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Coca-Cola Hellenic Bottling Company S.A. is among the largest players in the non alcoholic beverages industry. Its operations extend to twenty eight countries while managing a product portfolio of up to ninety brands. This paper entails a critical review and evaluation of CCHBC’s operations, productions, and supply and information technology. The impacts of each aspect on the company’s management, performance and developments, have been critically assessed. The conclusions arrived at assert CCHBC’s position as a world leader, with its operating procedures and product leadership serving as an example to other emerging businesses which are result oriented.
The diversity of Coca Cola Hellenic Bottling Company (CCHBC) in its product portfolio has attracted keen observations in its operating, production and processing procedures. The effective management style employed efficiencies in production and distribution while expanding its operations is subject to critical scrutiny. This report aims at illustrating the operational management strategies employed by CCHBC in its various processes and functions. The management of capacity while focusing on production planning and control is also observed and analyzed. Significantly the relationship existing between CCHBC and its rationale for its response to its suppliers is a significant subject. Information technology is essential in the success of any business strategies. In this respect, Management Information Systems are categorical to this end and the feasibility of fundamental guiding principles. The relevance of information versus knowledge in effective customer service is critically evaluated in this report. This report is subjective to finding of studies conducted on CCHBC.
Operations Management Practices That Enable CCHBC to Achieve Its Stated Strategic Aims
The strategic significance of any company is the realization of its aims and objectives. As a notable leader in the beverage production industry, CCHBC employs aggressive operations management style to ascertain its position and authority in the world market. The control sustaining and maintaining its markets while aggressively seeking new markets is critical to CCHBC attaining its strategic aims. In its effort to achieve this CCHBC has realigned itself into strategic operational, business units. The core strategic business units are divided according to regions with each strategic business unit’s leader reporting to the chief operational officer.
The operations management of CCHBC saw to the realignment of 2005 where the group’s structure adopted a technological stance by integrating Information technology in its operational structures. The aim was to align its operations under a single centralized business strategy. This would enable the company operational management to align it operations in the world as unified strategic business unit.
Since 2000, CCHBC made a strategic adjustment in its group holding structure by making significant acquisitions and investments. The strategic significance of aligning itself according to regions enables CCHBC to optimize given regions potential for a client base, raw materials supply and trade concessions. Categorically each Strategic Business Unit is divided into divisions spread across the given region. However, the operations in each division are strategically determined given the demographic trends, economic viability and availability of resources. The operational management of CCHBC factors to optimal coverage of critical regions in efforts to achieve its aims significantly market leadership in the beverage and bottling industry.
The operational management across its functions is strategic to earnings maximization objectives, without compromising its product diversity and placement initiatives. Product diversity creates a blanket system where CCHBC attempts to produce and bottle significant beverages and water products, under one Emblem. The management’s inclusion and encouragement of product diversity creates a differential in product mix across its markets. These afford CCHBC operational advantages across its regional markets through aggressive marketing and positioning of key brands.
The intense focus of newly created or recovered markets with vigorous advertising, marketing campaigns while providing incentives in price mix strategies with product improvements and differential. These strategic operations aim at attracting new consumers and re initiating existing consumers to new products. Its existing markets are reinvented by positioning new products while maintaining and cultivating its client base by rebranding and consumer education.
The operational strategies employed by CCHBC’s management involve corporate expansions and acquisitions (Girard 2005, p15). The integration of various businesses and expansion of operations is significant to the realization of its strategic objectives. The successful integration of acquisitions has enabled CCHBC to realize operational feasibility and profitability in potential markets. CCHBC has employed acquisitions of companies strategic to its operations as a significant resource and business gateway. These are re-engineered to encompass sales mix and pricing aspects aimed at improving CCHBC’s access to distribution channels, raw materials, processing installations and viable markets.
Improvement of manufacturing efficiencies and creation of a system based initiatives are instrumental in the improvement of operating efficiencies and capacity. These have led to improved service delivery to its consumers and streamlining operations in its various functions. These improvements are adopted across established and emerging markets by CCHBC's manufacturing, distribution and marketing operations.
CCHBC realizes that its emergence in world markets may not be appreciated by one aspect or other. Therefore, the management embarks on intense corporate social responsibility activities in its overall operations. In its corporate social responsibility statement, CCHBC indicates its intention of providing equal opportunities and benefits to all its stakeholders. This is achieved through a motivated productive and resilient workforce. However, this is done through methods that preserves and protects the environment while maintaining stewardship and sustained development in business decisions.
The employment of public relations management in its operations is a strategic attempt to convince the general population on the advantages and benefits of using CCHBC’s products. Perfecting its image and public perception is a critical aspect of its strategic operations management. Therefore, the fact that the public perception is pertinent in the realization of its objectives and goals makes CCHBC invest heavily in this aspect. Employment of public relations firms, donations, student sponsorship programs, strategic alliances and investment in research institutes is examples of CCHBC’s efforts to cultivate a positive image.
CCHBC uses sports sponsorships as a significant public relations campaign. In these events, CCHBC provides participants with beverages, soft drinks and water while campaigning on the safety, rejuvenating and performance enhancing abilities of its products. The creation of sports venues like arenas and funding of sports governing and managing bodies places CCHBC at an operational advantage aimed at realizing its fundamental aims and objectives.
The provision of essential services like water in regions which CCHBC has established itself reflects on its social responsibility responsiveness in its operations. Corporate social responsibilities are, however, undertaken with the involvement of local communities in the affected region. Its energy and waste disposal policies align with an environmental focus groups and organizations (Cooperate Social Responsibility Report 2003). These assist in effective launch and expansion of the existing operations across its markets. Strategic operations management is a fundamental aspect of CCHBC. The realization of its overall goals and objectives are premised on the efficiency and effectiveness of its operational management.
A Critical assessment of CCHBC’s approach to capacity management (including production planning and control) including significant challenges faced by the company in following this approach.
The capacity management of any company requires the consideration of all contributing factors. CCHBC’s capacity management approach puts into consideration the market demand, availability of raw materials, and the product in question. Given CCHBC 's broad range of products, capacity management has been systematical distributed across its affiliate companies. CCHBC is as a multinational company cannot produce all its products at one single point. It has, therefore, acquired several companies across the world. The acquired companies are utilized in their established regions as production units where their capacity is utilized to service the given region.
CCHBC efforts in acquisitions have seen its operations expanding into various regions, which in turn, boost production levels. However, CCHBC as a company can not sufficiently produce all the products needed in its market. The solution lies in the heavy investments CCHBC has made in other companies. These are categorized into wholly owned subsidiaries where CCHBC has full control of production, partially owned interests in companies where CCHBC has limited control and wholly autonomous companies where CCHBC has no controlling interest. These companies enable CCHBC to manage capacity, production planning and control.
A significant percentage of CCHBC’s production capacity is taken by these companies. However, CCHBC observes keenly the operations of these companies to ensure that its production capacity and product distributions are adequately satisfied. The installation of state of the art facilities across its markets has enabled CCHBC to mange its production capacity effectively. The optimization of available capacity requires adequate production planning. The market demand must be matched with production; therefore, an efficient and effective production plan is essential. CCHBC takes into consideration the markets demand, available raw materials in the region, distribution and marketing channels.
CCHBC emphasizes on establishing its production plants in regions; where raw materials are easily accessible while the finished products are re routed into the various markets. This is asserted by CCHBC’s acquisitions of companies that are in high demand regions and have access to essential raw materials. For example, the 2004 acquisition of Gotalka d.o.o in Croatia which dealt in spring water; is significant to accessing water as the critical raw material for production.
The determination of the workload to be allocated to a given production plant is planned in accordance with the capacity the plant is capable of handling. The processing of raw materials is optimized on the basis of a plants carrying capacity and the targeted product market. CCHBC production planning bears in mind the production and delivery schedules to be met. Given, that not all products are produced to completion at a localized location. For instance, some beverages and soft drinks are processed using a combination of several mixtures. A product extract, or syrup may be made in one production plant then taken to another for further processing, or finishing. The processes are planned and aligned to schedules which are strictly adhered to ensure a smooth flow of the production process.
CCHBC’s capacity management is constantly appraising the production plants efficiency in meeting its production deadlines. Finished products are dispatched to various markets or to other production units for to be used as raw materials. Increased capacity is implemented where necessary while evaluating the production requirements and objectivity in meeting market demands and schedules. However, CCHBC takes into consideration the market trends and forecasts in determining the levels of production and schedules to be planned for. The market trends of demand, product positioning whether it is an existing or new product and the targeted group in the market.
Product planning and control considers the intended product market, whether local or foreign. This enables the production management to plan accordingly for events of insufficient raw materials, product returns and other factors affecting production. However, CCHBC’s capacity management including production planning and control are faced with significant challenges. These challenges include establishing production in markets which are commanded by the competitors. Given the diverse number of products CCHBC produces it is faced with the logistical challenges. The product that is being produced may prove to be challenging given its requirements and product specifications.
The nature of the relationship existing between CCHBC and its suppliers and the reasons Why CCHBC manages its supplier relationships in the way that it does.
Suppliers are the providers of life within the company. CCHBC recognizes the importance of maintaining a strictly professional relationship between the company employees and suppliers. This has been facilitated by creating autonomy between suppliers and CCHBC. The essence of providing flexibility in manufacturing and processing, Suppliers play a critical role in ensuring that production conforms to scheduling while realizing marginal cost relief in routine distribution and marketing operations. The integration of various businesses requires an effective and timely supply chain. CCHBC expansion into various markets significantly requires streamlined supply chain management.
The network configuration of CCHBC requires substantial logistics being put in place to ensure at no point in time, does one aspect of production and distribution get impaired; while focusing on the volumetric and numeric aspects of the business performance. The diversity of CCHBC’s products grouping and geographical locations has made CCHBC ebb towards technological solutions in handling its supply management. This led to the introduction of largest and successful roll out SAP based Advanced Planning Optimizer, in significant operations within its network and across geographical boundaries by the consolidation of the best procedures and practices into a unified, single platform. CCHBC SAP platform aligns its supply chain while demand planning. CCHBC ensures that it maintains excellent relationships with its suppliers to save logistical costs.
CCHBC contracts suppliers who work within the agreed principles and guidelines. Initiations of training programs for its key suppliers have led to improved cordial relationships which have led to effective product delivery and distribution methods. CCHBC seeks to improve supplier efficiencies in lieu of faster and better supply chain executions. CCHBC strives to build “a fair and mutually beneficial relationship with suppliers to deliver the best value in terms of quality, cost, service and innovation.” (Barnes 2008, p231) The costs of production are continually increasing; therefore, CCHBC realizes the need to partner with suppliers to reduce the marginal costs of production while improving processes and efficiencies.
Quality assurance, efficiency and effectiveness of materials supplied is verified by both suppliers and CCHBC. The commonality of purpose in delivering quality products that satisfy the end users enables CCHBC to work cordially with its suppliers in vetting processes, capacities and quality. The implementation of quality systems, which ensure consistency, of high quality products and services in par with CCHBC is critical. This includes policies, procedures and programs which are in compliance to CCHBC’s requirements and regulatory obligations.
All suppliers are required to comply with Good Manufacturing Practices (GMP) as stipulated by the current laws and regulations. These practices ensure that suppliers maintain safe preparations, packing and storage of consumable products. This ensures sanitary conditions are maintained while observing Good Laboratory Practices (GLP). This planning, monitoring and documenting laboratory tests, which are aimed, at assessing the threat and hazard posed to users and the environment by chemical substances used by suppliers in the course of their business. Given the interactive relationship that exists between CCHBC and its suppliers, significant aspects of its products are handled by its suppliers. Therefore, the suppliers are required to train their staff to handle appropriately CCHBC’s products.
CCHBC activities require heavy documentation given the magnitude of its operations. The ease of access to information when and where required is elemental in any business arrangement. The supply chain management is required to ensure that appropriate records are kept and maintained (Supplier Expectations 2010). Deviations from standard practices are expected to be corrected, and measures implemented to prevent the occurrence or recurrence of undesired practices and standards. CCHBC’s purpose in setting standards for its suppliers is to ensure product integrity, compliance with the set laws and standards while maintaining superiority in product provision, quality assurance and market efficiencies.
It is CCHBC’s policy that all its suppliers must conform to the stipulated labor laws governing employment. All suppliers authorized by CCHBC are required to show consistency in observing practices, which conform to, human rights practices. Suppliers should not engage in activities that abuse labor, force labor or use child labor as stipulated by the law. This policy ensures that suppliers affiliated to CCHBC do not infringe human rights practices which may directly or indirectly cause CCHBC to assume liability. Companies associated with abuse of human rights and disregard labor laws are faced with significant legal problems which derails their public image and perception. CCHBC realizes that respecting human rights is critical to its business engagements and public perception which reflects on its products and services.
CCHBC takes into account its suppliers freedom of affiliations as long as such affiliations do not infringe the set laws and regulations (Supplier Expectations 2010). The suppliers mandate to supply CCHBC with quality products entails designing and implementing a process monitoring and control system. This ensures that the end product meets CCHBC’s required standards; therefore, maintaining quality assurance. Any products that do not meet the required standards should not be supplied to CCHBC. This requirement ensures that the raw materials and key ingredients used in the CCHBC’s production processes maintain their integrity.
The significant aspect of the relationship between CCHBC and its suppliers is Contractual. This deems all engagements between CCHBC and its suppliers to be contractual and; therefore, subject to applicable laws. CCHBC does not accept or allow the use of supplies which have been provided by suppliers who it does not have contractual obligations. This is due CCHBC’s intention to maintain a transparent business which prevents all aspects of possible ethical and business malpractices. However, CCHBC expects its contracted suppliers to observe the stipulated security protocols to ensure safety of operations, products, employees and other stakeholders. This also included patented materials, trademarks, intellectual properties and any other material which the supplier is entrusted with. Suppliers in this case act as custodians of CCHBC’s property which is under their disposal for CCHBC’s business purposes. These rules are aimed at protecting and preserving CCHBC’s property which is critical in its production processes, creation of unique brands with a purpose of achieving its aims while satisfying its markets needs.
How MIS helps CCHBC to monitor the achievement of its “A for availability” credo
Since the formation of CCHBC in 2000, it has been critical to manage disparate operations in the unification of information technology, infrastructures and to unite Enterprise Resource Planning tools across the company (Redwood Business Solutions 2010). Management Information Systems (MIS) was essential in integrating CCHBC’s operations under a centralized system. The challenge was the integration of its information technology systems across various regions into a single integrated, centralized system. The dilemma was in choosing the best Management Information System to integrate its business operations. In 2003, CCHBC installed and implemented Systems, Applications and Products (SAP) technologies; SAP R/3, SAP SCM, and SAP BW. The implementation of these systems was to integrate its core business and functions as a single unit, where information can disseminate and be shared within the enterprise.
CCHBC has premised itself on a crucial principle of “A for Availability.” MIS have consistently contributed to the realization of this principle. Through its first SAP implementation phase, referred to as Wave 1, CCHBC shifted its operations from a decentralized system to a centralized system. This oversaw the introduction of SAP Advanced Planning and Optimization (APO) components to aid management with significant aspects of business and operational planning. The utilization of the implemented MIS aids CCHBC in achieving the objective of providing its products readily, efficiently and adequately to all its markets (SAP Software and Services Drive Business Transformation). The installation of SAP Netweaver Business Warehouse component at the same time enables the integration of services and business operations aimed at ensuring the “A for Availability” credo is realized.
Management Information Systems implementation and upgrading to new SAP software enable CCHBC to align its business strategic decisions, customer services and growth in its portfolios. Hence, MIS initiated the significance transformation of CCHBC from functional defined processes to multi functional, end to end processes. These were in line with the second phase of SAP implementation referred to as Wave 2 (SAP 2010). However, this required the review of previous SAP processes to ascertain that end to end processes were achieved. These processes included finance management, human resources, market to cash, forecast to deploy and procure to deploy. The essential aspect of these processes was aligning to CCHBC’s business strategic initiatives.
CCHBC’s Management Information Systems with the aid of significant improvements in its SAP programs and advancement technology; has been significantly able to improve efficiencies while expecting future increased capacities, enhancements and expansions. This increases the chances of product and service availability. This leads to the realization of CCHBC’s fundamental principles of making its products readily accessible and available to all at all time. CCHBC has a clear defined Information Technology strategy and comprehends the significance of IT in supporting its business operations while observing its fundamental goals (Journey 2006, p7). The changes in technological implementations by CCHBC are aimed at improving its production capabilities while ensuring that its stakeholders are satisfied with technological developments and their contributions.
CCHBC implementation of SAP Customer Relationship Management (CRM) enables it to plan its marketing objectives in all customer interactive points. This gives CCHBC market insights as to the customer preferences, trends and consuming habits. This enables the company to plan and develop marketing activities while analyzing customer responses to its initiatives and products. CRM applications keep track of purchasing trends which enable CCHBC to plan and forecast which products to produce in which areas and quantities. This help in maintaining and sustaining the availability credo. CRM applications have aided CCHBC realize customer satisfaction while supporting sales and marketing operations.
SAP CRM has been instrumental in CCHBC’s increased revenues and reduction, in operating costs. These have been realized by the transformation of social interaction centers and facilities into strategic business delivery avenues for sales and marketing of its product portfolio. These strategically placed CRM tools ensure the availability of CCHBC’s products where and when needed. MIS in this case significantly contributes to the availability of products and services where they are essential at low costs.
Availability does not only apply to product access by end users but also entails other aspects of the business enterprise. These include the supply of materials and products essential in sustaining CCHBC’s product portfolio. Management Information Systems is optimally utilized in supply chain management systems. These are, however, incorporated in CCHBC’s SAP implementation initiative by embracing SAP SCM applications. These applications enable CCHBC to realize its set goals in respect of the supply. Material usage forecasts, optimal supply levels and scheduling are SAP SCM’s parameters. These are critical in realizing the “A for Availability” credo where materials are available where needed at the right time.
CCHBC realizes its supply chain plans while realizing significant efficiencies at minimal operational costs. This makes SAP SCM to be a strategic business tool essential in ensuring the timely availability of materials. The realization of visibility across the supply chain is enabled by the use of SAP SCM. CCHBC plans end to end operations using this application for the analysis and monitoring of performance across the entire supply chain is done centrally. Supply data are analyzed and collaborated by Key performance indicators which ensure the “A for Availability” credo is perpetuated as long as the company remains operational. Management Information Systems have enabled CCHBC to streamline its key objectives while conforming to technological developments and changing dynamics in the market environment.
CCHBC’s Acceptability factor demands, among other things, “effective customer service” Using examples, explain how data mining and related search tools can enable CCHBC to analyze performance here. Where will knowledge rather than information be relevant?
Market share is determined by any business enterprises acceptability. However, acceptability is a factor of various aspects of the business, significantly effective customer service. CCHBC realizes that its volumetric and numeric growth is determined by acceptability factors in the market. In order to ascertain that its products and services meet acceptability standards, CCHBC must ensure that it provides consumers with value for money concepts in mind while focusing on quality assurance campaigns.
Effective customer service is essential in realizing acceptability. The mode of product delivery, presentation of the product to the customer and response to consumer feedback is significant in the products acceptability. However, critical tools and activities are necessary in ensuring that effective customer service delivery is achieved. The indicators of acceptability can measure by the number of customers returning for the same product or service. CCHBC prides its reputation on the large markets it commands. Therefore, the retention and recruitment of new markets is dependent on effective customer service delivery on its part.
Given its previous Trends, CCHBC can determine and forecast it s acceptability index by using data mining tools. CCHBC can utilize the information in its databases, files and reports in determining expected consumer trends given the available data. The application of data mining as prediction a tool for acceptability in lieu of effective customer services is not reliable. Data mining depends on historical data to predict behaviors which are subjective to given conditions and attributes. However, acceptability cannot be determined by information provided by data mining.
Effective customer service is acquired knowledge through continuous training, practices and experience. CCHBC must realize that data mining is limited to the provision of information on a given problem but does not give knowledge on how to handle the problem. Therefore, the limitations of data mining as a resource in effective service delivery to customers are established. For example, CCHBC commands a diverse market hence diverse cultural practices and beliefs are in consideration. The method of service delivery in one region may have an associated significance to one person whereas, in another, it may have the opposite interpretation. In the event, of such a case, information does not mitigate the situation; but the knowledge of the situation and interpretation of reactions, while understanding their effect on efficient customer service is critical.
As much as data mining is significant in providing relevant prediction information and models; effective customer service is better served by intimate knowledge of the subject. CCHBC should, therefore, initiate vigorous programs where knowledge of effective customer service is disseminated. Acceptability is not easily predicted using data mining tools but, it is a continuous process, where experience and training ensure effective customer care services. Acceptability is not only an aspect of effective customer service but quality assurance, marketing skills and brand recognition.
CCHBC has made significance achievements in positioning itself as a formidable product and service leader in the non alcoholic beverages industry. Its operational strategies have enabled it to overcome significant challenges while focusing on its set goals and objectives. Its operations are exemplary in illustrating cooperate strategy in integrating its core values, and beliefs into its daily operations while focusing in maintain its position as a market leader and pacesetter.
The expansion into the various markets has left CCHBC to manage the extra capacities in production required to satisfy its new markets. This problem has been solved by its engagement in acquisitions where it entails to acquire essential companies wholly or partially. Its acquired interests assist in mitigating the increased demand and pressure for extra capacity in its existing production plants. CCHBC’s production planning and controls have enabled it to supply and distribute its products efficiently.
The management of it supply chain has proven to be critical in its operation and production strategies. CCHBC has ensured a cordial business relationship with its suppliers. The partnership of CCHBC and its suppliers is aimed at providing quality products effectively while optimizing its efficiencies and maintaining production integrity. CCHBC’s requirements for its suppliers to conform with standard business laws, rules, protocols and procedures, ensure that the integrity of its core values are intact while opting for creation of business opportunities and relationships with its suppliers.
CCHBC’s adoption of technological applications and processes in its Management Information Systems has significantly increased its product portfolio and improved efficiencies. The implementations of SAPs have moved its business strategies to a centralized platform where all aspects of the business have uniformity of purpose and objectives. The implementation of a centralized system has made it possible for CCHBC’s functions to access information at any opportune time while minimizing communication, operation and production costs.
Effectively, the application of knowledge should be emphasized when dealing with effective customer services. The processes of data mining should be used only in forecasting observable and predictable events. In the attempting to realize the acceptability principle based on effective customer service, CCHBC should focus its attention to staff training, while learning from knowledge acquired through extensive experience.