Case: Tetra-Partite Success Measurement Metrics For Supply Chain Management Of Coca Cola Company.
Problem Discussion
An attempt to measure the success of supply chain management has always been limited since the considerations given to the different parties has not been taken in a proportionate manner. This stems from the fact that there are four parties which are involved in the supply chain which makes it a system. This implies that to measure the success realised in this system then the different parties have to be considered not in the order in which they facilitate the system but rather in their order of importance.
To measure success in any supply chain management might mean different things depending on the party from which it is being taken from. Success to the manufacture, distributer, wholesaler and even the consumer might mean different things (Tayur Sridhar, 2012). Even though this is the case but all the four parties are working towards a common goal though they do it through different contributions, there is need therefore to find out an all-encompassing success measurement metric which can apply for all the parties (Richard, 2014).
What are tetra-partite all inclusive success measurement metrics for supply chain management for Coca Cola Company.
Sub-research question 1:
What are the success metric measures of the manufacturer in the supply chain management of Coca Cola Company?
Sub-research question 2:
What are the success metric measures of distributors, retailers and wholesalers in the supply chain management of Coca Cola Company?
Sub-research question 3
What are the success metric measures of consumers in the supply chain management of Coca Cola Company? Executive Summary
Supply chain management refers to the flow of goods and services involving the movement of storage materials, the work processes and finished goods from their point of production to their point of consumption. It takes place through a network of channels which combine to form the business whose core purpose is to provide goods and services. It is therefore a design which entails planning, execution, controlling and monitoring of the activities which take place in the supply chain with an aim of creating value and building a competitive infrastructure to leverage worldwide logistics and synchronise supply with demand.
In a given supply chain system, there is a combination of players who make up the system and their collaboration is crucial. Apart from this, their individual performance adds up to the total performance of the entire system. It should also be understood that apart from the four parties namely; producers, distributors or wholesalers, retailers and customers; there are also other parties which support the key players in the supply chain system. This implies that the performance of the system spans far much beyond the four main players (Davis, 2013). Each of the parties in the system has their role and duty as follows:
The producers or manufacturers make the product from raw materials. The producers can make an intermediate product or a finished product because still we have producers of raw materials and producers of finished products. Those who take part in the assembly should not be left out when it comes to a consideration of producers. If the producers do not do their homework well there are chances that the supply chain system will not even start functioning. Even though they appear to start off the system but there are other players behind them depending on which type of producer comes to the equation. It is therefore necessary to start by interrogating the contributions of the producers to the supply chain system in terms of its success or failure whichever comes.
The second party in the chain are the distributors who deliver different products to related product line customers. They can be wholesalers who sell the goods in large quantities and if this be the case then they buffer the producers from price fluctuation in the market by ensuring that the price which is charged for a given product remains constant at all moments and if it fluctuates, the fluctuation does not affect the production process (Griffin, 2013).
From the distributors we come to the retailers who now deliver the final product to the final consumer. Their contribution in the supply chain management is very important because they link the entire system to the consumer. They are at the grassroots and tend to know a lot. They should therefore play a crucial role in ensuring that the supply chain system is running in a smooth manner.
The last party is the final destination of the goods and services who is the consumer. The consumer should therefore receive the goods or services after they have gone through the whole process. The level of satisfaction a given consumer gets and the implications of all that was done to deliver the goods or services to the consumer contributes to their satisfaction and success.
The level of success that will be realised in this system will be highly dependent of the contributions of each and every party among the four members. This would imply that an attempt to seek for the success in the system then it has to be the sum total of success for each and every member of the system (Thomas, 2015). This has to be the case because even though everyone in the system has a different role but their contribution remains crucial and imperative to the success of the system. At the same time is should also be noted that the performance and even the satisfaction of each and every member is highly dependent on the surrounding environment. The surrounding environment will either support or fail to support a given course of action and therefore it cannot be taken for granted. At the same time it should be noted that at any single point the success begins from the previous step. The appreciation of the relationship that exists between different sections of the systems is also important. This is the case because one stage is highly dependent on the previous stage.
Metrics are exact parameters used to quantify and define the performance of the supply chain system. There has been metrics which would heavily depend on accuracy of the inventory, turn over and the inventory to sales ratio. Some have been using aspects like steady growth, evolution and delivery efforts. Other aspects like cash to cash cycle, accuracy of the freight bill, the order rate, day’s outstanding on sales, turnover on inventory, return on investment, on-time shipping, return reason, inventory velocity and inventory days of supply.
The metrics which have been utilised since time immemorial have been aimed at looking at the performance of a single participant without noting that this is a system. There is a need for a wholesome metric which will treat this like a system (Cooper, 2016).
The supply chain has five stages including the planning stage, sourcing stage, making stage, delivering stage and return stage. Value proposition maps for the various stages include the following:
Stage one: Planning
This is the first stage during which the producer or manufacture has to lay down a plan for their production process. It begins by a proper definition of the plan followed by agreement on an inventory strategy. The supply has to be optimized, constraints managed and the last part entails making of decisions before moving it to the second stage.
At the definition level one has to be clear on what is their plan. This allows them to come up with a series of actions which an individual has to undertake. Given that this work is not done by an individual but rather they have to work in groups then there is need for the team or group to come to a consensus with the strategy that will be utilised when working on a given project. The main reason as to why an individual has to make sure that there is a consensus is to allow different parties to contribute towards the required stages in the entire process.
The supply has to be optimised and constraints managed. This will ensure that instances under which the level of production would have gone down then there is need for mitigation to be done so that high levels of production can be realised. The constraints might come in the form of limited time, resources or even unfavourable conditions which hamper the production process. These conditions should be mitigated in an appropriate manner so that all is well during the production process (John, 2017).
The last part of the planning stage entails making key decisions which touches on the production process. This majorly touches on key management issues. An individual should be careful when making such decisions so that poorly thought about decisions do not interfere with the whole production process and all shall be well with a given production process. If this is the case then an individual has to make decisions after adequate consultation with concerned parties so that all shall be well when the practical stage comes.
Once this stage has been completed then one can easily move to the next stage which entails sourcing. If this is the case then an individual has to make sure that all things that will be necessary in the first stage has to be done.
When it comes to the planning stage the risk and conflict that has high chances of arising is failure to lay contingency plans whose results might be an interference of the production process. When planning, there are some things which might be assumed. This might bring the whole company to a standstill because it might strike the organisation as a risk or a hazard when it is least expected.
The hazards and risky things that occur when they are least expected but end up interfering with the production process will be handled by making sure that contingency plans have been laid down following a risk assessment of the whole production process. The contingency plans will aid in mitigating some issues which might arise unexpectedly (Buurman, 2012).
At the sourcing stage in the supply chain management system there are various risks which might affect the entire process thus reducing chances of getting high quality results. For instance the supply risks which come in the form of interruptions of the inflow of the raw materials or parts that are required to get things done. When such a thing happens there are high chances that something might be wrong. The production process cannot go on when there are no raw materials and when it is paused then it implies that one will have to stop the entire process unless there was a moment when the rate of production was higher than other processes. This might not be the case because in almost all instances individuals attempt to ensure that all the processes are going on at a controlled speed so that there is no excess production at any given stage.
This risk will be mitigated by making sure the parts, raw materials and other forms of inputs have been ordered in time. When an order has been placed in advance and it happens that there are delays then they will be just be delivered at the right time hence this will not interfere with the production process thereby keeping the supply chain process.
Apart from getting things done in this manner the order will also be placed in large quantities so even if there are delays then there will always be something in the store to ensure that the production process does not come to a standstill. This will be made possible by making sure that there is enough storage space for the raw materials when they are brought in especially in large quantities. This will ensure that all things are going on in the right manner and all shall be well during the first two stages in the supply chain management (Buurman, 2012).
|
Activity |
Responsibility (order on demand) |
Time frame |
|
Placement of the order |
Bottling company to the Coca-Cola plants |
Within two days |
|
Coca-Cola plants dispatch goods to the bottling company |
Distributor to the company |
One week |
|
After packing and branding the goods move to the retailer |
Distributer to the retailer |
One week |
|
Products are delivered to the consumer |
Retailer to the consumer |
Two days |
When it comes to an order that is placed when there is demand especially when large quantities of the product are demanded then the process starts from the point of demand. The communication moves in a backward direction until an order is placed at the Coca-Cola plants who will in turn respond to the order. They have to respond by producing different ingredients depending on the specialization of the plant. The products are then send to the bottling plant.
At the bottling plant packing, branding, sorting and mixing of the products is done by the plant. This is done in a special way such that the requirements of the buyer are met. It is also done within the stipulated time so that the whole process can be completed within the stipulated time frame. Packing is done in the manner that the required quantities are attained. At the same time the required number of products are packed and dispatched (Buurman, 2012).
The distribution or transportation of the products from the company to the retailor is done by a distribution company or for the sake of Coca-Cola Company it is done by the transport department. Enough information is given to the department so that the most appropriate mode of transport is selected depending on the distance and volume of goods to be transported. The time taken at each and every stage might vary depending on the volume of the goods being handled at that particular level, number of orders in the pipeline, production requirements and the distance through which the goods have to be moved. When a given set of goods have to be transported for a longer distance then one should be expecting to wait for a longer time but if the location is closer to the distributor and the plants then it should last shortest.
There will be the cost of production at each and every stage. This will vary from place to another depending on various aspects in America. One should expect that at one point in America the cost of production will be higher than the other place because of the extra production costs incurred. When this happens there are high chances that they might reflect in the final price of the product. This means that when an individual realises that there is price disparity then they should be in a position to understand that the cause of such disparities arise during production process in different parts of the country. This is the most common case especially when the cost of input tends to vary and there are chances that one is not in a position to buy the inputs from one area and use them in another area.
At the same time, it should be noted that production in different parts of the world for Coca-Cola Company varies depending in the law of the state. The raw materials which are also available in different countries also vary hence there will always be lots of disparities from one place to another. In general, the production of Coca-Cola products begins with different plants producing different inputs which are mixed by the bottling plant then send to the distributor for sales and distribution of the product to different parts of the country. This takes place in a special way such that there is a smooth movement of goods from one level to another.
|
Activity/production stage |
Responsibility to be done by |
Time frame for the activity to be completed |
|
Pre-production |
Coca-Cola Plants |
One week |
|
Production |
Coca-Cola plants |
Two weeks |
|
Transportation |
Transport department |
One week |
|
warehousing |
stock keeper |
One week |
|
Distribution to consumers |
Retailers |
One week |
There are various logistics which come to question when an individual thinks about the production process through which the outcome are the Coca-Cola products. The whole process is the sum total of contribution from different party members who play different roles in ensuring that all things have been done in the right manner.
The first step is the pre-production stage. At this level, things are brought to order, necessary materials are collected in preparation of the entire production process. At the pre-production stage, all materials that are necessary during the production process are assembled. When it comes to assembling the inputs, human resource should also be available because they will be operating the machines or attending to different tasks so that all is well with an individual (Buurman, 2012). It is important to make sure that all materials and inputs which are assembled are of the right quality and quantity to keep the production process going for as long as one will want it.
The second level is the production stage. At this stage inputs are combined in the most appropriate proportion to give birth to the final product. When combining, it has to be done in the right proportion so that none of the inputs is in excess. This will require that only individuals who have adequate understanding of the processing are brought to action. Just in case one of the individuals in the production process lacks a proper understanding of the production mechanisms then there is need to ensure that they are guided until they come to a proper understanding. This should be done because the production stage might not be reversible when a mistake is made. An attempt to reverse some of the processes that an individual might have gone through at this stage might be very much expensive or even prove impossible. This calls for total responsibility in all that an individual will be doing.
Transportation is the third stage and it has to be taken seriously. This is the level which ensures that goods are delivered to the retailers. There are various activities especially relating to book keeping and record keeping which are done at this stage. This will ensure one has taken note of the amount of goods to be moved from one place to another and the amount of goods which are remaining in the store. This is a crucial aspect because it allows an individual to keep track of the whole system. When an individual does not take track of the goods in the system a moment might come when they are thinking that there are some goods when there are no goods. In such a case an order might be received and processed when the company has no right quantity of goods to deliver. The record keeping process should therefore be done in an appropriate manner.
After transportation warehousing becomes necessary especially when the rate of production is higher than the rate of consumption. This means that an individual has to make sure that the right facilities have been set up at the warehouse. Whenever a demand arises, the goods are then moved from the warehouse to the consumer. The steps follow each other one after the other since one paves way for another.
|
Activity/step |
Responsibility to be accomplished by |
Time frame for completion of the activity |
|
Existence of demand |
Consumer |
One day |
|
Order placement |
Retailer |
One day |
|
Process the order |
distributor |
Two days |
|
Transit time |
Transport department |
Two days |
|
Order frequency |
Sales department |
Two days |
|
Inventory maintenance |
Book keeping department |
One day |
There are some instances when the order is placed through the mobile phone or when goods have to be distribution as a result of a mobile phone conversation. Before such a thing happens a demand must have been in existence in the first place. Once a consumer or consumers realises that there is a demand yet they have already established a good relationship with the supplier and have a proper understanding of the distribution channels to be used then they can place the order through a mobile conversation. In most cases, a mobile phone is used for repeat purchases and not for a first time purchase. It is a faster way of placing an order especially when the amount of goods in demand is low and the demand is urgent. The documents like the order can be send later but the most important thing is the message have been delivered.
One the order has been received it has to be processed. The processing of an order entails preparation to deliver the goods or act on the order. The preparation of any given order is done through different departments whose individual departmental contributions so that all things have been done. This might also entail preparation of the goods to be send to the buyer. All steps that entail the preparation of products so that when the buyer receives the goods they will be satisfied with what they get. This means that all things like packing, branding and even sorting of the products depending on the brands that are being sold is done in the right manner.
Transportation of the goods connects the buyer and the producer. In most instances the seller will organise for the transportation of the goods from the point of production to the point of consumption. At other moments, a buyer might decide that they will be taking care of transport activities on their own. This means that a person should be fully aware of whether a given buyer will transport the goods on their own. If this is not the case then the company which is selling a set of given products should make sure that this has been arranged for so that all things can run smoothly. The time that will be spend transporting goods from the point of production to the point of consumption will highly depend on the transport mode selected and the distance to be covered when transporting the goods from one place to another. The order frequency will also determine the time taken when processing the goods and all shall be well with an individual (Buurman, 2012).
The last step entails management of the inventory so that records are kept in the right manner. Management of the inventory helps to ensure that one is aware of where the goods are so that they can be able to respond to other enquiries by other buyers. Management of the inventory will also play a crucial role in tracing the movement of goods. This will aid in updating the buyer on where the goods in the system. Making sure that the buyer is updated then there is need for an individual to be aware of when the good will be delivered. This creates a good relationship between the buyer and the seller and at long last the supply chain system runs smoothly without interferences. The time taken at each and every stage will greatly depend on the frequency of the orders or the number of orders on the pipeline. This will happen because tasks which are yet to be attended to happens to be a barrier between an individual and newly received order.
The sustainability aspects are the things which when checked will ensure that the production process goes on in the smooth way. This will ensure that the production process can be kept going on and on so for a very long time. When an individual does not take time to check such issues then there are high chances that the supply chain system will be interfered with. The three aspects of sustainability which should be looked at include: getting the basics right, learning to think suitably and the science of sustainability.
When it comes to getting it right from the start is where many organisations get it wrong. When it comes to Coca-Cola Company, they have to get everything right from the start before they embark on the production process. This can only be done when an organisation understands what is needed by the market. An attempt to produce what people do not need will increase chances of failure. A company should therefore make sure that they have done a feasibility study before embarking on the production process.
For the sake of coca cola, the business development department plays a crucial role by informing the organisation about what is on the ground in response to their products. This comes at the pre-production level when all logistics touching on the production process are done. Throughout the process, people have to get things done and therefore this is a level at which the right person should be brought on board. One of the main reasons why coca cola is an international brand is that they invested in getting things right from the first day. This has ensured that things are running in a smooth manner and all shall be well. There is no need of being careless to an extent that a mistake is made at this point, such a mistake might end up costing the whole business or company (Buurman, 2012).
An organisation has to think sustainably so that it can realise the need to embed sustainability in the supply chain system operations. When a company does this it will tend to achieve it by clearly assessing the impacts of its products across its range of products. When it comes to coca cola the company had to think about the supply chain through various activities from management of the supply, designing of the product, the process of manufacturing and optimization of the distribution process. The company has been able to think and waddle through the aspects of sustainability by making sure that all things touching on the supply chain system have been attended to in the right manner.
When distribution is done, the choice and selection of the method of distribution has always been done carefully a coca cola such that the cost of transporting the goods does not make it very difficult for the company to sustain its operations on its own. The aspect of making sure that different aspects have been considered in an appropriate manner should span to all activities which an individual has to take part in hence ensuring that the whole process produces something that can enable the company to keep on producing for a longer process.
For instance, the coca cola company has been able to optimize the cost of production and transportation by establishing production plants in different countries. This has been done in a manner that production processes in one country might differ from what is done on a different country due to the differences in the law of the state, availability of raw materials and the cost of production in a given country.
The third level of a sustainability aspect is the science of sustainability. This has been achieved by coca cola through auditing and benchmarks conducts in different parts of the world to provide a framework which guides and sustains the supply chain operations of the company. This has given the company a clarity around the environment and its impacts so that adjustments can be done for the flexibility, agility and the cost of the supply chain system and its network in the company.
The third level seeks for insights from the current environment in which the company has realised means through which they can save on the production cost. The emerging trends and standards at the industrial and governmental level have been adhered to in a manner that does not attract a penalty.
The implementation of the risks and sustainability strategy has been done both downward and upward by Coca Cola Company. This has been done in various ways like whenever the organisation has had to choose a supplier for its raw materials, it has done in a manner that ensures that the cost of production does not go high. Frequent audits of different costs incurred by the company have been done and reviewed appropriately so that all things can be done in an admirable manner. Measures to reduce wastage through spillages and overproduction have also been taken care of through market and demand assessments. At long last this has given the company a competitive edge because it has been able to sustainably operate throughout the world so that the business does not close down.
Conclusion
There is no doubt that the supply chain management system is an entire system and has many individuals and parties contributing to its success or failure. This implies that the parties’ contributions really mean a lot to the system. For a long time, scholars and practitioners have been looking at it from a one-sided point of view. This has been an incomplete way of getting things done such that people were blamed and even praised even when they were not responsible for the success or failure in the question.
A realisation that the production process begins with the production makes those taking part in the production to feel as if they are part and parcel of the system. After production the distributors like wholesalers are also part of the system and should not forget to contribute positively to the system. The retailers and lastly consumers are also part of the system and should be recognised. Given that this is a system with a network it might not be possible for some parties like the consumers and the producers or manufacturers might interact. This will ensure that things have been done in the right manner. Whenever a consumer feels that something has not gone on in the right manner then it means that something might have gone wrong at some point.
From this study we therefore recommend the following to ensure that the supply chain management system goes on in the right manner. The recommendations include the following:
References
Buurman. (2012). supply chain logistics management. McGraw.
Cooper, L. D. (2016). issues in supply chain management. Industrial marketing management, 65-83.
Davis, T. (2013). effective supply chain management. Sloan management review, 34-35.
Griffin, T. D. (2013). `coordinated supply chain management. European journal of operational research, 1-15.
John, M. (2017). Defining supply chain management. joural of business logistics, 1-25.
Richard, L. (2014). Squaring lean supply with supply chain management. International journal of operations and production management, 183-196.
Tayur Sridhar, R. G. (2012). Qualitative models for supply chain management. Springer Science ad .
Thomas, V. (2015). Manufacturing planing and control of supply chain management.
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