COCA-COLA SUSTAINABLE SUPPLY CHAIN MANAGEMENT
Companies try to improve their competitive advantage through various approaches with the hope of securing a wider market share. Coca-Cola is an example of a multinational corporation that tries to advance its supply chain management operations by focusing on sustainable initiatives. The non-alcoholic beverage maker tries to achieve sustainable SCM by adhering to legal and ethical requirements, and by carrying out activities in a way that is not likely to harm the environment. Coca-Cola now places much emphasis on relating with suppliers who meet international standards, and who are likely to observe good quality, safety, and health. It is encouraging most of the approaches Coca-Cola employ to achieve sustainable SCM comply with the SDGs that offer guidance towards attaining sustainability. The group, nevertheless, should be cautious of the escalated competition as well as the high cost of acquiring and implementing the latest technology that could create significant challenges towards achieving sustainability. The firm, however, should advance its initiatives to use software that improve sustainable practices in SCM to remain competitive and to become more efficient. The company would be in a better position to improve sustainability if it trains its workers, and invest in the latest technology.
Coca-Cola Sustainable Supply Chain Management
Introduction to the Organization
The Coca-Cola Company is a U.S. multinational company that operates as the producer, retailer, and marketer of non-alcoholic beverages and syrups. The firm is widely known for its first product, Coca-Cola that was formed by John Pemberton in 1886 in Georgia. The company that has its head office in Atlanta, Georgia has employed a franchised distribution channel for several decades now mainly prepares the syrup concentrate, which is then supplied to bottlers across the world who hold valid license to produce the product (Coca-Cola 2019). The increased competition creates much constraint for Coca-Cola that has experienced significant drop in its revenue since 2012 when it generated $48.02 billion (Coca-Cola 2019). Coca-Cola’s revenue dropped to $46.84, $45.97, $44.28, $41.85, and $35.40 billion in 2013, 2014, 2015, 2016, and 2017 respectively (Coca-Cola 2019). Despite the dwindling revenues, the corporation still has the largest market share compared with competitors such as Pepsi, Nestlé, and Tropicana products. The group puts much effort to attract consumers through direct marketing, web and social media, sales and promotion, and viral marketing among others, and enlightens them about the various products and brands (Coca-Cola 2019). Other than employing various methodologies to gain competitive advantage, the company understands the need to employ appropriate and sustainable supply chain management strategies that would improve its supply chain operations as well as relationship with the various suppliers. The group tries to align its sustainable approaches to the United Nation’s Sustainable Development Goals (SDGs), although it must overcome some constraints
Review of Approaches and Practices towards achieving Sustainability
Supply chain management (SCM) according to Hasan (2013) and Hines (2004) refers to the management of the movement of services and goods, and involves all the processes that change raw materials into consumable products. SCM entails the active organization of the company’s supply-chain activities to improve the buyers’ value and achieve competitive advantage in the market (Ketchen and Hult 2006). SCM today shows an effort by companies and suppliers to create and implement supply chain strategies that are as economic and efficient as possible (Movahedi et al. 2009). Often, SCM tries to centrally link or regulate the manufacturing or production processes, storage, shipment, and distribution of a service or product (Jacoby 2009). Many firms today try to embrace sustainable SCM approaches that allow them to lower excessive costs, and deliver products quickly to buyers (Handfield & Nichols 2009). The management, however, must keep tighter measures of internal production, sales, inventories, and distribution.
Coca-Cola understands the importance of employing sustainable supply chain management practices, knowing the advantages it is likely to gain from effective application. The firm engages in the production, supply (distribution) and marketing of its products, and all these operations require competent and sustainable SCM (Coca-Cola 2019). The group knows there is need for a consistent structure to help with the purchase of supplies as well as to better fuse manufacturing, retailing, and bottling processes. The group, however, tries to achieve sustainable supply chain management practices by adhering to ethical and legal requirements to avoid any wrangles that could interfere with relationship with the people or groups forming part of the supply chain (Coca-Cola 2019). The company, for example, observes ethical requirements by acting in a way that satisfies every party rather than meeting the requirements of one side alone. Furthermore, the group strives to relate with stakeholders in the supply chain processes in accordance with the standards set by the society (Coca-Cola, 2019). Coca-Cola, for instance, neither abuses its suppliers nor offers them inadequate pay such that it generates some differences or conflicting opinions. The Coca-Cola Company Enterprise (CCE) that is in charge of most supply chain practices further strives to achieve sustainable SCM practices by seeking to conserve the environment while carrying out the process (Coca-Cola, 2019). CCE is dedicated to lowering carbon emission at every stage of production and the supply chain. The company targets to lower carbon emission while producing all products, and while handling all the packaging activities. The firm lowers social and environmental impact at every stage of the value chain by utilizing sustainable approaches and ingredients to carry out the production process (Coca-Cola 2019). The firm, for instance, observes the sustainable requirements during the packaging, bottling, transportation, chilling process, and during the disposal process.
Coca-Cola embraces other sustainable approaches to handle its SCM in a bid to gain competitive advantage through this area. The company, so far, has adopted some guidelines to help it achieve sustainability in its SCM. The firm, for example, hopes to lower the release of greenhouse gas from its core business operations by 50%, and further aims to recycle 100% of the water it uses in areas that experience severe shortages (Coca-Cola 2019). Furthermore, the corporation tries to ensure that 100% of its raw materials and agricultural ingredients will come from sustainable sources come 2020 (Benton 2017). Seeking to achieve quality production in all areas also forms part of Coca-Cola’s plan to achieve sustainable SCM operations (Coca-Cola 2019). The brand actually strives to develop a culture where quality production is a vital requirement and value across the whole company. The firm has reaffirmed its zero tolerance to poor performance to achieve the set standards and to deploy a mature continuum guideline to help it move its quality and food safety initiatives to the next phase. The group extends the approach to its suppliers, and requires all its suppliers to meet the quality standards set by the ISO 9001, the environmental guidelines set by ISO 14001, and the health and safety measures outlined in OHSAS 18001 (Coca-Cola 2019). The corporation further requires all its packaging and ingredient suppliers to comply with the FSSC 22000 certification for food safety to assure its buyers that the group cares for their health. The Coca-Cola Company in a bid to achieve sustainability actions in its SCM practices adopted mechanisms that would replace some of the approaches that are time-inefficient such as record-to-report, requisition-to-payment, and order-to-cash (Coca-Cola 2019). The company, therefore, tries to bridge the supply-demand gap by employing mechanisms such as just-in-time to ensure the raw materials for production are accessible when needed (Porter 1985). Tim Brett who serves as the company’s President in Western Europe said during an annual meeting that sustainability has always been part of the business and remains in its heart, and that the business is making significant strides towards realizing increased efficiency (Coca-Cola 2019). The group hopes to become even more sustainable in its SCM practices even as it moves into the future.
How Existing Sustainability Practices relate to SDGs
The Sustainable Development Goals (SDGs) are the guideline to attaining more sustainable practices for everyone in the future. The SDGs the global constraints people face, including those related to climate change, poverty, environmental degradation, peace and justice and inequality (Schramade 2017). The SDGs are 17 in number and they are all interlinked, and with the objective of leaving no one behind, it is vital that various groups and organizations attain them all come 2030 (United Nations 2019). The SDG goals chiefly attempts to eradicate poverty, address hunger, improve health and well-being, achieve quality education, attain gender equality, offer clean water and sanitation, and achieve affordable and clean energy (Osborn et al. 2015). The SDGs further seeks to promote economic growth and decent work, improve industry, infrastructure and innovation, reduce inequality, achieve sustainable cities and communities, and foster responsible production and consumption (Osborn et al. 2015). Furthermore, the SDGs seek to improve climatic conditions, use water wisely and economically, advance life on land, foster peace and justice in various institutions, and to develop partnerships to attain the desired goals.
Looking at the approaches Coca-Cola uses to achieve sustainable SCM, it is apparent that they have some connection with the SDGs. The company, for instance, is likely to achieve SDGs such as reduced poverty and hunger, as well as improved equality by observing ethical practices while carrying out is SCM. The company is also likely to achieve gender equality by observing ethical factors in its operations because it may see the importance of including both males and females in its supply chain operations. Also important is observing legal requirements while handling SCM will ensure that the firm builds peaceful and strong institutions that do not enter into conflicts with the suppliers or consumers, and will also promote sustainable and responsible production and consumption. Coca-Cola’s attempts to regulate how it impacts on the environment while handling its SCM also show some relationship with the SDGs. The efforts to lower carbon emission and the general desire to protect the environment from any adversities, for instance, may facilitate climate action, and may improve the quality of the life on land. The initiatives could also improve life below and on water, as well as promote the use of affordable and clean energy. The approach where the company requires its suppliers to meet international standards also shows some relationship with the SDGs. The need to observe international guidelines and standards, for instance, could promote the partnerships to meet the goals, as well as foster decent work and economic prosperity. Coca-Cola would be in a good position to improve sustainability in its SCM practices if it puts more effort to align its approaches with the SDGs.
Evaluation of Sustainability Improvements – Challenges and Opportunities
Coca-Cola while working hard to improve its sustainable SCM it must focus on the challenges that could derail its efforts as well as consider how it could utilize the possible opportunities to improve its processes in this area. A significant challenge is Coca-Cola’s competitors are improving their sustainability SCM approaches, which increase their ability to gain larger market shares. Pepsi while working to achieve sustainable SCM, for example, consider several operational factors that could have significant effects on performance. The team in charge of SCM at PepsiCo, for example, takes into account the effects of climate change, as well as considers the influence of demographic evolutions (PepsiCo 2019). PepsiCo also while working to achieve sustainable SCM considers how urbanization could influence its initiatives, as well as tries to embed smart technology into its activities (PepsiCo 2019). Tropicana Products in Chicago that commenced its operations in 1947 also places substantial pressure of Coca-Cola in the way it executes its plans towards realizing sustainable SCM. The company that makes its juices from freshly squeezed fruits, and which focuses on quality production now places much emphasis on achieving sustainability (Tropicana Products 2019). The group while working towards achieving sustainable SCM pay attention on three areas it deems so important; people, the environment, and profit (Tropicana Products 2019). The group’s SCM team understands that having competent people makes it possible to achieve the best results rather than working with employees who do not have the appropriate skills. Tropicana Products while working towards attaining sustainability consider approaches that would be profitable to the company rather than just adopting techniques that may not yield any profitable outcome (Tropicana Products 2019). More essentially, the corporation focuses on environmental sustainability while working on its SCM (Tropicana Products 2019). Other than the escalated competition in the use of technology, Coca-Cola experiences considerable challenge to acquire and implement the latest technology because of the huge financial burden needed to accomplish the process. Some of the software such as ERP and SAP are costly to purchase and implement and the company must really cope with the heavy commitment.
Coca-Cola, however, could grab the opportunities that it could use to improve its attempts to achieve sustainable SCM. The group happens to be on the right track towards using technology to improve its SCM operations in the way it employs enterprise resource planning (ERP) and sales and purchase (SAP) software (Coca-Cola 2019). Using ERP makes it possible for Coca-Cola to track its supply chain activities, as well as monitor other activities such as production, movement of raw materials, and forms of business commitments (Grant et al. 2006). ERP makes it possible for the corporation to share data across various departments, and facilitates the flow of information between all areas of business, and manages connections with stakeholders outside the firm (Yakovlev 2002). The corporation also employs the sales and purchase (SAP) software to facilitate its SCM practices, and believes the system would help it achieve sustainability. Being an influential company, the corporation should utilize the many computer applications that help companies nowadays to advance their SCM processes. The corporation should also take advantage of the increased number of expertise in the market with the ability to develop innovative ideas towards attaining sustainability. The company would be in a good position to excel in its sustainable SCM initiatives if it identifies and utilize the available opportunities in the appropriate manner.
Coca-Cola must take bold steps if it aspires to perform well in the highly competitive market not only in developing sustainable SCM, but also in other operational areas. The company needs to take advantage of the improved technology to advance its practices that would lead to sustainability. Pirzada and Ahmed (2013) write that companies have intense competition among them because of the increasingly changing demand of buyers. Organizations in their quest to achieve the demands need to be innovative, which mainly becomes possible with new technology (Head 2005). Now that every company depends on new technology because they know it will improve their performance and it will promote the fulfillment of their goals, Coca-Cola has to utilize the latest and innovative technologies. Ciobanu and Neamtu (2011) discover in their study that is descriptive in nature that old business planning approaches are still prevalent in corporations, yet these are the major reason for poor outcome of staff and managers. The management should know that the technological drawbacks can never lead to realizing the mission and vision, and to attain all the goals all workers should have vast insight and strong connection with the latest technology (Power & Sohal 2002). Coca-Cola may improve its application of technology in achieving sustainable practices by investing in training the employees who serve in SCM. Even though the undertaking might be costly and time-consuming, the firm shall benefit in the long run because it will be highly innovative and will not have to use so much money to hire external technology experts to guide the company on what it needs to do to excel.
The study pays particular attention to how Coca-Cola tries to achieve sustainable supply chain management practices through the application of various approaches. The America multinational corporation tries to be sustainable in its SCM by adhering to ethical and legal requirements, and by protecting the environment from unnecessary harm through regulating the emission of green house gasses, recycling wastes, and conserving water. The firm believes it will achieve sustainable SCM practices by dealing with suppliers who meet international standards, and who understand the importance of adhering to international standards. Fortunately, most of the strategies Coca-Cola uses to achieve sustainability in its SCM processes align with the SDGs set by the UN to champion growth and development in various areas come 2030. Coca-Cola should watch the competition it is likely to experience from other operators such as PepsiCo and Tropicana Products that show significant improvement in their handling of sustainable SCM practices. The escalated competition lowers Coca-Cola’s ability to attract more buyers, and might be the reason for the decreased financial performance witnessed in the recent past. The company should build on the foundation that it already has with software application and advance areas that would facilitate sustainable operations. Coca-Cola should invest in training its employees to equip them with the latest technology, as well as invest in the latest technology. Otherwise, the brand may experience considerable constraints achieving sustainable SCM processes.
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