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Coca-Cola: Purchasing and Supply Chain Management

Introduction

Supply chain management is the management of the network used to acquire raw materials, production and distribution to the customers. It can be said to be the process of attaining raw materials, production, storage and supply to the end-users. Every business or company has to employ good purchasing and supply chain management if it has to succeed in its production. For the Coca-Cola Company, good supply chain management will ensure its success in the 2012 Olympics.

Supply chain management can also be defined as the organization of the traditional business processes within a company’s supply chain and across its business processes with the aim of improving it to produce better returns in the long run. It is good to note that the supply chain is the set of activities that are linked with the flow of goods and services from their source to the customer (Venus, 2010). Supply chain management is therefore the process of managing this supply chain.

This can be done through the use of the software. Supply chain management is important in recognizing the number of suppliers that can be accessed by the company, their location, the distribution centers, management of inventory and warehousing facilities. It also helps in determining the strategy to be used in the integration of information within the supply chain. It is the work of the supply chain management to arrange the exchange of finances or the cash flow within the supply chain of the company. In this paper, I will look at the six rights in the theory of supply chain management and their relevance to the Coca-Cola company. I will also give an overview of some of the processes in the supply chain.

Purchases and Supply

For the purchase of goods or services, the supply chain management defines what the company wants and by what time. After defining, the item is identified and the supplier recognized. What follows is the negotiation for the price of the item identified. If an agreement is reached the goods are received from the supplier and payment arrangements follow. This in a nutshell explains the six rights in purchasing and supply chain management although I will have a broader approach to these rights and explain their relevance in the supply chain management of the Coca-Cola Company.

Coca-Cola Company is the leading company in the world that has monopoly powers in the production and distribution of soft drinks. However, for it to succeed in acquiring the biggest Market share in the 2012 Olympics, it has to employ effective supply chain management. As a consultant for the company, I would recommend the use the six rights as put forward by Snow (2008). These are:

  1. right products
  2. right quantity
  3. right conditions
  4. to the right place
  5. at the right time
  6. for the right cost

The first deals with acquiring the right products from the supplier and their distribution to the end-user. Raw material determines the value or the quality of the end product. If a company acquires low-quality products, not much can be done to improve the quality. Therefore, before the purchasing department places orders to any suppliers, it has to first carry out research on the available suppliers and the quality of their products. This may be time-consuming but it’s worth the cost. After recognizing the supplier on which to place the order, then the required item should be identified and proper scrutiny done

The second right in the theory of supply chain management talks about acquiring goods in the right quantities. Coca-Cola is a multinational company with many outlets in many parts of the world. It has to make sure that it meets the customer’s demand at all times. I have not heard any complaints from customers about their dissatisfaction from the company but that does not mean that all customers demand is met fully.

The purchasing department has to consider the number of products that the company requires at any given time taking into consideration the warehousing facilities, the speed of the internal processes and the rate at which the finished goods are moving. Not all products offered by suppliers are of good quality or in the right condition. The supply chain management is incorporated to take note of such irregularities.

If the goods purchased have expired or are almost expiring, then this will adversely affect the company in the short term and the long run and might limit its probability of leading in the supply of beverages in the 2012 Olympics. It’s therefore the work of the purchasing department to properly scrutinize any purchases that are made for the future success of the company.

Coca-Cola produces soft drinks with different flavors which appeal to different age groups. For example, the youths prefer the novida soft drinks whiles the old prefer drinks like storney or Coca-Cola and the kids are familiar to Fanta drinks. It is the work of the marketing department to identify the dominant age group in a given locality before the distribution of the drinks. Novida drinks will do well in areas with many learning institutions as compared to the rural areas because the youths are dominant in such areas.

On the other hand, taking soft drinks such as the storney or the Coca-Cola to such places will not yield much but this does not mean that they should not be availed. The consumption of soft drinks is preferred during the sunny season, therefore the internal processes should be advised about when to produce in bulk quantities and when not to and the marketing department should recognize where there is high demand and in which seasons so as to facilitate distribution.

Currently, Coca-Cola is one of the companies that have been selling its drinks at an affordable price to the common man. If it’s possible to reduce the price a little I think the company can make more profits but other factors should be put into consideration.

Process of Supply Chain Management

For the management of the supply chain to be successful, it requires a change from the management of individual activities to the integration of all the activities in the supply chain process. There are two crucial departments in the supply chain: the purchasing department and the marketing department. It is the work of the purchasing department to place orders for the company and to let the requirements of the company known to the supply chain manager (Venus, 2010).

The work of the marketing department is to distribute the finished goods to the customers. In doing so it interacts with the customers, gets views concerning the products, and makes recommendations to the supply chain. In its attempt to respond to the demand of the customers, it gets in touch with the available retailers and distributors in their locality. The partners in the supply chain share information with one another through process integration. This involves collaboration between the suppliers and the buyers and the internal processes of production. For this integration to be effective there should be a free flow of information among the key components.

The major supply chain processes as stated by Sovereign (2008) are but not limited to customer service and relationship management, management of demand, supplier relationship with the company and order satisfaction. Customer service or relationship management deals with the relationship between the company and the customers. It deals with the provision of the right information to customers in real-time. Such information may be concerning service or product delivery, availability of outlets for the delivery and information regarding any changes made to the products such as changes in flavors, color, shape or prices.

Conclusion

Supply chain management is the management of raw materials, the internal processes responsible for converting the raw materials into finished goods and the movement of the finished goods from the company to the customer. It helps in recognizing suppliers with the best products, monitors the internal processes and cash flow and determines the strategies to be used in the distribution of goods to the customers.

The success of every business lies in the managing of the supply chain since it is the heartbeat of the business. In purchasing items, it is good to take time and identify what the company wants and by when. Choose the right products for the company in the right quantities and the right conditions and then negotiate for the best price for these goods. All this ensures that the company produces high-quality goods for production.

Reference List

Snow, J. (2008). Why Is Logistics Important?. Web.

Sovereign, R. (2008). Importance of Supply Chain Management in Modern Businesses. Web.

Venus, D. (2010). What Is Supply Chain Management? Conjecture corporation. Web.