Having interned in the Strategy Consulting practice of Deloitte, I got the opportunity to work on some very interesting projects for some world renowned client organizations.One of the projects I worked on was for Hindustan Coca Cola Beverages (HCCB). Deloitte was engaged by HCCB to provide business process re-engineering (BPR) design and implementation services across the organization to support their on-going ERP (SAP) implementation.The main aim of the BPR project was to assist the ERP (SAP) implementation and also the delivery of improved HCCB-wide organisational operational efficiency and effectiveness in the production and distribution functions.Some objectives of this project were to: understand and document the current position of HCCB in relation to its processes, resources and roles define the optimal arrangements in terms of processes, roles and resources in support of the HCCBs strategic objectives (To-BE) design tools and templates for supporting the new processes provide HCCB with a plan to implement the changes necessary to achieve the optimal arrangementsWe will now focus on the distribution process, out of several processes being carried out at HCCB like any other organization.Funnel Model

Fig: Funnel ModelGlobal Environment

Business DriversImplicationsGrowth Drivers

Changing category preferences (functional, ready-to-eat) Stricter food safety regulations (emphasis on traceability) Quality and not cost key to success (esp. for exporters to developed markets) Focus on packaging align quantity & form to evolving fast-paced lifestyle Factor local preferences for product innovation

Country specific channel approach to deal with retailers account for market maturity, structure & retail formats Big manufacturers, in developing block, to gain from economies of scale from retailers drive towards consolidation Rising retailer bargaining power to increase price-pressures

Increase bargaining power with suppliers MNCs need to evaluate merits/demerits of local sourcing; emerging market firms to consider global sourcing alternative Investment in product innovation to reduce total cost of production (e.g. use of substitute inputs) Partner/Tie-up with 3PL players Changing Consumer Preferences Increased preference for convenience - rising middle class & urbanization, working women Health-concerns dominate in developed markets (SARS) Increasing health-consciousness in developing markets Rising preference for newer tastes increased travel and innovation by manufacturers Increased penetration of organized retail Emerging markets highly under-penetrated Scaling by MNCs likely to lead to consolidation likely in the large fragmented Chinese retail space Ramping up by domestic players in India Growing private label sales Newer alternative digital channels (e.g. online retail) Continuing margin pressures Commodity prices expected to rise further or to maintain their present high levels Price seasonality and fragmented supplier-base in developing countries Infrastructure and logistical bottlenecks in key emerging markets

Challenges

Trends

Global StrategiesCoca-Cola (NYSE: KO) plans to drive revenue growth through innovation, geographic expansion in developing markets, leading consumer marketing campaigns and improved bottler relationships, while enhancing margins through effective cost management strategies

Accelerating InnovationKO continues to introduce innovative products, product line extensions, and packaging, to strengthen its product portfolio. During the CAGNY conference management cited examples of product introductions such as Fanta still beverages in France and ready-to-drink coffee brand Illy Issimo in 11 markets. Additionally, the company plans to extend its Coke Zero platform to Fanta and Sprite. Within emerging markets, KO is focusing on making its products more affordable for bottlers and consumers by offering refillable packaging in countries such as Peru and Argentina.

Expanding Emerging Market BusinessKOs growth strategy is focused on developing consumption in emerging markets by creating distribution infrastructure and maximizing volume; building consumer loyalty by providing maximum value in developing markets; and maximizing profit and funding future growth in developed markets. Emerging markets today make up 16% of our total volume globally, but it will be 60% of incremental volume going forward to 2020. Personal wealth is going to double in emerging markets in the next ten years. Developing markets actually represent value growth. They currently [represent] about a third of our total volume and will be about 25% of our future volume growth. We expect these countries to add about $3,000 in purchasing power per person by 2020. -President & CEO, Muhtar Kent

Driving Global Beverage LeadershipKO aims at continued leadership in beverage market through sustained and innovative consumer marketing campaigns. In January 2009, Coca-Cola unveiled a new integrated global marketing campaign Open Happiness, which is focused on reconnecting our flagship brand with our consumers in a most effective way. Open Happiness essentially takes up where the award-winning Coke Side of Life campaign left off and reminds consumers of the simple but powerful joys of everyday life, including sharing a Coke with friends and with family. -President & CEO, Muhtar Kent

Enhancing System LeadershipKO is focused on improving its relationships with bottlers to increase profit margins within its bottling system. Last September we gathered our top 40 bottling partners who represented approximately 80% of our global volume for a meeting to begin the creation of a shared vision going forward to 2020. I'm happy to report that we have greatly improved our system margins in critical countries like China, India, Philippines, Germany and other markets under the leadership of our bottling investment group, and this significantly puts us into a significantly better position as we confront the current economic crisis. -President & CEO, Muhtar Kent

Cost ManagementWhile it continues to invest in marketing and advertising, KO is focused on sustaining its single digit SG&A as a percentage of revenue position. The companys cost-saving program launched in 2006, aims to generate $500 million in operating savings by 2011. We have reduced the number of ad agencies from over 80 to less than 35 globally, focusing on fewer, bigger, better agencies to drive coordination, scale and lower fees. (Opportunity) also exists in streamlining and enabling our $60 billion supply chain.

The Organization Organizationally HCCB is divided its market into 8 zones. Each zone reports into corporate. Zones reflect the same functions as that of corporate and are led by a zonal VP Zonal VP is a profit center and so is the Operations VP at corporate level Commercials is responsible for sales force training, key account management, coolers management and DME Operations look into sales execution Each zone identifies its HVOs (High Volume Outlets). Operations extends various trade discounts to HVOs. The discounts are primarily controlled by seasonality, type of product sold and competition pressure.HCCB has also made significant investments in Systems across the Supply Chain, including a comprehensive ERP system, Order taking and Route Settlement Hand-helds, Data-warehousing, Work-flow systems and these have been well received across all levels of users.HCCB has recently created a new Organization Structure to reduce the number of layers in the Supply ChainThe objective of the assignment was to provide strategic direction to business and to prepare HCCB for its next wave of sustainable and profitable growth over the next five years by reviewing, redesigning and implementing key processesBusiness ProcessFrom raw materials to sales to the customer the following is the high level end to end business process:

KO manufactures and sells concentrates and syrups to its bottlers, who are responsible for manufacturing, packaging, and distributing final KO products to customers and vendors.The Coca-Cola system comprises of KO and more than 300 bottling partners worldwide. KO manufactures and sells brand concentrates and syrups of its brands to bottling operations and conducts brand marketing. KOs bottling partners are responsible for the more capital-intensive processes of manufacturing, packaging, merchandising, and distributing the final KO-branded beverages to customers and vending partners. KO owns bottling operations outright, and has smaller ownership stakes in others. KO does not own or control most of its bottling partners. Specifically in FY08, bottling partners, in which KO did not have controlling interests, distributed 78 percent of KOs worldwide unit case volume.The distribution process is an integral part of the complete business process since this is how the beverage reaches the retailers and finally the consumers.For distribution, HCCB divides the areas into direct and indirect markets.The Distribution ProcessLooking specifically at distribution in direct markets like Delhi and Mumbai.AS-IS PROCESS:

Fig: Distribution in direct marketThe Area Sales Manager (ASM) instructs the MD/Sales Agent to take orders from outlets in the Area. The area is divided into beats which have outlets. The MD takes the orders from the stockist and as many outlets as he can, the Depot Tel-Sell takes the orders from the outlets where the MD could not visit.These orders are then documented and sent to the ASM who then forwards them to the depot where the Delivery Van is loaded. The MD accompanies the Delivery Van and delivers the stock to the outlets.The outlets are divided into 5 categories Diamond, Platinum, Gold, Silver and Bronze, depending on their average order quantities and discounts are given accordingly to them.Stockists are supposed to make deliveries to smaller outlets which are not covered directly by the MD.As deliveries are made, empty bottles are collected along the same path and taken back to the warehouse/depot where the finance function employee evaluates the deliveries, returned bottles and revenue collections.InefficienciesIn the previous process we see there are certain inefficiencies like Duplication of effort Opportunity for automation Steps that need to be checked, improper controls

1. A major issue was the manual documentation of orders collected by the MD, and the Depot Tel-Sell which was sent to the ASM and finally forwarded to the Depot Warehouse We see that in this case there is not just redundancy but also scope for automation especially with the implementation of advanced systems including ERP by HCCB.

2. Another issue we see in this process is concerning different discounts to various outlets. Greater discount is given to Higher Volume Outlets (HVOs) which are given discounts on the basis of the category they belong to. This fact is manipulated by the MDs for personal gains unethically. How this happens- The MD has to takes an order from 3 outlets 1 diamond, 1 gold and 1 bronze. The diamond outlet places and order of 10 cases, the gold outlets places and order of 7 cases and the bronze outlet places an order of 3 cases. He will report this order to the ASM as 14 cases for the diamond outlet, 5 cases for the gold outlet and 1 case for the bronze outlet. He manipulates the order in such a way that the total remains the same and while delivering he makes sure the delivery is made according to the original order, ultimately the sales promotion from HCCB reaches the pockets of the MD rather than the outlets.To Be State after Re-engineeringDifferent kind of recommendations can be made to move towards the To Be state. These recommendations can be put under the following categories: Automation of manual activities Work elimination Transfer of responsibilities and personnel from one department to another Job redesign Measurement plan for tracking process performance Documentation of work procedures Training to cover the new procedures Re-arrangement of the work forceIn the To Be state efficiencies are achieved primarily by implementation of RoadNet software and it integration with the ERP. All the orders are now collected by the MD/Sales Agent using handhelds which directly upload the data to the RoadNet server and the RoadNet server will on the basis of the order generate the route and quantity map and rpvide the same to the warehouse from where the Delivery Agent will accompany the Delivery Van to the outlets. In this scenario, the Sales Agent will no longer accompany the Delivery Van but Delivery Agent will (SOD is implemented).Even the finance function now only has to access the handheld for the correct record of deliveries and empty cases saving a lot of time.

Design Attributes for Order Collection and Delivery Process:ElementAttributes

Input Collection of orders on handhelds Automated collation of data

Processing Order processing and route generation is done by automated system RoadNet Manual data forwarding is eliminated SOD at order collection and delivery to avoid loss of sales promotion

Output Faster process, best possible routes generated Loss of sales promotion reduced