SUPPLY CHAIN ANALYSIS
The aim of this essay is to report the supply chain processes of a product. In addition, major challenges related to its supply chain’s management and operation will be highlighted. The product that will be discussed is represented by the Coca-Cola soda.
Coca-Cola, or Coke, is a carbonated soft drink produced by The Coca-Cola Company, which is an American multinational beverage enterprise headquartered in Atlanta, Georgia (Augustyn & Bauer, 2020). Coca-Cola Company adopted a singular supply chain management system in which the corporation uniquely produces syrup concentrate that is then sold to different bottlers, which are just partially owned by Coca-Cola (Anon., 2018). In order to provide a clearer picture of the drink’s supply chain, a channel flow within the United States has been described. Additionally, environmental challenges, such as plastic pollution have influenced Coca-Cola’s supply chain operation.
Coca-Cola’s syrup concentrate is produced in twenty different factories around the world. However, the most important ones are the Coca-Cola building located in Chicago and the headquarter located in Atlanta (Cohen, 2007).
The main ingredients of Coca-Cola are carbonated water, sugar that could be sucrose or corn syrup, caffeine, phosphoric acid, caramel E150d, and natural flavouring. In addition, the bottle which contains the soda is made of a type of plastic called polyethylene terephthalate (Iqbal, 2017); Regarding the upstream process, data reported 18,835 active suppliers in 2018 (Coca-Cola S.A., 2020). The Water is mainly imported from Alico Inc, located in Florida; The main source of sugar is provided by Archer daniels midland Co placed in Chicago (CSIMarket, 2020); While coca leaf extract is prepared by Stepan Company, based in New Jersey. Moreover, the plastic is mainly supplied by Aptargroup Inc, situated in Colorado (Iqbal, 2017). Further crucial suppliers are constituted by the drink company of Anheuser Busch Inbev Sa and the Cabot Corporation an American company specialised in chemicals (Coca-Cola S.A., 2020).
In order to simplify the entire supply chain, a small channel flow present in North America has been reviewed. Concerning the supply process, nine different steps are present in coca-cola supply chain. First is the extraction of raw materials, which are later imported to Coca-Cola company in Atlanta in order to manufacture the syrup. The product then is moved to one of its bottling partners, such as Coca-Cola enterprise, which is accountable for selling the good in Canada and North America. However, bottlers may sweeten differently the beverage in compliance with local taste (Anon., 2018). Coca-Cola enterprise mixes the syrup with other ingredients such as sweetened water and carbon dioxide to make it fizzy and refreshing. Additionally, the final drink is filled in empty bottles that are put on a conveyer belt. The bottles are then packed in big cartoon boxes and finally dispatched to the distributors (Business today, 2017).
The environment is becoming one of the most significant issues facing contemporary logistics managers (Wong, 2010). The Coca-Cola Company operates upon one of the largest supply chain systems in the world and, as a consequence of its volume, different challenges emerged. The corporation faces several significant issues related to its supply chain sustainability. Examples of these can be water stewardship and greenhouse gas emission. However, the most crucial challenge is represented by packaging pollution (Coca-Cola company, 2020). Coca-Cola has reported producing about three million tons of plastic packaging in one year, which corresponds to a production of 200,000 bottles per minute. Indeed, in 2019 Coca-Cola has been ranked as the greatest plastic polluting in the world (Calma, 2020).
As reported by the Coca-Cola business and suitability report, plastic pollution has been taken into account by the company as the major sustainability issue. For this reason, the company decided to bring different changes within its supply chain. Coca-Cola’s design and efforts focus especially on the pet, which is versatile and fully recyclable. More in detail, Coca-Cola claimed that, from the end of 2019, most of the Australian bottles are currently being made completely from recycled plastic. Furthermore, the company confirmed that Pet material will be used for all bottles in Sweden by 2020. The most valuable progress, however, has been made in Brazil where 2-litres coca-cola bottles are sold in refillable containers. As a consequence of this choice, the plastic to make 200 million ordinary bottles has been saved every year (Coca-Cola company, 2020).
Even though Coca-Cola altered its operation in order to be more environmentally friendly, changes cannot be generalized to the entire supply chain. Nevertheless, even with these changes, according to the business chief of communication, plastic will keep having a major function in Coca-Cola’s future (Calma, 2020). The reason for this statement is that consumers value Coca-Cola’s bottles too much and replacing them would significantly hurt sales (Rosane, 2020).
In order to minimize Coca-Cola’s supply chain plastic pollution, it can be advised to apply the reverse supply chain to its operation. This supply chain strategy consists in a series of activities needed to retrieve a used product from a customer and either dispose of or reuse it (Guide & Van Wassenhove, 2020). In order to establish a reverse supply chain, Coca-Cola will have to create new points of contact with customers to collect the used bottles, create a reverse logistic to move the bottles back to the manufacturers, and develop a reconditioning system. However, as reported by Harvard business review, a reverse supply chain strategy has been implemented by several companies, such as Kodak manufacturers, in order to decrease operation’s costs by reusing the product’s components and meet severe environmental standards (Guide & Van Wassenhove, 2020).
Finally, Coca-Cola Company implemented a unique supply chain management system in which the corporation produces syrup that is then sold to bottlers, which are just partially owned. The syrup concentrate is produced in 20 factories around the world and is made of water, sugar, caffeine, phosphoric acid, caramel, and natural flavoring. The main suppliers of Coca-Cola are represented by Alico Inc, Archer daniels midland Co, Stepan Company, and Aptargroup Inc. Moreover, nine steps characterize Coca-Cola’s logistics which comprise extraction of raw material and transportation to the syrup manufactures, moving the syrup to the bottlers who add further ingredients, filling the drink in empty bottles, and dispatching them to the distributors. Coca-Cola’s supply chain volume led the company to different sustainability challenges. The most relevant one is represented by plastic pollution. As a consequence of this phenomenon, the supply chain brought a series of changes within its operation which mainly focus on pet material and reusable containers. Lastly, due to Coca-Cola’s intention to keep using a plastic bottle, it has been suggested to apply the reverse supply chain strategy to its operation.
Anon., 2018. UK essays. [Online] Available at: https://www.ukessays.com/essays/marketing/coca-cola-supply-chain-analysis-marketing-essay.php [Accessed 10 5 2020].
Augustyn, A. & Bauer, P., 2020. Encyclopaedia Britanninca. [Online] Available at: https://www.britannica.com/topic/The-Coca-Cola-Company [Accessed 8 5 2020].