Collaborative Planning, Forecasting and Replenishment of Coca-Cola

Inventory Management The Coca-Cola Company is the world’s largest beverage company, and markets four of the world’s top five leading soft drinks: Coke, Diet Coke, Fanta, and Sprite. It also sells other brands including Powerade, Minute Maid, and Dansani bottled water. The company operates the largest distribution system in the world, which enables it to serve customers and business in more than two hundred countries. Coca-Cola estimates that more than 1 billion servings of its products are consumed every day.

At the same moment, the company sales volumes fluctuate according the price changes, promotions, competition and so on.

In this manufacturing world, the forecasting is very important and a great challenge. Coca-Colas experience with inventory forecasting supports the principles set forth by CPFR which is collaborative planning, forecasting and replenishment. According to the website of VICS “The CPFR is a business practice that combines the intelligence of multiple trading partners in the planning and fulfillment of customer demand. ” This is one of the series of supply chain initiatives to make supply chains more responsive to the demands of the customers.

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It always aims to improve the services and the quality of the products of one company.

The four main collaboration points of CPFR is “Strategy and Planning, Demand and Supply Management, Execution, and, Analysis. ” As Jean V. Murphy states in his article that “the company knew it needed to have better visibility to actual demand and more flexibility in production”. The company strategically created a plan which consisted of implementing Networks Demand, Networks Fulfillment, Networks Collaborate, Production Scheduling and Demand Planning Extended Edition.

This plan gave a huge fundamental change to the forecasting and schedule production in each manufacturing plant.

The demand and planning came first and then collaboration was executed. According to Murphy “With the Collaborate application, our sales managers are able to provide local intelligence to the system, and they also can see their forecast accuracy in the past as well as any adjustments they already have made. ”This has made it easy to plan and manage all new products adding to the list they carry. It has already succeeded in its implementation of collaborative system for its manufacturing plants warehouses, and distribution centers.

With demand, production and scheduling working collaboratively, the company has improved in its forecasting. The company has achieved above 90 percent accuracy of its forecasts, which the management think is a big edge in today’s dynamic marketplace. The company’s capital expenditure also decreased as the need for new warehouses decreases. According to Murphy, the closure of many of its facilities is not due to bankruptcy but because of its effective inventory management, and quicker product distribution, and an effective approach for reduction of expenditure cost.

Its next plans are to extend collaboration to its carriers, and to its suppliers. This is a clear insight that the company is hoping to fully implement the CPFR business model in the near future. Coca-Cola's experience with inventory forecasting does supports the principles set forth by CPFR. Works Cited Murphy, Jean V. "Special Issue: Collaborative Commerce - Forecasting Tool Lowers Coke Bottler’s Inventor. " Www. supplychainbrain. com. Web. ;Special Issue: Collaborative Commerce - Forecasting Tool Lowers Coke Bottler’s Inventor;. "VICS - CPFR® Committee. " VICS - Home. Web. ;http://www. vics. org/committees/cpfr/;.