Inventory And Supply Chain Management: A Case Study Of Coca Cola Great Britain

The Supply Chain Planning Techniques and Technologies

Inventory and Supply Chain Management comprises of managing the products and services of the company. It is the key component involved in the navigation of the inventory from point of origin to point of consumption.  It is the main component of the raw material consumption cycle (Beeharee, Busian & Rutten, 2016).

Supply Chain management has been described as the process which designs, procures, executes and regulates the movement of the inventory in the organization. Various processes of the inventory and supply chain management are adopted by Coca Cola Great Britain. It is the subsidiary of The Coca-Cola Company .It is headquartered in London, United Kingdom. It sells around 20 brands and 80 drinks in UK (Coca Cola Journey, 2016). In this report, the inventory and supply chain management processes are analyzed with reference to Coca Cola Great Britain. Also the risks associated with these processes and suggestions to mitigate them are also stated hereby.

There are various techniques of Supply Chain Management applied by Coca Cola Great Britain .Some of them are:

1. ERP or Enterprise Resource Planning: It is the process which combines various procedures such as inventory and order management, accounting, human resources and customer relationship management (SAP, 2018).
2. TQM or Total Quality Management: The aim of TQM is to incorporate all the processes related with procuring raw materials and allocating them when needed by the manufacturing department.
3. JIT or Just In Time: It is the inventory policy adopted by the company to reduce the waste and increase the effectiveness by procuring the raw materials only when they are needed. The manufacturing department should forecast the demand of raw materials accurately for its successful implementation (Habib, 2014).  

With reference to the Supply Chain Management of Coca Cola Great Britain, the project planning approach pertains to the use of schedules such as Gantt Charts to analyze and investigate the progress of the project. It is described as the use of suitable methodology to complete the project and report its progress to the management (Wieland, 2013).

With reference to Coca Cola Great Britain, the Quality Improvement Approach pertains to continuous observation and monitoring of the various processes at each level with the aim to improve them. It establishes the policies and procedures to meet the consumer satisfaction and product safety (Paiva, 2013).

Several risks are identified in the Supply Chain Management of Coca Cola Great Britain. Some of them are:

1. Supply Risks: When the flow of supply of raw material, work in progress and finished products is disturbed due to some external factor such as non-availability of the materials, labor strike and price hike, the system is prone to supply risk.
2. Demand Risk: When there is a sudden decrease in the demand for a certain product due to volatile or misunderstood customer demands, the system is prone to demand risk.
3. Environmental Risk: It exists outside the supply chain and is affected by economic, social, administrative and climate factors.
4. Commercial Risk: When the company is unable to procure the raw material from the market because of the withdrawal of the supplier to supply the goods and management’s inability to purchase the goods due to financial constraints.
5. Risks relating to Non Compliance: When the company does not comply with the applicable laws and regulations, it is prone to risk of noncompliance (Johnson, 2014).
6. Risk caused by disturbances in the manufacturing processes: The Company is prone to risk caused by disruptions in the manufacturing procedures and mechanisms.
7. Planning and Control Risks: When the management fails to plan the proper requirement and procurement of the raw materials, it is prone to planning and control risks.
8. Change in the managerial personnel and risks associated with them: When there is a change in the managerial personnel or processes pertaining   to the change in the ways of dealing with the suppliers and customers. With this the company might lose the customers or suppliers, thereby bearing wastage of tie and resources to procure new ones in their place.
9. Contingency Risks: When the management does not plan for alternative solutions for the contingencies, it is prone to contingency risks.
10. Cultural Risk: When the company has the culture of concealing the negative information and not resolving the issues and problems, it may not be able to react to the issues and problems, when they arise suddenly (Queensland Government, 2017).

 The PPRR Risk Management Model

The preparation, preparedness, response and recovery (PPRR) model is an effective approach to risk management. It assists in tracing the impact of risk on Coca Cola Great Britain and helps to reduce loss posed by the various threats. The steps of PPRR model are as follows:

1. Prevention: It enables the management to act by reducing the effects of risk or remove its likelihood to occur.
2. Preparedness: With the help of this step, the management acts before the occurrence of any incident. It helps the management to assure efficient response and recovery before the company is exposed to any risk.
3. Response: It helps the management to control and reduce the impact of risk.
4. Recovery: It helps to implement certain measures to reduce the harm caused by the risk and assists the business to recuperate from the loss suffered by the risk (Queensland Government, 2017).

 Financial activities of the company are amongst its crucial and complex activities. So, in order to fulfill the aim of the organization which pertains to minimizing cost and maximizing profits, the managerial personnel should make sure that the funds are used in the most effective manner. Some of the analytical tools and techniques which are important in the context of Supply Change Management are as follows:

The Project Planning Approach

Capital Expenditure is the investment of the company in fixed assets. For example in Coca Cola Greta Britain, the expenditure related to purchase of bottling machinery, land etc.

While Revenue expenditure is the expense incurred for working capital. It is the expenditure incurred for the routine expenses of the company. For example in Coca Cola Greta Britain the expenditure related to purchase of raw material, salaries paid etc. (Hasan,2013).

For any business, there arises a need to classify its costs. In Coca Cola Great Britain, it enables the company to run the business smoothly by classifying the costs to help in efficient decision making for the management . Direct Costs can be easily related to the particular element such as cost of manufacturing a product and salaries paid to the labor for manufacturing the product.  While Indirect Costs are those which affect the entire organization. For example in Coca Cola Greta Britain, the advertising costs, depreciation etc. are Indirect Costs (Hälinen, 2015).

Simon et al. (2015) suggested that cost allocation refers to recognizing and allocating the costs to different departments to enable their smooth working. For example in Coca Cola Great Britain, it is essential to bifurcate and allocate the costs to various departments.

Working out what your business should spend money on (no date) “One of the common investment appraisal techniques is Net Present Value Method (NPV).” It is the value derived from the current value of the net cash inflows generated by the project less the initial investment of the project. It is one of the most consistent methods which are used for cash flow calculations because it takes into account the time value for money by using discounted cash flows.  

Coca Cola Greta Britain is planning to assimilate new processes in its accounting system. It will enhance the efficiency in the business by automating the accounting processes. It will require an investment of £ 600 Million. Jory et al. (2016) suggested that to decide whether to take this project or not, it should calculate the present value of cash inflows by using NPV method.

In this project, the Present Value of the cash flows is calculated @ 10 %, which is calculated using the economic and other factors affecting the economy of the country. Using the NPV method, in the first year the cash inflow of the company is (£418Million). In the second year, the present value of the cash inflow is (£253 Million) while in the third year; the present value of the cash inflow is £123 Million which is a positive amount .Hence Coca Cola Great Britain can take this project.

The Quality Improvement Approach

Recommendations/Conclusions

Supply Chain Management is the management in the supply chain activities to increase the value of goods for the consumers and help the organization in accomplishing sustainable competitive advantage. It has two relevancies.  First is that every product which reaches to the end consumer is because of the supply chain management of the company. Secondly, there is a need for paying attention to the effectiveness of the Supply Chain management activities, which are responsible for delivering the end product to the consumer. It is because of the Supply Chain management that the product reaches to the consumers and retains its value (NC State University, 2017).

So in the context of Coca Cola Great Britain, the supply chain management activities include product development, sourcing with the dealers and customers, advertising the product and logistics management thereby delivering the end product to the customers.

 Beeharee, N.G., Busian, L. & Rutten, A. (2016) Responsible Supply Chain Management :Where do companies stand? [online]. Available from: https://www.vigeo-eiris.com/wp-content/uploads/2016/06/Vigeo-Eiris_SupplyChain_Study_2016.pdf Accessed 30^thJanuary, 2018].

Coca Cola Journey (2016) Our business [online]. Available from: https://www.coca-cola.co.uk/about-us/our-business [Accessed 29^thJanuary, 2018].

Habib, M.(2014) Supply Chain Management (SCM): Its Future Implications. Open Journal of Social Sciences. 2, pp. 238-246.

Hälinen, H.M. (2015) Understanding the Concept of Logistics Cost in Manufacturing [online]. Available from: https://www.doria.fi/bitstream/handle/10024/103549/Ae-1_2015.pdf?sequence=2 [Accessed 30^thJanuary, 2018].

Hasan, M. (2013) Sustainable Supply Chain Management Practices and Operational Performance. American Journal of Industrial and Business Management. 3,pp.42-48.

Johnson, C. (2014) Different types of risk in your supply chain, and how to avoid them.The European Business Review [online]. Available from: https://www.europeanbusinessreview.com/types-risk-supply-chain-avoid/ [Accessed 30^thJanuary, 2018].

Jory, S. R., Benamraoui, A.,  Boojihawon, D.R. &  Madichie, N.O.(2016) Net Present Value Analysis and the Wealth Creation Process: A Case Illustration. The Accounting Educators’ Journal.26, pp.85-99.

NC State University (2017) What is Supply Chain Management (SCM)? [online]. Available from: https://scm.ncsu.edu/scm-articles/article/what-is-supply-chain-management [Accessed 30^thJanuary, 2018].

Paiva, C.L. (2013) Quality Management: Important Aspects for the Food Industry [online]. Available from: https://www.intechopen.com/books/food-industry/quality-management-important-aspects-for-the-food-industry#article-front [Accessed 29^thJanuary, 2018].

Queensland Government (2017) Identifying supply chain risks [online]. Available from:  https://www.business.qld.gov.au/running-business/protecting-business/risk-management/supply-chains/identifying [Accessed 30^thJanuary, 2018].

 Queensland Government (2017) The PPRR risk management model [online]. Available from:  https://www.business.qld.gov.au/running-business/protecting-business/risk-management/pprr-model [Accessed 30^thJanuary, 2018].

SAP(2018) What is ERP? [online]. Available from: https://www.sap.com/india/products/what-is-erp.html [Accessed 29^thJanuary, 2018].

Simon, A.T., Serio, L. C. D., Pires, S. R. I.  & Martins, G. S. (2015) Evaluating Supply Chain Management: A Methodology Based on a Theoretical Model. RAC, Rio de Janeiro. 19(1), pp.26-44.

Wieland,A. (2013) Selecting the right supply chain based on risks. Journal of Manufacturing Technology Management. 24(5).

Working out what your business should spend money on (no date) Appraisal techniques [online]. Available from: https://www.mygov.scot/investment-appraisal/ [Accessed 30^thJanuary, 2018].

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