Coca Cola Company for Supply Chain †Myassignmenthelp.com

Question: Discuss about the Coca Cola Company for Supply Chain. Answer: Introduction: The Coca-Cola Company is a multinational company which was incorporated in Wilmington, Delaware and has its headquarters at Atlanta, Georgia. The company manufactures retails and markets non-alcoholic beverage concentrates and syrups. The company is popular for its product Coca-Cola which was invented 1886. The company produces syrup concentrates and it is sold to bottlers all over the world and they hold exclusive territory in it. The Coca Cola Company has started franchising its products since 1889. The biggest bottler of the company is Coca Cola Refreshments which is in North America. The company is a public company. The stock of the Company is listed in stock exchange and has a good growth in it. The Company had acquired Thums Up, Minute Maid and Barqs and various other concentrate syrup and fruit juices. Coca Cola is one of the most powerful brands throughout the world. The company has to face many challenges in order to make a long term and a sustainable growth. One of the challenges faced by the company is the supply chain management but it has overcome this challenge in a very effective and efficient manner. The company manufactures its product locally the place where it is sold. The company maintains the demand for its product by keeping the supply chain short and fast and also by keeping its sources of supply local. The flow and process of production is very fast and the company aims to provide high quality products to meet its demand. The process of the company is so fast that it takes just 48 hours for the company to send its products from the finished goods warehouse to the retail markets. The company invests huge funds towards the improvement and development of its production and distribution channels. It openly welcomes new technologies and inventions. Let us now understand what are a supply chain and its use. A supply chain is a network to produce a product and distribute it to the consumers. This results in a faster cycle of production and at a low cost. Inventories of a company primarily contain the raw materials, spares, packaging materials and finished products. Coca cola also keeps stock of its inventories. It values its inventories at cost or net realizable value, whichever is lower. The cost of the inventories is determined using the first-in-first-out basis. Coca cola follows perpetual inventory system. Perpetual inventory system is an accounting method in which the inventories are recorded in real time including its purchases and sales by using the computerized techniques continuously. This helps to accurately see the quantity of goods and helps in controlling the requirement of materials. The advantages of maintaining a perpetual inventory management for the company are the following: The company has good control over the inventories of the company as each transaction is recorded as and when it occurs. The can easily identify whether an item of the inventory is slow moving or fast moving. It helps in recording of the inventories very efficiently and accurately. The inventory valuation and quantity can be determined at any point of time due to continuous updation of the same. The gains and losses in inventories can be measured easily. The Coca Cola Company uses centralized management and handles all the businesses from one controlling head. The company carries inventories so that it can supply as when needed. But keeping surplus inventories also has its own drawbacks for the company. Some if the drawbacks are listed below: It takes a lot of space for storage and thus prevents the company from offering any new product to the customers. Due to excess inventories, products might get outdated and thus there is lack of better opportunities for the product. The excess inventory in stock leads to lower profit margins for the company. There is high amount of storage costs for the company. Also, there are high transport costs for sending the products to and from the warehouses. The products which remain unsold for a long period of time may get expired and thus become waste. Hence, it creates a disadvantage for the company. Paretos Law is also known as the 80/20 rule. It is an important tool which helps in analysis of product mix in the warehouse so that it maximizes the utilization of space in the warehouse. It also states that 80% of the volume of inventory consists of 20% of the products and vice versa. Pareto law can be used by the Company to keep track f its inventories and evaluate the same. The following are reasons as to why the Paretos Law can be used by an organization: It helps to improve the delivery schedule of the supplier. It analyses the performance of the suppliers and helps the management to decide on which supplier to focus. It helps to apply the inventory management appropriately through the use of Activity Based Costing technique. It reduces the cost and thus helping in cost saving. Through the technique cost drivers can be analysed and thus leading to focus on the most important factors to improve the activities. Since, Coca Cola is maintaining a high amount of inventory it must apply the Paretos Law in the value of the inventory. This save time consumption and also lead to cost reduction for the company. Hence, it is recommended to apply the Paretos Law in the company. Activity Based Costing (ABC) is method of costing which identifies all the activities that are performed by an organization and then costs are assigned indirectly to the products which are manufactures by the concern. It determines the relationship between the products, activities and the cost and then it assigns the indirect cost so the appropriate cost is given to the products. It makes the cost data more reliable and provides accurate costs to the products by the classification of the costs into the various processes and products to which it applies. It a very popularly applied method and helps the management to focus and make strategies as per the nearly true costs of the products. It helps the company to identify and eliminate the products which are not earning profits for the company. It helps to reduce prices of the products which are currently overpriced. It also helps to identify and eliminate the production processes which are inefficient. It should be applied for a better management of the products within the company. It also provides a tool for the performance management. It transfers the cost of high volume products to that of low volume products. Thus the cost per unit reduces for the high volume products. The basis of assignment of costs can be done on a completely new basis which may be difficult to implement initially. But on the whole the concept of Activity Based Costing is a very helpful technique. Since, Coca Cola Company carries a huge amount of inventory and has a diversified products, it should implement the Activity based costing in its technique of allocation costs. The costs should be indirect costs which are allocated to various products based on the activities performed in the production and the various cost drivers. Hence it is recommended to implement the Activity Based Costing technique by the company. References Coca cola Company: Overview. Website. Retrieved from https://en.wikipedia.org/wiki/The_Coca-Cola_Company Coca cola Company: about coca cola company. Website. Retrieved from https://www.vault.com/company-profiles/food-beverage/the-coca-cola-company/company-overview.aspx Supply chain: Meaning. Website. Retrieved from https://www.investopedia.com/terms/s/supplychain.asp Coca cola Company: supply chain. Website. Retrieved from https://www.csc.com/application_services/success_stories/78846-coca_cola_supply_chain_management_success_story Coca cola Company: supply chain. Website. Retrieved from https://www.manufacturingglobal.com/lean/358/From-factory-to-fridge:-Inside-Coca-Cola%27s-supply-chain Coca cola Company: Inventory management. Website. Retrieved from https://www.slideshare.net/asif76/perpetual-inventory-system-in-coca-cola-20247028?next_slideshow=1 Coca cola Company: Inventory management problems. Website. Retrieved from https://smallbusiness.chron.com/disadvantage-excess-inventory-22812.html Disadvantages of keeping surplus inventory. Website. Retrieved from https://smallbusiness.chron.com/disadvantages-holding-much-inventory-hand-22710.html Paretos law: Inventory control. Website. Retrieved from https://www.warehouseiq.com/paretos-law-and-the-80-20-rule-for-the-warehouse/ Activity based costing: meaning. Website. Retrieved from https://www.investopedia.com/terms/a/abc.asp