Supply Chain Management Strategy And Competitive Advantage In Industries Essay

Question:

Discuss about the Supply Chain Management Strategy and Competitive Advantage in industries.

Answer:

Introduction

Supply chain management in business organisations could be described as the operations which manage the flow of products and services from the suppliers to the production houses and from the organisations to the consumers. The main function of the supply chain management operations in an organisation is to manage the movement of production materials within organisation and also to ensure convenient movement of the produced goods to the targeted users or consumers (Christopher, 2016, Page 39). On the other hand competitive advantage of an organisation could be described as the factors related to the innovativeness and efficiency of an organisation which provides it with greater strength and market position from other of its competitor organisation in the market. Thus, depending on the basic concept of competitive advantage it could be said that convenient availability of the products and services to the consumers is a significant factor for providing an organisation with greater competitive advantage through better convenience and satisfaction of the consumers. On the other hand on time and on cost movement of the production goods or materials within organisation could effectively ensure efficient production of goods with better coordination with the exact product demands in the market and it could also ensure lower product pricing through effective management of the production cost as well (Stadtler, 2015, Page 24).

Depending on effective supply chain management, both the above factors could be efficiently management by an organisation and subsequently it could be said that supply chain management strategy in organisation has greater potential for contributing to the competitive advantage of the organisation (Dekker et al 2013, Page 37). A research on this topic including the views consumers and organisations about the competitive advantage of an organisation depending on the efficiency of supply chain management could be more effective for drawing more transparent conclusions. Hence, in the below segment of this report a detailed discussion has been made on the effectiveness of efficient supply management strategies on the competitive advantage of an organisation .The cased study aspect which has been considered for developing the discussions is supply chain management strategies and its contributions to the competitive advantage of one of the leading beverage industry organisation of the world, Coca-Cola (Bozarth, & Handfield, 2016, Page 63).

Main Report Body

Coca-Cola is most probably considered as one of the best global brands in any industry across the world depending on the convenient availability of the products of the brand in almost every possible nation across the world. There is no doubt that Coca-Cola is the most dominant force and global market share holder in the global non-alcoholic beverage production and retail industry (Monczka et al 2015, Page 43). The organisation has the widest variation and product range of carbonated and non-alcoholic beverage products along with 3500 types of products and it has supply and availability of its products from bigger hotels and restaurants to almost every smaller to smallest retailers in 200 different nations across the world. Thus it is a significant need for Coca-Cola to manage their supply chain activities in a more efficient manner so that such a larger variety of products could be produced according to their market demands and product supply within such a huge business territory could be managed for ensuring better product availability in almost every corner within it (Tayur et al 2012, Page 31).

Positive aspects of Coca-Cola Supply Chain Management towards its Competitive Advantage

If the most significant factors of the supply chain management strategies of Coca-Cola would be analysed it could be observed that the organisation follows some revolutionary approaches for meeting their business objectives. Some of the most effective strategic approaches associated with the supply chain management strategies in Coca-Cola are discussed below,

Supply of wider product range to every social segment in 200 different nations of operation

Coca-Cola has its product supply in 200 different nations across the world and it ensures effective product availability in almost all the significant shopping places, restaurants and hotels in these nations and even has supply of its products to smaller to smallest retailers in the urban areas as well. The wider range and variation of Coca-Cola products is also a significant factor associated with the greater need for efficient supply chain management within the organisation (Walker, 2015, Page 246). Coca-Cola has a product range of almost 3500 products including carbonated beverages, juices, health and emery drinks and purified water as well. Thus, it could be said that effective management of the product supply in almost every different segment in the society and offering a wider range of products to the consumers depending on efficient supply chain management strategies could be effectively helpful for making Coca-Cola products to be the first choice for the customers and subsequently the competitive advantage of the organisation could also be enhanced (Seuring, 2013, Page 47).

Local production strategies and individual transportation department for every different production house

Coca-Cola also has its product supply contract with most of the globally renowned supermarket chain and restaurant chain businesses which also ensures better availability of the products to the consumers. The organisation has production operations in most of the nations which are significant market places for the organisation along with greater product consumption rate. If the production operations of Coca-Cola would be considered it could be observed that almost 95% of the total yearly production volume of the organisation is produced in international locations where they are supposed to be sold (Christopher, 2016, Page 39). It should be mentioned that the organisation meets the product demand from more than 170 millions of consumers across the world every year. Thus it could be said that internationalisation of the supply chain management process for performing production operations in different nations within its business territory could effectively help Coca-Cola to ensure adequate availability of the production materials in every production house across the world. This strategy could also be helpful for Coca-Cola to minimise business expenditure through eliminating the need for product transportation in different market locations depending on the local production process and it could also help the organisation to keep the pricing for the products within reasonable range as well (Bozarth, & Handfield, 2016, Page 63). Thus strategy also helps the organisation to keep their production volume in local production houses in every nation within its business territory according to the supply demand in the markets. Thus this aspect of the supply chain management strategy of Coca-Cola is able to provide the organisation with various significant factors for its better competitive advantage in the market, such as cost minimisation and subsequent reasonable pricing for products, cost minimisation through eliminating the needs for transpiration of products across the world and coordination with the exact product demand in the market (Monczka et al 2015, Page 43).

Adaptation of modern generation technologies in supply chain management

Adaptation of modern generation technology is also a significant factor for supply chain management operations in Coca-Cola. The organisation is looking forwards for adopting automatic storage and retrieval system for their consumers so that more convenient delivery of the products to the consumers could be ensured (Simpson et al 2015, Page 43). For example, recently a newer €20m automatic storage and retrieval system has been availed in the distribution centre of the organisation in Dongen, The Netherlands. These strategies could be effectively helpful for the organisation to ensure better satisfaction of consumers depending on more effective product distribution and subsequently better competitive advantage could also be achieved (Sch?nsleben, 2016, Page 89).

Better accessibility to smaller retailers and effective product availability in smaller to smallest stores in the market

The organisation has the strategies for having efficient logistics teams with adequate and experienced staffs in almost every production houses across the world so that effective product distribution in the markets could be ensured without getting much dependent on third party distributors (Hsu et al 2013, Page 44). That supply chain management strategy effectively helps the organisation to maintain better transparency to the retailers irrespective of their size so that better control over of the market distribution and unethical price demands by the retailers could be controlled for better competitive advantage (Coyle et al 2016, Page 92).

The marketing department of Coca-Cola also maintains effective relation with the authentic distributors and bigger retailers in the significant market places so that exact demand of the retail market could be realised and products could be supplied accordingly. It helps Coca-Cola to ensure better availability of the products to the smaller to smallest retailers in the market from the bigger and most authentic distributors and retailers. Thus, this approach also triggers the competitive advantage of the organisation through ensuring better product availability to the smaller retailers and consumers in the surrounding localities (Zhu et al 2013, Page 11).

Product availability in many bigger international restaurant chain businesses

Using the popularity of other international food related organisations in different product lines is also a significant factor in the supply chain management strategy of Coca-Cola for providing the organisation with more effective competitive advantage around the globe (Pagell & Shevchenko, 2014, Page 62). For example, Coca-Cola has business relations with many of the globally famous food retail chain businesses like McDonalds, KFC, Subway, Dunkin Donuts and other for selling the products along with Coca-Cola beverages. This, supply chain management strategies effectively help Coca-Cola to utilise the international popularities of these organisation for gaining more production consumption rate in the markets (Brandenburg et al 2014, Page 67).

Analysis of the positive factors

Thus depending on the above illustration it could be observed that effective supply chain management strategies have provided Coca-Cola with several of advantageous factors which are capable of providing the organisation with more effective competitive advantage. Efficiency of the supply chain management operations in Coca-Cola and innovative approaches leaves no doubt for the organisation being the global market leader in the non-alcoholic beverage industry (Ahi & Searcy, 2013, Page 35). The most significant factors which could be identified from the above discussions and analysis about better competitive advantage of Coca-Cola depending on their supply chain management strategies are 1- Better product availability to the customers and subsequent consumer convenience, 2- Targets on bigger and smaller market aspects to supply products, 3- managing the product supply for over than 170 million customers every year in 200 different nations across the world along with a variety of 3500 products 4- control over product pricing in markets through better control over the middle level distributors, 5- internationalised supply chain management managed for meeting the supply objectives and required in different production locations across the world, 6- effective cost minimisation through elimination of need for international product transportation, 7- better coordination with exact product demand in every different market and 8- product availability in most of the globally renowned food retail chain businesses like Subway, KFC, McDonalds and others (Barney, 2012, Page 41). Thus it is very evident from the above analysis and discussions in this report that effective supply chain management is one of the most significant factors for Coca-Cola for their massive success and consumer popularity across the world. The basic conclusion which could be achieved from the discussions that effective supply chain management enables Coca-Cola to effectively perform their production operations across the world and it also ensures better availability of the products to consumers which are two most significant factors for triggering the competitive advantage of the brand (Fitzsimmons & Fitzsimmons, 2013, Page 56).

Negative aspects of Coca-Cola Supply Chain Management towards its Competitive Advantage

Now if the negative aspects associated with the supply chain management policies of Coca-Cola would be analysed it could be observed that along with above mentioned benefits for the competitive advantage of the organisation it also has some negative impacts as well (Christopher, 2016, Page 39). Some of the most significant aspects of the supply chain management strategies of Coca-Cola which could impact the competitive advantage of the organisation in negative manners are mentioned and discussed below,

Higher business expenditure for local production and individual transportation department strategies

First of all the organisation has its strategies to perform production operations in different nations where the product demand is higher but establishment of such a internationally diversified production operation needs greater amount of capital investments for setting production units across the world and it also generates the need for hiring larger number of staffs as well (Brandenburg et al 2014, Page 67). Moreover, having own transportation department for every different production house and location in different nations across the world significantly increases the business expenditure of the organisation due to the need of greater number of staffs and arrangement of huge number transportation vehicles. Higher business expenditure surely influences the profitability and profit margins for Coca-Cola which is a negative aspect of its competitive advantage in the markets (Barney, 2012, Page 41).

Greater dependency on middle level management for supply chain decision making

Coca-Cola majorly relies on middle level third party distributors and suppliers to supply their products to the smaller stores and retailers in the markets. Unethical approaches and pricing strategies of these middle level dealers and suppliers could affect the pricing for the Coca-Cola products in smaller stores in different nations and subsequently consumer satisfaction and loyalty towards the organisation and products could be affected as well (Bozarth, & Handfield, 2016, Page 63).

Decision making conflicts for top management to control supply chain management operations over such a huge business territory

Apart from that it is very difficult for the top management authority of Coca-Cola to coordinate with the supply chain activities thrived over such a huge business territory across the world. That complicates the decision making efficiencies and approaches of the top management authority and they have to rely more on the regional management authorities for taking important decisions according to the market situations. This it could create conflict and diversity in the decision making approaches of the organisation in different locations (Ahi & Searcy, 2013, Page 35).

Implications for supplying all the product variations in all the market places

Although the supply chain and production operations of Coca-Cola is internationalised but it does not have equally strong production houses around the world which could effectively produce all the products included in the larger product variety of the organisation. Only the products having higher popularity in the market are generally produced locally which limits the scopes for other products of the organisation to achieve uniform popularity across the world. Thus, even after having a product range of 3500 products Coca-Cola cannot utilise it properly to achieve the most effective competitive advantage in all the nations of its operation (Fitzsimmons & Fitzsimmons, 2013, Page 56).

Conclusion

Thus it could be concluded from the above report that the above analysis is highly justified to establish that fact that effective and efficient supply chain management is also a significant factor in organisations for gaining better competitive advantage in the markets. The analysis effectively discusses the ways by which efficiency of the supply chain management operations in Coca-Cola provides the organisation with several of advantages to gain effective competitive advantage from all other competitors in the global market (Dekker et al 2013, Page 37). Depending on the above discussions several competitive advantage factors for Coca-Cola have been identified which have been gained by the organisation effectively utilising their efficiency and strength in supply chain management process (Wisner et al 2014, Page 19). Thus it shows how effective supply chain management could contribute to its competitive advantage in the market. However, there are some limitations of the above analysis. All the conclusions have been achieved through secondary analysis process but prioritisation of the reviews of the organisations and consumers about the relevant topic depending on primary analysis could have been more effective for drawing more transparent conclusions. Thus, inclusions of primary analysis process in future could provide this report with greater opportunities for achieving more appropriate conclusions (Ross, 2013, Page 78).

References

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