Falling Flat?By Larry Barrett | Posted 2005-01-14 Print
Coca-Cola's largest bottler joined forces with SAP to develop a better way of getting bottles and cans into stores. But the project may be losing its fizz.
By keeping tabs on 454 facilities and more than 55,000 delivery trucks in the U.S., Canada and Europe, the system would allow the company to manage inventory and forecast demand better.
The ultimate goal: boost sales growth. While it posted sales in excess of $17.3 billion last year, CCE predicts volume growth of only 1.5 percent in 2004. Meanwhile, Pepsi Bottling Group has increased sales by 9.2 percent and 11.4 percent, respectively, in each of the last two years.
Can CCE close the gap on Pepsi? Possibly, but it'll take a while if its parent company's recent SAP history is any indicator.
The Coca-Cola Co., which owns about 37 percent of CCE, has been overhauling its systems with mySAP business software applications since the mid-1990s. The effort, Project Infinity, is intended to consolidate all of the pricing, distribution and information systems of its independent bottlers.
Key to this project was replacing Coke's proprietary system, BASIS (Beverage, Analytical, Sales, Information, Systems), used to route trucks and replenish store inventories.
The catch? BASIS is more than 25 years old and isn't integrated with CCE's SAP-based financial, supply chain or procurement software modules. That means there is no way to make the instant calculations necessary to efficiently match warehouse location, number of cases required and delivery drivers.
Ideally, the system would give CCE the ability to ship bottles and cans of Coke only after sales representatives place orders. Inventories would shrink. Giving handheld devices to every deliveryman and sales representative would reduce paperwork, cut response time for new deliveries and help Coke better target promotions.
CCE also could negotiate better margins with customers.
Rather than give a 7-cent-per-unit price break during the high-volume Fourth of July weekend, the distributor can give the customer a view of demand for the month—or longer—and offer a 2-cent price break for the entire period. Typically, CCE acquiesces to retailers that demand a big price break ahead of Independence Day. Retailers' rationale: Inventory stacks up, takes up storage space and has to be sold at a discount.
In theory, the new system would give both parties the information they need to ensure that shelves are always stocked with the exact amount of soda needed for any given day.
The reality is something different.
Pricing lists have to be updated every day; so do competitors' marketing and sales events. This information must be secured over a wireless network, and there's no margin for error. One misstep, and an entire region of 7-Eleven stores could face empty shelves.
"Any integration project at this level, from the back end to the front end, that incorporates mobile technology is going to be complex," says Paul Greenberg, president of the 56 Group, a CRM consulting firm in Manassas, Va. "SAP is not known for its nimbleness of code."
According to analysts, the immaturity of NetWeaver as a platform for sharing data from mobile devices to the SAP backbone is likely causing grief at CCE. A key, yet relatively new component to NetWeaver is the Master Data Management program, which ensures price and order data is real-time and available to the entire organization through an intranet or mobile device.
"The Master Data Management piece, which manages the data definitions in non-SAP products, has only been shipped to about 20-odd customers," says Gartner's White. "And of those, I've only heard of a few testing it with non-SAP data. This is especially troublesome in an environment like Coke's, with so many different vendors and customers using different systems."
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