Standards...the real thing for Coca-Cola
The dynamics and complexities of maintaining the iconic Coca-Cola product and brand involves extensive behind-the-scenes management.
When Dr John Styth Pemberton first created a refreshing cordial drink in 1886, he could scarcely have predicted that, over the next 100 years or so, its name and the flowing script that spells it out would become among the most recognised in the world.
Nor could he have envisaged the enormous complexity and attention to detail that enables his original creation, Coca-Cola, and the 300-plus soft drinks now produced under its brand, to be consumed world-wide at a staggering 10,450 drinks per second, per day.
This level of market penetration is enabled, in part, by licensing agreements between TCCC, based in Atlanta USA, and some 1200 bottling franchises around the globe.
Here in the Asia Pacific, with operations in Australia, New Zealand, South Korea, Indonesia, Fiji and Papua New Guinea, the principal Coca-Cola licensee is Coca-Cola Amatil (CCA). Thirty-five per cent owned by The Coco-Cola Company, CCA is also a successful independent manufacturer of its own soft drinks and mineral waters, with its 6o per cent share of the carbonated drinks market accounting for close to three-and-a-half billion dollars in soft drink revenue during 2002.
Not suprisingly with figures like these, CCA is one of The Coco-Cola Company's top bottlers world-wide, and the two companies share a close partnership.
The relationship is a complex one. Their respective fortunes are inextricably bound on many levels: in terms of shareholdings; in the use of the concentrate and beverage base for The Coca-Cola Company-branded products; and in the sales and marketing of product both to consumers - a responsibility that falls to The Coca-Cola Company - and to trade suppliers - which falls primarily to CCA.
Together, however, the companies are committed to building a sustainable growth strategy, which delivers higher revenue and growth returns to CCA and allows The Coca-Cola Company to profit from creating and delivering leading brands.
So, as shareholdings may fluctuate with market forces, as sales and marketing plans are developed, executed and replaced, this shared commitment remains. Underscoring it is the shared understanding that the success of both parties in the future relies - as it has in the past - on maintaining the consistency, quality and safety of their products.
To this end, development and implementation of systems and standards has become integral to both company's operations, and an important reference point in the relationship between the two.
For its part, The Coca-Cola Company's primary focus has to date been on the development and maintenance of its own internal standards, covering quality, occupational health and safety and environment. All bottlers must meet these standards. From this point, The Coca-Cola Company is also working with its major bottlers to explore models of management that complement the external commercial and business imperatives they face in everyday business.
For CCA, such imperatives include the need to meet regulatory standards (relating to manufacturing and food safety, for example) and the specific quality and related requirements of major customers. In addition to the meeting of The Coca-Cola Company's internal requirements, this has led to the adoption of a more systemised approach involving the implementation and certification of ISO-based management systems.
"For us the ISO-based management system has been the solution that addresses the critical issues: universal recognition, business effectiveness and a move toward consistency of operation with our global counterparts," explained Mr Wayne Hage, CCA's National Quality and Environmental Systems Manager.
"It also provides an effective vehicle for improving risk management and corporate performance on critical issues like environment."
According to Mr Hage, a further key benefit of ISO systems is that they can be tailored to meet multiple requirements.
"Specific requirements that may be outside of the ISO framework can still be added and met within the system. I would stress that to do this, you need the input and assistance of an experienced auditing body with global accreditation capability to ensure they are able and qualified to make the assessment," he said.
The global recognition factor is one that is critical to the choice of ISO-based Standards.
"When you consider that some 60 per cent of our sales volume is sourced from our top 10 customers, then the need to be customer focussed is clear," Wayne Hage explained. "So if we have McDonald's for example, requiring that we meet certain standards, then we will do so. The universal recognition factor is vital."
"Other major bottlers share this view.
"We need to meet customer demands in a manner that they understand and recognise. If they know and recognise and understand a certain standard, that is what we will provide them."
Further advantages then come into play.
"If we're all working off a similar management framework, then we have the ability to compare standards, compare the outcomes and productivity and other key issues affecting individual plants and systems. In giving us meaningful comparability we get true measurability and so a greater capacity for improvement." According to Wayne Hage, both CCA and other bottlers are also keenly communicating the benefits of working with a systemised management approach within TCCC itself.
"In a sense the ISO systems can form a bridge between The Coca-Cola Company's standards and the everyday operations of the major bottlers," he said.
And The Coca-Cola Company is also receptive to the possibilities. In the past twelve months or so, TCCC has been working on the so-called "Evolution 3" of the Coca-Cola internal quality systems, and input from major bottlers like CCA has been actively sought.
"One thing we're all aware of working with and within the Coca-Cola companies is that we have to work to very exacting standards to maintain the integrity of the brand and the strength of the business," said Wayne Hage.
"There is a real understanding that we need to use our respective skills and assets cooperatively. Atlanta (Coca-Cola headquarters) has recently established forums to forge closer links with the bottlers. CCA is keen to drive recognition of what we have achieved through use of the ISO Standards in such a forum. In a working relationship that rests on trust, commitment and congeniality, we look forward to the opportunity to continue to share this knowledge, with a view to benefiting all."
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