Coke Exploits Collaboration Technology To Keep Brand RelevantCoke Exploits Collaboration Technology To Keep Brand Relevant

BEYOND BABY STEPS
All great ideas--and none of them matters a bit if the drinks don't get into a bottle, onto a truck, then onto a shelf. And therein lies an even more ambitious and difficult collaboration plan by Coke, aimed at bringing the company closer than ever to its bottlers. It started several years ago with baby steps, such as standardizing desktop configurations. Now Coke's launching a sweeping hosted computing effort, years in the making, designed with the hope of getting Coke-owned bottlers and eventually its franchised bottlers using common, predefined business processes.

Coke owns controlling interests in only a small percentage of the more than 300 bottlers that distribute its products. The remaining are franchisees; they purchase beverage concentrate from Coke, bottle or can it, and sell it to retailers. There's a "healthy tension" between Coke and its bottlers, explains Tom Miller, general manager of Program Scale, Coke's bottler-collaboration effort. While they both want to sell lots of product, there are differing objectives: Coke's job is to grab greater beverage market share by dreaming up and marketing products to consumers, while bottlers must make efficient use of huge capital investments in bottling factories, warehouses, and trucks, and also maintain friendly relationships with retailers. The bottlers range from mom-and-pops to mammoths, and use a range of supply chain software that includes homegrown code, ancient mainframe systems, and old versions of SAP products.

In 2002, Coke created an IT council with its top six bottlers to discuss how the company could work more closely with the bottling community. Bottlers helped with upgrading Basis, Coke's legacy app for sales and distribution. After three years of working on smaller collaborative efforts, the IT council got around to talking about the elephant in the room: how to move to common processes and data standards. From that, Program Scale was born.

In the summer of 2006, Miller and his team spent 56 days on a road trip, traveling from continent to continent, meeting with 11 bottlers. The team looked at more than 400 business processes that bottlers used and discovered that about 90% of them were common among the bottlers it visited. It also learned most bottlers were planning software upgrades within the next few years. "So we had two compelling things in front of us: a bunch of bottlers that wanted to greatly improve, and the fact that most of what they were trying to improve was common," Miller says.

The result of all this is the Coke One bottler model, a system based on version 6.0 of SAP's ERP platform. Coke One supports more than 650 business processes defined by Coke and its bottlers, things such as procuring raw materials, invoicing retailers, selecting and pricing products, managing retailer relationships, and paying suppliers. Coke defined the processes down to significant details, such as how to configure the software and what job roles are involved, piling up about 10,000 pages of documentation. The processes were developed using SAP's service-oriented architecture toolset, NetWeaver, which is why Coke describes the processes as "services" rather than applications; the SOA approach lets each process run independently as a service, which should provide more flexibility for developers, system administrators, and bottlers to make changes than if it were a monolithic, sewn-up software application.

Arès paints Coke One as a template that can be localized by region. There are also "extended templates" for CRM, supply chain relationship management, and call-center processes. It will be hosted in two U.S. data centers managed by IBM.

The first bottler going live with Coke One, this month, is CCCIL, a Coke-owned bottler in China. Next up are company-owned bottlers in the Philippines, India, and Germany. "Our strategy is to demonstrate, conclusively, that the concept works within our own operations first," Arès says. Then the company will offer the services to franchisees, who can use the whole template or just components. A franchise bottler in Australia, Coca-Cola Amatil, has signed on for the Coke One-hosted system starting sometime this year.

However, Coke's largest bottler, Coca-Cola Enterprises, which is 35% owned by Coke, opted out of Project Scale and Coke One. That lets CCE create strategic partnerships with companies like Microsoft and Cisco to fit its own needs, says a spokesman. "Some of the larger bottlers don't need to have the Coke company's IT benefits," he says (see story, "Coke's Largest Bottler Taps Microsoft For SaaS").

Much of the Coke One system's success hinges on whether the services drive sales for bottlers. For example, Coke worked with bottlers to develop a "picture of success" at retail outlets, providing details on signs, banners, pricing materials, and other display elements. Bottler reps can view the prototype displays on handheld devices--that's the service delivered via Coke One--as they work with retailers to get displays right in the stores. Arès hopes that, with continued input from bottlers, Coke can build new mobile apps that help even more with promotional efforts at the retail level, where sales are won and lost.

There's still a question how--and how much--franchise bottlers will pay for these services. But Coke isn't worried that the franchisees won't see value in them. Arès notes that both company-owned and franchise bottlers chipped in funds to develop the processes and infrastructure for Coke One. And once they see all the intellectual property encapsulated in the system, Arès says, they'll decide they get a better deal, faster implementation, and higher capability "than to start from scratch."

Coke knows tradition--traditional brands, tastes, relationships, technology--isn't enough to drive its business forward. Collaboration is critical in a dynamic global marketplace, and Coke is looking to leverage its business technology expertise to make that a key ingredient in its new formula for success. Coke's tech team has spawned some innovative efforts, but it will need strong buy-in from both internal managers and bottler partners to ensure that formula satisfies consumers.

Photo illustration by Sek Leung

Continue to the sidebars:
Coke's Largest Bottler Taps Microsoft For SaaS,
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