SUPPLY CHAIN INTEGRATION

Supply Chain Integration

Table of Content

CHAPTER 03: METHODOLOGY1

A Case Study of Coca Cola-UK1

Efficient consumer response2

The Coca Cola Industry2

Basic Coca Cola Model and General Effects3

Selected Results from Coca Cola6

Theoretical Foundation for SCM Strategies8

Heide's Typology: The Intersection of Law, Economics, and Organization Theory8

Channel Coordination: Power Structures and Norms in Relationships10

CHAPTER 04: DISCUSSION13

The UK Retail Trade and Coca Cola Industry13

Applying the Coca Cola Principles in UK13

Relationship Maintenance through Coca Cola Standards19

Relationship Termination in Coca Cola-UK21

Discussion and managerial implications21

CHAPTER 05: CONCLUSIONS AND FUTURE DIRECTIONS24

REFERENCES27

CHAPTER 03: METHODOLOGY

A Case Study of Coca Cola-UK

An initial study in close cooperation with the UK Coca Cola-initiative, which is the UK branch to the Coca Cola-Europe movement, has been completed. Coca Cola-UK, as do the other member organizations, reports on its current progress at the annual Coca Cola-Europe meetings. The Europe-wide forum provides a good opportunity to see many aspects of the Coca Cola initiatives from various European members while also providing the chance to see more specific country outcomes, as needed.

The UK Coca Cola market is a microcosm of the entire European venture and offers an excellent venue for gathering case data. Not only does its highly concentrated Coca Cola industry limit the number of industry contacts but the fact that Coca Cola principles, or norms, have already been established allows the opportunity to view the heart of the Coca Cola operation. Indeed, insights from various partners of a national supply chain can be gained all at one time.

Once Coca Cola-UK was accepted as a case to be studied, an aggregation of exploratory methods was applied. Secondary data used in the analysis included UK trade journals and both the Coca Cola-UK and Europe manuals. Preliminary primary data was also gathered from observations of and attendance at presentations during the Coca Cola group meetings. Another critical input was a descriptive survey instrument that allowed for the examination of the application of Coca Cola principles among the member companies of the UK Coca Cola-committee. Table 3 summarizes the survey research methodology applied. Table 3. Description of Survey Research*

Efficient consumer response

The Coca Cola Industry

In the late eighties and early nineties a majority of the companies that form the Coca Cola industry (e.g., manufacturers and supermarket businesses) suffered from “the trade practice wars that had separated manufacturers and distributors”. The term “war” seemed to apply given the way business was managed between the partners: they “had squared off against each other over a variety of issues, including slotting allowances, coupon misredemption, forward buying, promotional fees…”. This led to a loss of productivity and market share.

While the negativity continued, mass merchant chains developed and began to carry more and more Coca Cola items thereby gaining the market share lost by the supermarkets. Mass merchants are defined as being “similar to department stores, except product selection is broader and prices are usually lower” (, p. 44). Well-known examples of this type of store include Wal-Mart, Target and K-Mart. During the mid-nineties these three companies alone held some 30% of the total mass merchant market, prompting ...