I had the privilege of speaking recently at the SCM World Leaders Forum in Gleneagles, Scotland, where procurement and operations executives from many of the world’s top companies and organizations met to explore the future design and execution of global supply chains. During my keynote remarks, I explained why we at Coca-Cola believe supply chain agility will help build brand love in the years to come.
Agility is a challenge for any business. Futurist Alvin Toffler said, “The illiterate of the future are not those who cannot read or write. It will be those who cannot learn, unlearn and relearn.” Businesses like ours must factor in a host of unknowns – from the cost of energy, to the next big technology breakthrough. All of that puts agility at the epicenter of supply chain’s changing place in driving competitive advantage, which in our case means creating a love so strong there is no room in consumers’ hearts for other brands.
There are many ways to think about the connection between agility and brand love. Our $64 billion supply chain covers more than 900 manufacturing facilities, 270 bottling partners and more than 20 million customer outlets. For two-thirds of our 20 million customers, we use one of the world’s largest direct store delivery (DSD) systems. We have more trucks on the road than UPS and FedEx combined.
Our product portfolio includes sparkling beverages, coffee, tea, sports drinks, energy drinks, packaged water, juices and dairy-enhanced drinks. The demands of our portfolio range from very stable sparkling beverages to perishable liquid foods. And since we produce and distribute locally in every country, we have the flexibility to tailor our brands, products and packages to fit the needs of our customers and consumers. Our feet on the street in each market allow us to spot opportunities early and deal with issues quickly. That presence and fast reaction time is critical because the road to brand love and consistent growth goes through the people who sell our products.
Meeting New Expectations
We have to win the love of a tough crowd. Millennials, our core consumer target, want what they want… right now. They care about the world deeply, and they’re watching. Disappoint them, and they have the means and motive to let the world know they’re unhappy.
Alex Cummings, EVP and Chief Administrative Officer, The Coca-Cola Company
Our consumers love Coca-Cola and have made it the largest beverage brand in the world. But they also want to constantly be surprised by the new and the different. We provide all of that through innovation – the great enabler – and customize our innovations by culture, market, customer and channel. We have R&D facilities in Atlanta, Ga.; Apopka, Fla.; Rio; Brussels; Tokyo and Shanghai – each with its own beverage category focus.
What happens in the lab is important. But just as important is what manifests on the streets. Our local presence enables us to satisfy local tastes and understand local channels. Many innovations start locally before scaling globally. For example, Minute Maid Pulpy was created in China and spread to other markets, quickly joining our stable of 16 billion-dollar brands.
One of our most interesting and effective supply chain innovations – what we call our Micro-Distribution Center (MDC) model – began in Africa and has reached other markets in the developing world. We train, supply, support and arrange funding for entrepreneurs – many of whom are women – who use everything from pick-up trucks to hand-carts to get our products to hard-to-reach outlets. In Africa, 3,500 of these small, entrepreneur-led businesses employ more than 19,000 people. And in countries like Kenya, Tanzania, Uganda, Ethiopia and Mozambique, MDCs account for the majority of our sales.
Sustainable in All Things
For years, we earned our social license to operate through philanthropy and by doing no harm. But new expectations call for collaboration among business, government and civil society – the Golden Triangle – in driving change and tackling society’s toughest challenges. In packaging, for example, our aspiration is zero waste. By redefining packaging from waste to resource, we are reducing materials, improving and promoting recycling. Our PlantBottle packaging, made of 30% renewable sugarcane waste, started as a breakthrough in the lab before integrating into our supply chain. Heinz is using the technology in its ketchup bottles, and a new partnership with Ford, Nike and P&G will expand use in their products. We’re also working with biotech partners to make a 100% plant-based bottle that is fully recyclable, renewable and scalable across our global supply chain.
Water is the core ingredient in our supply chain and our single most important environmental issue. Our goal by 2020 is to give back an amount of water that equals all the water we use in our products and their production. Through reduction and recycling, we’ve reduced consumption 20 percent since 2004. We’re at 99% towards meeting our stringent standards for wastewater treatment. Since 2005, we also have launched 500 water program partnerships in 100 countries where the need is greatest. Replenishment now accounts for 52% of the water we use in our finished beverages.
We believe an agile supply chain is at the heart of our ability to live up to a new age of expectations, making Coca-Cola worthy of the ultimate differentiation and true driver of growth: brand love. As much or more than marketing, public relations or any of the ways we converse with consumers, our supply chain is key to winning a multi-level chess game where the squares are in motion and the rules are in a state of constant change.
Alex Cummings is executive vice president and chief administrative officer at The Coca-Cola Company.
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