Introduction

Producing products efficiently cannot alone bring about business success for a company. For ensuring both profitability and success, a company needs to ensure that it is adhering to an effective and efficient distribution system constituted of agile, profitable, and effectual distribution channels. In this respect, the example of Coca Cola should be given because, since its inception, the company has strived for sustaining a potentially competent distribution system that has provided scopes to the company to maintain sufficient stocks of its products and has helped the company in maintaining the supply of its products as per the demands in the respective economies. The proficient distribution system of Coca Cola has allowed the company to select and collaborate with distribution channel partners who have continued to efficiently perform the vital functions of storing the products in the warehouses and supplying the products according to the market demand, thereby leveraging the supply chain system of Coca Cola in a thorough and explicit manner. Moreover, it has been observed over the years that prolific distribution management has resulted in profit orientation for Coca Cola in a potential manner because adherence to a robust distribution system has provided scopes to Coca Cola to manage the business cycle for distributors and wholesalers, which, in turn, has continued to help the company in enhancing its profit margins. Coca Cola’s effective distribution system has helped the company to quickly turn over their products, enhancing the sales of the products in a way that ensures profitability and cost-effectiveness.

The Uniqueness of Coca Cola’s Distribution System

The efficacy of Coca Cola’s business and its overall profitability has always largely relied on its unique distribution system that embodies a franchised distribution system and a quasi-direct distribution pattern (Jain, 2014). In 2015, the company’s official statistics revealed that Coca Cola sold 1.9 billion products globally on a daily basis and this profitable edifice of the business rests on the pillars of an effective distribution system (Lu & Tiwana, 2015). The unique distribution system of Coca Cola has helped the company in operating its global business effectively on a locale scale and this has allowed the company to obtain a competitive advantage over its rivals (Lu & Tiwana, 2015). It is noteworthy that because of its effective and efficient distribution system, Coca Cola has succeeded in creating a global reach with a local focus that has continued to be a source of its global profitability (Lu & Tiwana, 2015). Having more than 250 bottling partners worldwide, the robust distribution system of Coca Cola is a force to reckon with.

The Coca Cola Distribution System in a Nutshell (The Coca-Cola Company, 2021)

The Efficacy of Coca Cola’s Distribution System Management Models

Since 1889, Coca Cola has continued to concentrate on its core business of producing syrup concentrate and it has continued to sell its products to various bottlers throughout the world who hold exclusive business territories (Jain, 2014). In this respect, it has to be noted that Coca Cola’s success in the Asia-Pacific region, for example, has been thoroughly dependent on the efficacy of its regional franchised distribution system through which the company supplies its beverage bases and syrups to Coca-Cola Amatil (CCA) which is among the largest bottlers of nonalcoholic beverages within the Asia-Pacific region (Coca-Cola, 2014). Apart from the regional franchised distribution model Coca Cola also adheres to the hub and spoke model of distribution, which Coca Cola applies particularly and specifically to its rural distribution strategy (Jain, 2014). Coca Cola, following the hub and spoke model of distribution system management, divides the different categories of distributors on the basis of the area and extent they are covering (Jain, 2014). The adherence to the hub and spoke model of distribution channels has helped Coca Cola in leveraging its overall distribution system, owing to the fact that the concerned model has demonstrated the potential to create myriads of benefits for the company. In this respect, it has to be noted that the hub and spoke distribution system management model, which Coca Cola has continued to follow particularly in its rural distribution system, has sustained the continuous movement for loads that have been the result of the centralized handoffs pertaining to the Coca Cola’s unique distribution system (“Increase Efficiency by Embracing the Hub-and-Spoke Model”, 2021). Moreover, it has leveraged the company’s and its distributors’ supply chain’s cost efficiency by alleviating the lengths of haul, thereby, improving scheduling, reducing transit time, and helping delivery partners to comply thoroughly with regulations related to hours of service (“Increase Efficiency by Embracing the Hub-and-Spoke Model”, 2021).

The Advantages and Competencies of Coca Cola’s Distribution System

It has also to be taken into account that the hub and spoke paradigm adopted by Coca Cola in terms of enhancing its rural distribution system has helped the company in remaining consistent and competent in its business operations over the years. This can be argued by citing the fact that the model of distribution has provided scopes to Coca Cola to enhance its service levels, thereby ensuring the arrival and distribution of Coca Cola’s products in the right place at the right time (“Increase Efficiency by Embracing the Hub-and-Spoke Model”, 2021). The concerned distribution system has also helped Coca Cola in reducing its cost of production and has helped the company in enhancing its productivity by leveraging the economies of scale through propelling larger loads that reduce per-unit costs effectively (“Increase Efficiency by Embracing the Hub-and-Spoke Model”, 2021). Besides, the hub and spoke distribution system management model has also provided opportunities to Coca Cola to mitigate the risk of price fluctuations that are triggered by third-party carrier intervention (“Increase Efficiency by Embracing the Hub-and-Spoke Model”, 2021). It is also to be noted that the franchised distribution system of Coca Cola has also contributed largely to the company’s business growth, development, and expansion. The system has benefitted the company thoroughly from the perspective of overcoming the challenges of market entry and market penetration. In this respect, it must be conveyed that Coca Cola, by adopting the franchised distribution system for its global distribution system management, has been able to expand its businesses exponentially across the globe (“Franchising: gaining independence through partnership”, 2018). Coca Cola has been able to expand quickly into new markets because the franchised distribution system has relieved the company from investing more in setting up its own distribution facilities in the concerned markets and this has allowed the company the scope to invest more time and money into those of its core business processes that leverage market expansion substantially (“Franchising: gaining independence through partnership”, 2018). The franchised distribution system has also helped Coca Cola in maintaining its customer image and market reputation because the franchised distributors make stronger efforts to spread the brand consciousness among targeted customers efficiently (“Franchising: gaining independence through partnership”, 2018). This also adds to the robustness of Coca Cola’s marketing process in a thorough and explicit manner. Moreover, the franchised distribution system has also allowed Coca Cola the scope to remain lucrative to regional suppliers and this has added to the profitability of Coca Cola’s global business. Moreover, the quasi-direct distribution system of Coca Cola, which is largely characterized by a franchised distribution system management process, allows Coca Cola the chance to sometime earn more profit by distributing its products directly to the retailers. In this respect, it has to be noted that in its direct selling model, Coca Cola supply its products to retail shops locally by using its own transports and this enhances the company’s profit margin substantially (Jain, 2014). It is also noteworthy that the franchised distribution management system of Coca Cola has helped the company in continuing its presence in 200 countries across the globe which has added to its brand name and its brand strength extensively (Hartogh, 2007). The company’s philosophy of “think global, act local” has also been leveraged and transformed into practicality due to its effective franchised distribution system (Martin, 1997).

Conclusion

It is noteworthy that the dexterous distribution system of Coca Cola has allowed the company to select and collaborate with distribution channel partners who have continued to efficiently perform the vital functions of storing the products in the warehouses and supplying the products. It is noteworthy that the effectiveness of Coca Cola’s business and the profitability of its global business have always remained reliant on its efficacious distribution system that is characterized primarily by a franchised distribution system and a quasi-direct distribution pattern. Moreover, along with the regional franchised distribution model, Coca Cola also adheres to the hub and spoke model of distribution for its rural business and the model has also provided scopes and opportunities to Coca Cola to remain competent and profitable in its global operations. Coupled with a franchised distribution and quasi direct distribution system, the hub and spoke distribution system management model has helped Coca Cola in enhancing its overall distribution system, owing to the fact that the concerned model has demonstrated the potential to create myriads of benefits for the company. Hence, it can be said that the success of Coca Cola’s business and the edifice of its profitability rests thoroughly on the pillars of an effective and efficient distribution system that has provided the company with a competitive advantage over its rivals.

References

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