I. Overview
Coca-Cola is the global leader in the nonalcoholic beverages industry, and with a 43.7% market share, this company has a better chance of launching new products and remains competitive. This company has a broad portfolio that includes 500 brands sold in the over 200 countries that it has operations. In particular, the company's brands include Coca-Cola, Sprite, and Fanta in addition to coffee, tea, hydration, and sports brands such as Gold Peak, Dasani, and Costa. The company also offers plant-based beverages, dairy products, juices, and nutritious drinks, which translates to a large clientele base (The Coca-Cola Company, 2021). The company has managed to retain market leadership for manufacturing products that align with changing customer preferences since its founding in 1892. A decision to launch a new product ensures that the company is cognizant of prevailing competition from its business rivals.
The new product that the company hopes to launch should align with a need to provide consumers with healthy beverages as well as factor in economic and social factors. In particular, Coca-Cola should conduct a market survey to establish production and marketing dynamics to enhance the intake of its new products. In the past, this company has been launching different products, including coke zero and diet coke, in a bid to meet the needs of health-conscious customers. In the same manner, the company has been launching products of all sizes to satisfy customers from all economic classes. These quite successful strategies should still be adopted as the company plans to introduce a new product into the global market. The company should ensure that the new product not only aligns with customers' preferences but also with environmental and regulatory policies.
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II. Production Needs
Coca-Cola is an established company that has managed to build adequate facilities to ease the manufacture, storage, and distribution of its products on a global scale. Each of the company’s plant entails ten processing departments that handle various production and distribution processes (The Coca-Cola Company, 2019). The processing facility layout is a significant asset, considering that it determines if the company is in a position to launch the new product or not. In particular, if the company is overwhelmed by the existing products, it means that an additional product would slow the production rate. However, if the current facility layout allows for seamless production of the existing products, it would not be overwhelmed by an additional product. For this reason, there is a need to assess the facility layout to accommodate the new product as a way for achieving the intended objective.
A. Estimation of the process cycle time for the new product introduction as compared to estimated take time
The current facility layout allows the company to complete the entire production cycle within 48 hours from the time it receives ingredients to the time beverages reach clients. The company manages to complete the entire process quickly due to an efficient facility layout that incorporates modern production lines (White, 2015). While the time taken to manufacture beverages is significantly lower than its competitors, the launch of a new product would require less cycle time. The reason for this assertion has to do with the fact that the company is concerned with launching a new health product that is fresh and devoid of preservatives. In this case, the company has to ensure that the cycle time is lesser, meaning a need to overhaul the existing facility to accommodate the new product. Essentially, the cycle time should be reduced to 12 hours which means that the existing bottlenecks and delays should be eliminated. However, the time taken would be much longer, up to 24 hours, considering that the personnel would tarry before being used to the new processes and products. The same case would apply to clients who would take a while before accepting the new health products from Coca-Cola.
B. Process bottlenecks that may adversely affect cycle time of the new product introduction
The introduction of a new product in the existing facility outline is more likely to create process bottlenecks. The reason for this assertion is the fact that the company already has other products which take up to 48 hours from the delivery of raw material to the time that customers access them (The Coca-Cola Company, 2019). The new health product that the company hopes to launch is bound to create process bottlenecks for the existing products since it requires less cycle time to ensure that it maintains its freshness. In this case, the personnel would be forced to process the new product before the existing ones, a decision that would result in delays and bottlenecks. On the other hand, introducing the new product into the current facility outline would increase the cycle time up to 72 hours to create bottlenecks. Moreover, the personnel would take time before they get used to new processes and products, which paves the way for delays. Essentially the introduction of the new product means that there is a change in the usual routines which would overwhelm not only the facility but also the human and capital resources.
C. Application of lean management principles to the introduction of the new product to account for adverse effects on cycle time
The introduction of the new product into the existing facility outline would take time before the production process would be streamlined. As a way of dealing with the drawbacks associated with bottlenecks and delays, Coca-Cola has the option of applying lean management principles. The first principle that the company would consider is defining the value that customers will derive from consuming its new health product compared to existing beverages (Solaimani et al., 2019). Next, the company would want to map the product's value stream by determining attributes that make the product worthwhile to customers. From here, Coca-Cola would need to run additional activities to ensure that the remaining value stream activities are seamless. Similarly, the company would need to eliminate inventory and unnecessary procedures to ensure that consumers get the product in time. Solaimani et al. (2019) note that a company would need to make these activities the standard for production to ensure that clients are assured of a seamless flow of the entire process. The five principles of lean management are crucial since they set the stage for the introduction and uptake of the new product as it allows for optimization of activities and assets.
D. Recommending an appropriate strategy aligned with principles of lean management that the company could implement to improve cycle time of the new product introduction
Coca-Cola may adopt lean management principles to improve the new product cycle time by eliminating bottlenecks and delays. In particular, the company would need to focus more on external factors beyond its control to increase the uptake of the new product. Essentially, the company needs to design a marketing strategy that is appealing to customers' emotions to believe that the product would promote their well-being. The new marketing strategy would align with prior marketing slogans, which promote family, togetherness, and happiness. More so, the marketing campaign would need to adopt a slogan that points to the centrality of the clients as a way of eliciting acceptance of the products on the part of the clients. This strategy is of uttermost importance, considering that the products would contain no preservatives, thus the need to have a ready market to avoid wastage and losses. For this reason, the company would need to adjust its production capacity to ensure that it meets customers' needs and at the time achieves efficiency. The company needs to establish market trends as a way of ensuring that the facility may be adjusted depending on the demand pattern at each particular time.
E. Assessing labor, equipment, and material needs of the company that would be required to support the new product introduction
The introduction of a new part on the part of Coca-Cola means that their structural adjustments are inevitable to accommodate changes in processes. Simultaneously, a successful campaign would trigger demand for the new product, meaning there would be a possibility for just-in-time delivery. If this is the case, Coca-Cola would have to invest a significant part of its revenue in training its personnel on lean processes, safety, and production process. Training may target existing employees, or the company may be required to hire additional labor to meet expanded operations. Apart from training the employees, the company may be required to expand its production line, equipment, and current facilities, including warehouses and transportation, to enhance efficiency. As a way of improving the production process, the company may need to consult with production engineers so that it can establish the modifications that need to be made on facilities and plant equipment. In the same way, Coca-Cola has to determine the amount of additional raw materials that would be needed to manufacture the new health products. While at it, the company should establish if the raw materials used for manufacturing existing products apply to the new products as a way of cutting production costs.
F. Proposing a labor, equipment, and materials plan to support the new product introduction that could be implemented by the company
The introduction of the new product means that the company has to adjust its labor, equipment and materials plan to achieve efficiency and economies of scale. The first thing that the company needs to do is determine the demand for the new product to establish if there is a need for additional human and capital resources. A high-demand new drink would mean that the company would need to set aside employees who would precisely manufacture the product to achieve a seamless operation flow. Labor specification would be practical as it would reduce bottlenecks and delays associated with having to handle different and unrelated tasks (Zhou & Wan, 2016). More so, the company would need to review its existing equipment and production line to establish if they can handle the new product and, at the same time, support existing ones. The company should base this decision on the demand trends for the new product as well as the need to reduce cycle time, considering that it does not contain preservatives. In the same way, Coca-Cola should design a materials plan to establish if the existing ones would support the production of the new health drink. If there is a possibility of using the existing raw materials to produce the new product, the company should do so as a way of reducing production costs.
G. How the proposed labor, equipment, and materials plan supports the new product introduction
The proposed labor equipment and materials plan aim to achieve economies of scale and achieve a seamless flow of operations. The decision to launch the new product means that the company needs to review the existing plan to ensure that they meet industry standards. A decision to have labor specifications where a section of employees will only concentrate on the new product allows for efficiency. This assertion is that these employees will be able to identify market needs and, from here, work towards fulfilling them. Specialization, at this stage, would eliminate duplication of processes which would be the case if employees were to work on both the existing and new products. On the other hand, the modification of some of the production equipment in the plant would align with the new product's specifications. The new product may require different materials and processes to ensure that it is distinct from existing products. In the same way, the materials plan would support the introduction of the new product by establishing if the existing products use them or not. In the case where the materials for the new products are used for the existing ones, Coca-Cola would cut down on costs and still have a distinct product.
III. Risk and Financial Impact
A. Potential risks to the company associated with the new product introduction
Introducing a new product is a diversification strategy to ensure that the company retains its competitive advantage and profitability. However, it is not automatic that customers will immediately accept new products, meaning that there is a likelihood of financial risks. These risks are likely to be faced in the initial phases of the product launch, and without suitable approaches, they may persist and, in turn, negatively affect the company’s profitability. The most significant risk would be a poor uptake, especially if the customers are not convinced that the product would promote their wellbeing. Unlike the existing products, where the company processes large batches since they are already in demand, new products take time to be absorbed. Slow absorption means that the company would be required to incur significant transaction and holding costs, thus deriving Coca-Cola of economies of scale. The situation would be worse for health products, considering that they do not have preservatives, meaning that their shelf life is reduced significantly. The other risk that Coca-Cola would face delays to the project in the case where the managers are in charge of other projects, which may cause financial losses.
B. Risk mitigation plan to address identified risks associated with the introduction of the new product
The introduction of a new product presents Coca-Cola with a different set of challenges and potential risks, as it may take a while before customers fully accept it. Thus, the company needs to develop a risk mitigation plan to reduce wastage of resources and, in turn, financial losses. The most practical strategy is for the company to curb these risks is the production of smaller batches in the initial phase. On determining that clients are accepting the new products, the company would scale up production to meet rising demands. Essentially, the company needs to apply lean principles by manufacturing quantities that support optimum manufacturing level. In the same way, the management needs to create a buffer period that is supposed to handle delays in product development. The buffer period needs to align with lean manufacturing principles as a way of achieving cost-effectiveness. Coca-Cola should be open to constant modification to its risk mitigation plan to ensure that it aligns with market standards. Overall, the company should be flexible enough to change new product development so that it aligns with dynamic industry needs.
C. How the proposed risk mitigation plan will account for and address the previously identified risks
The proposed risk mitigation plan is a strategy for accounting for and addressing adverse impacts associated with the introduction of new products in the market. The plan focuses on achieving economies of scale through manufacturing smaller batches of the new product at the initial stage. This strategy is effective as it guards the company against wastage of resources and human resources on products that may not be absorbed on time. Instead of using these resources on production, Coca-Cola could capitalize on existing products to ensuring that it meets demands. Similarly, the plan cushions the company from delays that may emanate from poor leadership occasioned by managers having to oversee various projects at once. Essentially, the plan allows the company to design and follow through with production deadlines by paving the way for marketing campaigns, employee training, and consumer education. Additionally, the risk mitigation plan is a strategic plan that ensures that the company anticipates and pts mechanisms to deal with eventualities. The company, in this case, would be in a position to alter timelines and production processes to ensure that they align with market dynamics.
IV. Management Strategies
A. Key aspects and characteristics of the team that you would build to support the introduction of the new product
Product development is a tasking undertaking that requires cross-functional team collaboration to enhance the chances of success. The company would need to involve different teams drawn from research and development, top management, production, logistics, and marketing. The research and development teams would have to collaborate with their marketing counterparts to establish the existing market gaps to design a product that would appeal to customers. From here, the top management would need to collaborate with regulatory agencies, including FDA, to ascertain industry provisions. In particular, these teams will focus on designing products that align with safety, labor, and environmental standards to ensure that the resultant products are high quality. The production and logistics team will, in turn, actualize the designs by manufacturing and distributing products that align with industry specifications and provisions. Members of all these times must demonstrate the requisite skills that apply to their particular field in a bid to achieve efficiency and economies of scale. Mutual respect, empathy, understanding, and commitment are some of the characteristics that would ensure that the end product competes with those from rival companies.
B. Selection of stakeholder from the company that you would include on a cross-functional team to support the introduction of the new product
Coca-Cola is a renowned company that has managed to become a household brand by manufacturing unique products that meet customers’ needs. The company has achieved this status because its ability to conduct stakeholder analysis as a way of enhancing the uptake of its products. The introduction of a new product would not be any different as it would mean the inclusion of various individuals and agencies with a stake in the development process. The main stakeholders involved in the process are state, federal, and international regulatory agencies to enforce the production of safe, high-quality, and environmentally-friendly products. Moreover, the company would involve consumers, considering that they are at the center of the entire process, and their feedback would pave the way for better products. Similarly, the company would engage its employees so that they conduct market research, marketing campaigns, and the actual production and distribution. The incorporation of all these stakeholders allows for seamless flow of operations, which in turn increases the likelihood for new product development and uptake.
C. How the proposed team is cross-functional and how that assists them in supporting the introduction of the new product
The proposed multi-disciplinary team, which is drawn from all departments in the company, can support the introduction of the new product. The company has experts in research and development, engineering, human resources, production, and logistics departments to facilitate the product. The human resources team is of particular importance since it can motivate all employees to adopt requisite organizational behaviors to facilitate the process. This department would determine the teams and individuals who possess the right skills and competencies needed to incorporate the new product. In the same way, this department is in a position to resolve employees’ issues to ensure that they are in the right state of mind so that they render their support. The same case would apply to the company’s leaders who need to collaborate with departmental heads to ensure seamless flow of the production process. The development of cross-functional teams is a practical strategic plan that allows for the right behaviors and attitudes to initiate desired change. In the end, satisfied employees are more likely to be more productive as well as being ready to adhere to quality and safety provisions and standards.
D. Strategy for managing the cross-functional team tasked with supporting the introduction of the new product
The cross-functional team that is tasking with supporting the introduction of the new products entails people from diverse backgrounds, which pave the way for interpersonal conflicts. This reality means that there is a need to manage all the teams to ensure that they adopt a uniform organizational vision. The most practical strategy that would be useful in managing this diverse team is by trying to be impartial so that every person would feel valued. The team in charge of the development process needs to create open communication that allows for dialogues to achieve mutual respect. Moreover, the top management team must create smaller teams that are easier and manage and track as compared to larger teams. Similarly, an effective reward system that would be designed by human resource management would be a practical strategy to elicit commitment. Employees who feel that their effort and contribution are valued are likely to go far and beyond to prove their worth. Essentially, the strategy is aimed at ensuring that all the members of the cross-functional team give all they have to support the launch of the new product.
E. Applying principles of total quality management (TQM) in managing the product introduction
Total quality management (TQM) focuses on continuous improvement, with employees being viewed as pivotal in providing customers with valuable and high-quality products and services. Coca-Cola could infuse TQM principles in managing the development of a new product to ensure that it aligns with dynamic market trends. In particular, the company needs to train its employees on the manufacturing process to ensure that they adhere to quality and safety standards. The most practical approach for implementing TQM principles is to view them as key performance indicators (KPIs) for incentivizing the production process. Employees, in this case, would be in a position to earn individual or team bonuses in addition to their salaries depending on how well they adhere to production standards. Singh & Singh (2014) indicate that a company could use TQM principles both as a regulatory framework in the production process and as an incentive to achieve self-regulation. Strict adherence to TQM principles benefits not only the employees but also consumers since they will be assured that the products would promote their wellbeing.
F. Utilizing the total quality management (TQM) approach for fulfilling customer expectations associated with the new product
Consumers are crucial stakeholders in developing any new product, considering that they may decide to buy it not based on how it meets their preference. For this reason, Coca-Cola ought to utilize the TQM management approach to fulfill its expectations. Essentially, Coca-Cola’s leadership should provide requisite training, funding, and staffing, and oversight to facilitate production. The most important function here would be continuous monitoring and improvement to ensure that the resultant products meet customers’ expectations exhaustively. The total quality management framework advocates customers focus by manufacturing and distributing products that fulfill their short and long-term needs. The principle highlights that customers ought to believe that the products they buy have value for money to keep coming back for more. A company that understands what its customers require has a better chance of strategies that incorporate the requisite people, materials, and processes for meeting and exceeding their expectations. Overall, a customer-focused approach to TQM paves the way for cordial relationships based on feedback and mutual respect, which, in turn, promotes loyalty and more sales and revenue.
G. How each department in the company would approach assessing customer expectations of the product
Development and launching of new products require a multi-professional collaboration to increase the chances of uptake and, in turn, profitability. The decision to launch a new health product by Coca-Cola would require different departments to form a joint task force to ensure a successful launch. The task force would be focused on establishing whether the resultant product meets customers’ expectations at every stage of the development process. The research and development team would engage customers through various channels, including its website and social media pages, to establish their reactions. The marketing team would rely on surveys or direct interactions with distributors and individual clients to establish the level of uptake. On the other hand, the finance department would rely on financial reports to determine if the new product has a high absorption rate or not. The same case would apply to the logistics and production teams who would use requisition forms from distributors to track demand for the product. Together, all these teams will provide the joint task force with feedback which will be assessed to determine if Coca-Cola should continue with the production process or not.
References
Singh, J., & Singh, H. (2014). Performance enhancement of manufacturing industry by using continuous improvement strategies: A case study. International Journal of Productivity and Quality Management, 14 (1), 36. https://doi.org/10.1504/ijpqm.2014.063165
Solaimani, S., Veen, J. D., Sobek, D.K., Gulyaz, E., &Venugopal, V. (2019). On the application of Lean principles and practices to innovation management: A systematic review. The TQM Journal, 31 (6), 1064-1092. https://doi.org/10.1108/TQM-12-2018-0208
The Coca-Cola Company. (2019). 2018 business & sustainability report . https://www.coca-colacompany.com/content/dam/journey/us/en/policies/pdf/safety-health/coca-cola-business-and-sustainability-report-2018.pdf
The Coca-Cola Company. (2021). About . The Coca-Cola Company. Retrieved 9 March 2021, from https://investors.coca-colacompany.com/about.
White, G. (2015, February 6). From factory to fridge: Inside Coca-Cola’s supply chain. Manufacturing Global. https://www.manufacturingglobal.com/lean-manufacturing/factory-fridge-inside-coca-colas-supply-chain
Zhou, Y. M., &Wan, X. (2016). Product variety, sourcing complexity, and the bottleneck of coordination. Strategic Management Journal, 38 (8), 1569-1587. https://doi.org/10.1002/smj.2619
