Carbonated drinks manufacturers are focusing on the substitutes
Corporate Research Project on Carbonated Drinks Industry in Dubai
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Transcript of Corporate Research Project on Carbonated Drinks Industry in Dubai
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C O R P O R A T E R E S E A R C H P R O J E C T – 1
SUPPLY CHAIN MANAGEMENT IN CARBONATED DRINKS INDUSTRY
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OBJECTIVES
To study the Carbonated Drinks industry in the worldand in United Arab Emirates
To study the role of Supply Chain Management inCarbonated Drinks industry
To understand the best practices in sourcing anddistribution in carbonated drink industry in the world
To study the operations of Supply Chain Management in United Arab Emirates
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WORLD UNITED ARAB EMIRATES
Coca – Cola Limited
Pepsi Cola Limited
Cadbury Schweppes Ltd
Al Ahlia Gulf Line General Trading Company
Aujan Industries
Dubai Refreshments (PSC)
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MAJOR PLAYERS IN THE INDUSTRY
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MARKET SHARE
Industry expected to exceed $1,900 Billion by year 2015
Consumption Volume expected to exceed $245 Billion Kilograms by year 2015
Soft Drinks market to reach almost $586 Billion by year 2015; Carbonated Drinks to contribute almost 40% of soft drinks market
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Source: Market Line, 2012
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GLOBAL SCENARIO5
Source: Euro Monitor
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CONSUMPTION PATTERN (WORLD)6
Source: Market Line, 2012
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CONSUMPTION FIGURES7
Source: Euro Monitor
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PROJECTED GROWTH IN UAE8
GROWTH
2014 2015 2016 2017
Bottled Water 3% 6% 8% 10%
Carbonates 5% 9% 14% 18%
Concentrates 5% 10% 20% 25%
Fruit/Vegetable Juice 5% 11% 18% 24%
RTD Coffee 40% 100% 180% 300%
RTD Tea 6% 10% 15% 19%
Sports and Energy Drinks 5% 10% 13% 18%
Soft Drinks 4% 8% 12% 16%
Source: Euro Monitor
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DISTRIBUTION PATTERN IN UAE9
Percentage off-trade BW Carbonates F/VJ RTD C RTD T
Store-Based Retailing 80.6 99.3 100 96.7 100
Grocery Retailers 80.6 99.3 100 96.7 100
Hypermarkets 26.9 25.8 29 26.5 29.1
Supermarkets 12.6 10.5 11.4 10.8 11.8
Small Grocery Retailers 39.1 35.5 42.5 57.7 56.3
Convenience Stores 11.7 9.1 15.9 37.7 18.1
Independent Small Grocers 19.1 25.9 26.5 20 36.4
Source: Euro Monitor
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S U P P L Y C H A I N M A N A G E M E N T
LITERATURE REVIEW10
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SUPPLY CHAIN MANAGEMENT
Supply Chain is defined as a group of inter –connected participating companies that add value toa stream of transformed inputs from their source oforigin to the end products or services that aredemanded by the designated end – consumers.
- Dr. Lu, Fundamentals of Supply Chain Management
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ROLE OF SUPPLY CHAIN MANAGEMENT
Meeting consumer
needs
Involving minimum
costs
Distribution Network
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DISTRIBUTION NETWORK13
Types
Direct Shipping
Direct Shipping & In – Transit
Merge
Distributor Storage – Last Mile Delivery
Distributor Storage –
Consumer Pick Up
Retail Storage–Consumer Pick
Up
Distributor Storage –
Carrier Delivery
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COST FACTORS SERVICE FACTORS
Inventory
Transportation
Facilities and Handling
Information Technology
Response Time
Product Variety
Product Availability
Customer Experience
Order Visibility
Return Ability
FACTORS IN DISTRIBUTION NETWORK
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DISTRIBUTION NETWORK FOLLOWED
Distributor storage is suitable for industries which have fast moving items inwhich case storage at warehouses also makes sense when consumer wantsdelivery of goods relatively faster.
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Bulk Breaking
Warehousing
TransportationMarket
Information & Sourcing
Maintainance
DISTRIBUTOR’S FUNCTIONS16
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RECYCLING17
Consumer to Recycling Plants
Requires 15% less energy to reproduce
Preserves Environment
Use of recyclable materials
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INBOUND OUTBOUND
Raw materials for finished goods
Ingredients, Machinery
Activities for the finished product to reach the consumer
Transportation, Warehousing, Order Fulfillment
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INBOUND – OUTBOUND LOGISTICS
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A L – A H L I A G U L F L I N E G R O U P
( B O T T L E R S O F C O C A – C O L A I N U A E )
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PRIMARY RESEARCH
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PROCESS FOLLOWED20
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SUPPLY CHAIN – BOTTLERS21
Supplier Production Transportation
Warehousing Distribution Customer
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DEMAND FORECAST22
ForecastSales
ManagerDemand
Plan
Merging in software
Capacity Planning
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SWOT ANALYSIS23
Strength
• Large and growing Market
• Basic consumer need
• Low Cost
• Non Alcoholic
Weakness
• Traditional preservation style
• Narrow range of material
Opportunity
• Use of potential public relations
• Innovative packaging
• Replacement of alcoholic drinks
• Replacement of tea and coffee
Threat
• Health Issues
• Environmentalism
• Distribution costs
• Threat of substitutes
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PEST ANALYSIS24
• Taxes and Regulations regarding health issues
• Monopoly issuesPolitical
• Demand in developing countries• Financing situation in countriesEconomic
• Healthy substitutes becoming more attractive
• EnvironmentalismSocial
• Innovation in production• Innovation in packagingTechnology
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Porter’s Five Force Analysis– Concentrate producer
INDUSTRYCOMPETITOR
S
Rivalry amongexisting firms
BUYERS - Low
Two main buyers are Bottler and Fountain.
Concentrate producers have cooperative merchandising agreements with bottlers.
The number of bottlers had fallen continuously.
ENTRANTS - Low
It’s hard for new entrants to market, because they need a lot of resources and distribution channels are dominated by previous concentrate producers.
SUBSTITUTES - Low
Two concentrate producers(Coke and Pepsi) have dominated the market.
SUPPLIERS - Low
Concentrate producers have established long term relationship with suppliers.
Switching cost of suppliers is low.
Concentrate producers often maintained relationships with more than one suppliers.
Bargaining
power of
suppliers
Threat of
new
entrants
Bargaining
power of
buyers
Threat of
substitutes
POTTER’S ANALYSIS – CONCENTRATE PRODUCER
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Porter’s Five Force Analysis– Concentrate producer
INDUSTRYCOMPETITOR
S
Rivalry amongexisting firms
BUYERS - High
The market seems to be saturated.
Switching cost is low.
Rivalry between Coca-cola and Pepsi is very high.
ENTRANTS - Low
Bottlers’ profit is low.
Making new distribution channels is hard and expensive.
The market growth has decreased.
SUBSTITUTES - Low
Bottlers cannot be easily replaced by other marketing channels.
Selling soft drinks through bottlers still has a big portion of Concentrates’ sales.
SUPPLIERS - Medium
Concentrate producers have obtained small bottlers.
Bottlers have maintained relationship with more than one supplier.
Bargaining
power of
suppliers
Threat of
new
entrants
Bargaining
power of
buyers
Threat of
substitutes
POTTER’S ANALYSIS – BOTTLER
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LOGISTICS INVOLVED27
Average Order Size
Order Placement
Transit Time
Order Frequency
Inventory Management
Unsold/Damaged Stock
Technology
Mode of Transportation
Warehousing
Stock Keeping
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FUTURE CHALLENGES28
Consumers getting health conscious
Retailers launching own drinks
Emergence of non soda drinks in the market
Environmentalism
Rise of substitutes
Increasing regulations from the government
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RECOMMENDATIONS29
Focus on low calorie drinks
Increase waste water treatment
Recycling bins at major consumption areas and recycling campaigns
Develop Research and Development for new drinks in market
Widen the target audience to senior citizens
Focus on product differentiations
Focus to change the image and perception to fit healthy living trend
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January 2014
Team formation
Topic decision
February 2014
SOP submission
Meeting with the mentor
Discussion on the SOP and initiation of Secondary Research
March 2014
Research on the secondary data
Visit to Dubai Statistics Centre
Primary research on the basis of a visit to the beverage industry.
April 2014
Analysis and interpretation of
data
Final drafting of the report
Presentation of the report.
TIMELINE30
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RESEARCH FRAMEWORK31
Setting Objectives
Literature Review on Supply Chain
Secondary Research on the Industry
Primary Research by meeting Industry Experts
Analysis and Interpretation
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QUESTIONS PLEASE32
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P R E S E N T E D B Y
A N A N T B A N S A L
K O M A L S A G A R
S A N K E T G O L E C H H A
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THANK YOU
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ADDITIONAL
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COSTING RELATIONSHIPS
Inventory Cost + Facilities Cost + Transport Cost= Total Logistics Cost
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Source: Chopra and Meindl, 2001. “ Supply Chain Managemet”, Printice Hall NJ
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PERFORMANCE CHARACTERISTICS36
Cost Factor Performance
Inventory Higher than Direct Shipping model
Transportation Lower than Direct Shipping model, lowest for fast moving items
Facilities and Handling Higher than manufacturer storage with larger difference for slow
moving items
Information Simpler infrastructure compared to Manufacturer storage
Service Factor Performance
Response Time Relatively faster than other models
Product Variety Lower variety compared to other networks
Product Availability Higher cost to provide same level of availability as in Direct Shipping
Customer Experience Much better than Direct Shipping
Order Visibility Visibility much more and easier compared to direct shipping
Return Ability Easier than direct shipping model
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DIRECT SHIPPING
Manufacturer storage or Direct Shipping is best suitable for an industry whichinvolves large variety but low demand which are highly valuable and customersare ready to wait for deliveries and have scope for advance and partialpayments. Direct shipping is also suitable when customization of product isinvolved.
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CONSUMER PICK UP
Consumer Pick up is best suitable for companies where response time requiredis minimum and consumers need to choose from a variety of similar products.This design involves high handling costs at pick up points which should to betaken care off while implementing this pattern.
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DISTRIBUTION OVERVIEW39
Plant Warehouse
Direct Route
Market
Indirect Route
Distributor Market
Direct Route: The Bottler partner has direct control of the activitiesIndirect Route: An organization which is not a part of the Coca–Cola systemhas the control of distribution activities