New Coke: Bottlers are back

Over the lifetime of Coke the company has bottled its own product, and franchised. Over the past few years coke own 80% of the bottlers, but due to the capital intensiveness of these plants, transportation expenses, and truck maintenance the company has decided to roll back to the franchise model. The company won't be giving up much control, Coke only wants to reduce the plants it owns by 10%. It is interesting to see when a company decides to make a move such as this, a few days ago I reported on McDonald's poor customer service and its inability to combat the problem because most of the restaurants are not corporate owned. Coke could sacrifice quality for capital savings.

This is interesting because supply chain management can be difficult to handle, it is made even more difficult when control from the manufacturer is reduced. If all goes well the company will save billions by utilizing this strategy.

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