It Support In Coca Cola Enterprise Commerce Essay


Due to the size of Coca-Cola, the company has the need for information technology in different aspects including finances, logistics, customer services, etc. It requires an integrated business management system to handle the different aspects of their worldwide corporation. Therefore, Coca-Cola has incorporated SAP Strategic Enterprise Management ("SEM") and implemented mySAP Financials into their business in order to handle the financial function of the corporation.

SEM creates a single platform to make financial data accessible to management across the globe. It also provides Business Planning Simulation for finances, Data Warehousing for information collection and data analysis, and can generate financial reports and monthly sales forecasts. With incorporation of SAP SEM, mySAP Financials allows Coca-Cola to consolidate business and planning, and the data warehousing insures that all financial records can be kept without taking up the limited space on company's hard drives.

The SAP SEM solutions have integrated with the transaction system to consolidate financial information, strengthen financial planning and provide a comprehensive view of corporate financial performance across the enterprise structure. The solutions include SAP SEM Business Consolidation ("SEM-BCS") and Business Planning and Simulation ("SEM-BPS") on mySAP Financials side, and mySAP Business Intelligence Data Warehousing for information collection and analysis. The following parts are to describe how the solutions operate and support Coca-Cola's business operations.

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When SEM-BCS receives the financial information, it then processes the financial information from field locations through the Coca-Cola intranet, and further to consolidate the information at both the legal entity and business unit level. Basically, the SEM-BCS enables Coca-Cola to accelerate corporate accounting by automating the legal and management consolidation process. The proceeded information can be used to generate consolidated financial statements, including balance sheets, income statements, cashflow statements and appendices, in order to provide timely information to management, as well as internal reports for management. The system also supports value-based accounting, data collection, validation, currency translation, elimination of internal transactions, and automates the generation of investment entries in consolidated basis, all according to internal procedures and statutory accounting requirements. The information generated from the system is also used to create external reports for statutory requirements and as the foundation for further drill-down for business analysis.

Besides, mySAP Financials Controlling can extract the financial actuals automatically, on a daily basis. These actual results are used to assist the generation of monthly forecasts. This SAP solution enables Coca-Cola to generate financial reports for financial planners as well as divisional and regional financial managers at the profit-center level. The information is also used to generate monthly forecasts on sales, cost of sales, operating expenses and profitability. The forecast data is then summarized and sent to SEM-BCS for consolidation, which enables Coca-Cola to generate consolidated forecast results and compares the consolidated actuals with the forecast.

In conjunction with other financial information that is extracted daily from mySAP Financials, the consolidated data provides key baseline information for SEM-BPS. As a result, SEM-BPS can provide Coca-Cola with a complete suite of planning functions for modeling, simulation, integrated budgeting, target setting, forecasting, scenario planning, resource allocation, and risk evaluation. Such capability enables the company to perform business planning at both strategic and operational level around various financial issues, such as sales, price, costs, headcounts, profitability, and financial statements.

Also, Coca-Cola can now integrate actual data into its planning process for their annual budget and monthly rolling estimates with using SEM-BPS, which becomes the foundation to be able to apply dynamic business strategy models and analysis as well as simulation tools to identify the impacts of possible actions on the Profit & Loss, Balance Sheet, and overall corporate strategy.

Regarding the issue of data warehousing, Coca-Cola has implemented a solution called Data Warehousing from mySAP Business Intelligence, which enables the company's management to further slice-and-dice and analyze the financial information to support decision making. The consolidation and planning solutions feed one another data and share the same data at difference levels of detail. The business intelligence system works with both to refine information into more value-added form for query, reporting and analysis.

Another issue that Coca-Cola faces is to manage their diverse group of worldwide suppliers, due to the company's global expansion in the past years. Coca-Cola's business strategy is "Think local, act local", so the integration of local bottlers and delivery to the customers is crucial to Coca-Cola's overall operating efficiency and maintaining customer satisfaction, which requires the company to implement an IT system that takes into account all of its local bottlers in the worldwide.

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To cope with this issue, Coca-Cola started to implement the Direct Store Delivery ("DSD") system with SAP in 2003. DSD is a ERP system that can process and analyze the real time information to improve logistic performance and efficiency. The system allows the delivery sites directly transmit customer information to distributors and integrate the data in the process from sales to settlement, by eliminating unnecessary paperwork and ensuring proper cash settlement, which in turn improve the productivity and reduce the transaction costs. DSD tightly integrates the IT systems of the bottlers and delivery personnel with the on-site requests, such requests can come from a variety of mobile devices, field sales representatives and service staffs.

Besides, Coca-Cola also developed a plan with ORTEC to implement a software called "SHORTREC" in early 2004 for product delivery across all divisions and distributors throughout the company within an 18-month time frame. The main capability of SHORTREC is to identify an optimized route for product delivery. The route optimization process involves assigning orders to the proper vehicle, and the dispatcher typically runs several what-if scenarios to find the best solution.

Actually, the use of SHORTREC can enable the distributors to acquire the skills to manage more locations and increase their responsibilities, and also provide them to make quick decisions with the tools and enable them to work closely with sales teams. In addition, Coca-Cola should have monetary savings from the implementation, due to better route planning for delivery.

After implementation of the software, Coca-Cola had explicit benefits in their business operations. Overall, larger business locations and those with growing business volumes show greater monetary savings. The first example is among the 10 largest facilities in North America, where the yearly deliveries were approximately 20 million cases. During the implementation time, the business volume increased by 18.0% compared to the same period before implementation, but labor expenses only rose by 1.0% in that period. Thus, delivery cost per case improved by 15.0% over the prior year. In addition, missed deliveries fell to 2.4% from 6.3% before implementation. Such reduction led to improved customer satisfaction and fewer lost sales because more Coca-Cola products were present on the shelves. Another indicator, returns, which reflect a product that is taken to a retail outlet but not delivered, also dropped from 4.5% to 3.7% during implementation. In the case of a return, the product must be delivered again, and the retail outlet management and customers may dissatisfy the services. Moreover, cases delivered per hour improved from 86.3% to 98.3% during implementation, given that outlets serviced per day remained essentially flat. All the above figures reflect that optimization delivery enabled drivers to complete more deliveries within the same parameters, making Coca-Cola to be more productive.

The second example is a typical mid-sized facility that delivers around 3.4 million cases per year using different delivery modes. During implementation of SHORTREC in the facility, the volume of deliveries only increased by 1.0% compared to the same period before implementation, but delivery labor costs decreased by 15.0% in the period of implementation, which led to a 16.0% improvement in delivery cost per case, showing that the facility had higher efficiency during implementation given a similar delivery volumes in the period. Other favorable results were that missed deliveries dropped from 5.1% before implementation to 3.8%, returns fell from 4.9% to 3.6%, and cases per hour improved from 76.0 to 81.6, while outlets serviced per day stayed the same as the period before implementation.

One more example in two other divisions, North Texas and Central States, the volume decreased slightly during implementation of the system, but both divisions noted a reduction in delivery labor costs, with a 6.0% improvement over the period before implementation for North Texas and a 5.0% decline for Central States, which led to a net savings in cost per case by 5.0% for North Texas and 2.6% for Central States. During implementation, both divisions also had improvements in cases per hour, returns and unproductive outlets over the period before implementation.

All the improved figures reflect that Coca-Cola could achieve a greater operating efficiency during implementation of SHORTREC. Actually, the system enabled Coca-Cola to centralize its operations more completely. During implementation, Coca-Cola installed the software at 25 divisions that had about 400 dispatchers. Due to a larger span of control and an increased overview provided from the plan, the delivery process now takes place at 10 business units but only requires around 300 dispatchers.

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In addition to operational improvement, Coca-Cola has also implemented a system to improve customer services. As Mr. Lto Apotheker, the Executive Board member of SAP, says, "In an environment where increasing consumer and customer satisfaction is key for any company to survive and grow, consumer products companies must be able to meet demand and service requirements on time, according to expectations and as effectively as possible", Coca-Cola tried to achieve this goal with using IT system.

To achieve higher customer satisfaction, Coca-Cola has implemented SAP's Customer Relationship Management ("CRM") system, which enables Coca-Cola to transform its business operations towards their goal of customer focus. The CRM system can link with the DSD process from order to cash and settlement, and can also support the existing processes of mySAP to improve efficiency, providing new functionalities and opportunities to improve the customer services and satisfaction.

Being a global beverage company, Coca-Cola has various types of product lines. To handle different aspects of products, Coca-Cola has implemented CRM system to support these diverse product lines, in order to improve merchandising and reduce delivery costs, as well as to allow the company acquire market shares and increase customer satisfaction. In addition, the CRM system also handles and integrates customer services, which include reaching out to representatives in the company for any issue relating to the products. Below diagram is about SAP's CRM system that handles the contact centers around the globe.

The above diagram shows that customer service is not only provided through feedback, email and telephone services but also through quality monitoring as well as various types of analysis to maintain the best service practices. Give the integration of operations and customer services, the CRM system ensures efficiency in all aspects of customer service.