International Operations Management Of Coca Cola Business Essay
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Published: Mon, 5 Dec 2016
The soft drink industry in India has two major players, Pepsi and Coke. Besides these there are some local players at different market, operating with different market share. But they are not a big threat to the market share of either Pepsi or Coke. However as of now the two big names in cola industry are only two top U.S. players Pepsi and Coke and the fight for acquiring the market is always going between these two players and the Cola industry has along seen a COLD WAR between these two players to acquire the market share. That means one company gains at the cost of the other.
One of the main characteristics of the Cola industry is the absence of loyalty and it is consumed mainly on impulse. The CSD (Carbonated Soft Drinks) industry mainly Coca cola has channel through which it reaches the end consumer.
They are Production — Plant Warehouse — Depot Warehouse — Distribution Warehouse — Retail Stock — Retail Shelf — Consumer
The main reasons behind its business growth and business success are the quality product that they sale to their consumers. So, quality remains key priority for the success of the soft drink industry. Hence, Operation management is very important function of organization and quality management is key aspect of it.
The report in hand is the assessment of international operations management of Coca-Cola. The report is structured essentially into five parts. In the first part, quality management portion of Coca-Cola’s is assessed with the help of Fishbone Diagram. In the second part, design review (product design)of Coca-Cola is assessed with the help of fault tree analysis (FTA). In the third part, Total Quality Management (TQM) of Coca-Cola is assessed with the help of Quality Management System(QMS). In the fourth part inventory management of Coca-Cola is assessed.In the final and fifth part, capacity managementof Coca-Cola is assessed. The report is the combination of discussing concepts, theories and theoretical models specified in relation to quality management, review design, quality management system and inventory management, and capacity management.
Operations Management is present in many occupations as well as those of manufacturing and service industries. I believe it to be present in daily duties of any person although they may never notice. With this in mind I see operations management as a skill anyone has with an aim of achieving an outcome of something they are working towards in a logical process with thought of awareness of a system structure.
Operations management has been around for some time yet it was Christopher Polhelm (Sweden) first recognised a skill and recorded that ‘Nothing increases demand so much as low prices. Therefore there is a great need of machines and appliances which will diminish the amount or intensity of heavy work’ (Extract from text book Operations Management – supplied by DMU for open learning please see bibliography) this was around 1700. There are cases in many history books and stories passed down that operations management was present before this yet not identified as operations management. From 1700 business development has grew significantly and seems to have been a notable point of operations management to present day. Operation management is depending upon five performance objectives i.e. Quality, Flexibility, Cost, Speed and dependability.
Coca-Cola, the product that has given the world its best-known taste was born in Atlanta, Georgia, on May 8, 1886. Coca-Cola is the foremost drink company in the world and manufactures, markets, and distributes of nonalcoholic drinkwith having about 500 beverage brands. The company manufactures and distributes sodas, waters, fruit juice, teas and coffees and energy drinks. With the help of the world’s principaldrink distribution system, consumers in more than 200 countries consume the company’s drinks with over 1.6 billion servings every day, the Coca-Cola system has successfully applied a simple formula on a global scale: “Provide a moment of refreshment for a small amount of money- a billion times a day.”
The Coca-Cola Company and its network of bottlers comprise the most sophisticated and pervasive production and distribution system in the world. More than anything, that system is dedicated to people working long and hard to sell the products manufactured by the Company. This unique worldwide system has made The Coca-Cola Company the world’s premier soft-drink enterprise. From Boston to Beijing, from Montreal to Moscow, Coca-Cola, more than any other consumer product, has brought pleasure to thirsty consumers around the globe. For more than 115 years, Coca-Cola has created a special moment of pleasure for hundreds of millions of people every day.
The Company aims at increasing shareowner value over time. It accomplishes this by working with its business partners to deliver satisfaction and value to consumers through a worldwide system of superior brands and services, thus increasing brand equity on a global basis. They aim at managing their business well with people who are strongly committed to the Company values and culture and providing an appropriately controlled environment, to meet business goals and objectives. The associates of this Company jointly take responsibility to ensure compliance with the framework of policies and protect the Company’s assets and resources whilst limiting business risks.
Coca-Cola guarantees the best quality of its drinks by means of putting into application internationally established and validated manufacturing processes.
Source: Annual Report (2010)
Source: Annual Report (2010)
The location for Coca-Cola’s manufacturing plants is confirmed just after the source water has been examined for every supplies of drinkable water, where the analysis is all the time carried out by sovereign third party ascribed laboratories. The source water is after that correctly protected and re-tested occasionally to make sure that it matches to global standards. The water is after that drawn in the course of conserved pipelines into the storage tanks positioned in secured water treatment areas of the manufacturing plant.The company as well has a well-built interior audit system that monitors observance to global and local standards, where the manufacturing facilities are as well audited throughascribedexterior audit agencies that verify the quality management standard.
Conventionally, theories of quality management extended independent from the type of functional environment, industry or technology linked. However , based on the opinion of theory of contingency it fixes that a o firm should align itself with functional environment in order to achieve superior output (Dale, 2003). The traditional strategy of manufacture supports that the functional output is maximized when general, operation-based management and competency of quality, delivery, flexibility and cost is exchanged (Anand and Ward,2004). Nevertheless, these general competitive competences could be followed simultaneously beginning from the adaptation of quality. The results linked to the industries of high technology support the example that the growth of general competency of manufacture does not need to weight essentially with other. Consequently, the continuation of total quality is considered as initial strategy for the various operation-base faculties and the general firm output.
The research literature relating to operations management proposes the existence of different practice in the different industries because the unique operational environment that they face and the need for the arrangement. This uniqueness in each operational environment of industry, by opinion expectations of customers, competition, and change of technology is expected in order to it creates the different occasions and the threats for each industry. Consequently, the different corporate and strategies of manufacture between the industrial sectors should be expected (Brown, 2006). The measurements of quality may well vary in number or identity from an industry to other. The comprehension of these differences in the different industries could help the management in each industry to adopt the suitable approaches in the application of quality practices.
As far as soft drink industry, the quality management is more imperative and sensitive considering the use of drinking water and chemical products. So a genuine and high rate quality management is indispensible for soft drinks industry. Obviously, the quality management of Coca -Cola should be assessed from this perspective. Prior to assessing the quality management system of Coca -Cola with the help of a suitable model, it would be worth to throw some light on quality vision of the company.
Figure 2: Quality Vision of India
Source: Annual Report (2010)
For Coca-Cola, the company promises that it has the solo one quality system in its entire global operation. The company quality vision is concerns to endeavor to convenethe ever-changing desires of the world, where preserving quality process in the market is the highest business objective of the company. Moreover, the company emphasizes that customer and consumer satisfaction is the focus of its quality vision, where company wishes to behave as a responsible citizen wherever it operates. From the quality vision of Coca-Cola it comes out that the company not only implements an exclusive quality management system, but as well isflexible to cope with the changes in setting quality standards. Let us asses the quality management of Coca-Cola through Fishbone Diagram.
The Fishbone Diagram which also called Cause-Effect Diagram and developed by Ishikawa is conventionallymade use fordiscovering causes of predicaments that may well be involved to whatever to display a graded set of drivers that controlthe element to which it is involved. In this course of action, it may well beutilized forexplanation, investigation and extension of anextensivearray of diagrams, directing to an enhancement in the acknowledgement and communication of the diagram.A Fishbone Diagram in fact is essentially a modestmethod of demonstrating a grading and this is just a realistictrick utilized to help out fit new-fangled text in around currenttranscript, where the utilization of a grading is asignificantdeliberationas it recognizes that causes are not modest, with every cause generally being created and caused by one or more additional causes(http://syque.com/quality_tools/tools).
Figure 3: Fishbone Diagram and Coca-Cola
Fishbone Diagram analysis for Coca-Cola demonstrates that the majority of the problems that come out in relation to the quality of the products is because of the neglect of the people or staff , where people of not being trained and well skilled is the problem. Moreover, while the products that the company is manufacturing are consumable items exceptional care is expected that they are disinfected and do not create any health threats. This is for the reason that a minor neglect in relation to the company might direct to stark situations in relation to the health problem and therefore eventually might be calamitous to the life of the company and they might even end up dropping the license. In addition, the management too has to be alerted to this cause and has to guarantee that the work process of the firm requires to be altered as there are dodges in the process, and the dodgers are such that they caused slip-ups for the company.
Hence, it is recommended that Coca-Cola ought to guarantee thatevery one of its people or staff are appropriately trained formerly they develop portion of the manufacturing and operational team of the company. Moreover, the company ought guarantee that the machines that arefunctional in the manufacturing and purifying of water ought be the finest of quality, where increasingly high quality apparatuses prerequisite to be brought to exam the existence of microbes and additional such party and at the lowermost likely echelon. Last but not the least, the management of Coca-Cola necessitates to include more ranks of quality checks and guarantee that there is severely monitoring at every rank.
The tools itemized exist in order to helpparticipating a design review in the achievement of their objective. The tools are created for two distinct operations: evaluation of new significances and control of running drawing. The tools of evaluation and choice of drawing are used in order to they determine and they appreciate the most suitable solution of drawing that is created at the duration of new processes of production of drawing or idea. A uterus that allows the systematic estimate of drawings based on the adaptations in the certain requirements is a example of tool of evaluation (Ullman 2003). Participating design review can be mentioned or be distributed in various limits such as geographic, organisational, and time. While the distribution can be sought or essential it achieves an ideal combination of experience in the team, the dissemination can also make also the adoration diverse or costly in order to realizethisadvantage of experience. These experts can include the customer of product, the constitutive suppliers, the team of growth, and the constructional team. A solution in this problem of distribution is used the tool of communication (Wetmore 2004). The teams of design ofproducts that are constituted by the individuals with the different experience communicate continuously in the all process of realization, specifically at the duration of official collaborative revisions of drawing. The individuals with the essential experience for the address draw the revisions can be distributed in the diverse geographic places that requires or the expensive travel or the new tools of communication in order to imitate onsite the collaborative communication (Wetmore 2004).
The elementaryplan of product design at Coca-Cola has had been modest, tangible and continuing, whilst the company carry refreshment, worth, happiness and fun to the consumers and therefore the design vision is focused towards effectivelyfoster and protect products, where the operative team behind long lasting set up at Coca Cola has had been at the core of the product philosophy satisfying a responsibility to deliver time after time gorgeousreimbursement to the prices. Though,CocaCola is facing the problem to make a balance of its core product design vision and the changing trends. Therefore, the company offers likelyvisions into potentials for and glitches of learning from fragments of product design process and implementation.
For Wetmore (2004), design review is carried out for screening and confirming product quality, sturdiness, and conformance to customer-speci¬ed role, where two sorts of design reviews are highlighted namely selective and evaluative. Notably selective reviews in the forms of customer-based metrics, are utilized to selectamong options presented, an evaluation tools, in the form of failure modes e¬€ectsanalysis (FMEA) and fault tree analysis (FTA).
FTA is a deep-rootedapproach that links to compacted theories in the forms of Boolean logic and Probability Theory, where the former applies to making use of to ease the fault tree construction into the groupings of proceedingsdirecting to fiasco of the scheme, usually interpreted as negligibleexpurgatedcircles, numerous of which are characteristicallylocated; the latter is functional to controllikelihoods that the system will nose-divethroughout a specific mission, or is unobtainable at a specificperiod in time, assumed the likelihood of the particular proceedings. Moreover, likelihoods are measured for particular negligibleexpurgatedcircles, creating the foundation for their position by rankinrelation to their dependability and securityeffect(http://www.reliabilityeducation.com).
Figure 4: FTA and Coca-Cola
As per the figure the top rank proceeding ought to be labeledexactly, where elucidating the top proceeding too approximatelydirects to a flexible tree, demonstrating no particular cause or causes for catastrophe. Likewise, elucidating the top proceeding too barelydirects to likely cause oversights. Here FTA necessitates comprisingentire likelyflaws, faults or failures existing in the system that mightcreate safety threats or dependability problems. Therefore hardware, software, and human elements of the system ought to beencompassed in the FTA.Putting into application a manual assessment process that is both untrustworthy and time severe, where the application of FTA may well serve up as a troubleshooting device that might as well control the root cause of likely problems for Coca-Cola. The company should acknowledge that a comprehensible oversight system may well be functional to advance Coca-Cola’s upkeep package and will help out the company workers recognize the adding factors to a system catastrophe whilst restricting forthcoming events.
TOTAL QUALITY MANAGEMENT
TQM is an approach in the improvement of effectiveness and the flexibility of enterprise globally, that covers the requirements of customers and exterior and internal in the firm (Oakland, 2003). It is substantially a way and entire the firm, every one department, each individual person in each level. Oakland (2003) takes a mix and hard and soft approaches and it portrays TQM as pyramid that represents five distinct components included managerial obligation, chain customer-supplier, quality systems, statistical tools of control of activity, and common work. As the new millennium advances, TQM is expected in order to it matures in a phase of faculty of support in order to it supports a catholic operational strategy. These critical factors of success will vary so that are adapted the changes in the environment where the companies function. Despite the make that TQM the initiatives have been recognized by way of a lot of firms as capable the qualitative culture and the competitiveness, the new initiatives or the improved publications they are proposed to them in order to maintain TQM the courage and competence of support.
TQM of Coca-Cola is intended to inspire and distinguishrealapplication of environmental management system and this attainment has had been made conceivable by the plant’s devotion to company’s TQM program named The Coca-Cola Quality System (TCCQS). TCCQS includes management system (Total Quality) ranging environment management and supplementary business featuresin the forms Safety and Loss Prevention (SLP), product quality, packaging quality,processes capability upgrading and customer satisfaction.
The accounting of Quality Management System (QMS) is one from the quality tools in order to it helps the firm in order to improve the qualitative output. They are usually used in the effort to be located, to maintain itself and is improved the QMS. So that is achieved the intended various aspect of result of need of auditing to be examined. Karapetrovic and Willborn (2000) propose that the effectiveness auditing it can be measured so that is improved the effectiveness of auditing. The model of measurement of QMS is based the calculation of probability of availability, reliability and appropriateness of auditing. The auditing should aim at feasible so is feasible and each one aware from ton. Each process of auditing is programmed and it is a system that aimed in the continuous improvement. While the resources of auditing as the probative material they are critical they make sure that the staffs has the suitable knowledge relative with the types of QMS functions.
Figure 5: Quality Management System of Coca-Cola
The Coca-Cola QMS promotes the adoption of approach of process at growth, the application, and the improvement of effectiveness of system of qualitative management. This approach offers the running control of contact stuck between the processes in itsclassification of procedures, with that of the combination and their interaction. In consequence, the company is in position covers up the requirements of customers and consumers and thus, they strengthen their satisfaction. The company builds up an operational drawing that examines objectives and that promote the continuous improvement of the operational set up and the effectiveness of QMS. This comprises of the determination of metric that allows the control of output against the objectives. The objectives and metric should be argued. The leading management of each operational set up in the company is accountable for the guarantee that the operational drawing is corresponded in the each and every oneemployee. The each and every one employee is responsible for the comprehension of operational drawing, his objectives and metric so that they help with the realization of design. The leading management of each operational set up unit is named a member of management as pioneer QMS. Nevertheless, the leading management of Coca-Cola should ensure that the suitable processes of communication are established in the set up and that the communication is realize with regard to the effectiveness of QMS. Further, the leading management of unit Coca-Cola should revise the QMS in programmed intervals in order to ensure the suitable application, the appropriateness, sufficiency, efficiency, and effectiveness.
Because the mounting force for the eve competitive in the overall market, that optimizes the inventories beyond the supply the chain has turned out to be an important dispute for the industries of process in order todrop off the expenses and in order to improve the service of customers. This challenge requires the management of inventories with the drawing of networks of chains of supply, so the decisions with regard to the places in order to they provide the list and the relative sum of list in each place of feminine socks can are determined all together for the lower cost and the highest level of services of customers. Nevertheless, the completion is usually nontrivial for the chains of supply of level and their relative systems of inventories presence of uncertain requirements of customers. The administrative problem of inventories of level has been studied extensively in past enough decades (Daskin et al, 2002). Nevertheless, the bigger part of literature of inventories examines only the optimization of decisions of inventories without their incorporation with in the drawing of chains of supply and planning of decisions. Simpson studied initially the control of system of inventories of level on a partial chain of supply. In that document, Simpson proposes the guaranteed approach of services in order to describe the engineers of partial system of inventories, in which each stage functions a political base-reserve despite the accidental but marginal requirement. Meanwhile, the guaranteed approach of services, that is based on the idea of biggest time benefit of services in each place of inventories, has drawn more attention because competence for the calculation for the systems of inventories of big scale. The graves planned that the quandary from Simpson possibly will untie itself as full of life agenda (Magnanti et al, 2006).
Operation managers are concerned with three types of inventories, first is a raw material inventory includes materials that will be part of the product during the production process, second is the works in progress inventory consists of partially completed products, and third is finished goods inventory consists of completed goods. And this each inventory includes holding cost or storage cost and the cost of running out of inventory. So, inventory control is essential because it is the process of managing inventories in such a way help to minimize inventory cost such as holding cost and potential stock out cost.
For cost effective and efficient inventory management Coca-Cola implements Just In Time(JIT) which an inventory management tool that directs to cutting the costs and to fastening the ¬‚ow of final products to customer, where adopting this tool the company has benefits entailing advancing performance measures, offering more precise and suitable measures for pricing decision-making, justifying production costs, and selecting the best production combination , and taking on an exact system for inventory control at the side of a high rate information system. However, it is recommended that Coca-Cola JIT based inventory management should be well equipped with full synchronization flanked by productivity on the one hand, and dealers on the other hand.The JIT vision of Coca-Cola ought to be manufacturing and delivering the essential items in looked-for quantities at the compulsory time and this vision as well ought to be continuous improvement in which non-value-adding activities are recognized and detached.
Although no doubt that just in time based inventory management system in place, but the company should co-ordinate the productivity on one hand and dealers on the other hand. Because company sometimes face the problem in manufacturing plant of which it sometimes ran out of the company’s familiar red and white aluminum cans as an impact of this which can result in . So, company dependent on supplier for the basic inventory which is needed for their finished product. Because of this company should take in to consideration that co- ordination between productivity and dealers is essential
Capacity characteristically illustrates competences in operations management which is usual to mull over a system of a variety of processing resources, as well termed as a processing network (Atamtürk and Hochbaum, 2001). Rajagopalan and Swaminathan (2001) extend a multiproduct setting where demand for products is recognized and mounting steadily while capacity accompaniments are distinct in terms of brand name and product portfolio. The capacity management of Coca-Cola is examined below.
Figure 6: Capacity Management and Coca -Cola
Source: Annual Report (2010)
Coca-Cola is noteworthy case illustration of companies who productively leveraged core competencies towards spreading out into new-fangled markets whilst recognizing when to take advantage of and reduce the risks entailed in business. The capacity management in terms of product level of Coca-Cola is controlled through actual product, core product and augmented product. Through this capacity management, the company is capable to pull economies of scale, spread out into fresh markets,and defend their core brands with that of warding off the likelihood of cannibalization.However, in order to most excellently inflate its worldwide product mix it is prudent to carry on undertaking what the company is doing best in the past, where Coca-Cola is recommended to take on a less risky and more money-making staged expansion focused on brand name and quality.
CONCLUSION AND RECOMMENDATIONS
The report concludes that the measurements of quality may well vary in number or identity from an industry to other. The comprehension of these differences in the different industries could help the management in each industry to adopt the suitable approaches in the application of quality practices. As far as soft drink industry, the quality management is more imperative and sensitive considering the use of drinking water and chemical products. So a genuine and high rate quality management is indispensible for soft drinks industry. Obviously, the quality management of Coca-Cola should be assessed from this perspective. Prior to assessing the quality management system of Coca -Cola with the help of a suitable model, it would be worth to throw some light on quality vision of the company. Coca-Cola ought to guarantee that every one of its people or staff are appropriately trained formerly they develop portion of the manufacturing and operational team of the company. Moreover, the company ought guarantee that the machines that are functional in the manufacturing and purifying of water ought be the finest of quality, where increasingly high quality apparatuses prerequisite to be brought to exam the existence of microbes and additional such party and at the lowermost likely echelon. Last but not the least, the management of Coca-Cola necessitates to include more ranks of quality checks and guarantee that there is severely monitoring at every rank.
The elementary plan of product design at Coca-Cola has had been modest, tangible and continuing, whilst the company carry refreshment, worth, happiness and fun to the consumers and therefore the design vision is focused towards effectively foster and protect products.Though Coca Cola is facing the problem to make a balance of its core product design vision and the changing trends. Therefore, the company offers likely visions into potentials for and glitches of learning from fragments of product design process and implementation.The company should acknowledge that a comprehensible oversight system may well be functional to advance Coca-Cola’s upkeep package and will help out the company workers recognize the adding factors to a system catastrophe whilst restricting forthcoming events.TQM of Coca-Cola is intended to inspire and distinguish real application of environmental management system and this attainment has had been made conceivable by the plant’s devotion to company’s TQM program named TCCQS.The leading management of Coca -Cola should ensure that the suitable processes of communication are established in the set up and that the communication is realize with regard to the effectiveness of QMS. Further, the leading management of unit Coca-Cola should revise the QMS in programmed intervals in order to ensure thesuitable application, the appropriateness, sufficiency, efficiency, and effectiveness.For cost effective and efficient inventory management Coca-Cola implements JIT which an inventory management tool that directs to cutting thecosts and to fastening the ¬‚ow of final products to customer, where adopting this tool the company has benefits entailing advancing performance measures, offering more precise and suitable measures for pricing decision-making. However, it is recommended that Coca-Cola JIT based inventory management should be well equipped with full synchronization flanked by productivity on the one hand, and dealers on the other hand.Last but not the least, the capacity management in terms of product level of Coca-Cola is controlled through actual product, core product and augmented product. Through this capacity management, the company is capable to pull economies of scale, spread out into fresh markets, and defend their core brands with that of warding off the likelihood of cannibalization. However, in order to most excellently inflate its worldwide product mix it is prudent to carry on undertaking what the company is doing best in the past, where Coca-Cola is recommended to take on a less risky and more money-making staged expansion focused on brand name and quality.
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