How Coca Cola HBCs practices enable it to achieve strategic goals Essay Example
How Coca Cola HBCs practices enable it to achieve strategic goals Essay Example

How Coca Cola HBCs practices enable it to achieve strategic goals Essay Example

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  • Pages: 16 (4194 words)
  • Published: August 29, 2017
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Executive Summary

The study examines the impact of Coca Cola HBC's strategies on their goal attainment. It aims to understand the organization and the factors influencing product planning, management, and delivery. The effectiveness of Coca Cola HBC's supply chain management and operational approach is crucial for their achievements.

The company has successfully identified and addressed existing production issues and their causes, enabling them to make necessary corrections. They have also established improvement and achievement goals to guide them throughout the process. Coca Cola HBC is a well-managed company that recognizes the importance of building lasting relationships with customers, suppliers, and retailers in today's challenging business environment.

Introduction

In 1969, Hellenic Bottling Company S.A. started its journey in Greece by producing a single soft drink in small glass bottles at its modest headquarters. This marked the humble beginnings of the comp

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any as a response to the straightforward business environment at that time.

The company's operations were initially straightforward, consisting of refilling distribution centers for drivers. Their tasks included loading trucks, planning routes, and delivering supplies. However, globalization began to affect global consumption and production, causing changes in the business environment. In response, the company adjusted and expanded by broadening its product range, enhancing production capacity, and improving operational competitiveness and complexity. In 1981, a private holding company obtained a majority stake in the company, resulting in further growth through acquisitions.

Coca Cola Hellenic Bottling Company, which was created in 2000 through the merger of the Hellenic Bottling Company and Coca-Cola Beverages in London, is now one of the largest distributors of The Coca Cola Company's products worldwide. It is particularly prominent in Europe. Their main focus is on manufacturing, marketing, an

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selling the popular Coca Cola brand to customers all over the world.

Operations Management Practices

The evaluation of CCHBC's operations management practices should critically assess their ability to achieve strategic goals as outlined in the Four A's creed. This creed consists of:

  • Availability
  • Affordability
  • Acceptability
  • Activation

Coca Cola HBC cleverly integrates their processes into an operations strategy that goes beyond their organizational boundaries and includes suppliers and customers. This creates a supply chain that effectively meets ongoing demands and supports market growth.

According to Krajeski et Al (2010), a firm can compete not only through new products, innovative marketing, or expert finances, but also by having unique capabilities in operations and strong management of core processes. The Sand Cone Model proposes that firms can develop four sustainable competitive advantages in a specific order of strategic priorities. This order consists of quality, reliability, flexibility, and cost. If a company achieves excellent operations performance in quality, it gains the ability to deliver high-quality products. Similarly, excellent operations performance in reliability allows the company to compete based on fast and dependable deliveries (availability). Additionally, excellent operations management in flexibility enables the company to deliver a wider range of products and new products (activation).

The company's excellent operations presentation results in cost advantages, making their products affordable. Following this focus allows organizations to develop their advantages in all areas. According to the Hayes & Wheelwright four-stage model for manufacturing competitiveness, Coca Cola HBC can be classified as externally supportive, or stage 4. Their operations are actively managed to support the overall business strategy. Their operations are considered world-class and are aimed at achieving customer satisfaction. By establishing strong relationships with

suppliers, they are able to offer the best value in terms of quality, cost, service, and innovation, which aligns with their creed and helps them achieve the four A's.

These partnerships involve ongoing collaboration and cooperation, focusing on both operational and business matters. In some cases, joint investments and operations may also be part of these relationships. The bonds are so strong that many international providers have established local production in various countries. Information sharing with trade partners is crucial for effective operations management, including sharing product data and information. This includes sharing new product developments, promotions, marketing initiatives, operational advancements, supply availability, pricing strategies, existing plans, and logistics. In this collaborative culture, honesty and trust are highly valued. Bar codes are now essential technology for supply systems, regardless of the product.

This engineering allows for the unique identification and tracking of all products within the supply network. Coca Cola HBC, like many companies, relies on bar codes, electronic data interchange (EDI), and point of sale (PoS) information sharing to connect all activities in the supply system to real-time customer demand. It is unclear if the company utilizes it, but EDI is also a critical technological component that facilitates connections between companies within a shared operational network. This technology can enhance the interconnectedness between retailers and suppliers throughout the entire network. EDI is also used to support electronic trading, enabling global sourcing and acting as a low-cost communication option. Building strong relationships and partnerships with customers, suppliers, and other members of the supply chain allows CCHBC to save costs while addressing and influencing consumer preferences at the point of sale.

Collecting point of sale (PoS) information is crucial

for companies like this. However, it would not be very useful if the organization only keeps the information. To achieve a flexible and responsive supply and demand system, forward inventory planning and forecasting are necessary instead of reacting to real-time demand patterns. This supports a continuous and automated replenishment system, which is important for restocking items at the exact rate of sale by vendors or suppliers. Operational schedules are driven by demand information, and restocking is done directly from production output rather than inventory holding. These strong relationships also involve customers, retailers, and suppliers in product development, changes, and planning processes.

This allows for the quick development of new products or advanced packaging to be tested in-store before product launches. Additionally, their intelligent manufacturing and improved supply chain provide a high level of responsiveness, speed, and agility. Despite high initial costs and time for full implementation, many suppliers are increasingly adopting this form of production organization due to its highly valuable long-term benefits. All of these practices are important building blocks of Coca Cola HBC's operations strategy, helping to shape them into a customer-driven and customer-focused company.

Our operations map is the cornerstone of our competitive edge and industry norms. As the retail landscape undergoes constant change and consumer preferences expand, we recognize the importance of adapting to meet their demands. Additionally, our customers have increasingly higher expectations for service levels. In this ever-evolving environment, we consistently assess our business practices to achieve profitable and enduring growth. To secure the long-term viability of our business outcomes, we implemented a new strategic initiative in 2006.

'Excellence Across the Board' focuses on developing top-quality commercial and distribution capabilities, as well

as streamlining financial resource management. In particular, we are creating strong route-to-market systems and dynamic partnerships with clients to ensure our market performance is exceptional. Simultaneously, we aim to optimize the use of our financial working capital and reevaluate internal processes and systems. Additionally, as part of the 'Excellence Across the Board' strategic initiative, we aim to expand into regions that align geographically and contribute to our long-term growth opportunities. Meanwhile, we remain committed to researching other promising business areas to leverage our infrastructure, strengthen client relationships, and explore new avenues for growth and value.

We also manage our business following these six priorities:

  • increasing our beverage categories to become a more diverse non-alcoholic beverage company
  • building brand equity to generate value for clients
  • driving profitable product mix and exploring new channels to enhance profits
  • managing capital for growth and value
  • optimizing cost efficiency throughout our business
  • achieving superior sustainable returns

Here are examples that demonstrate how we accomplish these objectives.

Customer Coaction

Coca-Cola Hellenic aims to establish a strong partnership with the 1.4 million stores, restaurants, supermarkets, discount chains, and other businesses that sell the Company's beverages. To achieve this, we improve our route-to-market and commercial capabilities to ensure a continuously expanding range of products is available in the market.

Effective route-to-market systems

Another crucial element in driving sustainable growth is our route-to-market strategy for various trade channels.

This strategy focuses on adopting the most efficient methods to guarantee the complete availability of our products in the market and develop long-lasting relationships with store owners.

Excellence in market place executing

Achieving excellence in market place execution is supported by our ongoing investments in enhancing salesforce effectiveness. We invest in trading equipment to generate impulse sales and equip our salespeople with mobile devices to improve order taking, invoicing, and asset tracking.

At Coca-Cola Hellenic, our second important goal is to increase market share by offering exceptional customer service and top-notch products. We strive to adapt our business to meet evolving customer demands, implementing programs tailored specifically for each customer. This approach encourages a cross-functional strategy that aligns our organization with their practices, providing added value. To strengthen customer relationships, we plan to enhance joint annual planning, develop effective promotional strategies, implement gross growth initiatives, improve inventory management, and personalize refrigerator placement.

In functioning consumers, our design can be summarized in four words: handiness, affordability, acceptableness, and activation.

Handiness

We ensure that our range of products is easily accessible to consumers by placing them in the right bundle, at the right location and time. We prioritize building strong relationships with our clients to guarantee that the desired products are always in stock and visible for easy access wherever and whenever consumers may want a non-alcoholic drink.

Affordability

We offer a wide variety of premium quality products that are sold at the appropriate price for different occasions. Our aim is to reach as many consumers as possible while considering the varying purchasing power levels in the countries where we operate.

Acceptability

To increase consumer acceptance, we continuously expand our range of

high-quality products that meet stringent quality standards in each country. We have an extensive understanding of consumer needs and utilize effective communication channels to enhance product acceptance among target audiences.

We utilize our expertise in quality control, customer service, and efficient distribution to meet the needs of our clients and customers across all markets. Our goal is to encourage customers to purchase our products by enhancing availability and appeal at the point of sale while bolstering our brand in local markets. This objective is accomplished through close collaboration with clients, which includes arranging cold drink equipment, supplying signage and promotional materials, and implementing local marketing initiatives. Our capacity management approach plays a crucial role in satisfying customer demand and effectively adapting to evolving needs over time. It encompasses production planning and control, making it indispensable for the success of our organization.

According to Barnes (2008), the goal of capacity management is to align supply and demand. Insufficient capacity can result in dissatisfied customers and missed sales opportunities as consumer demand cannot be adequately met. On the other hand, excessive capacity typically leads to higher costs as resources are underutilized. Coca Cola HBC's approach to capacity management is centered around matching capacity with demand. However, this strategy heavily relies on accurately predicting future demand, a challenging task. While this seems to be the most suitable approach for the company, it also means that they may struggle to meet sudden increases in demand due to long lead times involved in capital investment decisions.

The author Barnes (2008) states that decisions regarding adding capacity should be made in a timely manner, as it can take years to create the necessary structure

and equipment. Coca Cola HBC believes that long-term prediction-based production planning is no longer necessary, and instead, they have chosen to implement a continuous planning process. Krajeski et al. (2010) agree with this notion, as they assert that forecast accuracy decreases as the forecast horizon lengthens. However, Barnes (2008) disagrees and argues that predicting future demand is important in both the long and short term. He maintains that long-term forecasts are needed when planning investments in new facilities and equipment, while short-term forecasts are crucial for effectively managing existing capacity.

At Coca Cola HBC, a dedicated prognosis director is responsible for using historical sales data and consumer information to generate a weekly demand plan. This approach relies on scientific methods and data mining tools, but accuracy remains a challenge. Regardless of the number of forecasting methods used, no method is highly accurate in predicting demand. According to Barnes (2008), any forecast is still better than none as it prompts managers to consider the future and find the best response to changes in demand.

Coca Cola HBC is using a quantitative method based on clip series analysis to predict the future. However, this method may not always be accurate. They should also use a casual analysis to identify relationships between demand and other factors such as weather conditions, advertising campaigns, and major sports/music events. It is likely that they also use qualitative methods such as market surveys and scenario planning to help them make predictions. These methods rely on estimates and opinions from customers or managers, so they cannot guarantee accurate forecasts. The company's planning process relies heavily on reaching a consensus among senior managers. This approach is

valuable as it aims to meet the goals and constraints of all involved parties.

However, it heavily depends on effective communication and excellent teamwork among all members, which is not easy to achieve. If relationships are not strong and teamwork is not exceptional, members may focus more on their individual goals rather than the team's objective. The administration faces multiple challenges due to their approach to capacity management, but these can be mitigated by fostering good relationships and partnering with customers, suppliers, retailers, and other supply chain members. The administration deals with a lengthy and complex supply network, which adds to the difficulty of management.

The house should constantly review the capacity direction strategy used in its supply chain as it affects all members and processes, as well as various departments within the organization. Therefore, the entire chain should be designed for efficiency. Agile supply chains are better equipped to handle unexpected increases in demand due to their action-oriented, competitive, and performance-driven nature.

Supply Management Approach

"Assess CCHBC's approach to managing its suppliers." Coca Cola HBC has a truly global outlook and maintains a global sourcing network with facilities in multiple countries.

All administration activities, including buying and more, are well-coordinated and integrated throughout the entire organization. They have developed strong and mutually beneficial relationships to ensure the best in terms of quality, cost, service, and innovation. With regards to relationships with suppliers, they work extensively with them to improve processes, reduce costs, and introduce innovation and efficiencies. These suppliers range from large international companies to smaller local ones. Some international suppliers have established production in different countries, allowing the organization to source from

them. Management of these relationships occurs at both the country and group levels, with multi-functional teams ensuring quality and efficiency. It is essential that all suppliers of ingredients and primary packaging materials are approved, while also adhering to strict standards for business ethics, human rights, labor practices, and environmental management. Third-party audits are conducted every two years to verify compliance with these principles.

In terms of Management Information Systems (MIS), how can it help Coca Cola monitor the achievement of its "A for availability" principle? Provide specific examples that demonstrate the value of chosen reports and information.The importance of good decision-making skills and problem-solving abilities is widely recognized, as they enable organizations to achieve their objectives. Managing information systems (MIS) can aid in reaching these goals by offering insights into the company's daily operations, allowing for better control, coordination, and planning.

According to Stair et Al ( 2008 ), a management information system (MIS) is a comprehensive collection of people, processes, databases, hardware, and software designed to provide managers with information for making better decisions to achieve organizational goals. MIS also facilitates collaboration between companies in the supply chain, in addition to supporting internal operations. By employing high-speed networks and databases, companies can easily share more reliable data to enhance the management of both the supply chain as a whole and their individual operations. Hugos ( 2006 ) argues that the use of this technology is crucial to a company's success.


An efficient management information system can benefit an organization in multiple ways:

  • Enhances planning - improves the quality of planning by providing relevant information for decision making.

  • Reduces information overload - transforms a large amount of data into summarized form, avoiding confusion caused by excessive detailed information.
  • Facilitates coordination - integrates activities and connects all decision centers within the organization.
  • Supports control - serves as a link between managerial planning and control, improving the ability to evaluate and optimize performance.
  • Enables decentralization - allows monitoring of operations at lower levels and frees up resources for departmental managers to focus on strategic activities.
  • The output of a management information system is information that assists in managerial functions. Various reports, such as charts, graphs, tables, summaries, etc., can be generated to support management decisions. There are five main types of reports, which can be utilized by Coca Cola CHB in different contexts but with the same objective of providing insights into the company's regular operations.

    To ensure the effectiveness of its products, Coca Cola HBC can utilize periodic scheduled reports to monitor and control manufacturing output. The supply chain management director can use a daily summary report to ensure production targets are being met. Additionally, they can ensure profitability targets are being achieved by using a weekly summary report to manage labor costs. Another valuable managerial tool is a key-indicator report, which provides insights into the previous day's activities. This report allows the production manager to quickly take corrective action in case of any deviations, such as unexpected production interruptions or supply shortages.

    Demand studies can also be generated to meet specific information needs upon request. The SCM director can

    use these to investigate the production status of particular products or assess the performance of a specific production line. Coca Cola CHB could also utilize exception reports, which would be automatically generated when an unusual situation arises or when a problem requires management action. For example, they could be generated when there is a production issue. This would then allow the relevant manager to make a quick, timely, and informed decision. As their name implies, drill-down reports provide highly detailed data about a particular situation.

    This research can be utilized to analyze revenue data for states, regions, cities, or even individual retailers. These studies provide valuable information for managers to make informed decisions and address issues in line with the organization's strategic planning and corporate policies. Production scheduling, inventory control, manufacturing resource planning, and quality control are all activities that can potentially be improved through the use of these various reports. In fact, Coca Cola CHB recognizes the importance of business studies. According to their 2009 Annual Report, they have successfully implemented SAP information systems to enhance the efficiency of their entire business. This includes improving the speed and accuracy of production, warehousing, and sales functions, as well as enhancing customer service levels. The company could also follow Coca Cola's example in the United States and implement a Group Decision Support System (GDSS). GroupSystem 5 enables Coca Cola to save time and money by utilizing a meeting facilitator and ensuring all participants remain anonymous.

    The inclusion of anonymous remarks and lineation options has eliminated the usual role of a small group of individuals dominating decision-making meetings.

    Interaction is necessary but limited, resulting in shorter meetings, less stressful

    conferences, a focus on important values and concerns, and increased efficiency. The effective use of the management information system and its studies provides support to directors as they work towards achieving corporate goals, giving the company a competitive advantage. With an effective management information system in place, Coca Cola HBC can monitor the achievement of the "Availability" principle, identify problem areas and improvement opportunities. By aligning company goals with customer desires and needs, they can deliver the right product, in the right location, and at the right time.

    Data Mining and Search Tools Analysis

    "Coca Cola's acceptance factor requires, among other things, effective customer service."

    Using specific examples, explain how data mining and related search tools can help Coca Cola analyze performance here. Many businesses and organizations gather data about their operations. They then analyze this data to gain insights into their operations and transactions. This can be as simple as periodically looking at a business report or can involve complex analysis using advanced software tools. Data mining is used because it can enhance customer service, improve targeted marketing campaigns, identify problematic customers, and enhance production processes. Its primary purpose is to help a company save money.

    Data mining can be effectively used at the outset of a product's lifecycle to reduce costs in research and development. It can also be efficiently used to save money in manufacturing. Sensors can be installed to monitor various factors specific to a process. The output from these sensors is then controlled by computer programs that can make small adjustments to maintain production within the "proper" limits.

    Data mining also helps marketing professionals enhance their understanding of customer behavior. Effective customer relationship management

    requires comprehension of customers, their needs, and their preferences. When data mining is properly utilized within the organization, the entire company can benefit from an increased understanding of its customers and market, a more focused marketing strategy, and a more efficient utilization of resources. According to Berry & Linoff (2004), data mining plays an important role in both advertising and direct marketing by identifying the right audience, selecting the best communication channels, and choosing the most appropriate messages. Coca Cola HBC can integrate their systems with retailers to analyze shopping baskets in supermarkets, making it easy to identify unexpected shopping patterns.

    Another way to use data mining is by using past behavior to rank customers. Coca Cola HBC can use sales data to differentiate between profitable and unprofitable customers. They can also use this data to predict which customers are likely to switch to a different brand in the future. Recently, Coca Cola introduced a new vending machine, equipped with a flat screen, which shows the various products available. The machine offers a wide range of drinks, many of which are not yet available in retail.

    The main purpose of this new vending machine is to extract information about people's consumption. With this information, Coca Cola can then identify new consumption trends and subsequently identify potential new blends and products to develop. Berry & Linoff (2004) state that the potential of data mining is to shift the focus of business towards serving customers and providing efficient business processes. This is extremely important in today's world, where we have learned that targeted marketing leads to more satisfied and profitable customers.

    Data Mining can be used to identify unexpected shopping

    patterns in supermarkets, optimize website profitability by making appropriate offers to each visitor, predict client response rates in marketing campaigns, and define new customer groups for marketing purposes. In summary, Data Mining can be applied anywhere in a business or organization where predictable outcomes are desired.

    Coca Cola HBC's strategic supply chain management and operations approach has been successful. The company has been able to identify and address production problems and their causes, leading to continuous improvement and achievement. The implementation of a prediction program required efforts from field sales managers and demand analysts, who collected customer demand data for the system. This data was used to forecast production volume and shipping strategies, as well as introducing new products and reducing inventory.CCHBC is a company that is undergoing a transformation and its future strategic supply chain management initiative can be enhanced through the use of vendor-managed inventory and outsourcing. Coca Cola HBC is a strong and well-managed company, and its approach to building long-lasting relationships with customers, suppliers, and retailers is crucial for success in today's competitive business environment.

    Appendix 1 - Teamwork Commentary

    The groups were divided in class on Saturday, October 30th.

    Division of research was done, with Candi and Maka focusing on text editions while the male children were dedicated to conducting company research. It was agreed that we would meet on Saturday 14th November after class. The first group meeting took place promptly, immediately following a discussion in Organisations and People Management about groups and teams, where we talked about the Tuckman model. This was our first meeting as a group and naturally, I became the group leader and led our

    discussion.

    We discussed a timetable for the project and agreed on the following steps. It was agreed that the next meeting would be on Saturday 13th November after class, and we should all come having read the survey instance and answered the questions separately. The next day, I took the initiative to create a timetable and shared it with the group. Communication and interaction were smooth as we already knew each other well prior to the project division.

    As you would expect, every group has a member. Not all members of the group are the same.

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