Coca Cola: "Always" Class A MRP II

By Chris Gray

A History of Successful Implementations

Besides owning the most well-known brand name in the world, the Coca-Cola Company can also lay claim to achieving Class A MRP II performance on four continents, in eight countries and at eight concentrate manufacturing facilities and one major canning plant. This accomplishment includes an impressive list of Class A MRP II firsts: first in Puerto Rico, first in Latin America, first in Korea and first in mainland China. And, if everything goes according to plan, 1997 will see one more continent, three more countries and three more concentrate manufacturing facilities reaching Class A!**

Initially implementing MRP II in concentrate plants in the Commonwealth of Puerto Rico in 1987 and the Republic of Ireland in 1988, the company added a third concentrate plant in the South of France in 1990 and a company owned canning plant in Northern France in 1991. In 1995, a strategy to implement MRP II in other concentrate operations around the world began to bear fruit, with Class A certifications of the concentrate manufacturing facility located in the heart of the Amazon region of Brazil and also at concentrate plants in Korea and Thailand. In 1996 the Philippines was certified, as was China in early 1997.

Significant Payback Achieved for the Corporation

Achieving Class A certification has been a core component of the CPE (Constant Pursuit of Excellence) program initiated within Coca-Cola to support growth, improve customer service and increase market responsiveness. Reluctant to quote specific financial results, the company says it saw the following in each Class A plant:

Inventory levels: down
Each of the facilities saw a significant improvement in inventory turnover, with two of the facilities seeing the number of weeks of inventory on hand decline anywhere from 50 to 75%

Productivity: up
Productivity gains of 85% to 100% were common.

Customer delivery performance: improved
The time since the last missed shipment is measured in years, not days, weeks or months, in these facilities. Order fulfillment and delivery are virtually 100% on time every time in the nine facilities.

Supplier delivery performance: better
Each facility has supplier on-time delivery performance higher than 95% today, significantly higher than the 50-75% performance pre-MRP II.

Business Processes: improved
Large reductions in cycle times were achieved for processes such as purchasing and customer order processing.

Data integrity: high
Inventory record accuracy is consistently 99-100%, bill of material accuracy is 100%

Cost of goods: down
Significant improvements have been seen here, with reductions as high as 20% in a single year in one facility.

Team Spirit: high
Improved communications between marketing, finance, quality assurance and manufacturing has significantly improved the sense of team within the plants.

Keys to Success

Four Keys to success at Coca-Cola were:

Improvement not Systems Replacement as Implementation Focus

Although nearly every plant replaced an existing system, the first and foremost objective of the implementation was to improve the operation of the business. The software and all its functionality (or lack of functionality) was never allowed to impede or divert the efforts of implementation teams.

One Plant at a Time

Implementations have been undertaken in manageable chunks, generally with two parallel implementations at once and without succumbing to the temptation of implementing everything everywhere at once. At some point in the future, the pace of the implementations may increase, but at least at the start Coke management felt it important to get the experiences of several successes rather than a lot of failures.

Plant Ownership/Corporate Support

No plant was forced to implement MRP II. This was entirely their decision based on anticipated benefits. Corporate provided consulting and training support at the level needed to be successful, but did not overstep the boundaries that define where ultimate accountability for success or failure lies: at the plant doorstep.

High Expectations and High Standards of Performance

From the beginning, each plant beginning the journey to MRP II was expected to achieve Class A recognition along the way. Class C or even B performance isn't good enough at the Coca-Cola Company!

What's Next?

The Coca-Cola Company is commited to implementing MRP II in concentrate facilities around the world. Expected to join the elite group of Class A facilities are plants in Mexico, Swaziland and India.**

Where many companies would be content to have a single Class A facility on a single continent, the Coca-Cola Company may soon have facilities on every continent save Antarctica. Without a doubt, whether it has to do with the product or with company operations, whenever it's world class performance, it is "Always Coca-Cola."

** Footnote:  Since the writing of this article, concentrate plants in India and Swaziland have been certified Class A, and the concentrate manufacturing plant in Mexico has achieved preliminary Class A certification.  

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