Global supply chain optimisation is at the heart of a $1 billion programme put in place by The Coca Cola Company following what, by its standards, was a disappointing year in 2013.
I suspect that many organisations would be thrilled to have a year like Coca Cola did in 2013 – operating profit of $10.2 billion on sales of $46.8 billion. The trouble is that that is down very slightly on 2012.
Hence the expansion of a productivity and reinvestment initiative to drive an incremental $1 billion in productivity by 2016 that will be reinvested in the brands.
“We know from experience that focusing on productivity and investing in our brands during turbulent times will ensure we emerge stronger and better positioned to win long-term,” chairman and CEO Muhtar Kent told US analysts last week.
Global supply chain optimisation is a primary component of the incremental productivity goal along with savings from data and information technology system standardisation, which will be reinvested in global brand-building initiatives with an emphasis on increased media spending.
The company is also looking for improved effectiveness of our marketing investments by transforming its marketing and commercial model to redeploy into more consumer-facing marketing investments to generate the highest possible return and accelerate growth.
The productivity and reinvestment programme was first introduced at the beginning of 2012 with the aim of saving up to $650m by the end of 2015 to reinvest in the brands.
Historically, large profitable companies have been almost entirely focused on expanding market share. The fact that The Coca Cola Company has made it clear that it is determined to create a cost competitive advantage across its global supply chain, reflects the fact that organisations now need to sparkle in all aspects of their operation.