Coca-Cola's secret formula

In 1977, Coke's secret formula got it into trouble with Indian government. Because the company refused to give up the formulation that went into its drink, it was asked to pack up and leave. So, when the Indian economy opened up in the early 90s, the cola that much of the world has come to associate with soft drinks, wanted in. It had 16 years of catching up to do. And it was in a hurry.

In true style, it threw plenty of money at the problem. By partnering with cricket tournaments and creating now-famous taglines like 'Life Ho To Aisi' and 'Thanda Matlab Coca Cola', Coca-Cola India made sure that they were heard and seen. It also snapped up the competition including popular 'cold drink' brands like Limca, Maaza, Citra and Gold Spot.

According to a report by the Tuck School of Business, Dartmouth, the company pumped in $1 billion into its Indian operations between 1993 and 2003. This frenetic pace extended to the way the company created a mammoth distribution system by partnering with bottling plants all over the country to keep the market juiced up on cola.

By the turn of the century, the oversights made in those early days would start to hurt the company. In the heat of expansion, Coca- Cola signed on multiple -- and stand-alone -- bottling deals. Each plant had its own system of accounting, monitoring, and inventory. Plus, their just-get-in-there-quickly approach to planting the Coca- Cola flag in the remotest regions created a tenuous distribution chain.

At around the same time, the business was trying to muscle its way into the rural market by introducing a smaller bottle at half the price of the traditional Rs 10 ($0.25) bottle. The idea was to meet the competition -- from lemonade, tender coconut water, lassi and tea -- on its own turf. Simultaneously, Coca-Cola doubled the number of retail outlets in rural areas from 80,000 in 2001 to 160,000 in 2003. The two-pronged strategy paid off: per capita consumption doubled between 2001-2003 and the company increased its market penetration from 13 to 25 percent. But greater demand from more retailers made it only harder to supply the drinks, which meant that some far-flung regions only got a trickle.

The organization decided to fix the problem and brought in Project COLA (Countrywide Outbound Logistics Automation). COLA is developed around the ERP system and is designed to cover all functions including manufacturing, sales, distribution, finance and logistics.

Treacle Trickle

Sluggish as treacle. That's the only way to define the flow of information from retailers around the country to manufacturing plants -- which made production planning an elevated form of educated guesswork.

This is because when Coca-Cola returned to India in 1993, it set up a concentrate plant and then quickly acquired a number of bottling plants across the country, demarcating geographies to ensure that it covered as much ground as possible. At last count, Hindustan Coca Cola had over 25 bottling plants spread across the country. However, this strategy created a disagreeable byproduct: a massive gap in MIS.