CENTRAL UNIVERSITY COLLEGE

QUESTION:
Identify the
supply chain
of a company.
Investigate
why or analyze
reasons for which they are practicing
that supply chain concept.

COURSE: SUPPLY CHAIN MANAGEMENT

LECTURERS NAME: Mr. Gunadiish Gilbert

Nyavie

DATE FOR SUBMISSION: Thursday April 16, 2015

PRUDENCE GROUP MEMBERS DETAILS

NAMES
PHONE NO

INDEX NUMBERS

email

SIGN

1. ANDREW SAPATHY
0240442085
2. EBENEZER DICKSON
0263323803
3. ABIGAIL DAVID-ADJAH
0267774652

INTRODUCTION

MGT/12/01/0439
MGT/12/01/0999

andrewsapathy@yahoo.com
lilglen10@gmail.com

MGT/12/01/1562 loveulotsaby@yahoo.com

According to the Council of Supply Chain Management

Professionals (CSCMP), supply chain management encompasses
the planning and management of all activities involved in
sourcing, procurement, conversion, and logistics management. It
also includes coordination and collaboration with channel
partners, which may be suppliers, intermediaries, third-party
service providers, or customers. Supply chain management
integrates supply and demand management within and across
companies. More recently, the loosely coupled, self-organizing
network of businesses that cooperate to provide product and
service offerings has been called the Extended Enterprise.
Supply chain management managing complex and dynamic
supply and demand networks. ( Wieland/Wallenburg, 2011)

The company we chose to investigate is the Coca Cola Company.

Manufacturers of goods and services often struggle with finding
the right mix of identifying their particular product or service with
the right customer base along with the appropriate price and
quantity to satisfy demand. Supply chain management provides

valuable insight and assistance by providing organizations

information identifying core competencies and competitive
advantages. When used to develop a strategic plan supply chain
management can identify areas of improvement resulting in
improved processes and increased profitability through cost
reductions and improved customer responsiveness.
Coca Cola began as a small organization with a limited supply
chain in a small local market. However, as Coca Cola grew and
expanded, its supply chain grew with it. Coca Colas supply chain
changes throughout its life cycle from traditional mass
merchandising, inventory management and cost containment,
supplier and customer alliances, relationship formation, and the
future capabilities of its supply chain.
Supply chain management encompasses the preemptive
managing of the progression of goods, services, data, and money
between the raw materials stage to the end user, the customer.
An amazing 1.8 billion servings of Coca-Cola products are sold
around the world everyday according to Steve Buffington, vice
president of supply chain development and director of supply

chain, Bottling Investments Group for The Coca-Cola Company.

Making sure that every one of the thirsty clients gets the right
product, at the right time and in the right price range is CocaColas supply chain priority.

THE SUPPLY CHAIN OF COCA-COLA COMPANY

Although Coca-Cola is a global company, its products never travel
far to reach the final consumer, making it a local company in each
market where it operates. They typically dont ship Coca-Cola
more than a few hundred miles; its all about being responsible to
the customers needs and the local tastes of the consumers in
every market.

COCA-COLA SUPPLY CHAIN PROCESS

Information flow (orders, schedules, forecasts, etc.)
Supplier
s
Material
s

Manufactur
ers
Parts
Manufactu

Assemblers

Product
Assembly

Retailers

Sales

Customers

Use of
Consumpti

Material flow (supplies, production, deliveries, etc.)

But to make it easier, the supply chain for the Coca-Cola
Company is;
Supplier

Manufacturer

Distributor

Retailer

Shopper

When the Coca-Cola Company is supplied the raw materials

supposed to be used to produce the soft drinks, they process the
raw materials to produce a finished product which is a bottle of
Coca-Cola. Then, after the manufacturers have finished with the
processing, they move on to package the product in order to
differentiate it from other soft drinks and to also ease the process
involved in the transportation of the products to Distributors who
in turn break the bulk products into bits and sell them to Retailers
or wholesalers who would sell it to the consumers or shoppers.

RAW MATERIALS
Water is a main ingredient in all Coca Cola products. Carbonated
water consists of 94% of a soft drink. Water is a limited resource
in many parts of the world and Coca Cola recognizes water
availability, quality and the sustainability of the natural resource
for both their operations and also the communities where they

operate as one of the key challenges facing their business.

(Oliver, Thomas 1986)
In addition to water, the second main ingredient is sugar, which
makes up 7-12% of a soft drink. The principal raw materials used
are nutritive and non-nutritive sweeteners. In the US, the principal
nutritive sweetener is high fructose corn syrup (HFCS), a form of
sugar, which is available from numerous domestic sources. The
principal nutritive sweetener used outside the US is sucrose
another form of sugar, which is also available from numerous
domestic sources. In the US, they purchase HFCS to meet their
bottlers requirements with the assistance of Coca-Cola Bottlers
Sales & Services Company LLC (CCBSS). CCBSS is a limited
liability company that is owned by authorized Coca Cola bottlers
doing business in the US. CCBSS also provides procurement
services to Coca Cola Company for the purchase of various goods
and services in the US, including HFCS.
The principal non-nutritive sweeteners are aspartame, acesulfame
potassium, saccharin, cyclamate and sucralose. Generally, these
raw materials are readily available from numerous sources.

However, Coca Cola Company purchases aspartame an important

non-nutritive sweetener that is used alone or in combination with
other important non-nutritive sweeteners such as saccharin or
acesulfame potassium in their low calorie sparkling beverage
products, primarily from The NutraSweet Company and Ajinomoto
Co., Inc., which they consider to be their primary source for the
supply of the product. They currently purchase acesulfame
potassium from Nutrinova Nutrition Specialties & Food Ingredients
GmbH, which they consider to be their primary source for the
supply of this product, and from two additional suppliers.
Coca Cola Company sells a number of products sweetened with
sucralose, a non-nutritive sweetener. They work closely with Tate
& Lyle, their sucralose supplier, to maintain continuity of supply.
Although Tate & Lyle is their single source for sucralose, they do
not anticipate difficulties in obtaining their requirements for
sucralose.
With regard to juice and juice-drink products, citrus fruit,
particularly orange juice concentrate, is their principal raw
material. The citrus industry is subject to the variability of

weather conditions. In particular freezing weather or hurricanes in

central Florida may result in shortages and higher prices for
orange juice concentrate throughout the industry. Due to their
ability to also source orange juice concentrate from the Southern
Hemisphere (particularly from Brazil); they normally have an
adequate supply of orange juice concentrate which meets their
Companys standards.
Their Company-owned or consolidated bottling and canning
operations and their finished products business also purchase
various other raw materials including, but not limited to, PET
resin, preforms and bottles; glass and aluminum bottles;
aluminum and steel cans; plastic closures; aseptic fiber
packaging; labels; cartons; cases; post-mix packaging; and carbon
dioxide. They generally purchase theses raw materials from
multiple suppliers and historically have not experienced material
shortages.

THE MANUFACTURING PROCESS

Most of their soft drinks are made at local bottling and canning
companies. Brand name franchise companies grant licenses to
bottlers to mix the soft drinks in strict accordance to their secret
formulas and their required manufacturing procedures. (Mitchell,
Alan J; 1990)
Clarifying the Water
The quality of water is crucial to the success of the soft drink.
Impurities, such as suspended particles, organic matter, and
bacteria, may degrade taste and color. They are generally
removed through the traditional process of a series of
coagulation, filtration and chlorination. Coagulation involves
mixing a gelatinous precipitate, or floc (ferric sulphate or
aluminum sulphate), into the water. The floc absorbs suspended
particles, making them larger and more easily trapped by filters.
During the clarification process, alkalinity must be adjusted with
an addition of lime to reach the desired pH level.

 Filtering, sterilizing, and dechlorinating the water

The clarified water is poured through a sand filter to remove fine
particles of floc. The water passes through a layer of sand and
courser beds of gravel to capture the particles.
Sterilization is necessary to destroy bacteria and organic
compounds that might spoil the waters taste or color. The water
is pumped into a storage tank and is dosed with a small amount
of free chlorine. The chlorinated water remains in the storage tank
for about two hours until the reaction is complete.

Next, an activated carbon filter dechlorinates the water and

removes residual organic matter, much like the sand filter. A
vacuum pump de-aerates the water before it passes into a dosing
station.

Mixing the ingredients

The dissolved sugar and flavor concentrates are pumped into the
dosing station in a predetermined sequence according to their
compatibility. The ingredients are conveyed into batch tanks
where they are carefully mixed; too much agitation can cause
unwanted aeration. The syrup may be sterilized while in the

tanks, using ultraviolet radiation or flash pasteurization, which

involves quickly heating and cooling the mixture. Fruit based
syrups generally must be pasteurized.
The water and syrup are carefully combined by sophisticated
machines, called proportioners, which regulate the flow rates and
ratios of the liquids. The vessels are pressurized with carbon
dioxide to prevent aeration of the mixture.
Carbonating the beverage
Carbonation is generally added to the finished product, though it
may be mixed into the water at an earlier stage. The temperature
of the liquid must be carefully controlled since carbon dioxide
solubility increases as the liquid temperature decreases. Many
carbonators are required with their own cooling systems. The
amount of carbon dioxide pressure used depends on the type of
soft drink. For instance, fruit drinks require far less carbonation
than mixer drinks, such as tonics, which are meant to be diluted
with other liquids. The beverage is slightly over-pressured with
carbon dioxide to facilitate the movement into storage tanks and
ultimately to the filler machine.

 Filling and packaging

The finished product is transferred into bottles or cans at
extremely high flow rates. The containers are immediately sealed
with pressure-resistant closures, either tinplate or steel crowns
with corrugated edges, twist off, or pull tabs.
Because soft drinks are generally cooled during the
manufacturing process, they must be brought to room
temperature before labeling to prevent condensation from ruining
the labels. This is usually achieved by spraying the containers
with warm water and drying them. Labels are then affixed to
bottles to provide information about the brand, ingredients, shelf
life, and safe use of the product. Most labels are made of paper
though some are made of a plastic film. Cans are generally preprinted with product information before the filling stage.
Finally, containers are packed into cartons or trays which are then
shipped in larger pallets or crates to distributors.

PRODUCT ASSEMBLY

The actual Coca-Cola owned factories do not make the actual soft
drink. They make the concentrate which is then used to make the
soft drink. The concentrate is then shipped to what they would
refer to as a bottler who would use the concentrate to make the
actual soda. There are very few concentrate manufacturing plants
globally and the whole of Africa shares two, one in Swaziland and
the other in Egypt. Concentrate manufacturing is very delicate,
and it takes small variances in environment, personnel, process to
ruin the quality of a process as per statistical process control.
There are two types of concentrate used; Powder concentrate and
liquid concentrate.
The manner in which they run such a process is simple.
Automation. Almost all processes are automated to save a few
manual processes and those processes fall under extreme
scrutiny to maximize production while reducing overheads.

SALES
They are a global business that operates on a local scale, in every
community where they do business. They are able to create

global reach with local focus because of the strength of the CocaCola system, which comprises of their company and their more
than 250 bottling partners worldwide.
The Coca-Cola system is not a single entity from a legal or
managerial perspective, and the Company does not own or
control all of their bottling partners.
While many view their company as simply Coca-Cola, their
system operates through multiple local channels. Their company
manufactures and sells concentrates, beverage bases and syrups
to bottling operations, owns the brands and is responsible for
consumer brand marketing initiatives. Their bottling partners
manufacture, package, merchandise and distribute the final
branded beverages to their customers and vending partners, who
then sell their products to consumers.
All bottling partners work closely with customers grocery stores,
restaurants, street vendors, convenience stores, movie theaters
and amusement parks, among many others to execute localized
strategies developed in partnership with their company.

Customers then sell their products to consumers at a rate of more

than 1.9 billion servings a day.

DISTRIBUTION
The first thing to realize is that Coca-Cola is a sort of franchised
operation. The people in Atlanta take care of the brand and
overall marketing, product development, but then each country
has its own bottler, or more likely bottlers. Although Coca Cola
may have an interest in some of these bottling operations they
are generally separate legal entities. Many in their current firm
are totally dependent on Coca Cola as they do not bottle anything
else. However, this is not always the case. In Ghana, for example,
Accra Brewery Limited (ABL), a subsidiary of SABMiller, is the sole
bottler of Coca-Cola in the country, and also bottle beer.
Within each country, the same pattern of devolution is seen when
it comes to distribution. In Africa, we have seen two sorts of
distribution models.

There is the much trumpeted Manual Distribution Centre (MDC)

model which operates within densely populated areas e.g. Around
large towns and cities. The MDCs are independent businesses
with links to their local bottler who may provide technical support
(e.g. sales training and general support) and credit to the MDCs.
The owners of the MDCs generally own the bottles and crates
they use. They advertise a liquid only wholesale price. MDCs can
be solely dedicated to the sale of Coca-Cola but some are
wholesalers of other products as well (e.g. bottled beer). MDCs
are often run from shipping containers painted red. They receive a
delivery of Coca-Cola once a week or thereabout. Typically a
Coca-Cola lorry leaving the bottler will visit one MDC which will
take the entire load. Distribution from the MDCs is mostly
manual with crates being loaded on to handcarts, bicycles etc.
The relationship between the MDCs and the bottler is similar to
that between the bottlers and Coca-Cola Atlanta although the
MDCs are legally independent businesses, many depend on the
local Coca-Cola bottler for their business to succeed.

REASONS COCA-COLA IS PRACTICING THIS SUPPLY

CHAIN

The Coca-Cola Company is a universally recognized beverage

manufacturing company. It is a global company, but they dont
have to go through a lot of processes to get their products to
certain parts of the world. That is because they have
manufacturing companies present in almost all the countries they
distribute Coca-Cola.
The Coca-Cola Company tries as much as possible to reduce the
expense incurred while trying to get the product to the final
consumers. Their primary aim is to satisfy thirsty customers, and
to have their product available at the right place at the right time
and in the right price range.
If Coca-Cola Company had a longer or more complicated chain, it
would incur more expenses which would lead to an increase in the
price of each bottle of Coca-Cola.
If Coca-Cola Company dont give its products to distributors, it
would be harder for consumers to access it. So they need to give
the distributors who would in turn sell to retailers who are closer
to the final consumers.

There are too many people that consume Coca-Cola, and if the
supply chain was just from the manufacturers to the consumers, it
would be very difficult for them to meet the needs of all their
customers around the world.

CONCLUSION
Coca-Cola Company has adopted a very useful supply chain,
which has enabled them gain a lot of customers, and has
subsequently given them competitive advantage over their
competitors.
While some companies sell directly to their consumers while
eliminating their middlemen, they dont get to maintain a very
large customer base because they are in charge of every logistics
process.
Coca-Cola is one of the biggest and most patronized beverage
companies. Their bottling partners are in charge of the sales to
grocery stores, restaurants, street vendors, convenience stores,

movie theaters and amusement parks who in turn sell to the

consumers. This helps Coca Cola Company assess as many
consumers as possible. And that is the main reason they are
recognized in every country.

REFERENCES
Andreas Wieland and Carl Marcus Wallenburg (2011):
Supply-chain-management in sturmischen Zeiten (in
German). Berlin: ISBN 978-3-7983-2304-9
Council of Supply Chain Management Professionals
Mitchell, Alan J. (1990), 1st edition: Formulation and
Production of carbonated Soft Drinks. AVI
Oliver, Thomas (1986): The Real Coke. Random House.

BIBLIOGRAPHY
Jacoby, David (2009). Guide to Supply Chain Management:
How Getting it Right boosts corporate performance. The
Economist Books (1st edition) Bloomberg Press
Lummus R.R, Krumwiede D.K and Vokurka R.J. (2001) The
relationship of logistics to Supply Chain Management:
developing a common industry definition. Industrial

management and Data systems, Vol. 101. NO. 8, 426-32

www.wikinvest.com>KO>Topics: KO 10-K filed Feb 26 2010.
www.madehow.com/volume
www.colalife.org
www.usanfranonline.com>resources
www.csc.co>success_stories
www.grin.com>e-book>coca-cola-the-evolution
www.coca-colacompany.com/our-company/the-coca-cola-

system#TCCC
En.m.wikipedia.org>wiki>Accra_Brewery