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Students bottle success for Coke
May 03, 2013
| From front to back: Joseph Anderson, Bora Kim, Lindsay Hill, Xiaofang Wang, Tom Rockwell. |
For a business, the appeal is irresistible: take a vexing problem, hand it to a group of top business students and faculty and work together to create a solution that’s as refreshing and satisfying as a cold drink on a sweltering Carolina day.
That’s exactly what the Coca-Cola Bottling Co. Consolidated (CCBCC) did when it worked on a Capstone consulting project with a team consisting of company employees, five supply chain students and Jack Jensen
, Ph.D., managing director of the Center for Global Supply Chain and Process Management
and Clinical Professor at the Darla Moore School of Business.
Steve Brooks, supply chain planning manager at CCBCC, asked the team to help the company improve its inventory management. CCBCC is the nation's largest independent Coca-Cola bottler, with five plants and 47 distribution centers, mainly in the Southeast. It produces about 200 SKUs (stock keeping units) and purchases another 300 different SKUs.
“Inventory is challenging,” said Brooks. “This was not a softball thrown up to them.” After all, the company sells 14,700 cases each hour and turns over its largest warehouse completely every five days.
The team was asked to find a way to lower inventory levels and improve order cycles and replenishment quantities, which would free up capital, while maintaining or improving customer service levels. The stakes were high, since a pilot project at the Greenville, S.C., bottling plant would show whether the students succeeded or not.
The students—Joseph Anderson, Lindsay Hill, Bora Kim, Tom Rockwell and Xiaofang (Sophia) Wang—were ready for the job. “It was a great learning experience to take everything we were taught in the classroom and finally apply it to the project with Coke,” said Anderson, a senior from the Boston area. Global Supply Chain and Operations Management (GSCOM) majors must compete to be selected for a Capstone consulting project.
Over the next 14 weeks, the students created computer models, pored over data and interviewed CCBCC supply chain planning employees during weekly meetings. Using the Lean Six Sigma methodologies they learned in class, they developed and proposed a pilot solution.
First the students tried to improve upon CCBCC’s current way of managing inventory, which relied on forecasting demand. When they tweaked the replenishment process, they weren’t able to deliver substantial inventory reductions. But they did uncover an important issue: CCBCC didn’t have a stated inventory management policy.
Here was an opportunity. The team would create an inventory policy model, and instead of just trying to forecast demand, they would also look at historical data. They analyzed 40 different SKUs, looking at average sales and other factors, and set target inventory levels. They also established quantities to order when an SKU dropped below a certain level.
Next it was time to test their policy in Greenville. The students selected 11 SKUs to pilot test the new replenishment model. So far, results are impressive: inventory levels are expected to be reduced, trimming labor and holding costs while keeping customer services levels high.
“By greatly decreasing their inventory level, they can use the capital for other purposes,” said Kim, one of the student consultants and a native of South Korea. “They are less dependent on forecasting and more dependent on current inventory.” The model also allows employees to spend less time reviewing data and ordering, freeing them up for other tasks.
Brooks said CCBCC was encouraged by the findings and will continue the pilot for several months. If results remain positive, they will implement the model at other locations. Potential savings to CCBCC should be tens of thousands of dollars for each location, estimated Jensen, who advised the USC students on the project.
CCBCC is just one of dozens of companies that have worked with GSCOM since it was launched six years ago. There are many member companies, including Siemens, Michelin/Snider Tire, Palmetto Health Richland and Johnson & Johnson. Companies contribute a $50,000 fee to the GSCPM Center, which provides them two Capstone improvement projects per year.
Brooks highly recommends the program. “You get to use the top-performing students who are fresh in their ideas. It allows you to use somebody who isn’t set in their ways or stuck in a certain way of thinking. They can look at something and focus together to achieve a workable solution for your company.”
Each year, about 100 undergraduates receive their business degree with a Management Science major, and 30 students earn an International MBA with a concentration in GSCOM. The Moore School’s program is believed to be the only one in the country to offer students the opportunity to earn a Lean Six Sigma Green Belt certification from industry.
Employment prospects are excellent, said Jensen. The department places 90 to 100 percent of students by graduation, and they command about $15,000 more in starting salaries than graduates of other business school majors.
By Erin MacLellan
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