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Coke Distribution Project

Group 9
Q1- Motivations for Walmart, Coca cola and small distributors.
Coca Cola Walmart Small Distributors
Threat of competition from Better inventory control Shelf inventory
private label product of management
Walmart
More shelf pace Increased distribution In store forecasting
margin
PowerAde faced competition Flexible and responsive Store level authorized
from Gatorade due to late supply chain item management
entry in the market
Stock price, revenue and Improves sale performance Price and promotion
volume growth of soft drinks incentives
slowed down1/10 of Cokes
product sale provided by
Walmart
Strong relationship with giant Greater control over retail In store
retailer Walmart will push shelf space merchandising
sales of all its products incentives
Q2 - Does Coke lose anything moving to warehouse delivery?

Bottlers provide value added services, more special bar coding, special labelling and special market displays. In case of
warehouse delivery, Walmart may not focus on providing such services since it focuses to reduce costs

It may tarnish relationship between coke and bottlers. Coke dictates concentrate and syrup prices to bottlers and after
warehouse delivery to Walmart, bottlers may start selling at lower margins to cut Walmarts sales. This can lead to
channel conflict

Coke might lose bottlers loyalty. On the other hand, If warehouse delivery distribution fails, Walmart can still introduce
private label

Bottlers such as Robert Browne was working on a system with Walmart stores which would allow stores to be stocked
with greater precision. Such measures may not be taken up by Walmart as it will add unnecessary cost to its operations

Small distributors, which accounts for 10% of volume from cans/bottles in the US, will no longer deliver to Walmart. This
implies small bottlers revenue will decline and this may force bottlers to shift towards competitors
Q3 - Could Coke have avoided the conflict with the distributors?

Conflict could have been avoided by-

Increasing margins in the conventional channels


Provide timeline to improve the supply time and efficiency
Monitor Bottlers based on the Service Level Agreement
Provide time for improvement
After the pilot monitoring period change the distribution system passing the
blame to the distributors
Compensating distributors/small bottlers with other forms of outlets like:

Institutional sales
Sport events
Vending Machines etc.