- Other than these, the brand logo is also used to set the differentiation basis The standingout and unique brand emblem has created a powerful brand impression in the minds ofcustomers Despite several changes, the essence of the brand has stayed consistent, whichacts as a powerful differentiating element

1.2 Cost leadership: The objective of executing this strategy is to maintain

the market leadership position through efficient value chain management

- This approach enables Coca-Cola to increase its market share by focusing on the middle class, which accounts for the majority of the overall targeted consumer Middle-class

customers perceive a great value on pricing, and cost leadership is the ideal method for meeting the demands of this market category

- Coca-Cola puts much attention on “affordability” and easy “accessibility” of theofferings around the world, which contributes to great brand recognition and sales growth, aswell as a strong competitive advantage

- Coca-Cola regularly gives discounts and coupons to accomplish sales objectives and dealwith competitive pressure from its nearest opponent, in addition to charging cheap pricesthrough decreasing manufacturing costs and maximizing supply chain efficiency Thesediscount and promotional efforts are meant to promote brand popularity and stimulatepurchasing

- The results are shown in quick brand recognition among customers, expanded customer base, high consumption and high sales

2 Intensive Strategy

2.1 Market development:

This is a strategy for expanding into new markets or areas and selling to new clients It

is yet another important approach that has aided Coca-Cola in becoming a worldwidebrand Coca-Cola products are available in over 200 countries The brand hasexpanded to virtually every corner of the globe Apart from the flavor of Coca-Coladrinks and their inexpensive rices, credit for worldwide expansion also belongs to theuse of marketing and promotions The strategy has proven to be very effective,allowing Coca-Cola to take the lead in the beverage sector

2.2 Product development:

Product development is the strategy of introducing more offerings to the market to target higher sales and revenue Coca-product Cola's line has expanded significantly over time Its extensive product range includes 500 sparkling and still brands, and it offers over 3900 beverage options Its portfolio now includes 21 billion-dollar brands Coca Cola has grown significantly as a result of product development

2.3 Diversification

Coca-Cola has mastered the art of diversity in the bottled drink industry Regardless ofthe various commercial concepts that Coca-Cola pursues, the corporation can discoverwhat the consumers in the area like and adapt the beverages appropriately Forexample, in India, where bottled water is in high demand, Coca Cola offers a line ofbottled water that people associate with the brand and quality

3 Sustainable business:

It includes not just bottling factories and distribution, but also our raw material supply(agricultural raw material source for components.) includes social and environmentalissues, as well as agricultural management systems All bottling facilities haveenvironmental and safety management systems in place, as well as goals for improvingenergy and water usage, waste reduction, safety, and so on

3.1 A world without waste

Coca cola has set the goal by 2025 to make all products approximately 20% less

virgin plastic and to make 100% of packaging recyclable globally by 2025

3.2 Water security strategy

The company focuses on three priorities: “Reducing shared water challenges aroundthe world; enhancing community water resilience with a focus on women and girls;and improving the health of priority watersheds Localized, context-based targets, willsupport the global framework.”

3.3 Product quality:

The Coca-Cola Company endorses the current recommendations of numerousprominent health experts that people consume no more than 10% of their total caloriesfrom added sugar Coca-Cola is taking steps to reduce added sugar, change the recipethroughout our portfolio, and reduce sugar by at least 30% in some of the major brands

in foreign market, including Coca-Cola, Fanta, Sprite, and Fuze Tea

IV Global Supply Chain Management Analysis

Before starting the analysis of the supply chain management, in this part we will base

on the SCOR (The supply chain operation reference) model to define the process ofsupply chain management The top-level of this model has 6 different processes,which are also known as 6 components of supply chain management - Plan, Source,Make, Deliver, Return, and Enable Therefore, we will use these components toanalyze the contribution to implement the company’s global business strategy

1 Planning

1.1 Forecasting

Forecasting is a crucial challenge for manufacturing, and it influences the company’ssales and promotion policies The Coca-Cola Company utilizes the entrepreneurshipCollaborative Planning, Forecasting, and Replenishment (CPFR) system CPFR aims toenhance supply chain integration by supporting and assisting joint practices CPFRseeks cooperative management of inventory through joint visibility and replenishment

of products throughout the supply chain These policies were established to allow eachcomponent of the supply chain to be a partner in the success of fulfilling customerdemand This practice was created so that suppliers could have greater visibility intoretailer's sales forecasts This allows each business component to have better controlover their respective inventories

The Coca Cola Company has applied the Collaborative Planning, Forecasting, andReplenishment (CPFR) system in its forecasting activity CPFR expects to improvestore network coordination by supporting and helping joint practices This practicewas made with the goal that providers could have greater visibility into retailer’sexpected sales This permits every business part in the supply chain to have bettercontrol over their respective inventories

The CPFR system is planned and constrained by a centralized planning team Thissystem depends on an interactive platform that guarantees concurrent work in alldistribution areas Coca Cola Company utilizes this system to serve and facilitate theforecasting activity of some largest company’s clients After gathering all appropriatedata, the centralized planning team creates a customer demand model and tests itutilizing out-of-sample data Such testing permits working on the model and uncoversconceivable negative situations Lastly, the team will link the customer demandforecast to the supply chain of the company

1.2 Product Innovation

Product innovation presents an essential part in Coca Cola business to implement theirtransnational strategy It is crucial for Coca-Cola to make new items, new drinks toimprove its competitive advantage and to penetrate to the foreign markets Presently,customers' awareness of health problems is increasing day by day Besides the basicaspects of a drink such as taste, packaging, price, customers will care more about theingredients and potential harms of that drink as to whether it is harmful to their health

or not Coca Cola is also facing such problems with its customers Currently, manyCoca Cola customers are concerned about possible negative health effects of CocaCola such as obesity and inactivity

To face this problem, Coca Cola has invested heavily in RnD (Research andDevelopment) activities to be able to develop innovative products that satisfy thewants and needs of customers To eliminate the negative effects of Coca Cola, thecompany launched Diet Coke products After its launch, Diet Coke received theattention of many customers and created a great success for the company With this inmind, the company continues to develop other innovative products based on Diet Cokewith different flavors to suit different customers with different tastes That series offlavour extensions include Diet Coke with Lemon, Diet Vanilla Coke, Diet CherryCoke, and Diet Coke with Lime In addition, in 2005, Coca Cola succeeded inlaunching another innovative product that can satisfy customers' need for health relatedissues - The Coca Zero with no calories

Product innovation is considered as one of Coca Cola's most important activities inimplementing its transnational strategy through product development This activityhelps the company expand its product portfolio, extend its product lines, providecustomers with a variety of options, increase market dominance, and stay innovativeand creative to suit rapidly changing needs, lifestyles of customers

1.3 Product strategy

Coca Cola always focuses on product diversity in the countries where they operate.They want to guarantee a high degree of local adaptation and modification in eachforeign country It means that for each different country, Coca Cola will always try tohave products suitable to the lifestyle and preferences of customers in those countries.This helps Coca Cola have higher local responsiveness, increasing competitivenesswhen entering a new market This product strategy helps the company to realize thecore global business strategy of the company, which is transnational throughdiversification This may be due to the fact that the countries in which Coca Cola isoperating have customers with very different tastes and cultures So if you want tocontinue to succeed in penetrating the market, local adaptation is a must-do job.Furthermore, by executing product strategy, Coca Cola Company will diversify itsproducts further, expand its product portfolio, extend its product lines and expandchoices for customers For example, Samurai, a caffeinated drink, is just created andsold in Asian nations Additionally, Vita is a juice of Coca Cola Company, which isonly available in Africa Sprite Green is a sparkling drink from the United States which

is just accessible in some selected areas in New York and Chicago

2 Purchasing

2.1 Focus on local sourcing

The supply chain starts with the purchasing of raw materials, which includeagricultural products such as sugar cane or fruit and water in the case of Coca-Cola.The most crucial elements, such as water and sugar, are sourced locally, with thepartners having just the sort of sugar to select from Coca-Cola always prioritizespurchasing and manufacturing locally, resulting in a widespread and powerful localenvironment for Coca Cola Coca-Cola already sources the majority of its rawmaterials locally wherever possible Only the sort of sugar can be chosen by the localpartners Sugar derived from maize syrup is utilized in the United States Beet sugar ismostly utilized throughout Europe Cane sugar is utilized in Asia There are 3 mainreasons why Coca Cola chooses to source locally

First, Coca Cola Company wants to optimize the supply chain The company needs tolocate the production plant close to where the sugar is grown in each country toshorten the shipping time Because agricultural products are very susceptible tospoilage and mold if not stored and transported carefully, shortening the shipping time

is one way for the company to reduce the risk of raw materials being damaged orspoiled in the transportation process because during transportation, it will not bepossible to guarantee the quality of preservation as good as in the factory or in thewarehouse Besides, local sourcing also helps the company keep its supply chain shortand fast, which is critical for meeting quick changing demands of different countries.Once agricultural products such as sugar cane or fruit and water are transported to theproduction plant, it will be processed immediately without needing to be stored for toolong in the warehouse or transferred to another production plant in a different country.This helps ensure the freshness of raw materials and produces high-quality drinks inthe right quantity and at the right time With an efficient supply chain like this, CocaCola can get its drink done within 2 days and deliver it to Coca Cola's distributionpartners

Second, Coca Cola Company wants to contribute to and develop the socio economic environment of countries in which they are operating Local sourcing and local

manufacturing will certainly create a lot of jobs for local citizens Farmers can sell more agricultural products such as sugar cane, fruit, and workers have more chances

to get jobs in factories Additionally, being coached by one of the largest MNCs in the world and having access to the company's advanced technologies will help broaden employees' knowledge and provide opportunities for them to learn

Last, shortening the transportation distance of ingredients will help Coca Cola reduceGHG emissions emitted from transportation This is tied to one of the company'sstrategies which is sustainable business In every process, Coca Cola always wants tominimize negative impacts on the environment to create a sustainable business Andwith local sourcing, Coca Cola is able to optimize the number of shipments whilelowering the CO2 impact