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Ict coca cola-case_study
- 1. Carlos Auguet Linh Thi Thuy Bui Ahmad Fahmy Mateo Prezelus Swati Singh Piyush Virmani Xulun Wang January 2016 – ICT and Technology for SCM Final Project: The Coca-Cola Company
- 2. Agenda 1. Company and sector description 2. Products, delivery channels & e-commerce 3. Supply Chain Structure 4. The Coca-Cola Company ERP 5. Role of ICT 6. ICT future plans 7. Strategic ICT Advantage
- 3. 1. Company and sector description (I) “94% of the world’s population recognize Coca-Cola’s red and white logo” Founded in 1886 by Dr. John Styth Pemberton Average servings/day: 9 in 1886 and 1.9 billion in 2015
- 4. 1. Company and sector description (II) Mission statement: - To refresh the world... - To inspire moments of optimism and happiness... - To create value and make a difference. Vision statement: - People - Portfolio - Partners - Planet - Profit - Productivity
- 5. 1. Company and sector description (III) Sector: Consumer goods Industry: Beverages Sub-industry: Soft-drinks $0 $50 $100 $150 $200 $250 $300 $350 What the world drinks? Global market share ($ Billion) 49% 20% 31% Carbonated Beverages Market share CoCa-Cola Co. PepsiCo Inc. Other
- 6. 2. Products, delivery channels & e-commerce (I) 500+ sparkling and still brands… …3,600+ drink products sold in 200+ countries… …and a wide variety of collectibles and gifts
- 7. 2. Products, delivery channels & e-commerce (II) BIG MERCHANDISE
- 8. 2. Products, delivery channels & e-commerce (III) E -COMMERCE
- 9. 3. Supply Chain Structure (I)
- 10. 3. Supply Chain Structure (II) Upstream & Operations The Coca Cola Company Global business, local scale Manufactures and sells concentrates, beverage bases and syrups Own the brand, do brand marketing initiatives
- 11. 3. Supply Chain Structure (III) Downstream & Reverse Logistics 250 bottling partners Coca Cola Refreshments (CCR) 15 international bottling partners (BIG) 700 associates in the systems
- 12. 3. Supply Chain Structure (IV) Potential Problems Information flow between nodes along supply chain when there are many entities involved in. Management of inventories at bottling partners level requires a delicate system. Management of safety stock and production when there are aggressive marketing campaigns launched. Develop system base which has capacity for future expansion in e- commerce and automatic point of sales
- 13. 4. The Coca-Cola Company ERP (I) • Earlier SAP R/3 Enterprise system was used together with Oracle database • Upgrade their SAP R/3 Enterprise system to SAP ERP 6.0 • Decided to engage to a new database platform IBM DB2, instead of upgrading the Oracle Database which would have been expensive.
- 14. 4. The Coca-Cola Company ERP (II) Implementation process • DB2 delivered a reduction in storage needs of approximately 40 per cent. • The duration of manufacturing runs was reduced by more than 65 per cent • Connect store deliveries with back-end systems. • Time and cost savings and the opportunity to drive revenues. • Excellent customer service by providing customer centric procedures like inventory management and invoicing accuracy
- 15. 5. Role of ICT (I) ICT for Supply Chain Integration • Accelerator of replacing and minimizing out- of-stocks. • Optimize the procurement procedure to save costs. • Intellectualize the nodes in supply chain to optimize the efficiency and minimizing the waste.
- 16. 5. Role of ICT (II) Electronic Data Interchange Establishing data contents in EDI context Invoicing Payment Orders Purchase Orders Shipping & Billing Notice (with/without prices) Pre-delivery invoice
- 17. 6. ICT Future Plans (I) Digital Technology on Vending Machines Innovation Intelligent Vending Machines Cashless Gateway Mobile Wallets
- 18. 6. ICT Future Plans (II) Coca-Cola embarks on green IT strategy • Targeting technology's energy consumption • Energy metering and management • Reducing technology's carbon footprint • Raising energy efficiency awareness among staff
- 19. 7. Strategic ICT Advantage (I) Spider-web Analysis 0 1 2 3 4 5 6 7 8 9 Demand Forecasting Business Analytics and Reporting EDI and EDM Social Networking Mobile Application Development Supply Management Knowledge Management Customer Engagement Model Innovation PepsiCo Coca Cola Coca Cola vs PepsiCo
- 20. 7. Strategic ICT Advantage (II) Recommended Strategies • Although Coca Cola has a bigger fan following on the social media platform, it does not engage in building up loyalty with its customers. • Social analytics is not part of their business analytics and decision making which makes them vulnerable to the changing customer needs. • Coca cola can be innovative in its marketing strategies where they can engage with the customers • To improve demand forecasting, Coca Cola needs to invest in vendor management and retail management to understand the challenges and issues at both ends Based on Spider-web Analysis
- 21. OPENING MINDS TO IMPACT THE WORLD THANK YOU FOR YOUR ATTENTION!
Notes de l'éditeur
- The Coca-Cola Company description The Coca-Cola Company is a public American company founded in 1886 and stock listed on the NYSE as “Coca-Cola Bottling. Co. Consolidated. An average of 1.9 billion people are served daily nowadays compared to an average of 9 people in 1886. This account for almost 26% of the world’s population. On top of this, Business Insider states that “94% of the world’s population recognize Coca-Cola’s red and white logo”. http://www.coca-colacompany.com/careers/who-we-are-infographic/ http://www.businessinsider.com/facts-about-coca-cola-2011-6?op=1&IR=T http://fm.cnbc.com/applications/cnbc.com/resources/img/editorial/2011/08/23/33794661-Coke_Slide_Slide4_new.JPG
- The Coca-Cola Company mission and vision statement Mission statement: To refresh the world... To inspire moments of optimism and happiness... To create value and make a difference. Vision statement: People: Be a great place to work where people are inspired to be the best they can be. Portfolio: Bring to the world a portfolio of quality beverage brands that anticipate and satisfy people's desires and needs. Partners: Nurture a winning network of customers and suppliers, together we create mutual, enduring value. Planet: Be a responsible citizen that makes a difference by helping build and support sustainable communities. Profit: Maximize long-term return to shareowners while being mindful of our overall responsibilities. Productivity: Be a highly effective, lean and fast-moving organization. http://www.coca-colacompany.com/our-company/mission-vision-values/
- The Coca-Cola Company Industry and Sector Sector: Consumer goods Industry: Beverages – Soft Drinks Coca-Cola is the biggest soft-drink company in the world owning almost half of the global market in carbonated soft drinks (48.6%). The second biggest company in the beverage industry of soft drinks is PepsiCo with approximately 20.5% world market share. Other companies such as Nestle (3rd), Suntory (4th), Dr Pepper Snapple (5th), Danone (6th), Kirin (7th), Red Bull (8th), etc. represent altogether 30.9% of total market share. Each of these companies represent less than 5% market share. These figures obviously show the ongoing competition between Coca-Cola and PepsiCo. To give an idea of how big Coca-Cola is, it’s brand is worth $74 billion, whilst Budweiser, Pepsi, Starbucks, and Red Bull combined are only worth approximately $50 billion. http://www.statista.com/statistics/387318/market-share-of-leading-carbonated-beverage-companies-worldwide/ http://www.adbrands.net/sectors/sector_softdrinks.htm http://www.bloombergview.com/articles/2015-01-21/still-sweet-on-coke-and-pepsi-
- The Coca-Cola Company products The flagship product of The Coca-Cola Company (Coca-Cola) has been served since 1886. Nowadays, The Coca-Cola Company has more than 500 sparkling and still brands (20 of which are billion-dollar brands) and offers 3,600+ products sold in 200+ countries around the world. Coca-Cola, Sprite and Fanta were situated in the top 8 of most valuable soft drinks brands of 2015 (according to the Brand Finance annual report). The main products of the company are: Coca-Cola, Sprite, Fanta, Diet Coke and Coca-Cola Zero. Moreover, The Coca-Cola company's store (both physic and online) offers a variety of products, collectibles and gifts including apparel, memorabilia, and Coke Polar Bears merchandise that positions the company far beyond of being just a soft drink firm. http://coca-colacompany.com http://www.coca-colastore.com/ http://brandfinance.com/images/upload/brand_finance_soft_drinks_10_2015.pdf
- The Coca-Cola Company delivering channels The Coca-Cola Company defines itself as a global business that operates on a local scale. The firm manufactures and sells concentrates, beverage bases and syrups to bottling firms, owns the brands and is responsible for consumer brand marketing initiatives. Its bottling partners manufacture, package, merchandise and distribute the final branded beverages to the vending partners, who then sell the products to end consumers. The Coca-Cola Company vending partners include large international chains of retailers and restaurants and small independent businesses. They work together with them to create mutual benefit. These vending partners include grocery stores, restaurants, street vendors, convenience stores, movie theaters and amusement parks, among many others and are the ones responsible to sell the product to the end consumer. All bottling firms work closely with the vending partners in order to execute localized strategies developed together with The Coca-Cola Company. For the bottling of the beverages, the company uses two main channels: independent bottling franchises and the Bottling Investments Group (BIG) for a total of 250 bottling partners worldwide. For a variety of reasons, some bottling franchises need help that is beyond their capabilities, and that is why the BIG was created. It is intended to ensure that those struggling bottling operations remain a part of the company’s system and receive the appropriate investments and expertise to ensure their long-term success. Finally, when a bottling operation is stable, BIG’s goals are to find a qualified bottler to assume operations and continue to grow the business. Finally, the collectibles, gifts and merchandise of the company are mainly sold online, but also through The Coca-Cola stores of Atlanta and Las Vegas. http://coca-colacompany.com http://www.coca-colastore.com/
- E-commerce role The main e-commerce activity of the company is the selling of its merchandise products (accessories, clothing, home and décor…) through its online shops. Besides this, the firm has launched some e-commerce operations throughout the past years: - The SURGE re-launch e-commerce operation: SURGE (a citrus flavored soft drink), which debuted in 1996 and was taken off the market in the early 2000s, was the first company discontinued brand to return to market. Additionally, it was part of an innovative distribution deal between The Coca-Cola Company and Amazon, being the first product of the firm being solely distributed through e-commerce. Nowadays it can be also found in physical shops. - ‘Share a Coke’ e-commerce operation: consumers can order personalized glass bottles of Coca-Cola online – either for themselves or to share with someone special – through an e-Commerce platform for at-home delivery within days. - Coke2Home.com e-commerce operation: online store for home delivery of some of the company beverage products in some cities of India. It started in 2013. - Marketing e-commerce operation: the firm takes advantage of the marketing side of e-commerce through newsletter subscriptions, online advertising and mobile entertainment apps. http://timesofindia.indiatimes.com/business/india-business/Coke-takes-e-com-sip-starts-online-home-delivery-store/articleshow/20359348.cms http://coca-colacompany.com
- The Coca-Cola Company Supply Chain Structure The Coca Cola Company (CCC) has a supply chain structure composed of three parts: upstream, downstream and reverse logistics. Upstream supply chain starts from suppliers of raw materials for CCC such as sugar, corn, green tea, other ingredients and packaging materials which are used to produce concentrates, beverage bases and syrups. The downstream begins with bottling partners, who receives inputs from CCC to make beverage, fill into bottles and handle distribution activities. Reverse logistics activities are important to the green image that CCC has built for years. Used bottles will be collected and recycled for further usage. http://www.coca-colacompany.com/content/dam/journey/us/en/private/fileassets/pdf/2015/09/2014-2015-sustainability-report.pdf https://infogr.am/The-Coca-Cola-Company
- The Coca-Cola Company Upstream & Operations Coca Cola Company run a global business but in local scale. That means this business has the same model around the world but it is operated independently in each country/region to satisfactorily meet local demands. The Coca Cola Company manufactures and sells concentrates, beverage bases and syrups to bottling partners. Concentrates are produced in few locations only while bottling plants are located around the world. Coca Cola owns the brand and do brand marketing initiatives. They run expensive and decentralized marketing programs to expand market share in each country. We can see Coca Cola’s products in the most attractive positions in retail shelves, large promotions during the year or many big events sponsored by Coca Cola. Agricultural inputs like sugar and corn are produced and supplied by local farmers. Coca Cola Company also carries out collaborated projects with farmers to improve and assure the quality of inputs.
- The Coca-Cola Company Downstream & Reverse Logistics The Coca Cola Company has 250 bottling partners around the world, among which they have their own bottling plants - Coca Cola Refreshments (CCR) and 15 international bottling partners (including BIG). There are also 700 associates in this complicated system. According to their report, in 2014, company-owned bottlers represented 26 percent of bottling operations globally, in terms of unit case volume. The five largest independent bottling partners represented 33 percent, and the 10 largest bottling partners, including CCR and BIG, represented nearly 70 percent of global volume. Bottling partners take charge of manufacturing, packaging, merchandizing and distributing finished beverages to customers. Using the ingredients supplied by the Coca Cola Company, different type of beverages are produced, filled into bottles, labeled and are ready for the market. This process is conducted in a modern and automatic assembly line. Then, bottling partners also take care of inventories and distribute the products into the market. Final branded beverages are sent to vending partners (KFC, MC Donald’s, Subways, Dunkin Donuts, Walmart…) and customers (grocery stores, restaurants, street vendors, convenience stores, movie theaters, amusement parks,…). Delivery can be in bulk (to retailers/franchise with high demand) or direct to small shops with little amount. The reverse logistics activities are carried out in closed-loop model. That means, bottles are collected from points of sales such as super market, retail stores… then delivered back to the bottling factory. Here, the bottles will be cleaned and checked size, form, damages, leakages by laser and picture analyze while being moved along the line. If the bottle is good enough, it will be labelled for reuse and fill in with beverage. If not, it will be recycled.
- The Coca-Cola Company potential problems IT has an very important role in Coca Cola’s supply chain. As modern manufacturing lines are used at both CCC facilities and bottling partners thus all the plans and information flow must be correctly smoothly transferred. Though CCC run a globally local business, there are many entities involved in its systems as suppliers or customers thus IT system are far more important to connect demand and supply. Two problems arise that whether all the entities can fit into the software system of CCC and Is there any back up system if system breaks down. Coca Cola has a huge collection of product brands. It is required to have a delicate system to manage each product category, decide on production batch, and distribute products in a large network with local bottling partners around the world. Further more, it takes time to collaborate plans in each nodes of Coca Cola network. Coca Cola spends huge amount of money on marketing as well as promotion activities every year in every market. That can cause unexpected increase in demand as Coca Cola has impacts in vast majority of market share. Thus there is a need to forecast the impacts of those activities on sales, supporting decisions on production lot size and safety stock level. Coca Cola has big ambition to launch advertisement via social media and develop online sales. Thus its IT system needs to have improved capacity to handle big amount of information for future commercial trend like automatic point of sale or mobile wallet.
- The Coca-Cola Company ERP Strategy used was that earlier SAP R/3 Enterprise system was used together with Oracle database. Since SAP R/3 ERP was upgraded to SAP 6.0, CCC decided to use the IBM DB2 instead of upgrading the Oracle database because it can cost much beyond the budget of the company . The company has reduced licensing and maintenance costs by avoiding the purchase of additional Oracle licenses, and predicts savings in the next five years of about US$750,000 http://enelia90.blogspot.be/2012/02/enterprise-resource-planning-system.html
- The Coca-Cola Company ERP implementation
- ICT role in The Coca-Cola Company Coca Cola has been working with hard the last couple of years to integrate its plant and distribution systems to make it possible for it to see exactly what’s happening with its products as they move through the supply chain. In order to achieve this management goal, Coca Cola is working with SAP and running various ERP and supply chain management applications, including SAP’s R/3 material and production planning applications. The agreement between Coca Cola and SAP tries to improve supply chain visibility, allowing for improved planning and reducing the potential for unwanted deliveries. The output of the big investment on ICT is that time and cost savings and the opportunity to drive revenues, for instance faster replacing and minimizing out-of-stocks. Vending machine management has been improved by applying applications, with support for direct upload and download of sales information using a handheld device. This improved further with the use of electronic tracking technologies such as radio frequency identification tagging. In addition, the more intelligent fountain dispenser with computer embedded records all the data involved every single pour and knows when it’s running low on certain products while informing the system and making the optimized order immediately as well as calculating the lowest delivery cost. Better selection of suppliers by implementing various ICT application helps Coca Cola to save spending on procurement while generating less financial cost. http://www.t-systems.com/news-media/it-transformation-at-coca-cola-cio-ed-steinike-re-defines-his-tasks-t-systems/1163038 http://www.computerweekly.com/feature/Coca-Cola-and-SAP-collaborate-on-managing-supply-chain-networks http://insight.proximagroup.com/supply-chain-finance-and-procurement-at-coca-cola
- ICT role in The Coca-Cola Company Invoicing: This transaction contains the format and establishes the data contents of the Invoice Transaction for use within the context of an Electronic Data Interchange (EDI) environment. Purchase Order: The transaction set can be used to provide for customary and establishes business practice w.r.t. placement of purchase orders. Shipping & Billing Notice (with/without prices): Provides a recipient of a shipment with data for both receive planning and payment generation. Pre-delivery invoice: Enables pre-invoice data to be send to a supplier prior to actual product delivery. www.cokesolutions.com
- The Coca-Cola Company ICT future plans Intelligent Vending Machines: Venders connected to the internet can report sales, inventory and service issues to Coca-Cola refreshments in real time, which resulted in a huge improvement of service levels while reducing operating costs Cashless Gateway: The company built its own cashless gateway called Coca-Cola swipe to lower transaction costs and increase control over cashless payments processing. Tens of thousands of machines are being outfitted with credit/debit card readers to provide the payment flexibility demanded by today consumers. Mobile Wallets: People increasingly expect an enhanced and mobile-enabled vending experience. To delivery just that, Coca-Cola refreshments, through a partnerships with Isis mobile wallet, enables consumers using a downloadable app loaded on their smartphones to make beverage purchases. Google wallet can be downloaded on selected sprint smartphones and work with most cashless devices installed on Coca-Cola refreshments vending machines. www.cokesolutions.com
- The Coca-Cola Company ICT future plans Targeting technology's energy consumption With 15% of the UK's total energy bill related to office equipment such as PCs, photocopiers, multifunction devices, servers and racks, IT equipment is a major contributor to CCE's carbon footprint. CCE plans to work out the energy consumption of its in-house systems, and will also work with its hosting providers to drill down to get energy data, which is important for the company to meet its Carbon Reduction commitment. Energy metering and management Once CCE's IT department understands the energy required to provide IT services, the company will focus on targeting energy reduction, they need to monitor and understand their current energy consumption and figure out initiatives to reduce it Reducing technology's carbon footprint Coca-Cola Enterprises is taking a two-pronged approach to improving IT's carbon footprint, they will add energy meters in their IT environment to start pulling consumption data from devices, the software will be able to look for and identify devices connected to the company’s IP network by interrogating the device’s firmware, and CCE will use a hardware asset database that will contain data such as manufacturer specifications for the device which will include the manufacturer stated energy data. Raising energy efficiency awareness among staff CCE is started a program to train its IT staff in energy efficiency. It is the first IT department to sign up to the low energy company inititave, their target is was to achieve awareness of energy consumption to all their employees.
- The Coca-Cola Company Strategic ICT Advantage: Spider-web analysis Demand Forecasting: Coca Cola suffers 7-10% out-of-stock condition in the shelves due to inaccurate demand forecasts which leads to inefficiencies in the supply chain management. (http://www.supplychainbrain.com/content/nc/videos/2013-videos/cscmp-2013/the-demand-driven-supply-chain-at-coca-cola/) PepsiCo uses Data utilization software in partnership with Deloitte to improve their forecasts continuously. Business Analytics and Reporting: moved from a decentralized approach to a centralized approach, where the data is combined centrally and available via the shared platforms across the organization. PepsiCo has not only invested heavily in business analytics to optimize their S&OP but also social analytics to understand the various consumer trends. Social Networking: Facebook: PepsiCo- 34.5 million, Coca Cola- 96 million, Twitter: Pepsi –2.97 million Coca Coal- 3.17 million Mobile Apps: Coca-Cola App’s most unique rewards aspect allows members to donate their My Coke Rewards points to special causes and schools, such as United Service Organizations, the Special Olympics and American Red Cross, instead of redeeming for material rewards. Pepsi’s loyalty platform has more of a leisure mindset, and consequently, may have a larger chance at grasping younger consumers’ attention. Besides being product-focused, the app will reward fans for having fun and hanging out with their friends who also have the app. Supply Management: Coca-Cola Hellenic (CCH), one of the largest bottlers of non-alcoholic beverages in Europe, has already implemented at several locations the ORTEC beverage solutions for Route Planning and Dispatching, Pallet and Loadbuilding as well as for Warehouse Control and Picking. Pepsi also uses ORTEC technology. Pepsi uses the wireless network to dispatch all of its technicians, and it has no problem locating the one nearest a job site, thanks to Global Positioning System receivers built into the trucks. The receivers automatically relay location information to the call centers. Coca Cola uses a similar process to fix vending machines. Knowledge Management: In PepsiCO, Knowledge engineers review new solutions and check whether they are publish-worthy, check customer feedback and apply technical knowledge to it. Coca cola implemented a knowledge platform tool that has helped merge key decision points and better informed all parties involved. Bit it did not consider customer feedback in its business decisions. Customer Engagement Model: Pepsi has launched a social media project called “Pepsi Refresh Project” which invites fresh ideas from individuals which as selected and funded based on customer votes. In turn the individuals extensively mention Pepsi on social media platform to gather votes. Similarly Pepsi is more focused on the youth and chooses platforms that connect pepsi with the youth for eg sports events, startup events , music festivals etc. Coca cola has a clearly defined audience and could easily use social media platforms to communicate with its customers and increase brand loyalty, however it prefers instead to use it primarily as a broadcast tool. Innovation: Coca-Cola uses big data to produce orange juice that has a consistent taste year-round, although the oranges used have a peak-growing season of just three months. They have developed an algorithm, called the Black Book model, that combines various data sets such as satellite imagery, weather date, expected crop yields, cost pressures, regional consumer preferences, detailed data about the myriad of 600 different flavors that make up an orange, and many other variables such as acidity or sweetness rates to tell Coca-Cola how to blend the orange juice to create a consistent taste, down to the pulp content. It is yet to innovate in being sustainable. PepsiCo is more focused in marketing innovation such as investing in startups like ParcelGenie, an application that allowed consumers to gift products through social media, to TVTak which brought the ability to check-in and serve up brand content to accompany TV advertisements, Slingshot, which was a software program that allowed consumers to place items in an online shopping basket via Facebook or a mobile device, teamed with Doritos on a pilot to drive online sales through a Facebook page integration. The initiative resulted in an impressive 49% conversion rate - See more at: http://www.innovationexcellence.com/blog/2015/04/13/a-look-at-pepsicos-recent-open-innovation-efforts-csreport2015/#sthash.YuSwpzLN.dpuf Sources: https://datafloq.com/read/coca-cola-takes-refreshing-approach-big-data/425
- The Coca-Cola Company Strategic ICT Advantage: Recommended Strategies