0PERATIONS
MANAGEMENT REPORT
ON COCA COLA
Report on Coca-Cola in Multan and Pakistan
Brief history of Coca-Cola
Coca-Cola was originated in Atlanta, Georgia. Dr. John Syth
Permberton a pharmacist produced the syrup of Coca-Cola. He took the syrup to
the Jacob’s Pharmacy where it was placed on sale as Coca-Cola fountain drink
for five cents of a glass. When carbonated water was teamed with the new syrup,
refreshment history was made. Dr. Permberton’s managing partner Frank M
Robinson suggested the name Coca-Cola and prepared its logo.
In 1888, Mr. Asa G. Candlor purchased all rights of the business.
He paid $ 2300 for it. The business was incorporated as “ the Coca Cola
Company” in 1882. In 1894, Joseph A. Biedelharn of Vicksberg, Mississippi
became the first to bottle the Coca-Cola by installing bottle machinery in his
candy store.
Coca-Cola was exported for the first time to Canada and Hawaii in
1897. In 1900 Coca-Cola was exported to Europe for the first time. In 1905 its
trademark was registered in Canada.
In 1970, Fanta and Sprite were introduced in Pakistan. The Coke
Company entered into the entertainment business in 1982. In, 1984 Coke
foundation was established to utilize resources to benefits society.
Karachi
Beverages Limited.
Initially it produced Coca-Cola only and at that time its
production capacity was 35 bottles per minute. In early 80’s the plant was
modified, thus increased its capacity up to 180 bottles per minute, then plant
had the capacity to produce 320 bottles per minute and company also started
production of Fanta and Sprite. It has engaged in a contract of producing
Simba. In 1988, the liter bottle was introduced , which was greatly appreciated
by the customers.
Present Karachi Beverages has modified their plant with double
line process and is producing 2*320 bottles per minute, due to the crying need
of the customers.
Now, the factory produces 75% of Coke, 20 % Sprite ,4% Fanta while
no return and liter bottle has only 1% share in the overall production.
The factory has the empty bottle stock of 400,000 bottles.
The Karachi Beverages has installed a new flexible plant, producing
all sizes.
Bottle size of Coca-Cola
Height 233.8mm
major diameter 58.13 mm
pinch diameter 51.3 mm
weight 424grams
Sugar level in
the Beverage
Coca Cola 10.37
Fanta 12.00
Sprite 10.00
Current Status of Coca Cola
Now the company’s products are sold through 3500 fountain
wholesalers and distributors. Now the soft drink are asked for by name more
than 524 million time a day, in more than 80 languages and in approximately 168
countries. The Coke company directly employees 17000 people and 15000 jobs have
been created through wholesalers and distributors. It is the largest selling
non-alcoholic drink in the world. Diet coke represents of 47 % of low choleric
drink market.
Today, the Coke Company operates through three business sectors.
· North America soft drink business sector
· International soft drink business sector
· Food business sector
More than 15000 bottling plants in Coke systems are with few
exceptions owned and operated by independent business people native to
countries in which they are located. The current report examines that the
productivity of the coke can be imagined by the statement
“ Cans up to
the moons”
It means that if the cans of Coke are put on one another they will
touch the moon.
The independent bottles provide the required investment of land,
building, machinery, and equipment. The company supplies not only the syrup or
concentrate but also actively engages in management guidance to ensure the
profitable growth of the bottles business.
Some Basic Information about Coca Cola
The nature of Soft Drink
Soft drinks produced and marketed by the Coca-Cola Company are
refreshing thirst quencher, which provides psychological and physiological
satisfaction. Soft drink basically contains carbonated water, nutritive of
intense sweeteners and flavors. Depending on the beverages some contain colour
acidultants and emulsifiers.
Nutrition
Carbonated soft drinks can provide people with sum of the daily
liquid, which is important to good health. Soft drinks, which use nutritive
sweeteners, provide calories, which the body uses, for the energy.
Health
The Coca-Cola company safe guards at every stage of the
manufacturing and bottling process to minimize the process of a product
developing an off-taste or containing a foreign object, however should you
encounter any problem with the beverage product it should not be consumed and
if possible should be returned to the point of purchase.
Quality
The Coca-Cola Company ensures the quality of its product by
continually analyzing the treated water, sugar and other ingredients to make
certain that they are of highest quality. To ensure uniformity, the company
maintains laboratories around the world to regularly examine the sample of
beverages produced by individual bottling plants.
Consumers perceive taste in very different ways. It is however
possible for the same soft drink to vary slightly in taste due to such factors
such as temperature at which it is consumed, the foods with which it is
consumed or the conditions of storage of the product prior to consumption.
All company bottling plants adhere to guidelines called good
manufacturing practices (international Quality standards) which ensure the
highest quality controls for sanitary conditions and plant and production
cleanliness.
Why formula of Coca Cola is kept secret
Coca-Cola is a wholesome beverage and is in compliance with the
pure food laws and practices of all the countries throughout the world where it
is sold. The formula is kept because it is a valuable property right of the
Coca-Cola Company.
Sugar level
In general the amount of sugar in most soft drinks including
Coca-Cola is between 8 % and 13% of the finished products. This is to the
amount that is found in fruit juices.
Current Consumption of Coca Cola
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Ranks
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Country
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Volume Consumed (Millions)
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Share (%)
|
|
1
|
USA
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9466
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34.8
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2
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Mexico
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2129
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7.8
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3
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Brazil
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1665
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6.7
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4
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Germany
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1169
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4.3
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23
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India
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207
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0.8
|
Carbonated Drink Industry in Pakistan
The carbonated drinks are the ones, which are prepared using
aerated, water (water charged with air or with carbon dioxide or other gas) as
base.
Besides the local brand names in the informal market, the major
players are Coca-Cola, Pepsi Cola and 7 up, while the informal sector is said
to be available mainly in villages and small towns. There are 35 plants of
carbonated drinks in the formal sector which are located mainly in cities which
produce an estimate 60 million crates of 24 bottles of 280 ml. Have carbonated
drinks per annum. Coca-Cola and Pepsi Cola control the main market.
Out of 35, 11 beverage plants are manufacturing Coca Cola, 7 R.C
Cola, 2 plants making 7 up, 4 manufacturing a famous local brand drink Pak
Cola, while one plant, locate in Hyderabad also new factory a local drink under
a brand name Gold drink.
COCA COLA IN PAKISTAN
The Coca-Cola Corporation entered in Pakistan market in 1953 after
purchasing local plant located in Karachi, Hyderabad , Gujranwala, and Sialkot.
Now Company has 10 manufacturing plants in Pakistan. These are located in :
1. Karachi
2. Hyderabad
3. Lahore
4. Sialkot
5. Gujranwala
6. Multan
7. Faisal abad
8. Rawal pindi
9. Peshawar
10. Rahim Yar Khan
The company has plants to purchase more plants in the country to
get a good hold in the market and compete the rival Pepsi.
The price of a bottle of size 250 ml. Is Rs. 7 which is reduced
from Rs.8 due to intense competition between Coca-Cola and Pepsi Cola.
Devaluation of Pak rupee also effects the industry because one of
the ingredients ‘concentrate’ is imported from out side the country.
Operations Management by the Coca Cola Company
LOCATION
SELECTION
Facility location is the process of determining a geographic site
for a firm’s operations.
Location selection depend on the factors which are
· Sensitive to location
· High impact on the company’s ability to meet its goods.
Location selection decision of Multan beverages was done in 1964
with the help of parent company. This selection seems to be dependent on
following considerations.
Southern Punjab
Southern Punjab is highly populated area of Pakistan. It possesses
plenty of potential for consumer product companies. The corporate
decision-makers also realized the fact and made the decision to start
production in Multan.
Multan – Center of Southern Punjab
Multan is the center of the Southern Punjab so is southern Punjab
Multan was selected for facility locations.. Due to centralization proximity to
customers on all these sales of Southern Punjab become easy. This factor also
decreases high transportation expenses because Beverage Company like Coca-Cola
could not afford to be at a long distance from the market.
Cheap Labor
In Southern Punjab, labor is cheaper than upper Punjab. This
factor was also considered when locating the facility.
Free of Cost Land
Additionally company enjoyed land facility free of cost, which
played a dominant role in the location selection with in the Multan City.
Production process
Process management is the selection of inputs, operations,
workforce and methods for producing goods and services. Input selection
includes choosing the mix of human skills, raw materials , outside services and
equipment consistent with organization’s positioning strategies and its ability
to obtain these resources. Production process at Multan beverages could be
divided into following heads.
Purchase of
Bottles
Whenever there is need of new bottles, the company orders the
contractors glass company to send new bottles. This step is basic in case of
disposable (NR) bottles. Every time when production process starts there is a
need to purchase new bottles.
Collection of
Bottles
Ordinary bottles of Coca-Cola are collected from dealers and
contractors in the factory area. Some bottles are not returned from dealers and
customers which decreases the quality of empty bottles stock. Then there is
need for purchasing of new bottles. In case of breakage it also need arises and
order is sent to purchase new bottles of that much quality.
Decaser
These empty bottles are then sent to the washing department by the
decaser.
Washing of
Bottles
Washing department has an automatic plant. This plant
automatically washes al the bottles. The process of washing is as follows.
There are four tanks called soak washers through which the bottles
have to pass. These soaks are filled by water with caustic soda andsodium
gliucnate.
· Inspection section (empty bottles)
In the inspection station the light inspector having lights checks
bottles. The light inspectors pick up unacceptable bottles.
· First soak
In this soak, bottles are passed under the pressure of 40 to 50
C0.
· Second soak
In this soak bottles are passed under the temperature of 55 to 60
C0. there are certain type of jets in this section, which rotate the bottles
upwards to downward, hot water tank.
· Third soak
In this soak temperature is between 65 to 75 C caustic wash is
provided to the bottles.
· Fourth Soak
This is last water soak in the washing department. In this soak
chlorine is mixed with water to purity the water. Water temperature is 45-55
C.. after this washing treatment washing process is completed and then bottles
come out of this tank for further processing .
Light room
(empty bottles)
In this section, again, the light inspectors pass bottles. if any
bottle is reached unwashed then this bottle is again sent to the washing
department for washing.
Water treatment
Water is obtained from the turbines of the company and then this
water is treated according to the international drinking water standards. All
the hardness of water is eliminated and the water is made pure for the use in
the syrup manufacturing.
Syrup manufacturing
Water is mixed with the sugar and concentrate according to the
fixed ratio of the formula for Coke.
First, brix is manufactured according to the following ratio.
Coca Cola 54.80 ( concentrate . sugar )
Fanta 57.30 =
Sprite 53.00 =
Then beverage is prepare according to
Coca Cola 10.37
Fanta 12.00
Sprite 10.00
Then water and Co2 is added to the brix, which concentrate it Co
beverage. Then beverage is passed through ammonia gas which cold the beverage.
Filling of
bottles
The company has modern automatic filling machines where by bottles
is automatically filled and then automatic machine puts crown corks or cap
corks on the bottles.
The capacity of this mach8ne is 7.5 cycles per minute and per
cycle 40 bottles can be filled.
Light room
(Filled bottles)
In this stage the quality of the filled bottles is checked. Any
less filled or over filled bottle is filtered out in this stage.
Loading
After the inspection an automatic machine is used to print the
certain things on the caps of the bottles, e.g. code number, line , expiry date
etc.
Packing
The bottles are put into the crates. The standard of the crate is
24 bottles per crate. Packing of bottles is done manually by workers.
Store room or Godowns
Then bottles are sent to the storeroom or godown.
Loading and delivery
Loading and delivery is done according to the demand. Bottles are
loaded by the fork differs into the trucking of the company and then sales
department then is responsible for its distribution into the market.
Facility layout
Layout planning involves decisions about the physical arrangement
of economic activity centers within a facility. An economic activity center can
be any thing that consumes space, a person or a group of people, a machine ,
workstation and a department.
In Multan beverage was installed then due to limited space the
washer placed in side the production hall. Heat comes inside the production
hall due to washer temperature. This washer should be out side the hall for the
health of employees. The company realized this thing while installing the
second unit. Now the washer of second unit is placed out side the hall. Other
layout designing has been set according to the standards prescribed by the
parent company.
Capacity
Capacity is the maximum rate of out put for a facility. Capacity
can be measured in terms of input and output. Capacity in the Multan beverages
in term of machine cycles. This machine is used to fill the bottles. Maximum or
peak capacity of the system is 9 cycles per minute. In a cycle forty bottles
can be filled so it means that capacity is 320 bottles per minutes.
Currently company’s utilization capacity is 6 cycles per minute,
which is 240 bottles per minutes. Keep in mind that this is the peak season for
the company.
Utilization capacity of the company is the average utilization
capacity in the high demand day company increases the cycle to 8 cycle per
minutes. Company is planned to install third line in the year 2000.
Company has two bottling plants in the facility, which can produce
720 bottles per minutes.
Capacity Cushion
Company has a capacity cushion of 3*2 cycles per minutes which is
the cushion of 240 bottles per minutes.
Quality management
In a general sense, quality may be defined as meeting or exceeding
the expectations of the customers. Company gives special type of consideration
to the quality of raw material, work in process and finished goods.
Raw material
Concentrate
Multan beverages have to get the concentrate from Lahore, which is
the Franchiser Company of Coca-Cola. This concentrate is a major component of
the finished goods. The parent company is itself quality consciouses company so
Multan beverage has never had any complaint about the concentrate quality.
Sugar
Sugar is purchased from different suppliers. When there is major
or regular need then order is placed to the Ittefaq sugar mills or Sheikhupura
Sugar Mills. Company has a minimum acceptable level as standard to check the
quality.
Company also receives the certificate of analysis from the
supplier before delivery. Sugar is also tested in the lab of the company. Only
the sugar of high quality is used in the manufacturing of the process.
Water
Very high standards are kept to process the water and then several
checks are made whether the quality of water is up to the required standard or
not. Following are the technical names of tests.
· Upper lab test
· Water softness test
· Sound filter test
· Carbon purifier test
These tests assure that the quality of water used in the products
is equal to the standards of mineral water.
Work in process
Syrup treatment
The syrup produced is treated at about 9.2 F.H to make hygienic.
This process makes the quality of product more reliable. Coke Company already
has given the standards to check the syrup.
Lab test
When carbon dioxide and ammonia are added to the syrup then a lab
test is made of the ingredients of the products. This test is most important
test as it is the final test before the converted into the finished product.
Finished
product
Finished good
test
Finished product is randomly selected and tested in the lab. This
test also checks the ingredients and preservation status of the bottles. In the
finished goods test two type of test are used to maintain the quality of
finished products. These tests are following.
X bar chart
X-bar chart is used to check the gas volume and the sugar quantity
in the filled bottles. These bottles are selected randomly after every half an
hour and tested in the lab. The results of these tests are then drawn on the
X-bar chart.
Carbon dioxide
gas volume
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Sugar
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This X-bar chart tells that weather the standard of quality is
maintained or not. If the test incharge sees teat there is a trend or higher
fluctuation in the observations then he tells to the concerned shift incharge
to check the problem and find the solution. Mean of the x-bar chart, which is X
–double bar always, remains same and never change. This shows the consistent
quality policy of the company.
Gauge test
To check the under filled or over filled bottles, forty bottles
are selected sequentially and then tested on a gauge scale. On this scale
following limits are given.
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0 line shows that bottle is up to the mark not over or under
filled.
¼ lines are the maximum acceptable deviations. Any bottle away
from these lines showing under or lower filled. These bottles are selected
sequentially twice in a shift. Each and every bottle in a sample is tested so
by doing this company can check that which filling pipe has a fault because
there are forty filling pipes in a cycle of machine.
After delivery test
A test is conducted after delivery of the bottles to the dealers.
A sample is selected from the market place and then tested. This test tells that
whether bottle’s quality remains same with in the expiry date or not.
Empty bottle
check
The empty bottle department checks purchased empty bottles. During
the test following thing are checked to maintain the standard size of bottle.
Appraisal
Internal failure
External failure
Multan Beverages company have not any external failure cost but
they have internal failure cost associated with finished product’s inspection.
When the bottles are under or over filled, higher or lower sugar quantity and
higher or lower gas volume than standard then the internal failure cost incur.
Company also has Appraisal cost which is related to detect the causes before
the product is going to complete.
Forecasting
In this regard company do not have any formalized procedure, company
uses a very simple procedure for forecasting. They look on the previous years
sales for a certain period (usually for a month) and add or subtract any future
projection made up by the judgement of executives. These executives made
forecast which is then used as target for the managers. These managers have to
fulfill the target with in the given date. Manager divide these target into
parts and then supervisors who are working under managers has a target of one
part
Production
planning
On the basis of forecast of sales, the production department of
the company makes production plan. Usually the difference between two is of the
dates. As the production has to start before sales requirement. These plans may
be daily, weekly, monthly or quarterly. For the season of summer company some
times stores the bottles in advance to meet the high demand. This anticipating
inventory is kept for few days. Production plan bridges the gap between high
demand and low demand time period. In the Coca-Cola company production
planning, although is informal but it very much effective as it is based on the
experience of the executives.
Material
requirement planning
Multan beverages do material requirement planning informally.
Material requirement planning of different type of materials has the following
dimensions.
Concentrate
Company has to get concentrate from Lahore. Multan beverage has to
inform Lahore office in advance, gross requirement of six month. Then company
according to the need place order and gets concentrate. As concentrate takes
two days to come, company places the order four or five days before the finish
of concentrate. Company keeps safety stock of three days to avoid stock out.
The quantity of the order and period between order is not fixed.
Sugar
Its demand depends on the demands of bottles. Company gets the
sugar from two sugar mills regularly. Company can get sugar from local market
if the demand is increased uncertainly. Company has not any particular type of
relationship with the suppliers. Company has to get sugar on cash basis. So on
the basis of cash on hand company buys sugar. Company prepares a form in which
all per unit requirement of all materials is written the company does not name
(it). Company determines the requirement of raw material by multiplying the
demand of finished product with the per unit requirement. Company keeps the
stock of sugar. Sugar reaches in the factory in three days after placing the
order. Company places the order before five days of reaching the inventory
level to zero. Company keeps the safety stock of five days to avoid any stock
out.
Empty Bottles
Requirement of empty bottles is determined by the formula
Actual requirement - present stock + breakage = present
requirement
Empty bottles are come from Ravi glass factory. Company has a
contract with the supplier. Standards and specifications are already given to
supplier.
Crowns and caps
Crowns and caps are same as the requirement of finished products,
but some stock of breakage or loss crowns and caps is there. Company brings the
crowns and caps in heavy amount from the supplier.
Carbon dioxide
Company has per unit requirement of 3.8 pounds of Co2. So by
multiplying the figure with the requirement with the finished goods company
determines the amount needed. Company purchases Co2 from K.A gases, Pak gases,
and Kaka khail gases Faisalabad. Company keeps safety stock and order is
reached in three days after placing.
Other locally
available raw material
The policy of the company about all locally available raw
materials is same. That is procurement of raw material according to production
plans and avoids any stock out.
Safety stock
The company does maintain the safety stock of all the raw material
used, but does not have any dead line for the safety stock. The average safety
stock of concentrate and sugar is as follows.
Concentrate
One week safety stock
Sugar
Five days safety stock
Quantity
discount consideration
When Company has adequate funds available it enjoys attractive
quantity discounts. But again there is no hard and fast rule regarding quantity
discount. It depends highly on the financial status of the company at that
time.
Lead-time
Lead-time is the time between order reached and orders received.
Lead-time for different raw materials in the Coca-Cola Company is as follows
Concentrate
Two days lead-time
Sugar
One day lead time
Co2
Three day lead time
Consideration for other locally available raw material is not
trouble some as this material are commonly available in the market.
Inventory
management
Effective and efficient inventory management system of
manufacturing concern means satisfaction of customers, no back orders and
better cash projections. All of these things lead to ultimate success and
prosperity. The inventory system helps the management in the following ways.
Current record of all sort of inventory is kept and can be
inquired at any time.
The recorder level can be checked at any time and order can be
placed for new purchases of raw materials. Thus avoiding back orders and
cancellation of orders.
The projection can be made regarding the cash to be required for
purchases and the required amount can be arranged to fulfill the cash
requirements.
By controlling the finished goods inventory the amount to be
generated as revenue is calculated and amount of tax can be estimated.
The order frequency and order size regarding different customers
is calculated and it can be determined that which customers are more profitable
for the business.
The lead-time calculation can tell about efficiency of receiving
cell and the supplier.
The computerization has added to the efficiency and profitability
of the business and provides a lot of benefits.
Following effective reports are made for the effective management
of inventory.
Summary of empty issue / receipt
It shows the overall incoming and out going details of empty
bottles.
This document
involves the following.
Date
Vehicles
Party name and code
No. Of issued, filled or empties
Parties sales vouchers
It shows that all the particulars about the customer requiring the
products. It involves the following.
Serial number
Date
Parties names and codes
Vehicle no.
Driver names
Details of liquid filled in.
Inward gate pass. (Empty)
This is the permission to the customers of Multan beverages for
delivering required products. It having the following details.
Serial number
Date
Customer name and code
Truck no.
Driver name
Particulars and details about products and quantity
Rough unload report
It is related with the return of the bottles, which shows the
following.
Gate pass no.
Vehicle no.
Total load
Station
Parties name and code
Total sound bottles
Breakage
Brust
Daily sales report
This report show all the records of the customers individually and
particulars about the products. It has the following details.
Gate pass no.
Parties name and codes
Station
Vehicle no
Details about product and quantities
Daily Godown report
It shows the details of godown involving finished goods issued and
empty bottles stocked as under.
Opening balance
Details of the received
Details of sales
Returns
Closing balance
Sales load and target reports
This report shows the sales load and target achieved during the
specific period of time. It has the details of targets of the supervisors,
sales managers and marketing manager. It shows all the statistical calculations
about load and target.
Aggregate planning
Aggregate planning is concerned with determination of the sizing
and timing of production for the immediate future. Operation managers try to
determine the best way to meet the forecasted demand by adjusting production
rates, labor, land, inventory level, overtime work and other control able
variables. There is no forma aggregate planning procedure but the executives at
Multan beverages do aggregate planning informally. They foresee the high demand
in summer and produce extra to stock for summer. They also hire contractual
daily wage employees for their organization, in the high demand days and fire
them after the seasons. There is no change in the level of permanent employees
with respect to season. There is no concept of under time in the company where
as over time is usual thing among the employees. Company uses aggressive
strategy for meeting the demand. Company gives incentives to the middleman and
increases the demand. Company also requires efforts from sales force to
increase the sales and meet the target of sales.
Promotion
The Multan beverages also use local area promotional tool and
tactics. These tools include
Point of purchase display
Stickers and posters
Public relation efforts and publicity
Banners and hoarding
Bill boards
The parent company is responsible for the TV commercials only. The
parent company distributes the cost of commercial on all the companies
manufacturing Coca-Cola in Pakistan.
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