Coke's Secret Formula: Wireless, SCM, And CRM

Let's take a short, nostalgic trip back to the eighties. It was a time of significant changes. In the music arena, the CD player and MTV were birthed and "Video Killed The Radio Star." In the world of gaming, Atari was phasing out and Nintendo was the new leader. And in the political arena, the cold war ended and the Berlin Wall came down. One battle that was still unsettled raged between two beverage powerhouses: Coca-Cola and Pepsi. Pepsi's "Choice Of The Next Generation" was gaining wide acceptance and taking a strong lead over its rival. Coke put its neck on the line and decided to not only radically change its marketing strategy, but to change its secret formula, too. In 1986 Coke answered the "Pepsi Challenge" with a new product and a computer-generated spokesman named M-M-Max Headroom. For almost an entire year Max appeared in New Coke ads using sarcastic quips such as "Don't use the P-word" and "Catch the wave" to convince the world to choose Coke over Pepsi. But, within a year Coke decided to "can" both its new formula and its hip pitchman. A w-w-wise choice on both accounts. To this day no one knows for sure if the company's plan was to really replace its classic product with the New Coke or if it wanted to do a giant experiment in reverse psychology. Whatever the reason, it worked - Coke was once again a viable competitor of Pepsi.

Another significant change that happened with Coca-Cola was with The Philadelphia Coca-Cola Bottling Company. The company, which had been in business since 1902, changed ownership. The new CEO, Bruce Llewellyn, with some financial backing from Julius "Dr. J." Erving and Bill Cosby, took over Philly Coke in 1985. The company, owned only 30% by the Coca-Cola Company, would eventually grow to be the fourth largest Coca-Cola bottling company in the United States.

Incompatible Platforms Threaten Profits
Even though Coca-Cola's classic formula has proven it requires no modifications, Philly Coke's supply chain management system was another story. The company equips its 350 drivers and sales representatives with Intermec Norand 6920 wireless handheld PCs to capture such data elements as number of products sold, price per product unit, type of product, type of bottles sold, and special discounts offered. Each night the salespeople had to get back to the plant by 3:30 p.m. to dock their handheld devices and upload their information onto the company's AS/400 server. Previously, Philly Coke was transferring its data via an OS/2 operating system. The average time for the handheld devices to upload data was 30 minutes - a very time-consuming process - but that wasn't the worst part. According to Bob McDonald, senior programmer analyst for Philly Coke, the worst part of its SCM (supply chain management) system was the glitches. "Our legacy Microsoft OS/2 operating system randomly rejected information from the handheld devices, or worse yet, the server crashed and we lost the data from that day." Often this problem was noticed after McDonald had left for the day and he was called at home and had to trek back into work to troubleshoot the problem. By the time all was said and done, about 25 second-shift workers had to work four hours overtime to get the distribution center back on schedule so the drivers could leave on time the following morning. It wasn't long before Philly Coke realized it was time to make some serious technology changes. The IT team led by McDonald and CIO and VP Alison Woods, began establishing a technology road map for the business to follow. Because of the magnitude of the project, Woods determined that outside help would be needed to accomplish the company's goals. "Rather than rely upon our already over-burdened IT personnel to architect this foundation, we chose CommerceQuest (Tampa, FL) to help us with this particular process," recalls Woods. CommerceQuest determined that Philly Coke needed to make a few changes. First, it needed a different operating system - the OS/2 operating system was notorious for causing synchronization problems with AS/400 servers. CommerceQuest recommended that the company upgrade to a Windows NT system. Second, a middleware messaging solution would be needed to speed the transmission of the data from the wireless handheld devices to the database and from the proprietary BASIS SCM and accounting software to the handheld devices. CommerceQuest recommended and implemented IBM's MQSeries strategic messaging infrastructure. After creating a stable data-sharing environment, CommerceQuest installed its enableNet Data Integrator middleware solution to integrate Philly Coke's BASIS software across diverse hardware platforms in order to manage the flow of its business-critical information.

Solid, Seamless, SCM
In addition to correcting its crashing and data synchronization problems, Philly Coke's salespeople are now able to upload and download information to and from their Norand devices within two minutes. "The 28-minute savings on the daily upload times of each of our 350 handheld devices is a much greater business benefit than one might first realize," notes Woods. "Besides saving hundreds of overtime hours per month, the upgrade has given our salespeople and drivers 163 additional hours [28 minutes multiplied by 350 workers] out on the road selling and delivering our products." While the company has not released any data on the exact return on investment the new integrated solution has given it, a simple, conservative estimate of 100 overtime hours per month times an overtime rate of $16 per hour could save the company over $19,200 per year. This statistic, coupled with the extra 42,380 selling and delivery hours gained, has put a new bounce in the company's stride. "In addition to the time and money savings we are currently realizing, we are now in a position to capitalize further on the information we gather," says Woods. "Our immediate plans are to implement solutions which enable us to help our customers figure out profitability from our products and to do occasion-based marketing."

Can The Secret Formula Be Improved?
Much like the ingredients in Coke's classic formula, Philly Coke uses many technology ingredients to run its business. The company uses a combination of CRM (customer relationship management), analytics, document management, and sales force automation tools to reach its customers with the right product at the right time. On the sales side, Philly Coke uses a profit management system from Salient Corp. to track its sales and profit margins. Additionally, the company incorporates QAD's MFG/PRO software as part of its manufacturing process to maintain its bills of material and production routing data. Additionally, Philly Coke uses a software solution from Intellution called iFix which interfaces to its QAD and BASIS solutions to enable real time data capture from its production lines. The production information is used on a daily basis to alert drivers and sales representatives on the immediate availability of product, and the data is also used in conjunction with the company's quality control software from Applied Statistics to analyze its production capability and overall production efficiency.

On the customer side, Philly Coke uses a basic customer tracking and analytics software program from Davis Software called TeleScope. TeleScope comprises three modules, which are used primarily by the company's Customer Communications Center. CSRs (customer service representatives) use the Agent Module to enter orders, service calls, and customer leads; track customer issues, administer customer surveys, and collect miscellaneous data. The second module, the Automated Call Distribution Module, automatically distributes calls to available CSRs and collects call statistics. The third module, the Interactive Voice Response System, is used by associates outside the call center to enter orders, retrieve delivery "running orders," and enter market execution surveys using a telephone.

In order to help manage some of the data it collects, Philly Coke uses a document management solution from Vanguard Systems called IMS/21. IMS/21 is used to scan all credit invoices into the company's BASIS system, and then automatically retrieves and sends them with billing statements at the appropriate time. In the near future, the company plans to replace its current wireless handheld devices with mobile wireless computing handheld devices. This will give Philly Coke's sales representatives the ability to upload product orders immediately after the information is keyed into the handheld device without having to travel back to the distribution center and dock their units in a cradle. Mobile wireless computing will also allow Philly Coke's sales representatives to stay out on the road longer and enable them to get more sales.

Philly Coke has seen its share of changes over the years not only in its technology but also in the way its products have been marketed to the masses. Recently, Philly Coke celebrated its 100th anniversary. In all that time the one product that got the company off the ground and helped it get where it is today is still the company's best selling product. Despite Pepsi's double-digit growth each year since 1998, Coke still has managed to edge out its competitor and retain the crown as cola king with 2000 sales bringing in $20.5 billion in revenue versus Pepsi's reported earnings of $20.4 billion. And, even though some skeptics might say that the title may soon be handed to "the P-word", Coke's Philadelphia Bottling Company says with a confident smile, "Life Tastes Good."