Reverse Inventory Management & Financial Implications IP-4 Deliverable Length: See assignment details

Introduction

An organization that has a strong focus on distribution is Coca Cola Company. The Company has one of the best planned and executed distribution system compared to any other company in the beverages category. This has made it to have a big impact on consumers and hence a greater impact on distributers and wholesalers since the product has taken an essential part in the mind of the consumer. Their high visibility has made the company to achieve its goal by making the product available across the whole world even to the most remote places. The company has made its branded beverage products to be available to customer in over 200 countries through an effective distribution system. Coca cola puts a strong focus on distribution to expand its marketing presence. Their stable and strong distribution system helps them to capture growth by distributing enhance and innovative products to its consumers around the world.

Coca Cola’s Forward and Reverse Distribution Processes

Coca Cola Company has both forward and reverse distribution processes. Their conventional forward freight distribution involves the distribution of the syrup and finished products to suppliers, bottlers wholesalers and customers. Coca Cola Company sells about 1.8 billion Coca cola products in a day across the world. They ensure that every customer gets their product at the right place and time through their supply chain.

Coca cola reverse distribution process is also a common activity of the company. Most of its packages are brought back in the supply chain for refilling. In some cases like when their product is defective the distributor will take back the products. Other packages such as the plastic packages are collected and recycled. The reverse distribution is mainly concerned with the movement of goods that were previously shipped from the customers to the distribution centers or the manufacture for recycling, replacement, returns or for refilling (Lee, 2012). These processes have changed greatly over the last 20 years. The company has entered into partnerships with companies across the world to recycle its waste products like the packaging material and make other products such as brushes from them. It has also intensified its forward distribution processes by establishing many distribution channels to reach customer across the world.

Company Financials Relating To Distribution Costs and Volume

Coca cola products are distributed and sold via different channels. They include direct sales to retail stores and outlets across the country such as institutional accounts, vending machine outlets and food markets. In the financial year 2014, 68% of Coca cola’s bottle volume was sold to be consumed in the future and 32% was sold to be consumed immediately. The largest customer for Coca Cola is Walmart store who account for about 22% of the total bottle volumes of the company and about 15% of the total net sales of Coca Cola in 2014. The second largest customer is Food Lion who accounted for about 9% of the total volume of the company product. Distribution fees recorded by the company in net sales amounted to $6.2 million. The distribution costs that include transportation of finished goods t customer outlet amounted to $ 211.6 million (Coca-Cola, 2015). The company has been focusing on converting the distribution system to the predictive distribution system from a conventional routing system. This will help the company to handle the number of products that have been increasing year by year. To reduce its sixed warehouse costs, the company has closed down some small sales distribution centers.

The Overall Health of the Coca Cola Company

The coca cola company overall health is good. The company has a well planned distribution system that has enabled them to succeed in availing their products to over 200 countries across the world. This has made them to earn good revenues. the net income of the company in 2014 attributable to shareholders was $7,098 million. The company also has a good management system that has maintained a very healthy cash flow in the company. The total cash flow from the company’s operations was $8,958 (Coca-Cola, 2015). This has enable the company reduce its debt, raise its dividends and also buy back some stock. The company is therefore doing very well and its health attracts a lot of investors.

Opportunities That Lie in the Company’s Supply Chain

Coca Cola Company has many opportunities lying in its supply chain. The company can partner with organization providing supply chain data to access the supply chain data. This will help it to identify the risks that lie in the supply chain and drive improvements from the sourcing. Coca Cola’s responsible and sustainable growth depends on its open and positive relationship with its suppliers. This partnership will increase the visibility throughout its supply chain. A company that has data regarding the supply chain in drinks industry will help coca cola collaborate with its suppliers and ensure long-term sustainability of it products and hence its business (Bozarth, 2015).

Coca Cola Company can also develop a distribution system that has many segments. This will help them get their products to the broad customer base through different outlets. The company should consider a direct-to-store delivery to the larger outlets and the key customers. They should also establish local distribution nodes to reach their products to the small rural outlets that are located in areas with poor roads. This opportunity will increase the sales of the company and also enables it reach a wide range of target customers (Bozarth, 2015).

Conclusion

From doing this research, I have learned a lot about the importance of a well established distribution network to companies. A company that has put strong focus on distribution is able to reach its target customers more easily. Companies will also in most cases use both the forward and the reverse distribution processes. Companies that use the reverse model to recycle their packaging material save a lot of money used in packaging. They also tend to be environmentally friendly and this creates a good public image. A good supply management system is essential for the success of any business.

References

Bozarth, C. C., & Handfield, R. B. (2015). Introduction to operations and supply chain management. Prentice Hall.

Lee, Y. J., Baker, T., & Jayaraman, V. (2012). Redesigning an integrated forward–reverse logistics system for a third party service provider: an empirical study. International Journal of Production Research, 50(19), 5615-5634.