Operations Management in Coca-Cola Business
Operations management concerns the transformation of inputs into outputs. Management of the process combines and transforms various resources in the operations subsystems of the business into value added services in a given process consistent with the policies of the organisation. The idea is to achieve a balance between supply and demand. For example, having excess supply or capacity is wasteful and costly. As a result, while the operation function is responsible for producing and delivering services, it needs support from others areas of the organisation.
The Differences between Operational and Operations Management
Operation is the division of an organisation that undertakes the various planning and operating functions. As a result, operations management is the effective control of such functions that helps to achieve performance. Nonetheless, operational management is the control of the various process or series of actions to fulfil the task. As a result, the former is the control of human resources while the latter is the process. However, for a business to achieve efficiency, it must integrate both functions. For example, skills and tools related to development, manufacturing and production must be consistent with the overall objective (Attaran & Attaran, 2006).
Coca-Cola aims at customising services through its supply chain regardless of the global outlet. For example, the company has more than 16 million retail outlets globally. It establishes dedicated people and business partners to manage operations in various regions. Coca-Cola has policy framework that protects the business assets and resources to limit the operating risk. Secondly, the company has a centralised system related to procurement, production and distribution in different regions. The purpose is to optimize the Supply Chain Management (SCM) and reduce the operating cost (“Building a stronger Coca-Cola Hellenic,” 2012).
However, to achieve efficiency the company must develop collective practices, process, and capability for associate businesses. Although Coca-Cola is multinational, the products do not travel far to reach the local markets. As a result, the firm’s operations are customer driven. On the commercial side, the firm uses customer feedback called “brand, pack, price, channel architecture” to tailor products (“Building a stronger Coca-Cola Hellenic,” 2012). It enables the company to establish equipment and service in order to accomplish different functions. Such level of customer services requires segmentation based on markets needs and product attributes. Therefore, the firm operations can be efficient-dominant, or responsive depending on the portfolio and market needs.
The need to Produce Safely; on Time; to Cost; to Quality and within the Law
Coca-Cola began as a regional manufacturer that later employed large scale manufacturing. However, the techniques prevented efficient product design, research, and development. At the time, the firm objective was to establish a consistent production to maintain steady supplies (“Building a stronger Coca-Cola Hellenic,” 2012). However, the system was ineffective since it resulted in excess work-in-process inventory. The reason was that it conducted all the process at one location, and; therefore, glocalisation was not viable (Iyer & Ye, 2000). The solution was to establish a Just-in-time system to transform inputs into finished products and meet the needs of different retailers. Secondly, to counter the cost of operations, the bottlers had to establish local offices (“Building a stronger Coca-Cola Hellenic,” 2012).
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As the business expanded internationally, Coca-Cola recognised the need to license bottlers and distributors. Nonetheless, the company recognized that inventory control is significant to cost reduction. As a result, the business adopted material requirement planning and manufacturing resources as well as planning systems to manage inventory such as new and used bottles, syrup, and sugar among others. Secondly, the firm establishes both the Canners with the maker at adjoining facilities. Thirdly, the Packers collaborate with supermarkets chains and other outlets to ensure promotional efficiency. The information systems also guarantee that supplies do not pile at bottlers and canners, and also delivery to avoid delays. For example demands rise during summer; therefore, bottlers need to plan increased production (“Building a stronger Coca-Cola Hellenic,” 2012).
The Link between Operations Management and Strategic Planning
Business planning involves several steps such as strategic planning to outline company objectives, process, and methods to achieve performance. Secondly, operational management is a comprehensive function that allows departments to share resources and achieve the firm’s goals. As a result, the links between the strategic plan and operations are essential for businesses to operate efficiently (Gattorna, 2000), caused by the entry of different soft drink manufacturers in the industry. Companies such as Pepsi investigated ways to reduce the cost while achieving high-quality product and customer service level. For example, Coca-Cola also uses SAP software to improve processes, execution, and store delivery. Secondly, Coca-Cola developed strategies such as cooperative suppliers-customer relationship to allow the selection of suppliers providing quality services. The firms identify such dealers and give the majority of its business (“Building a stronger Coca-Cola Hellenic,” 2012).
Coca-Cola integrated the lean six-sigma SCM to leverage best practices, process, and operational efficiency. The strategy links operations management to the firm’s goals. It enables the business to be local, responsive, and market-driven as well as leverage on the brand, innovation, and technology. Essential elements in Coca-Cola operations and strategy links are culture and capability. For example, the firm establishes a culture of continuous improvements in all the departments. Additionally, the business integrates the diversity from the various suppliers, and customers through distributors to enhance brand acceptance (Chang, 2004). Finally, the firm provides the concentrate, organizes procurement on a global basis to enrich the capability. Nonetheless, it provides franchise, leadership, and strategic development. The strategy ensures that associates apply best practices established to enhance performance (“Building a stronger Coca-Cola Hellenic,” 2012).
In conclusion, organisations face increased competition and uncertain economic conditions. As a result, they must integrate operations management into their SCM strategies for efficiency. A company such as Coca-Cola uses the just-in-time strategy to manage supplies and demand. To achieve the above, the company focus on cost reductions and organisation core competence leading to long-term competitive advantage. For example, Coca-Cola uses SAP software to improve processes, execution, and store delivery. Such systems integrate skills and tools related to the development, manufacturing, and production to be consistent with the overall objective.