Major Facts
The Coca-Cola Company is the world’s largest beverage company, and its product offerings include nonalcoholic beverages such as carbonated soft drinks, sports drinks, juices, teas, coffees, and water. The Coca-Cola Company competes with PepsiCo in the beverage industry. PepsiCo offers a wider variety of beverages than Coke, including snacks and food products in addition to beverages. In order to be successful, Coke has had to focus on creating efficient supply chains that can quickly deliver products to retailers in Kenya (Wambua & Omwenga, 2017). This has helped Coke remain competitive against PepsiCo despite its smaller product line.
Coca-Cola Company has been able to differentiate its products through a combination of product innovation and efficient supply chains that can quickly deliver products to retailers in the United States. For example, the company’s Dasani water brand has been successful in part because of the efficient supply chain that allows it to quickly deliver bottles of water to stores in Kenya (Wambua & Omwenga, 2017). In addition, Coca-Cola’s Fanta and Sprite brands have been popular for many years because the company has been able to keep up with changing consumer preferences by regularly introducing new flavors.
Major Problems
Coca-Cola has a complex and highly integrated supply chain that helps it to be very responsive to changes in product demand. However, this poses three problems for the company; first, the company’s supply chain is very centralized and lacks regional flexibility. This means that shortages or surpluses of particular products can happen if there are disruptions at a single manufacturing plant or distribution center. Second, the company’s supply chain is geared towards producing high volumes of standardized products rather than customized products. This can make it difficult to meet the needs of specific markets or customers (Wambua & Omwenga, 2017). Third, Coca-Cola has been slow to adopt new production technologies and flexible manufacturing processes, which has resulted in higher production costs and longer lead times. Among the three problems, the main and current problem is the high volume production of standardized products instead of customized production.
Possible Solutions
There are three ways in which the Coca-Cola Company can solve the high volume production of standardized products instead of customized production. This problem can be solved by, first, increasing efficiency in its supply chain; the Coca-Cola Company could work to boost the efficiency of its supply chain by collaborating with more suppliers. This would help them to produce diverse and more products at a lower cost (Cole et al., 2019). There can also be disadvantages to having many suppliers for the company. This can lead to more complexity in the supply chain and difficulty in coordinating shipments. It can also lead to higher inventory levels as the company tries to hedge against disruptions and various stock materials that would meet all customers’ demands.
Second, investing in technology that will automate the customization process. Coca-Cola can use technology to automate the customization of its products to meet customer demands (Cole et al., 2019). For example, Coca-Cola freestyle machines can allow customers to choose from over one hundred different flavors of Coca-Cola, Diet Coke and Sprite. Interactive vending machines let customers select their drink and customize it with their favorite mix of flavors and toppings. This is advantageous because it makes work easier for the clients, thus ensuring perfect customer service, while its disadvantage is that it is too expensive to install.
Third, Cocacola can solve the problem by outsourcing to an organization that specializes in producing customized products. Outsourcing will allow Cocacola company to tap into a global pool of talent, which means that they can find professionals who are skilled in meeting the specific needs of their customers. Additionally, by outsourcing production, the firm will save money on labor costs and focus its resources on other areas of its business (Hedenstierna et al., 2019). The disadvantage of this is that the company cannot be independent but instead dependent on other companies so that in case of contracted company closes, Cocacola will not deliver customized products.
Choice and Rationale
There are a number of reasons why outsourcing is the best option for ensuring customized order production and delivery. To start with, by outsourcing a project to a third-party company, Cocacola will essentially free up its own staff to focus on other tasks (Hedenstierna et al., 2019). In addition, working with a third-party company will give the company access to a larger pool of resources and specialized equipment that may not be available in-house. This can be extremely beneficial when it comes to meeting tight deadlines or handling complex projects that require specific expertise. Investing in technology for automation is expensive since it will engage the purchasing of machines and training of the human resources to operate the systems (Cole et al., 2019). Conversely, collaborating with many suppliers cannot find an effective solution because the company will have to maintain a huge inventory of different products, which will lead to increased expenses for handling the materials.
Implementation Plan
There are a few ways that Coca-Cola can outsource its activities to ensure customized order delivery. Coca-Cola can partner with an existing e-commerce platform that specializes in customized order fulfillment. This will allow Coca-Cola to tap into the platform’s existing infrastructure and get up and running quickly. Similarly, the plan will include specifying the duties of each party involved in the process, outlining the steps that need to be followed, and establishing timelines. Communication is key in ensuring a smooth and successful outsourcing operation, so regular checkpoints should be scheduled to review the progress of the project.
References
Cole, R., Stevenson, M., & Aitken, J. (2019). Blockchain technology: Implications for operations and supply chain management. Supply Chain Management: An International Journal.
Hedenstierna, C. P. T., Disney, S. M., Eyers, D. R., Holmström, J., Syntetos, A. A., & Wang, X. (2019). Economies of collaboration in build‐to‐model operations. Journal of Operations Management, 65(8), 753-773.
Wambua, F. M., & Omwenga, J. Q. (2017). Role of vertical supply chain collaboration on manufacturing firms’ distribution service performance in Kenya. A case of Nairobi bottlers limited. International Journal of Social Sciences and Information Technology, 3(3), 57-89.