The reliance on traditional supply chain execution has become impossible due to an increase in customer expectations and competitive pricing. Business analytics are employed to optimize every management process in an organization. Supply chain management is an example of a management process that ensures the continuous movement of raw materials and finished goods. Analytics of supply chains has also become part of business operations due to increased fuel costs, competition from low-cost suppliers and a decrease in the supply of raw material. These challenges are the leading causes of waste in a supply chain. As a result, data analytics has been implemented in supply chain management to ensure efficiency. This report looks at the importance of business analytics in supply chain management for Coca-Cola.
Analytics in supply chain management is considered a new trend in some industries due to the implementation of new supply chain software and cloud data management tools. The efficient movement of raw materials, intermediate goods, and finished goods at real-time speed is the main reason for the development of supply chain analytics (Act & Arc, 2020). Companies also aim to improve forecasting, sales and operations management through the implementation of data analytics. Organizations such as Coca-Cola ensure that their supply chains add value to the organization. The goal is to create efficiency and save on additional costs that were experienced through the use of a traditional supply chain system. As a result of data analytics, Coca-Cola can efficiently distribute their syrup concentrate to their global distribution points (Bowers et al., 2017).
In Africa, Coca-Cola identified that for efficient distribution of preforms and syrup concentrate, they set up a central distribution point in South Africa. This has made it methodical for the distribution of these raw materials to the rest of the continent at a lower cost creating value in the supply chain. In markets such as China and other Asian countries, Coca-Cola imports finished products since it is cheaper compared to producing the products in these countries (Bowers et al., 2017). These decisions are only possible through analysis of previous supply chain information such as distribution costs, distance covered, manufacturing costs, and cost of raw material in different markets. Such information is useful in the analysis of supply chain management.
Through analytics, Coca-Cola has implemented the use of blockchain. This has eliminated intermediaries in the communication processes making it faster and more cost-effective. Such changes are only possible through analysis of available data to identify the cost incurred through the use of intermediaries of communication (Bowers et al., 2017). Analytics have also helped to improve the technology applied by Coca-Cola. They have created a partnership with SAP aimed at improving cooperation between Coca-Cola and all its Partners who make 160,000 orders per day (Bowers et al., 2017). Supply chain analytics led to the implementation of blockchain technology which has created more transparency in the communication process and reduced distribution costs for the organization.
Competitive pricing has forced businesses to always consider lowering their cost of production to meet market expectations. This implies that organizations have to employ analytics and identify the most effective supply chain that does not exponentially increase the price of the final product (Act & Arc, 2020). Coca-Cola’s supply chains always ensure that the final product is affordable to the locals. Pricing is done according to the market as different supply chains for the raw materials are used. The supply of raw materials is also critical for the success of Coca-Cola (Bowers et al., 2017). The Syrup is only made at their headquarters which makes it essential that the supply chains used to deliver the raw material to different markets remain cheap and effective to ensure no delays and the final product is affordable.
Business Analytics on Performance
Business analytics (BA) uses a combination of techniques to identify the performance of a supply chain (SC). BA involves management processes such as identification, measuring, planning, communication, and offering feedback for gathered information (Power et al., 2018). Data analysis is applied in every business before decisions are made. Each decision made has to factor in the effects it will have on the supply chain. The decision by Coca-Cola to have one central distribution point in Africa was influenced by the cost and efficiency of getting the raw materials across the African continent (Power et al., 2018). Transportation of finished products to the African market was very expensive compared to the local production of beverages. Hence, all other raw materials such as water and production plants are locally set-up. Syrup, sugar, and preform are distributed from South Africa to the rest of the continent.
The improvement of supply chains is a continuous process that requires an analytical performance system. This contributes to valuable decision-making that reduces supply chain costs and provides accurate market predictions. Supply chain analytics involves processes such as planning, sourcing, making and delivering goods from one point to the other. Business analytics analyzes all these processes to identify the most affordable supply chain that adds value to the organization (Laursen & Thorlund, 2016). Analytics conducted on a supply chain use the changes in data required to evaluate the value added by the supply chain compared to a potentially new SC. Coca-Cola is constantly looking for better Supply chains that will promote efficient communication and reduce its operational costs based on the current economic conditions.
Business analytics are applied in an entire organization which incorporates supply chain management. Each process from the transfer of raw material to the delivery of finished goods generates data on costs, transportation distance, cargo quantity, and additional information depending on the type of company. This information is used to design or employ the most effective supply chain that is efficient and adds value to an organization. Coca-Cola has employed the use of business analytics in different markets across the world. The company decided on local production or importation based on the cost of operations associated with each option. To avoid wastage Coca-Cola has implemented the use of blockchain technology which helped to eliminate intermediaries in communication with its partners.
Act, A., & Arc, G. I. S. (2020). Application of Big Data and Business Analytics. benefits, 132, 133. Web.
Bowers, M. R., Petrie, A., & Holcomb, M. C. (2017). Unleashing the potential of supply chain analytics. MIT Sloan Management Review, 59(1), 14.
Laursen, G. H., & Thorlund, J. (2016). Business analytics for managers: taking business intelligence beyond reporting. John Wiley & Sons.
Power, D. J., Heavin, C., McDermott, J., & Daly, M. (2018). Defining business analytics: an empirical approach. Journal of Business Analytics, 1(1), 40-53.