Coca-Cola Case Study: The Six Sigma Process in 2024 [Updated]

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Six Sigma process leads us to one conclusion that“Customer is the King”. Customers are the most important aspect of your business. Without the customer, you wouldn’t have a business. Companies have to understand that customers can make or ruin them completely.

One of the large companies like Coca – Cola tried to rule the market according to their wish, which lead to mammoth loss for the company.

The Coca-Cola Company (TCCC) is a leading manufacturer, retailer, and marketer of beverages, which sells beverage products in more than 200 countries. It is an American multinational beverage corporation headquartered in Atlanta, Georgia.

The Coca-Cola Company is into the manufacturing, retailing and marketing of nonalcoholic beverages. The company produces Coca-Cola, invented in 1886 by pharmacist John Stith Pemberton. In 1889 the formula and brand were sold for $2,300 to Asa Griggs Candler, incorporated The Coca-Cola Company in Atlanta in 1892.

Coca-Cola is the most popular soft drink in the world. It’s sold almost everywhere, and its brand name is known in most languages. 

The Coca-Cola Company manufactures and sells not only Coca-Cola itself, but also offers a wide range of other beverages, like Fanta, Sprite, water, juices, and energy drinks. The brand owes its success primarily to the product itself and then to its iconic marketing campaigns that position Coke as a drink with a fun and active lifestyle – “Open Happiness”

It was April 23, 1985 when the Coca-Cola Company changed their Coke recipe. A national poll conducted showed that only about 13% of beverage’s fans liked the new Coke. The company observed a steep downfall; their customers weren’t upset, they were transparently angry.

The customers of Coca-Cola took it upon themselves to initiate the launch of a campaign to bring back the original Coca-Cola back. These passionate customers did everything, from setting up hotlines to signing petitions, and were outspoken in their quest to get the original Coke back.

In this duration, the Coca-Cola Company took a major hit. They spent $4 million in development, and then after deciding to pull it back from the market, they had over $30 million worth of unwanted new Coke concentrate. This was the worst mistake that the Coca-Cola Company had ever made, and it is still referred to as the worst gaffe a company has ever made.

Let’s first understand the Supply chain of TCCC: How it Works

In a nutshell, Coca-Cola beverages go through the following destinations in their journey:

• Manufacturer
• Distributor
• Retailer
• Consumer

The classic workflow within Coca-Cola supply chain:

• The Company has its headquarters in Atlanta. The manufacturing of the concentrated syrup is done here and then sold it to Coca-Cola Enterprises (CCE) or another bottling partner, which is responsible for selling the product in North America and Canada.
• The bottling partner sends it to a manufacturing facility, which mixes the syrup with other ingredients, such as filtered water and sweeteners. After that, the bottler packages the final product and distributes it to retail partners (stores, restaurants, vending machines, etc.)
• The Coca-Cola Export Corporation (TCCEC) partners with local bottlers across the world and distributes the drink to the corresponding local markets.

Other things that contribute to Coca-Cola’s supply chain:

1. Innovation

Coca-Cola Enterprises flawlessly integrates modern technologies into its supply chain. For instance, it uses 3D printing to manufacture bottles and cans for its drinks.

    2. People

Logistics team consists of more than 100 people to ensure the safe journey of each bottle from factory to fridge. 

    3. Long-term relationships with retail partners

Over the past few decades, Coca-Cola has proven to be one of the most valuable and reliable suppliers for its retail partners. For instance, the company has been growing together with McDonald’s since 1955.

4. Strict quality control

The company has strict quality requirements for its manufacturing practices. For instance, Coca-Cola HBC, a bottling franchise partner of Coca-Cola Enterprises, requires quality, environment, and health safety certifications from its suppliers.

5. Global Supply Chain Council

The Coca-Cola Company is a beverage giant which has established the Global Supply Chain Council, which consists of subcommittees that focus on adhering to its established supply chain strategy. The Council has its own centralized portal where the employees and supply chain participants share their experiences and best practices.

6. Close collaboration with bottlers

The Coca-Cola Company provides a standard set of guidelines for all of its bottling partners and suppliers. As a result, most of the strategic decisions are centralized. The headquarters controls most of the bottling partner’s operations.

Coca-Cola Logistics

Logistics is an integral part of any supply chain, and Coca-Cola’s logistics expertise undeniably contributes to its supply chain success. Here are some of the logistics-related best practices executed by Coca-Cola:

• Manufacturing products on a more frequent basis
• Connecting with core team weekly worldwide
• Shifting the production plants closer to customers
• Introducing daily interaction among the main sites
• Introducing seamless processes that are shared between all supply chain participants.

Implementation of Six- Sigma process by The Coca-Cola Company

The Definition of the problem was based on Customer’s complaints. The complaint was mostly about the delay in responding to their questions instead of using various lines of customer care. Others had complaints about the lack of consistency of answers given to various customers related to questions like effects of this drink on toddlers. After so much Research, Customer Care department has authorized use of DMAIC project plan to get rid of delay in answering to customer’s query.

The Measure phase analyzed the reason for the delay in responses. Various hotline numbers were inspected along with the various Customer care departments. Machines and other technical issues were examined thoroughly to check whether they played any sort of role for the delay in responses or not. List of Common questions were also shared among the entire customer care department so as to make sure regarding the consistency of answers given to the customers.

The Analyzing Phase, data was presented more in the mathematical form. Uses of graphs, charts were recommended for easy interpretation. This was done to examine why some hotline numbers performed better than others. It also examined why there was delay in responses from customer care department to the customers.

The Improvement Phase was the phase where focus was on the how to solve the identified problems. Employees whose call numbers had better performance were requested to guide other employees so that all the employees are in the same level. Employees were also briefed on how to group questions to be able to give consistent answers to the customers.

The Coca-Cola Company required issuing some Goodwill message to the customers to clarify the matters which customers asked frequently. This will help the customer care call center to get rid of some of the questions which caused delays. Only the uncommon queries were attended by customer care department and therefore the loading on system reduced, which further resulted in better performance of customer care department.

The Control Phase was to ensure that the new standards were followed and maintained. Customer care department was required to submit the weekly reports to Coca-Cola Management to show the progress.

DMAIC project plan has worked in many companies and also worked for Coca-Cola Company. 

Now, let us understand what is “SIX-Sigma”?

Six Sigma is a methodology which provides tools and techniques to define and evaluate each step of a process. It provides methods to improve efficiencies in a business structure improve the quality of the process and increase the bottom-line profit.

Six Sigma is ranked among the important approaches for making business processes more effective and efficient. In addition to establishing a culture dedicated to continuous process improvement, Six Sigma offers tools and eliminates defects and helps to identify the root causes of errors, allowing organizations to create better products and services for consumers.

Six Sigma is:

A Business Strategy: Using Six Sigma approaches, a business can make strategies along with plan of action and drive revenue to new heights, cost reduction and process improvements can also be done in all parts of the organization.

A Vision: Six Sigma approaches are helpful for the Senior Management to create a vision which provide defect free, positive environment to the organization.

A Benchmark: Six Sigma approaches help in improving process metrics. Once the improved process metrics achieve stability; we can use Six Sigma methodology again to improve the newly stabilized process metrics.

 

A Goal: By using Six Sigma approaches, companies can keep a rigid goal for themselves and work towards achieving them throughout the year. If any company uses proper approaches of six sigma then it often leads these organizations to achieve these goals.

 

A Statistical Measure: Six Sigma is a data driven approach. Statistical Analysis is used to identify root-causes of the problem. Additionally, Six Sigma approach is highly used to calculate the process performance using its own unit known as Sigma unit.

 

A Robust Methodology: Six Sigma is the only approach available in the market today which is a documented methodology for problem solving. If used in the right manner, Six Sigma improvements are bullet-proof and they give high yielding returns.

 

While most people associate Six Sigma with manufacturing, but the methodology is applicable to every type of process in any industry. An organization uses Six Sigma approach to set up a management system that systematically identifies errors and provides methods for eliminating them.

Watch this video for a complete understanding of Six Sigma.

The Importance of People in Six Sigma

A key component of successful Six Sigma implementation is buy-in and support from executives. This methodology does not work well when the entire organization has not engaged in.

Further, another vital aspect is the training of personnel at all levels of the organization. White Belts and Yellow Belts typically receive an introduction to process improvement theories and Six Sigma Terminologies.

Green Belts typically work for Black Belts on projects, helping with data collection and analysis. Black Belts lead projects while Master Black Belts look for ways to apply Six Sigma across an organization.

People develop expertise in Six Sigma by earning belts at each level of accomplishment. These include Yellow belts, Green Belts, White Belts, Black Belts and Master Black Belts.

The martial arts belt structure is used to recognize proficiency in training and application in Six Sigma, using the following colors:

• White Belt – Overview DMAIC, Define Phase
• Yellow Belt – White Belt + process mapping, data collection and charting, assisting with a project
• Six Sigma Green Belt Certification – Yellow Belt + Project leader, core Six Sigma tools, change management, hypothesis tests and more
• Six Sigma Black Belt Certification – Green Belt + advanced statistical analysis and experiments, change management,
• Six Sigma Master Black Belt Certification – Black Belt + Design for Six Sigma, more advanced statistical analysis, unique tools for specific industries and processes, working with leadership, implementing successful improvement programs

Formal certification is recognized at the Green Belt, Black Belt and Master Black Belt level based on one or more of the following criteria:

• Completion of training covering the body of knowledge
• Years of work experience with the body of knowledge
• Passing an exam covering the body of knowledge
• Completion of one or more Six Sigma projects

Process of Six Sigma

There are two major approaches used within Six Sigma:

1. DMADV: The DMADV method is typically used to create new processes and new products or services. The letters stand for:

Define the project goals

Measure critical components of the process and the product capabilities

Analyze the data and develop various designs for the process, eventually picking the best one

Design and test details of the process

Verify the design by running simulations and a pilot program, and then handing over the process to the client

• DMAIC: The DMAIC process is used primarily for improving existing business processes. The letters stand for:

The DMAIC project methodology has five phases:

• Define the system, the voice of the customer and their requirements, and the project goals, specifically.
• Measure key aspects of the current process and collect relevant data; calculate the ‘as-is’ Process Capability.
• Analyze the data to investigate and verify cause-and-effect relationships. It also attempts to ensure that all factors are considered.
• Improve or optimize the current process based upon data analysis using techniques such as design of mistake proofing, and standard work to create a new, future state process.
• Control the future state process to ensure that any deviations from the target are corrected before they result in defects. A control check is created to monitor the progress of the process.

 

The DMAIC framework, Six Sigma can utilize several quality management tools:

Seven Basic Quality Tools (Quality core tools):

1. Cause and Effect Diagram:

Also, known as Fishbone diagram. The diagram has its shape similar to a fish skeleton. Hence, named as Fishbone diagram. This tool is used to explore causes to a single effect (or event) through brainstorming. These causes are put under different common categories known as 5 M or 6 M. Where, 6 M expands as – Man, Material, Method, Machine, Measurement & Mother Nature.

2. Flow Chart:

It suggests the process flow in a diagrammatic way. It outlines a pictorial representation of processes or process steps to understand their flow upstream or downstream.

3. Pareto Chart:

Also, known as 80:20 principle. The Principle states, 80% of the outcome is a result of 20% causes. It’s a kind of bar chart showing the frequencies of different causes or factors in descending order. The main purpose of this chart is to highlight the most significant factors among a number of factors.

4. Histogram:

It’s a bar chart to study the frequency distribution of data set. It’s used to understand nature of data.

5. Check sheet:

It is used for data collection. A frequency of factorized data is collected in check sheet.

6. Control Chart:

These charts are used to check, whether process data remains under control for the shorter time span. They involve process control limits and sometimes customer specification limits as operational ranges or bands. The aim of these charts is to ensure process data doesn’t go beyond control limits. However, some exception rules are also there to ascertain the condition of a process going out of control, while well within control limits.

Six Sigma strategies seek to improve the quality of the output of a process by identifying and removing the causes of defects and minimizing impact variability in manufacturing 

Each Six Sigma project carried out within an organization follows a defined sequence of steps and has specific value targets, for example: reduce process cycle time, reduce pollution, reduce costs, increase customer satisfaction, and increase profits.

The application of Six Sigma has the ability to reduce the variation of the characteristics of the product or service from the target by using either continuous improvement or a design/redesign approach.

Interesting Facts

It wasn’t that the Coca-Cola Company didn’t do their research; in fact over 53% loved the new Coke over the original. In the blind taste test, the subjects were just asked which one they liked best. So they didn’t have a choice. If they had been told that in choosing the new Coke the original would be moved out from the market, then the result of research would have been something else.

According to the grapevine, customers make their purchasing decisions on habit, longing, and loyalty.

This decision could have destroyed a great company. Luckily they listened to their customers and went back to the original Coca-Cola, and today with Six Sigma methodologies implemented, they are $182.9 billion strong!

Does Coke’s Supply Chain Management Inspire You?

Coca-Cola’s manufacturing and supply chain management have inspired many other companies to learn from their gaffe which resulted in steep lose for the company.

But businesses today had scale growth at a much rapid rate than you could back in the early 1990s because of the new software and automation techniques.

If you too are motivated to learn the Six-Sigma Process, what are six-sigma approaches, what is Six Sigma DMAIC etc. then there is certification courses which is available online and offline. You can pursue the Six- sigma course and earn belts as you accomplish each phase.

Frequently asked Questions and Answers

Q. What is Sig Sigma?

A. Six Sigma is a measurement-based strategy for process improvement. It’s a methodology, which aims at improving process and increasing customer satisfaction (Both internal & external). The concept behind this approach is to reduce the variation in processes. This reduction leads to consistent and desired outcomes from processes. Hence, Continuous process improvement with low defects is the goal of this method.

Q. How Coca-Cola Company used Six-Sigma process?

A.  The Company used the most Common and applicable to almost all the companies Six-Sigma approach to bounce back in market in no time. Refer BSI Case Study Coca-Cola Enterprises Ltd, for more clarity.

Q. What is Six-Sigma DMAIC?

It is an integral part of Lean Six Sigma process, but can be implemented as a standalone quality improvement process. Indeed, it is the most preferred tool that can help improving the efficiency and the effectiveness of any organization six- Sigma Approach DMAIC

Q. Which is the best online platform for Six Sigma Course?

A. Sig Sigma Course from Henry Harvin Education is ranked as top online platform to pursue Six-sigma Course.

Q. Career benefits after Six-Sigma course?

A. After completing the six sigma course certification you become eligible for jobs demanding analytical background, you Open doors to Job Opportunities Abroad demanding specialization. Or you can also Support a Startup with improved Process and Performance that leads to high-quality products and services.

 

Recommended Reads

• Best Six Sigma Course in India
• Best Six Sigma Courses in Bangalore
• Best Six Sigma Black Belt Courses in Delhi
• Best Six Sigma Courses in Chennai
  • Best Six Sigma Courses in UK
  • Best Six Sigma Courses in USA

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