Global Supply Chain Management (GSCM)

Discuss about the Global Supply Chain Management (GSCM).

 

 

Supply Chain Management ( SCM ) is a procedure of taking decision and performing actions along a supply chain aiming at some general goals such as planning, managing and controlling. SCM means the supervision of the chain of commodities and services from the position of its production to the position of its consumption (Hasan 2013). In other words, SCM is the process by which a good is reached from the manufacture to the consumer. SCOR is another concept of business which is related to SCM (Chalikias and Skordoulis 2016). Generally, the supply chain operations reference model(SCOR ) is a tool that is used to develop a company’s supply chain management process with the buyers and producers of a company (Bradley 2013). This is a model that explains th e procedure needed to fulfill the consumer’s demand. This model also describes the procedure of the whole supply chain and illustrates how to develop (Bradley 2013) the process. The SCOR model emphasizes on major five factors: planning, source, manufacturing, distribution and return. All along the supply chain, these five aspects are repeated many times ( Ashby Leat and Smith 2012 ).

According to Ellram and Cooper (2014), though SCM model like the Global Supply Chain Forum and SCOR have been generated, the way they are introduced and also their focus may differ substantially among the companies. Therefore, SCM should take some policies to support a company’s competitive advantage. They focused on a set of policies that emphasizes the supply chain management matters but in the real world, it is found that these are used differently in companies on the basis of their competitive advantage (Chalikias and Skordoulis 2016)

In this report, the Coca-Cola Company is taken as a global organization which has it’s headquarter in Atlanta, Georgia. This company was established by the pharmacist John Stith Pemberton. The company’s present CEO and Chairman is Muhtar Kent. The company presently has more than 500 brands among 200 countries (Sodhi and Tang 2014).

According to Christopher (2016), This SCM was established by the supply chain council along with the support of the world’s top 70 manufacturing industries. Now a day the supply chain functions in such a world where the pace of changes is very high.  The coca Cola Company started as a small company with an inadequate supply chain and in a local market. Over the years, as the company grew and developed, its supply chain was also developed with it. Some other aspects are also related with this such as inventory management, consumer alliances, cost minimization, relationship development and further potentiality of the supply chain (Tallant 2016).

Coca-cola is one of the most dominant companies worldwide. According to the global rankings, it has been a leading company in the global beverage market for more than hundred years. Coca Cola Company has achieved its short-term goals, but in the long run it faces some challenges like many other manufacturing companies. The company needs more contemporary and a steady supply flow. It requires a constant process to maintain its achievements. It requires an improved manufacturing procedure solution. Now days Coca Cola Enterprise ( CCE ) is one of the greatest manufactures, dealers and distributors of the products of Coca Cola Company. In the year 2010, CCE did an important deal with the company (Sáenz and Revilla 2014). CCE started to organize a latest supply chain management system in 17 European industries. This new scheme will substitute and mechanize many of Coca Cola Enterprise’s supply chain procedures and it needs new technologies to make sure the essential rate of deployment. CCE required a collaborator to support this newly formed business renovation. This includes providing a technological solution and also some skilled users of this new technology to make sure that the entire benefits of this system are achieved (Lambert and Schwieterman 2014).

According to Tetteh (2015), there are some principles of the supply chain of the Coca Cola Company. The supply chain should provide the product to the consumers in every time all over the world. The company should apply the idea of client motivated supply chain management. The Coca Cola Company has different types of products in its production system globally. It has high cooperation with the suppliers to make sure that they can provide the excellent service in the purchasing processes. The centralized management policy is taken for manufacturing and prediction plans. The supply chain of the Coca- Cola Company is illustrated by the following figure 1.

Material flow ( supplies, production, deliveries)

Figure 1 : Supply Chain of the Coca- Cola Company

(Source : Gualandris et al. 2015)

The figure 1 describes how a product is reached to a consumer from the supplier. The SCM procedures along with their short clarifications developed by the Global Supply Chain Framework  ( GSCF ) are described below ( White, 2012 ).

This policy incorporates managing the deals between the company and its clients with a particular objective of supervising the consumer’s problems actively. Sometimes the company fails to keep their promises made to customers, and then this policy is applied. The main objective of this policy is to provide best services to the customers (Andini and Simatupang 2014)

This policy involves in fulfilling the consumer’s needs with the capacity of the supply chain through anticipating, decrease in demand, and also balancing the supply and demand. It is sometimes found that the company is unable to meet the customer’s demand. Therefore, this management policy mainly focuses on delivering the customer’s requirements efficiently (Crandall et al. 2014).

This policy involves all actions which are required to plan a delivery network chain and allow a company to fulfill the consumer’s needs as well as to reduce costs as much as possible. Hence, this Order Fulfillment policy emphasizes on completing the customer’s demand within proper time and also focuses on minimizing the cost of production to increase the profit margin (Mena et al. 2014).

This strategy involves activities that are related with handling the returned items. It also consists the reserve logistics and analysis of the returned products. Sometimes it is found that some products are defective and then those are returned to the manufacturer. By this management policy the reason is identified and further investigation is done on the returned items (Singh and Gupta 2014).

This policy incorporates the activities to deliver the framework for further developing and bringing latest products to markets along with the consumers as well as the suppliers. The main objective of this Product Development and Commercialization policy is to improve the quality of the products and to distribute the products properly (Tallant 2013).

This policy consists of all the actions that are needed to achieve, execute and handle the manufacturing along the supply chain and to shift the commodities from the companies to the retailers. Mainly this manufacturing flow management policy deals with the activities which are required although the manufacturing process.

This strategy consists of the activities to recognize the major consumer segments and to identify the system and processes regarding the delivery of the goods and services to the consumers. This Customer Relationship Management policy mainly deals with the supply of goods to the customers efficiently. This policy is related to the consumers.

This policy consists of those activities whose objective is to supply the structure for the company’s further development process.  This Supplier Relationship Management policy mainly deals with the producers of the Coca-Cola Company. It focuses on delivering the products and improving the production process effectively (Wilkinson 2013).

The next part of the discussion section describes various aspects of the Coca Cola Company regarding its supply chain management and this part also highlights the issues that are needed to be improved in the future.

A company like Coca Cola began their production with limited resources but gradually it introduced some large scale production technologies. However, these conventional manufacturing technologies avoided quick commodity framework, investigation and development. During the last 10 years, the Coca Cola Company emphasized on manufacturing cold-drinks by operating a steady flow of the products those consequents in extra work-in-process stock. In this situation, due to the data, model, manufacture and distribution are executed in house; therefore outside cooperation is not a feasible alternative (Tallant 2016)

developed worldwide by including licensed dealers and bottlers. This company identified the requirement to manage inventory and its associated cost to the industry. The introduction of Material Requirement Planning ( MRP ) policy and Manufacturing Resource Planning ( MRP 2 ) along with better computer abilities supplied companies such as the Coca Cola the potentiality to follow inventory correctly. As a consequence of this, the decreases in inventories like syrup, fresh and used containers, sugar, and other components takes place along with further developments in keeping contact regarding when future acquisitions are needed. Later the Coca Cola Company understood the significance of radio frequency recognition as a gain for future periods but it did not implement this policy.

The Coca Cola Company faces severe global competition for its other rival companies, such as Pepsi, Sprite, 28 BLACK, .Afri-Cola, Apfelschorle, .Bionade, and Bluna Brottrunk. The company faces competition mainly from Pepsi Cola. The producers explored various techniques to supply goods with lower costs and higher quality, at the same time retaining higher consumer service levels. To fulfill this objective, the company introduced ‘just in time ( JIT ) and total quality management ( TQM ) policies to enhance the features, producing effectiveness and time of deliveries (Chalikias et al. 2016).  The industries stated to observe the worth of the products in strategic and mutual producer consumer relationships by using the above mentioned two policies JIT and TQM. To lessen the disputes in the manufacturing process is also another objective of the policies.

Generating planned and mutual customer producer relationships helps a industry such as the Coca Cola Company to choose the dealers who supply the best quality services. The company selects those dealers and gives them the major portion of their business. The companies that are suffering from competition and unfavorable economic conditions, utilize business process reengineering ( BPR ) . It is a business procedure to decrease waste and enhance efficiency. Another aspect is that the Coca Cola Company has introduced software called SAP to support enhancing the procedures, implementation and delivery of items.

SCOR model is applied in business to improve supply chain management system of a company. Supply Chain operations reference model is abbreviated as SCOR model. This model considers business plan, source of resources, production, and delivery of products and return of defective products (Brandenburg et al. 2014).

Figure 1: SCOR model

(Source: Brandenburg et al. 2014)

The SCOR model has five steps, which are used to improve communication and business relation with the stakeholders such as customers and suppliers. The first step is the planning stage, which includes resource planning, management of supply chain efficiency. At this stage, the company decides what business strategy is beneficial for the company (Rushton et al. 2014)). Planning about inventory management, transportation, financial planning and time management are included in this stage. Company forms regulations in the effective supply chain management system. In the second stage, the company needs to identify sources of supply, assess performance of the suppliers, and identify import-export network and supplier network. The third step considers production and manufacturing aspects. The Coca-Cola Company has to follow product manufacturing, packaging, labeling and releasing of product. At the delivery stage, the company has to manage order, warehousing and transportation of products. The last stage involves returning of products to the company (Wisner et al. 2014). At the last stage of this cycle, defective product returns to the company.

There are four stages in the implementation process of SCOR such as process, performance, practice and skills.           

Figure 2: SCOR management model

(Source: Wisner et al. 2014)

The process stage involves planning and resource allocation in the production process. The performance aspect includes fulfillment of order in time, asset and inventory management efficiency, job responsibilities, cost management etc. The performance is evaluated by using score card and setting a performance benchmarking. When applying SCOR model in business, the Coca-Cola Company needs to maintain best standard of the product quality. In order to get success in supply chain management process, skill improvement of the employees is necessary (Schönsleben 2016).

Cost management is an important aspect of SCOR model and also Coca-Cola business model. This company gives importance to the transportation cost management and product distribution costs. Transportation cost management has facilitated the company to increase brands and packages. Cost reduction gives the company a competitive advantage (Heckmann et al. 2015). Thus the company has closed relatively smaller centre for product distribution to reduce fixed warehouse costs. Coca-Cola has three delivery systems such as bulk delivery, pre-sell delivery and full service delivery. Bulk delivery system is used for delivering product to the large supermarket. For convenience store and small super market, pre-sell delivery method is used. Full service delivery system is provided to the customer.

In the business development process, Coca-Cola has used strategic supply chain management system and has explored business globally. However, this company has faced issues regarding product quality and packaging numerous time. Therefore, there is scope of further improvement of supply chain management system in business. Using cloud based management system can increase efficiency of the process. For daily business operation, improved software and hardware technologies are helpful. Comprehensive software helps the company to mange huge information at single point of time. Cloud based system helps to manage information of suppliers, customers and other stakeholders and improves supply chain management system. Enterprise resource planning is an effective application in this respect. However, training of employees is necessary to increase supply chain management efficiency as team members are integral part of this system. Improvement of customer relationship management is another approach of supply chain management. Segmentation of product market and customer segmentation can be used for CRM. As Coca-Cola has global presence, virtual integration among different stores across world can improve supply chain of this company.

As the SCOR model suggests, the improvement of service quality, product innovation and obtaining cost leadership in the market can help the company to improve supply chain. Marketing is an important factor, which can tell about customer choice and expectation of the customers from Coca-Cola. Marketing often can facilitate to differentiate products from the competitors. A performance standard can be set for the entire organization and also for the employees to achieve organizational goal. More extensive key performance indicators need to use apart from traditional metrics such as cost, capital utilization and service quality. Capacity to handle risk, market segmentation, product innovation, working capital management etc can also be used.

The report has analyzed supply chain management techniques of Coca-Cola. In the organizational development process, the company has maintained a strong supply chain management to explore its business worldwide. During 2010, the company has developed new supply chain management system to improve its business. Previously the company targeted to expand the supply chain to the emerging economies. However, this has not appeared to be effective strategy as the growth rate of those countries has slowed down due to global economic slowdown. SCOR model can be applied in the company for effective supply chain management. The SCOR model has five steps, which are used to improve communication and business relation with the stakeholders such as customers and suppliers. Customer service management, demand management, orders fulfillments are parts of supply chain management. The SCOR model considers business plan, source of resources, production, and delivery of products and return of defective products in business. Improved data management system, customer relationship management, keeping transparency in management process is helpful in SCM. Enterprise management system is an integrated tool, which helps in information management.

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