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Requirement
Topic 1:
Warehousing in its many forms appears at different points across supply chain networks. The intermodal choice is also important for the overall performance of the supply chain. Choose a company to: describe and examine its warehouse facilities and inventory; identify and explain its intermodal choice; and critically evaluate the link between the warehouse, inventory and intermodal choice. This question carries 45% of the marks.
Topic 2:
The facility location is considered key to business success. Choose a company to: identify and explain the reasons and objectives for its location decision; critically evaluate the factors the company took into account when selecting this location, and examine whether or not this location can support the company’s future expansion. This question carries 45% of the marks.
The remaining 10% of the marks are awarded for executive summary, presentation, grammar, style, and layout.
Please answer these two topics separately under numbered headings/sub-headings and use academic theories and examples to support your discussions. You are expected to use all material from lectures, seminars and also use an appropriate number of academic resources including textbooks and peer-reviewed academic journal papers.
Solution
Executive Summary
The company Coca-Cola is the marketer, manufacturer, and retailer of the non-alcoholic beverage syrups and concentrates. Headquarter of the company is in Atlanta. Coca-Cola is being recognized as the extravagant brand. Coca-Cola markets four brands which include Fanta, Sprite, and Diet Coke, juices, coffee, sports and energy drinks. Further, the report will help in understanding the movement of the product and the network of the supply chain of the company. The facilities of the warehouse and the inventories of the Coca-Cola will also be explained below. The preferable usage of the intermodal choice is given for the company so that the company can generate more revenue. Further, the factors which the company has taken while making the decision for the location are also explained. The impact of the factors on the decision of the location are explained in detail for the better understanding. And the impact of current location of the company in the future expansion is also given. Therefore, the secondary information has been used which has been taken from the various research papers and the articles.
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PART 1:
Product Movement and Supply Chain Network
The Coca-Cola Company supervenes a unique and distinct system of supply chain management as the company yields syrup concentrate which is further sold to the bottlers across the globe. The company possesses the anchor bottler by the name Coca-Cola refreshments in North America. The other bottlers who have the contract with the Coca-Cola Company generate the finished products in bottles and cans from the concentrate in amalgamation with sweeteners and filtered water (Hofmann, E. 2013). After the production, the beverages are moved to sales and distribution centers by using the fleet of the bottlers of the commercial vehicles. The centers of the distribution are accountable for managing and storing the inventory consisting of distinct SKU and then dispatch them off to the retailers. Further, the bottlers sell, assort and merchandise the product of Coca-Cola to the retail stores, restaurants, vending machines, distributors of food and service. The network of the supply chain is classified into various different levels. The company has ERP systems in order to trace the variation regularly at the global price (Johnsen et al., 2014).
The below given diagram will clearly help in understanding the product movement by analyzing the supply chain network of the company Coca-Cola and being an individual I will mainly focus on the warehouse like the company also focuses on the warehouse so that the products are delivered on time to both the distributors and the buyers without getting damaged. (Nahmias et al., (2015).
Source: ("Manufacturing Global - Manufacturing Magazine & Website - Manufacturing News", 2016)
Warehouse Facilities and Inventories
The Coca-Cola Company has unique facilities in the warehouse. The technology of RFID enables the real time tracing and tracking of the goods and this helps in controlling the inventory. The company is using automated warehouse rather than conventional warehouse and the storage capacity is 40 percent more in automated warehouse. The automated warehouse helps in reducing the energy and it is being conserved. The company handles the products with an ease and there are less chances of damage to the products and there is no damage because of the human error. The company requires less maintenance cost than the standard machinery in order to manage and maintain the warehouse. The company requires less workers in order to manage the various operational activities (Rushton et al., 2014). Further, there is a reduction of carbon footprint of the complete operation. The finished products which the company looks after are juices, sweeteners, energy and sports drink. In order to add concentrates they buy carbon dioxide, cans, plastic bottles, closures, etc. They generally buy raw materials, mineral water, syrups, etc. from various suppliers. The company order the raw materials when the cost of the raw materials is not high and the company is able to recover the cost from the customers by deciding the price accordingly. The Coca-Cola Company has the specialists in order to control and manage the inventory. The specialists manages the merchandise things and items which are in transit and on hand. They perform various activities like manage returns, required adjustments, validating the merchandise and further implement the reporting strategies of inventory. The company uses periodic inventory review as it minimizes the time and the manager is able to spend more time on analyzing the counts of inventory. The company uses EOQ model to re- order the raw material as it helps in determining the right quantity for the inventory. The company uses EOQ model helps in reducing the cost of variable inventory the company uses setup cost, demand cost, production cost and interest rate in order to calculate EOQ ("Coca-Cola Singapore", 2016).
From the below given diagram, it can be easily understood that how the warehouse functions in order to ship the products to the retailers.
Source: ("Logistics Management", 2016)
Further, the raw materials and the packaging of the Coca-Cola company has declined from the 2014-15. The finished good of the company also declined from the year 2014-15 and as result overall inventory has declined from the year 2014-15. The below given is being taken from the annual reports of the company, and the values are in USD $ in a million.
Source: ("annual report", 2016)
Usage of Intermodal Choice
This section will help in understanding the comparative analysis between the various intermodal choices. The Coca-Cola Company uses three types of transportation and the first one is the trucking intermodal choice. As the company uses this transport in order to carry the products from the warehouse to the vessels of sea freight and even to the airport. The company uses various types of platforms of trucking to carry the products like adjustable width pallet truck, aluminium platform truck, deep tray trucks, double and triple decker hardwood platform truck. The usage of water intermodal choice is more time consuming as it takes time for the buyer to gets the product and there are more chances of damage of the product are maximum ("Academia.edu - Share research", 2016). And if the goods are damaged at the cargo then it will be the responsibility of the shipper only (Srpová, J. 2012). There are more chances that the products get delayed, and the buyer refuses to accept them. Furthermore, the water intermodal choice is very difficult to maintain and manage for the company (Petersen et al., 2004). The air intermodal choice is the fastest mode of transport, and the goods are being delivered at the short intervals to the respective destinations. It is easy to prepare documents for the air transport like the document of customs clearance, storage of goods, etc. Further, the buyers are being informed about the arrival of the product as they get the delivery on time without any delay. In the air intermodal choice, the chances of damage of products are very less, and the buyer receives the product on time like within 24 hours after the shipment of goods.
Therefore, it can be concluded that air transport is the most suitable and preferable choice of intermodal in order to deliver products and services because according to the researchers (Reis, V. (2014), the water mode is much cheaper than the air mode but the goods are more damaged in the water mode. There are chances that goods are delivered to the buyers even after the date of the shipment. The goods are being impacted by the uncertainty of weather. Whereas, the air mode is much expensive than the water mode because the goods are taken care of when they are at the flights. There are less chances of goods to get damaged. As the moderate temperature has been kept in order to protect the products. The goods are being delivered to the customers on the right time and the customers are informed about the date and time of the shipment correctly.
Linkage between Warehouse, Inventory, and the Intermodal Choice
The warehouse, inventory and the intermodal choice are strongly connected as we are focusing on warehouse. The connection is strong because of the overstock which the company keeps so that if there will be any shortage of materials or inventory then the company would not get impacted. The company focuses more on warehouse because of overstocking and for this they need a best choice of intermodal. As the water intermodal transports various products like coal, petroleum, oil and other types of consumer products. The products of the consumer are shipped in the containers of intermodal which are made up of metal in order to protect the product. The products of the company Coca-Cola cannot be kept in the warehouse for a longer period of time as the shipping through cargo is itself a long procedure. But the shipping through water is less expensive as compared to other intermodal choices. But the major problem with this mode is that it is very slow. The weather badly impacts the consumer products (Macharis et al., 2004). The other intermodal choice i.e. air that is the fastest mode to transfer goods. The air shipment is much costlier as compared to water shipment. As the products are kept at the right temperature with doesn't impact the products. And the company like Coca-Cola can easily deliver the products to the distributors without any delay. Moreover, the air transportation mode is growing faster, and the products are kept in the unique type of containers with the coolants in order to protect the products from the humidity (Coyle et al., 2015).
Therefore, there is a strong linkage between the warehouse, inventory and the intermodal choice and the Coca-Cola prefers air freight mode in order to deliver the products to the distributors on time and without any damage.
According to the researchers (Mentzer et al., 2001), the intermodal routes includes the selection of various routes for the shipment with the help of an intermodal network. The intermodal transport is competitive in nature as compared to unimodal transport route because of the economies of scale. The various objectives can be defined, like the minimizing the cost and time of the route and maximizing the economies of the scale. The manufacturing companies use the intermodal route by examining the various determinants which would impact the company to gain sustainable competitive advantage by generating the revenue and maximizing the business value. Therefore, there is a strong linkage between warehouse, inventory and the intermodal choice because the company keeps the overstock of the raw materials and inventory.
REFERENCES
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Academia.edu - Share research. (2016). Academia.edu. Retrieved 25 October 2016, from http://www.academia.edu/
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annual report. (2016). Retrieved 25 October 2016, from http://www.coca-colacompany.com/
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Coca-Cola Singapore. (2016). Coca-cola.com.sg. Retrieved 25 October 2016, from http://www.coca-cola.com.sg/
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Coyle, J. J., Novack, R. A., Gibson, B., & Bardi, E. J. (2015). Transportation: A Global Supply Chain Perspective. Cengage Learning.
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Hofmann, E. (2013). Supply Chain Management: Strategy, Planning, and Operation, S. Chopra, P. Meindl. Journal of Purchasing and Supply Management, 19(3), 212-213.
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Johnsen, T., Howard, M., & Miemczyk, J. (2014). Purchasing and supply chain management: a sustainability perspective. Routledge.
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Logistics Management. (2016). Logisticsmgmt.com. Retrieved 25 October 2016, from http://www.logisticsmgmt.com/
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Macharis, C., & Bontekoning, Y. M. (2004). Opportunities for OR in intermodal freight transport research: A review. European Journal of operational research, 153(2), 400-416.
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Mentzer, J. T., DeWitt, W., Keebler, J. S., Min, S., Nix, N. W., Smith, C. D., & Zacharia, Z. G. (2001). Defining supply chain management. Journal of Business logistics, 22(2), 1-25.
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Nahmias, S., & Olsen, T. L. (2015). Production and Operations Analysis. Waveland Press.
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Petersen, C. G., Aase, G. R., & Heiser, D. R. (2004). Improving order-picking performance through the implementation of class-based storage. International Journal of Physical Distribution & Logistics Management, 34(7), 534-544.
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Reis, V. (2014). Analysis of mode choice variables in short-distance intermodal freight transport using an agent-based model. Transportation Research Part A: Policy and Practice, 61, 100-120.
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Rushton, A., Croucher, P., & Baker, P. (2014). The handbook of logistics and distribution management: Understanding the supply chain. Kogan Page Publishers.
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Srpová, J. (2012). Analysis of the Quality Management using First Choice Methodology (Doctoral dissertation, Masarykova univerzita, Fakulta informatiky).
PART 2:
Reasons and Objectives for Location Decision
The company Coca-Cola identified the various reasons and objectives in order to take the decision for the location. The company mainly wanted to locate near the warehouse so that the products can be easily taken out and distributed further without wastage time and money because the company is in a habit to have overstock. Further are the supporting considerations for the decision of location like the company wanted to locate near the market only at the reasonable price. The Coca-Cola also wanted they get raw materials on time from the suppliers (Company et al., 2016). So, they wanted they are also located near the suppliers so that there will be no delay in the raw materials and further the production can be done on time. The company wanted that there should be transport facility where they are being located so that the products and inventory can be easily loaded and unloaded on time without causing any damage to the products (Tate et al., 2014). The Coca-Cola Company wanted that they easily get the labor at lower wages so that they can work efficiently and effectively and the company can maximize the production. The company wanted to locate at such a place where they will be able to follow government policies and various rules and legislations. The climatic condition in Singapore is also not sustainable, so the company wanted a place where the products don't get damaged from the weather. The Coca-Cola wanted to locate at such a place where the basic facilities of amenities are present like port facilities, roads, power lines, hospitals in case of emergency, etc. ("Wiley Online Library", 2016).
Therefore, the company mainly focused on the warehouse while taking a decision for the location and the other reasons and objectives which are mentioned above were the supporting considerations.
According to the researchers (White et al., 2016), the manufacturing company do the analysis on the location decisions of the other companies in order to make the most effective decision for the location. The companies look at the various factors of the location of other companies like where the suppliers of that company are situated, how far is the company from the target market, whether the company is able to get cheap and effective labor or not. Therefore, the companies gather all the desired information before taking the decision for the location in that particular area. Moreover, the companies want they don’t have any competitor in that particular area because it will affect the company and further the company will not be able to grow as expected.
Impact of Factors on Facility Location
The Coca-Cola Company was largely impacted by the various factors in a positive way like supply-side which included labor cost, transportation cost, and the factors of demand-side like an image of location, suitability, convenience, etc. The location where the company decided to set up helped the company to generate profits. As the labor cost was minimized and production was maximized. The company was able to get raw materials easily, and the goods were delivered to the distributers without any damage because of the best facility of transport ("Singapore property, rent et al., 2016)
According to the researchers (Schoenherr et al., 2008), the survey was conducted in order to know the various factors on which the manufacturing companies focuses in order to generate the revenue. The factors were, cost (stability, labor, availability), logistics (availability and stability of transportation), minimum risk at supply chain, strategic access (presence of customer, access to supplier, risk), risk of the country (political instability, issues of the environment) and the trade policies of the government (subsidiaries, advantages of tax) (MacCarthy et al., 2003). There are various theoretical perceptions that helps the manufacturer to make the right decision about the location. It has been suggested that the individual firms try to move towards the area of lower cost from the area of higher cost. Moreover, the areas which have greater differences of culture or have limited protection of intellectual property may develop a potential for less attractiveness. It is further researched that the decision of location from a level of macro or global are being impacted by the cost’s host and the various other factors which are related to the risk which also includes the foreign direct investment (Kremic et al., 2006). The researchers also stated that the owner while deciding the location of the production plant thinks about the ownership, internalization and location advantages in order to generate more and more profit and sustain in the competitive world by gaining competitive advantage and the brand value.
The internalization and the ownership are well connected and also focuses on the analysis of the firm (Ellram et al., 2013). Whereas, it has been suggested that the advantage of the location relies on the advantage which is gained from the resources, the policies and regulations of the government, material and labor cost, the advantage of trade and distribution i.e. improvised access of the market with the help of proximity to the consumers or the buyers (Demirbag et al., 2010). Further, the research was conducted in order to know the indicators which influence the location decision of the manufacturing, and the indicators were the relative size of the market, the hourly wages, raw materials and labor. Interestingly, cost saving is not the influential determinant which impacts the decision of the owner regarding location (Buckley et al., 2007).
Impact of Current Location on the Company’s Future Expansion
The company mainly focuses on the warehouse in order to grow and expand in future as the company keeps the overstock of the materials and the inventory. Further, the company is having the quick and timely facility of raw materials; the company has got cheap labor who works efficiently and gives productive results. The company also have the transport facility and the products are easily transported to the warehouses and the distributors ("Business Insider Singapore", 2016). Further, the company has the potential to grow as the prices of the products of the company are not so high but the demands of the product are high, and there will be changes in the future, and the company will be able to increase the supply of the products as compared to its competitors. The company has the suitable location as it is situated near the suppliers, distributors, and the target market. The company even has the facilities of the basic amenities as well (Bhatnagar et al., 2005). Therefore, the location of the company will help in the future expansion to a great extent as the size of the warehouse is- the surface area of the warehouse of the company in Singapore is 2000 m2, length is 105 m, the width is 16 m, height is 24 m, and the slots of the pallet are 8,092 (Company et al., 2016). And the company is having a strong connection within the location and it also have all the facilities which are important to gain a sustainable competitive advantage.
According to the researchers (Ellram, L. M. 2013), every manufacturing company do the analysis of the desired location in order to maximize the competitive advantage and also increase the business value because the location affects the company in order to grow and expand further. As the demand and supply are not certain and can be changed according to the situation in future. So, it is very important for the companies to make the right decision for the location by keeping the future goals in mind. It has also been suggested that the companies who make the right decision for the location have the potential to grow and expand in future.
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Bhatnagar, R., & Sohal, A. S. (2005). Supply chain competitiveness: measuring the impact of location factors, uncertainty and manufacturing practices. Technovation, 25(5), 443-456.
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Buckley, P. J., Devinney, T. M., & Louviere, J. J. (2007). Do managers behave the way theory suggests? A choice-theoretic examination of foreign direct investment location decision-making. Journal of international business studies, 38(7), 1069-1094.
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Business Insider Singapore. (2016). Businessinsider.in. Retrieved 25 October 2016, from http://www.businessinsider.in/
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Company, O., Main, O., Journey, A., Mission, V., System, T., & Overview, W. et al. (2016). Coca-Cola Journey Homepage. The Coca-Cola Company. Retrieved 25 October 2016, from http://www.coca-colacompany.com/
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Demirbag, M., & Glaister, K. W. (2010). Factors determining offshore location choice for R&D projects: A comparative study of developed and emerging regions. Journal of Management Studies, 47(8), 1534-1560.
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Ellram, L. M. (2013). Offshoring, reshoring, and the manufacturing location decision. Journal of Supply Chain Management, 49(2), 3-5.
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Ellram, L. M., Tate, W. L., & Petersen, K. J. (2013). Offshoring and reshoring: an update on the manufacturing location decision. Journal of Supply Chain Management, 49(2), 14-22.
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Kremic, T., Icmeli Tukel, O., & Rom, W. O. (2006). Outsourcing decision support: a survey of benefits, risks, and decision factors. Supply Chain Management: an international journal, 11(6), 467-482.
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MacCarthy, B. L., & Atthirawong, W. (2003). Factors affecting location decisions in international operations-a Delphi study. International Journal of Operations & Production Management, 23(7), 794-818.
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Schoenherr, T., Tummala, V. R., & Harrison, T. P. (2008). Assessing supply chain risks with the analytic hierarchy process: Providing decision support for the offshoring decision by a US manufacturing company. Journal of Purchasing and Supply Management, 14(2), 100-111.
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Singapore Expats - Singapore property, housing rent, relocation, living, staying in Singapore. Singapore property rental / sale, Singapore apartment for rent, Singapore condo for rent, Singapore house for rent. (2016). Singaporeexpats.com. Retrieved 25 October 2016, from http://www.singaporeexpats.com/
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Tate, W. L., Ellram, L. M., Schoenherr, T., & Petersen, K. J. (2014). Global competitive conditions driving the manufacturing location decision. Business Horizons, 57(3), 381-390.
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White, S., & Hagel, J. (2016). 5 factors to consider when designing benefits plans. Journal of Accountancy, 221(6), 20.
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Wiley Online Library. (2016). Onlinelibrary.wiley.com. Retrieved 25 October 2016, from http://onlinelibrary.wiley.com/
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