Falling Flat?

By Larry Barrett  |  Posted 2005-01-14 Email Print this article 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.

Nearly a year ago, Coca-Cola Enterprises touted an uncommon deal with SAP to co-develop the most elaborate system to date for taking bottles and cans of soda from factories to stores, with minimal reliance on distributors.

Today, the silence on this project is conspicuous.

The co-development deal, part of what Coca-Cola Enterprises (CCE) calls Project Pinnacle, represents an estimated $20 million to $30 million of the bottler's $200 million investment in SAP business software, according to AMR Research analyst Roddy Martin.

Analysts and project managers familiar with the project say CCE, the largest bottler of Coke in North America, may have underestimated the difficulty of employing SAP's NetWeaver software to knead together SAP applications, custom code and other programs into wireless services running over the Internet. The bottler, which won't comment, may have also underestimated the complexity of importing data from drivers' handheld devices to the company's basic accounting system, says Gartner analyst Andrew White.

"It is surprising that there's been no noise about this thing, especially because of its scope and cost," White says. "But you can bet that if it were going well, they'd be talking about it."

"We enjoy a strong, strategic and productive partnership with Coca-Cola Enterprises," says Jim Dever, director of public relations for SAP. "At the same time, (we) respect our customers' decisions as to if and when they discuss their projects publicly."

Dever says "it would be presumptious to draw conclusions on any project," based on a company's decision to decline an interview; and noted that Coca-Cola Enterprises has typically been circumspect or close-mouthed in promoting its business process improvement activities with SAP, in the press. The company, he adds, has only spoken to the press when it first selected SAP and years later when it made the decision to work with SAP on the delivery initiative.

The original goal was to launch the system at CCE by early to mid-2006, according to Kevin Capitani, global account director for SAP's Direct Store Delivery program. Neither SAP nor the bottler would say whether the system is on track to meet the original target date.

The stakes are high for CCE, which saw profits for the first nine months of 2004 slip to $514 million from $547 million in 2003. Its rival, the Pepsi Bottling Group, installed its own SAP-based direct-store-delivery system in 2002 and is now reaping the benefits. Its profits in the first nine months of 2004 improved to $383 million from $347 million a year earlier.

CCE says its system would save millions each year in distribution costs, reduce the frequency that Coke products are out of stock at retail outlets, cut paperwork, and allow Coke to react to rivals' sales and promotions as soon as delivery reps send competitive data back from stores.

For SAP, the project would demonstrate the prowess of its NetWeaver software for integrating applications and creating new ones that run on the Web. NetWeaver is SAP's answer to Microsoft's .Net and Sun Microsystems' Java frameworks for creating complex services that link programs, data and scripts found on multiple servers.

Click here to read more about SAP's view of the Oracle-PeopleSoft merger as an opportunity.

Although CCE executives such as CFO Pat Mannelly hailed the deal in February 2004, no executives at the Atlanta-based company will comment officially on Project Pinnacle or NetWeaver's ability to tie together tens of thousands of delivery routes that transport 2 billion cases of Coke each year. However, one Coca-Cola technology manager, who didn't want to be identified, called Pinnacle a "monster."

"The size of the development is just so big," says Capitani. And the delivery project "is only a portion of Project Pinnacle."

Here's how CCE envisions the information relay from Pinnacle playing out:

  • Deliveryman arrives at retail store. Takes inventory of products in stock.
  • Results entered into wireless device connected to SAP enterprise planning system.
  • Deliveryman unloads the shipment of products he's brought with him.
  • Before leaving, he enters information on Pepsi's discount to $4.99 of its 12-packs, and other competitors' pricing and marketing activities, into the system.
  • Repeats process at next stop.
  • At day's end, a new forecast of demand is produced by the SAP software, using the inventory and competitive pricing data.
  • Analytical software creates the most efficient routes for the next deliveries in the region and the amount of each Coke product to stock in each truck.

    Next Page: Integrating for sales growth.



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Senior Writer
larry_barrett@ziffdavisenterprise.com
Larry, of San Carlos, Calif., was a senior writer and editor at CNet, writing analysis, breaking news and opinion stories. He was technology reporter at the San Jose Business Journal from 1996-1997. He graduated with a B.A. from San Jose State University where he was also executive editor of the daily student newspaper.
 
 
 
 
 
 

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