Logistics and Coca Cola Company
The cost of a company might low when the company is doing well in this two important department. Transportation is the way that a company use for the purpose to shift or carry their goods or product from a place to another place. Warehousing is a place for company to store their good and stuff. Besides, there will be inbound and outbound for the transportation and warehousing.
For transportation, the inbound is meaning that the goods or partly goods are send to the company/ warehouse from other place. Inversely, the outbound is meaning that the goods are send to the retailer or the outlets from company. (Genco. com, 2014) For warehousing, the inbound and outbound is considering as a flow in and flow out of product in the warehouse. (Msdn. microsoft. com, 2014) (Msdn. microsoft. com, 2014) There are various type of transportation such as sea, air, rail, road and pipeline. There will be different cost for different type of transportation.
Therefore, choosing a right transportation for deliver the company goods will lower the cost of the company and there will be opposite if the company choose the wrong transportation. For example, the company should concern on the speed by choose the air transportation when transport the fresh fruit because the other transportation might not be quick enough and may cause the fresh fruit turn into bad condition. The company should choose the transportation mode depends on the size and weight of the product, time consume, cost, value of product and distance.
For instance, the company can decide to handle the logistic by itself of outsource the work to a freight forwarder/ 3rd party logistic. Moreover, there will be three type of warehousing setup. First, all the product will store or put in a place and only distributed to the outlet or client when they need which is called centralized. Second, some of the product might store in more than one warehouse which is called decentralized. Third, the company might choose to use 3rd part logistics warehousing rather than build and own a warehouse.
Choosing the right warehousing setup will minimize the cost of a company. For example, an importer will choose the 3rd party logistic warehousing to store his product for temporary because its product will not store for a long period and the cost is depends on how long the company store its product in the 3rd party logistic warehousing. According to the article, the warehouse is playing a new role that no longer just for storage and it is involve in cost conscious and efficiency-driven environment. (Inboundlogistics. om, 2014)
In short, the inbound of transportation and warehousing is the relationship between the raw material supplier and the manufacturer; the outbound of transportation and warehousing is the relationship between the manufacturer and the respective outlet/client. 2. 0 Literature reviews The successful management of a small logistics company In this paper, there is discuss a case about a small 3rd party logistics company in Hong Kong and the company is interesting in that it has been designated as the “king” of Hong Kong’s 3rd party logistics companies.
Besides, the company has been successful in its overall business performance and it also satisfies its customers. This company’s strategic alliances with both clients and customers have helped to improve the utilization of its resources, such as warehouse space and transportation ? eets. Moreover, the company wants to become a full-pledged 3rd party logistic company and it also in the process of expanding its operations across greater China.
The analysis of this case is focuses on the important success factors about the strategies and technologies that have allowed a small company started only in 1996 to become so successful in its operations. In short, a framework has been provided for the company to develop its logistics operations as a full-pledged 3rd party logistic company. (Gunasekaran and Ngai, 2003, pp. 825-842) Third-party logistics in Europe – five years later This journal is discuss the results of a survey between shippers in several European countries involved in outsourcing their transport, warehousing and other logistics activities.
The survey is made by more than one reserchers which is the universities of Cranfield, Eindhoven, Linkoping and Rotterdam (Erasmus) and of ManDat GmbH. Besides, the survey is about the characteristics of logistics partnerships and the benefit for a shipper by using the 3rd party logistic company. There are two major observations found in the survey which is the scope and level of sophistication of the partnerships has increased over the last five years and the perception of outsourcing by shippers has not changed over the last five years. Laarhoven and Berglund et al. , 2000, pp. 425-442)
Success factors and cost management strategies for logistics outsourcing According to the journal, the logistics outsourcing has a significant effect on how manufacturing firms produce and deliver the products to their customers. In addition, many manufacturing firms do not own or manage the transportation and warehousing resources used for inbound and outbound shipments due to the reason that the company might need to invest a big amount of funds to own a warehouse and transportation.
In short, a company can use the money for other purpose that is profit to the company rather than use the fund to own a warehousing and transportation and the company business might efficiency and reduce in cost by outsourced the warehousing and transportation to the 3rd party logistic company. (George and Mary, n. d, pp1-17) Transportation Reduce total purchase cost by 5% through inbound freight management This journal is discusses the strategies and opportunities of reducing to the total cost of purchase by 5% or more through managing inbound freight transportation.
An overall of the transportation management strategic is use to identify how and why the concept is beneficial to the strategic purchasing activities of a firm. The journal had provide more on understanding the key transportation concepts such as weight makes for a better rate, consolidate providers, increase information equal to reduce cost and it also pinpointing specific opportunities to effectively on the purchasing inbound transportation services. In short, applying the inbound freight management is based on the company informational needs and the potential of traps. Dr. M. Theodore Farris II, n. d)
Cost Saving for Inbound Freight In the journal, there will be a number of issues that relate to determine whether the products should be ordered independently and ship as a single product order, or co-ordinated and shipped as a group or order from a single source. Besides, there is also some factors that might influences the company decisions such as the volume of demand, the distribution of demand across products, the weight of items and the attractiveness of the quantity discount offered.
Other than that, the effect of the company decision in the aspect of logistic might influence the cost of the company such as the order interval, whether the product order should in group or separately and etc. (Russell and Cooper, 1992, pp. 20-43) The role of transportation in logistic chain In the journal, it is more discuss and focus on the transportation system and the inter relationship between the logistics and transportation. Transportation is playing an important role in the manipulation of logistic.
Besides, the operation of transportation will determines the efficiency of moving products from a place to another place. The progress in technique and management principles will improves the moving load, delivery speed, services quality, operation costs, the usage of facilities and the energy saving. (Screenivas and Srinivas, n. d) Warehousing Centralization VS decentralization of warehousing In this paper, that is more on discuss about the perspective of a small and medium size enterprise when they are decide whether to choose the centralized or decentralized warehousing location for their aspect in logistic.
A medium company in Danish which is Do-it-yourself (DIY) had been chosen for the purpose to investigate the issue. The company faces the challenge whether to apply centralization or decentralization warehousing structure in its company. Furthermore, a company must choose the warehousing structure based on the company needs and do some research whether the centralized or decentralized warehousing location is suit for the company and is that will improve the efficiency and reduce the cost of company. (Pedersen and Zachariassen et al. , 2012, pp. 352-369)
The impact of routing and storage policies on warehouse efficiency The activity such as order and picking by which a number of goods are retrieved from a warehousing system to satisfy a number of customer orders and it is an essential link in the supply chain. Besides, it is the major cost component of warehousing. The major issue is to reduce the cost and increase the speed of the order picking activity at the same time. Moreover, there are few purposes of this paper. First, evaluating various routing heuristics and an optimal routine in a volume based.
Second, comparing the performance of volume based storage with the random storage. Third, examining the impact of travel speed and picking rates on routing and storage policy performance. Furthermore, the experimental results show the solution gap between routing heuristics and optimal routing is highly dependent on the travel speed and picking rate, the storage policy, and the size of the pick list. In addition, volume based storage produced significant savings over random storage, but again these savings are dependent on the travel speed and picking rate. (II, 1999, pp. 053-1064) Recent Trends in Warehousing Development There are more discuss about the recent trend in warehousing development in this journal.
The growth of technology is faster and it changing every year. An up-to-date company in warehousing might gain the competitive advantage in the market place by purchase the new and more feature machine for warehousing. Besides, those companies might not perform well in its business if it fail to realize the changes of the warehousing due to the reason that the company logistic might not efficiency and effect the overall business. Mckinnon, 1987, pp. 8-11) RFID adoption and implementation in warehousing The journal is more discuss on the RFID adoption and implementation in warehousing. From the journal, we know that the warehousing industry is changing with the respect to RFID implementation. By adopt the RFID into the company logistic, it might improve the business process of the company and cost reduction. For those companies who concern on the return on investment (ROI) might refuse to adopt the RFID in the warehousing if the ROI is less than the expectation.
Osyk and Vijayaraman et al. , 2012, pp. 904-926) 3. 0 Background of the Organization (Coca Cola Company) Coca Cola Company is an American multinational beverage corporation which is located in Atlanta, Georgia and it also the world’s largest beverage company. Besides, it serves consumers in more than 200 countries. (Brainmass. com, 2014) Pepsi’s company is the one of the bigger competitor to Coca Cola Company. Coca Cola Company also own some brand such as Minute Maid and Thums Up. For instance, Coca Cola not only produce the beverage of coke r coca cola, it also produces other soft drinks such as Fanta, Sprite, Powerade (sports beverage), Nesta, Fruitopia and etc. Since the consumer is more concern on healthy beverages, the Coca Cola company start produces some new formula coke and other beverage in order to gain the competitive advantage in the global market like diet coke and sports beverage (Powerade). (Oracle. com, 2014) The Coca Cola Company only produces the syrup and sold to the various bottlers who hold a Coca Cola franchise in the world. (Oracle. om, 2014)
The Coca Cola bottlers will produce the finished good in cans and bottles with the combination of filter water and sweeteners. After that, the bottlers will sell or distribute the finished Coca Cola product to the retail stores, restaurants, hypermarket and etc. (Computer Sciences Corporation, 2014) Furthermore, Coca Cola Company also owns a film company before which is the Columbia Pictures. When the time that the Film Company still own by the Coca Cola Company, it produce some popular films such as Ghostbusters, the karate kid and others.
The Columbia Pictures was owned by the Sony Pictures Entertainment in 1987. (Oracle. com, 2014) Other than that, Coca Cola is a well-known sponsorship in the sports and other events/competition such as the English Football League, NBA, FIFA World Cups, American Idol and etc. Coca Cola Company can increase it company goodwill and gain the awareness from public by sponsor on the famous event. (Oracle. com, 2014) Moreover, Coca Cola also involve itself in the corporation social responsibility (CSR) by donates money for charity.
Besides, it also does well in environment friendly by using the trucks which is lower exhaust emissions. Coca Cola Company also involve itself to fight the aids by provide the job opportunities to the aids patient. (Investors and Company et al. , 2014) 4. 0 Description 4. 1 Description of the transportation Transportation is playing an important role in the International Trade. Choosing the right mode of transportation is important to ensure the company import and export operation is efficient and cost effective. (Gov. k, 2014) Coca Cola Company transports its product by using various type of transportation mode such as sea, air, rail and road.
According to the research, Coca Cola Company also hires more than one 3rd party logistic for the transportation aspect such as Oracle Transportation Management and ORTEC. (Oracle. com, 2014) (Ortec. com, 2014) Road: Road transport can be the most flexible option for the business. The road transport have extensive road network for company to deliver the product and the company also can scheduled the delivery day.
Besides, the company also can choose the transport that suit to transport the product and it also can track the location of goods. In America, Coca Cola Company use the Interstate Highway System to transport product across the America by using the Coca Cola trucks and made deliveries to place everywhere. (Slideshare. net, 2014) According to the internet sources, Coca Cola transport most of their product on the road. Therefore, the company does its best to reduce the harmful to the environment.
Coca Cola Company bought Biomethane-powered truck to move its product and each of the vehicle carbon footprints is less compare to the typical diesel truck. (Biomethane is the gas derived from waste found at landfill sites) (Coca-Cola GB, 2014) Besides, Coca Cola Company will use smaller vehicles to move the small loads such as use the Nissan Leaf 100% electric cars and low-emission Vauxhall Astra ecoFLEX cars.
In Addition, the company also purchases those trucks with the specified EEV (enhanced environmentally-friendly vehicle) status which means the truck is lower exhaust emissions. Coca-Cola GB, 2014) Air: Air Transportation is the fastest transportation to transport the product between two different countries and it also high in cost. Coca Cola Company also use Hartsfield Jackson International Airport to transport it’s good to another country. (Slideshare. net, 2014) Sea: Sea transportation can transport large quantities of product to another place or country compare to Air transportation. Besides, a company can ship large volume of product at one time at a low costs but it might take a long time than other transportation.
Besides, the shipping containers can also be used for further transportation in the destination such as by road or rail transportation. The company should concern on the document when choosing the sea transportation such as bill of lading, letter of credit and etc. Coca Cola Company use the Deepwater Ports to ship cargo filled with the Coca Cola products to other countries. (Slideshare. net, 2014) Rail: Rail transport is may consider is a cost effective and efficient way to move the company goods from a place to another place.
There will be benefit for those nations which have fast rail links such as the Europe, Japan and China. Rail transportation is environmentally friendly compare to the other transportation modes. Although the Coca Cola Company transport most of their product on the road but they also use the train to transport their product like the Coca Cola Company is working with Tesco on a dedicated rail-freight route. (Coca-Cola GB, 2014) 4. 2 Description of Warehousing Warehousing and storage is an act of storing and assorting the finished goods in order to create maximum time utility at minimum cost. Slideshare. net, 2014) There are various type of warehouse such as General, Specific, Bonded, Bulk storage and refrigerated warehouse. Besides, the location of warehouse can classified as centralized and decentralized warehouse.
The Company also can choose to use the 3rd party logistics warehousing. Coca Cola Company is using the decentralized warehousing. Coca Cola Company had more than 120 warehouses in the world and it can serve the customer better positioning by reduce the time required to deliver the goods to the customer and this will increase the customer relationship. Investors and Company et al. , 2014) Besides, a decentralized warehouse can make decision and solve the problem faster because it no needs to wait the decision from top management. (Manda, 2014) Furthermore, firms will save on freight charges due to the reason of bulk handling. (Slideshare. net, 2014) Moreover, Coca Cola also use the 3rd party logistic warehousing for its products. The 3rd party Logistics Company is an independent business that specialized in provide a specific services to a larger client such as Honda, Coca Cola, Pepsi and etc. Slideshare. net, 2014)
The 3rd party logistic is focus on the supply chain such as transportation and warehousing in order to improve the efficiency and to reduce the cost of the clients. According to the research, the Coca Cola Company is outsources a part of their supply chain of the warehousing and transportation of finished goods to the DB Schenker Logistics in Poland. (User, 2014) The purpose for Coca Cola Company is to reduce its cost such as lease a warehouse and pay employees. 4. 3 Description of Communication technology
The communication technology aspect of logistic is the way or method that a company can know the location or shipping progress of their product. Besides, the company will reduce the cost when it had a good communication in the aspect of logistic. According to the article, the Coca Cola bottling Company had successful reduces the cost by 20% with the GPS- based fleet tracking and win the fleet management formula. By applying the GPS in the truck or fleet, the company can improve the driver safety and indirect increase the safety of the product to reach the destination. (Fieldtechnologiesonline. om, 2014)
For example, the GPS will inform and alert the driver to lower the speed when the driver tries to speed up on the road. Besides, Coca Cola Company also had provided the tracking system (RFID) for consumers or client to track and know their shipments. (Coca-colastore. com, 2014) In other word, the tracking system also able for the Coca Cola Company to know the shipment process and location such as whether the product is reach to the warehouse or is it the product is on the way to the destination. For instance, Coca Cola company also using the Speedyred for customer able to track their orders or shipment through the internet. Speedyred. com, 2014)
This website that provide by Speedyred is able to track most of the transportation mode such as Air shipment tracking, Sea shipment tracking and also Cargo tracking system. 5. 0 Logistic Challenge faced by Coca Cola Company A company success in its home country might not easy to success or fail in perform in other nations. There are many issue that will cause a company fail in perform in the other nations such as political risk , cultural and etc. Therefore, it will cause a company to face some challenge such as logistic challenge.
Illegal in using the truck GPS Applying the GPS on the truck is the benefit for a company in aspect of logistic that able for a company to check and know the shipping process and this is good for company to know the location and the data of the shipment but it will be bad if the company is using the GPS data in another way or for another purpose. According to the article, the China is accuses Coca Cola of illegal using the GPS. The Coca Cola Company using the GPS to gather the confidential information and spotlighting the sensitivity surrounding data in the country. Burkitt, 2014) For my recommendation, the company should not use the other company data for other purpose that might harm the other company benefit. Besides, the company should be ethic to operate its business.
The bad impact of outsourcing the logistic to 3rd party logistic The purpose of a company to outsourcing the transportation and warehousing is to reduce the cost and increase the efficiency and it also will increase the job opportunity in the 3rd party logistics company due to the reason the work is outsourced to the 3rd party logistic company and they might need to increase the manpower.
According to the article, the Coca-Cola Bottlers Philippines Inc (CCBPI) had increased the use of third party logistic to operate it transportation and warehousing in Philippine. This should be good news for the Philippines resident due to the job opportunities has increased but those 3rd parties logistic company didn’t treat their worker well. Today more workers are employed through this 3rd party logistic company than the entire sales and delivery workforce employed directly by CCBPI but the specialized logistics companies they are just labor agencies and the actual operations are run by CCBPI.
Meaning that the 3rd party logistic workers had no health insurance, no medical benefits, no overtime paid and etc. 150 workers which is work in Manila and operate by a 3rd party logistic faced with unpaid wages for 2 to 3 month. (Iuf. org, 2014) For my recommendation, the company should have a certain understand on the the 3rd party logistic company that it choose for outsourced in order to avoid the same incident happen again in the future. 6. 0 Recommendations The company should setting the labor standard in aspect of the transportation and warehousing in order to increase the efficiency of production.
The company should provide training or seminar or workshop for those new workers to learn the process that how to operate some complex machine. Besides, the company should set some requirement for hiring workers such as the education level and experiences. For instance, the company also can implement the gain sharing programs in logistic by reward the warehouse and transportation employees for good performance by pay them short-term bonus. This action will motivate the employees to work hard for the company.
For example, a country which is short-term orientation and the country worker might easy to motivate because they are more prefer immediate gratification and this will let the company get immediate result by pay the immediate bonus to the workers. (Inboundlogistics. com, 2014) Moreover, the company should choose the right 3rd party logistic for outsource because choosing the wrong 3rd party logistic will cause the company increase in cost and also might harm to the company name. For example, the 3rd parties logistic involve in the transaction of drug by put the drug in the Coca Cola company product. 7. 0 Personal reflection
By doing this assignment, I had a clearly and deeply knowing about the inbound and outbound of transportation and warehousing. Besides, I also gain the knowledge about the Coca Cola Company especially of their logistic. Furthermore, I realized that the company cost might decrease by perform well in the transportation and warehousing and concurrently increase the company profit. In Addition, i also learnt that how to choose a right transportation mode for transport purpose and the type of warehouse for company products.
Other than that, I also gain the knowledge about the benefit to outsource the works to 3rd party logistics. . 0 Conclusion In conclusion, Logistic system has a more important position in the society activities and the transportation and warehousing is playing an important role in the logistic system. Without the linking of transportation and warehousing, a powerful logistic strategy cannot bring its capacity into full play. (Anonymous, 2014) A company without well develop in transportation systems will lead cause a company increase in cost and loss in profit due to the reason that around 1/3 to 2/3 of the expenses of company logistics cost are spent on transportation. Anonymous, 2014)
A good transportation system will provide a better logistics efficiency, reduce operation cost and promote the services quality for a company. Other than reduce in cost of a company, a well handled transport system will satisfy the customers demand by send the goods to the right place at the right time and it also will improve the relationship between the company and the customers. Besides, the warehousing also represents a critical link in the transportation supply chain.
The inventory in the warehouse must sufficient because it might break the relationship between the company and customers due to the reason that the customers demand cannot be satisfy. Furthermore, the warehouse must build at the right location in order to reduce the time and space distance between the supplier and customers because it will increase the cost of transport if the warehouse is far to the outlet or end user. The warehouse also playing an important role in maintains the steady sources of supplies.