Inventory Management System and Warehousing Operations of Coca-Cola

The Coca-Cola Company’s Supply Chain and Logistics Operations

The Coca-Cola Company produces and distributes more than 500 non-alcoholic beverage brands in over 200 countries. The inventory management system and warehousing operations are the two logistics activities that support Coca-Cola’s supply chain and business strategies. The inventory management system relies on the use of advanced information system. Coca-Cola has a wide network of distribution centers responsible for transportation and shipping of the finished product.

Inventory Management Approach

In inventory management, the total cost approach aims at finding the lowest and most efficient cost option for the entire (not functions) supply chain. Coca-Cola applies this by accumulating the carrying, ordering, and handling costs for all the products. The aim is to arrive at the lowest cost for all activities of managing inventory (Kasilingam, 2012). On the other hand, warehousing operations apply the total cost approach by accumulating all the transportation and warehousing costs for all the products taken as a whole. For instance, Coca-Cola might realize that using trucks increases the transportation costs. However, the company makes cost savings because of the less investment in inventory. Therefore, by applying total cost approach, Coca-Cola offsets the higher costs of transportation by incurring lower inventory costs (the overall result is beneficial).

SCOR Model for Measuring Logistics Performance

A tool that Coca-Cola uses to measure the quality of its logistics performance is the SCOR (supply chain operations response) model. SCOR measures the effectiveness by which a company organizes its supply chain and logistics to satisfy customer demand (Paddeeu, 2016). Coca-Cola uses the SCOR tool to assess its effectiveness in logistics planning, sourcing, making, delivery, and return. Planning deals with the management of demand and supply while sourcing focuses on supplier relationships and inventory management. Making addresses the production of the syrups and concentrates while delivery focuses on the distribution of the finished goods to the bottlers and customers all over the world.

References

Kasilingam, R. (2012). Logistics and Transportation: Design and planning. Springer Science & Business Media.

Paddeu, D. (2016). How do you evaluate logistics and supply chain performance? A review of the main methods and indicators. European Transport/Trasporti europei, 61(4), 1-16