Capacity and Demand Planning in Coca- Cola Essay
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Coca-Cola is an American multinational beverage corporation that was found on 1892 by Asa Candler and is a manufacturer, retailer and marketer of non-alcoholic beverage concentrates and syrups. Coca-Cola operate in a make- to -stock enviroment. This process can help to provide faster service to customers from available stock and lower costs considering Coke normally has a distribution process of bulk items. The customers buy directly from the available inventory. Demand management and distribution is therefore a fey focus.They use the continuous flow method of manufacturing.
The products are made in a continuous fashion and tend to be highly standardized and automated with very high volumes of production. The production flow of Coca Cola involves passing sub-assemblies/parts from one stage of production to another in a regular flow.
• Briefly outline the forecastng technique(s) used by the company. Coca-Cola uses the forecasting technique of linear regression using a functional relationship between two or more correlated variables. The relationship is usually developed from observable data and plotted in a graph the two variables regress to form a straight line.
The linear regression line is of the form Y=a+bX, where Y is the value of the dependent variable that we are solving for,a is the Y-intercept, b is the slope, and X is the independent variable( In the time series analysis, X is the units of time)This method is useful for long-term forecasting of major occurences and aggregate planning. The linear regression model is based on the relative increase in consumer sales, which is then translated with a separate retailer model into the sell-out sales forecast of Coca-Cola.
The restrictions with this method is that past data and future projections are assumed to fall about a straight liner.Linear regression is used for time series forecasting and for casual relationship forecasting. • Note if the company utilises a sales and operations planning process and if so, indicate how this compares with the process steps detailed in the text book. Coca-Cola’s Sales and Operations Planning Process is primarily focused on maintaining and improving forecast accuracy also including tactical market planning, customer order management, master scheduling and detailed weekly planning.S&OP were implemented at CCM (a regional division of Coca-Cola in France) when the plant was started in 1991.This typically involves a five-step monthly process comprised of : data gathering and review, demand planning, supply planning, meeting with patners and executives.
monitoring and managing demand and supply in a product family and volume levels. S&OP pulls together and reconciles other separate, but connected business processes including strategic planning, sales and marketing planning, financial planning, detailed sales forecasting, customer order management, master production scheduling, distribution resource planning, and rough cut capacity planning. Face-to-face meetings cover four suppliers representing 71% of total juice volume. Volume changes are implemented based upon agreed-upon time limits within select time frames.Coca-Cola’s monthly S&OP process actually begins ten days before the month end, when preliminary demand data is updated based on the requirements from sister Coca-Cola divisions. This data is updated over the next two weeks as actual results occur. These meetings also address:
Inventory and demand management issues
Product in QA quarantine
Service defect rates and corrective actions
Improvements planned and requested
According to Jacobs, Berry, Whybark & Vollmann the monthly S&OP involves making decisions on each product family concerning changes to the sales pklan,operation plan and inventory backlog.Current data of recent forecasts and recommendations fom middle and senior management is used to make decisions. The 5 steps they outline are: Run Sales Forecast Report- End of month
Demand Planning Phase-Statistical forecasts, field sales worksheets Supply Planning Phase-Management forecast, First-pass spreadsheets Pre-SOP Meeting-Cappacity constaints, Second-pass spreadsheets-Recommendations and agenda for executive SOP meeting Executive SOP meeting-Decisions, Authorised game plan