Brett Frankenberg, Senior Vice President of Product Supply Planning and Bottler Sales, at Coca-Cola Consolidated spoke at the FourKites appropriately named user conference Visibility on September 19th. “In 2017 there was a team that went on a ‘digital safari.’ The group came back, talked about a few ideas, but after the excitement subsided, decided to do nothing at that time.”
But Mr. Frankenberg, who believes the term “digital” is being overhyped, nevertheless used this as an opportunity to assemble an internal cross-functional team from the company’s customer, manufacturing, logistics, and IT organizations. “I was just looking for four or five people not wed to the old processes.”
Coca-Cola Consolidated Has a Complex Supply Chain
Charlotte headquartered Coca-Cola Consolidated is the largest Coca-Cola bottler in the US. They have operations in the Southeast, Midwest, Mid South, and Mid-Atlantic. In addition to bottling for Coke, they also make, sell and distribute other branded beverages – all in, over 300 brands and handle over 400 million cases per year – and a service territory of over 66 million consumers. The public company has $4.6 billion in revenues and has grown, in part, through many territory acquisitions. The company now operates 13 production centers and 75 distribution and sales centers.
Manufacturing involves buying concentrate from Coca-Cola, turning it into syrup, then turning the syrup into product and packaging products for delivery. The distribution is complex and involves direct store delivery. That means that after the company delivers the finished product to customer outlets, merchandisers employed by the company go into stores and put the product on the shelves. Further, promoted items can have huge “lifts.” The same stock-keeping unit when promoted can sell 14 times the volume it does when it is not promoted.
Despite the complexities, Coca-Cola Consolidated was achieving an over 98 percent in-stock position with its retail customers. This was achieved, in part, by pushing demand from promoted products forward so that manufacturing constraints could be respected. But that performance was also achieved by carrying 4 to 5 days of inventory at their own warehouses. “There is a tight tolerance for supply variability,” Mr. Frankenberg explained. “We are in a must execute environment.”
While 98 percent in-stock position sounds very good. No one on the newly assembled cross-functional team was happy with their service levels. The team also felt that high service levels were costing too much in 2018 in additional freight moves to their warehouses. But, Mr. Frankenberg said, “change is hard!” This is a big public company with shareholders and the kind of tight operating margins characteristic of this industry. The company has also been in operation since 1902 and age makes it easier for a company to get set in its ways. “We needed to get better, but it is hard to change inertia.”
The Real-time Visibility Opportunity
As the team dug into opportunities to improve processes, they kept coming back to how better real-time visibility could be a catalyst for change. “With an Uber app, you can see when your ride will arrive. But our warehouses had no idea where their trucks were.” Inbound to the warehouse, Coca-Cola Consolidated is moving product from 43 product lines and whose output is needed within 48 hours. It was not unusual for the unloading crew at a distribution center to be sent home while inbound trucks were within an hour of arriving. Visibility would improve warehouse scheduling and utilization. This was a high priority.
In 2017, Mr. Frankenberg ran into Matt Elenjickal, the CEO of FourKites. “Matt popped open his laptop” and demonstrated the kind of driven real-time visibility the FourKites solution could provide. The visibility is based on integration to truck carriers’ GPS enabled electronic logging devices or small carriers use of FourKites’ real-time mobility solution. “That is what we need,” Mr. Frankenberg thought. “With a solution like this, we could empower our warehouses, planning department, and production functions to operate with better information and improve execution.” The estimated times of arrival factored in traffic and weather. “This was relevant, fresh, and actionable data.”
Coca-Cola Consolidated went through an extensive request for proposal process in 2017. “But FourKites really stood apart. It has robust functionality that is easy to use.” Once they began to work with FourKites, they also found FourKites to be a responsive partner that could add desired functionality very quickly. And the FourKites community was welcoming. Other FourKites customers gave them good tips on how to use the system.
Integration to other applications was necessary to maximize the usefulness of the visibility solution. Coca-Cola Consolidated does supply chain planning with JDA Software, transportation management with BluJay Solutions’ solution, and the solution is also integrated to SAP’s HANA solution so that the time-stamped arrival data from FourKites can be combined with data from other systems for an on-time in full metric along with other analytics.
By 2018, the FourKites solution was live. “User adoption is always an issue. Different groups require different things.” Coca-Cola Consolidated is going through a phased implementation – a crawl, walk, run approach – with more benefits targeted for future phases.
Significant Improvements Have Occurred Based on Real-time Visibility
Part of the phased approach involves working with carriers to improve the visibility they provide. “Seventy-two percent of our loads are now tracked consistently,” Mr. Frankenberg said. The big carriers like Cowan Systems and Marten Transport that Coca-Cola Consolidated uses (through brokering via its subsidiary transportation Company, Red Classic Transportation) are providing consistent tracking of their trucks well over 90 percent of the time. But small carriers don’t perform as consistently. “There is a long tail in transportation;” the leading carriers make up a significant share of the total truckload market, but there are thousands of small service providers moving freight. Most of the small companies have just a few trucks and may not have a Transportation Management System. This leads to some of the challenges trying to integrate with the smaller carriers.
Coca-Cola Consolidated has not been at this long, but it can point to significant improvements. The company’s in-stock position improved by over one percent to over 99% while at the same time they are carrying less excess inventory. Their cost per case delivered has also declined.
Mr. Frankenberg pointed out that determining the return on investment of the FourKites solution is not easy. Not all these gains can be attributed solely to the visibility platform. The results are part of a suite of process changes. But FourKites – which generates real-time visibility and continues to build new solutions that create more transparency across the end-to-end supply chain – certainly contributes to those gains and organizational process changes. “We’ve gotten better based on better execution.” That is in part driven by using reliable data to drive objective conversations with key partners. And Coca-Cola Consolidated has better visibility into their own operations and the places they need to improve. Nevertheless, it is fair to say these results would not have been as easily gained without FourKites.
Coca-Cola Consolidated is still early in its journey, and there are still great opportunities. “We want to extend visibility to our Direct Store Delivery routes,” Mr. Frankenberg noted. “If our merchandisers experience one-tenth of one percent productivity improvement, FourKites will have paid for itself many, many times over.”