BBA FOREIGN TRADE

V SEM

TPTM PROJECT

SUVMITTED BY- MANASI MARATHE AND ANJALI PATIDAR

TOTAL QUALITY MANAGEMENT OF COCA COLA

Introduction
Total Quality Management (TQM) are the activities in the management function that
influence the quality of policies, responsibilities, objectives and their implementation through
quality control, quality planning and quality improvement. Most organizations are focusing on
quality improvement process than on the product itself. In other terms quality management
system is the process of quality improvement where skills are used to add value to the
quality of the products and enhance their future.Total quality management consists of
competitive moves and business approaches aimed at producing successful performance; it
is a management’s “game plan” for running the business, strengthening a firm’s competitive
position, satisfying the customers, the stakeholders, share holders and the staffs. It seeks to
develop the way into which all those that are a party to the business get satisfied. It aims at
going a step further and satisfying the customers beyond their expectations.

Most of the successive organizations have realized that a key factor in monitoring
performance is TQM to ensure that all of the needs and requirements of customers are
being met. They have come to the understanding that the customers do not only refer to the
people who buy products from them but also to the employees. Employees are one of the
important assets that any organization can boast of and therefore they have to be handled
with care at all times.

One of the organizations that have realized the benefits of TQM in its operations is Coca-
Cola Company. This company ensures that all its personnel interact with its own supplies in
its processes, this does not only refer to the people who sell products or services to the
company, but all its internal suppliers. These internal suppliers are personnel involved in the
production processes and they are people who provide input to the next level of production.
Each customer has specific needs and demand appropriate requirements; it is upon
suppliers to focus their efforts in order to build quality and ensure that they are able to meet
all the requirements of customers. This includes making appropriate identification and
improvement of the production process.

Overview of Coca-Cola Company

Coca Cola Company is the largest manufacturer and distributor of soft drinks and non
alcoholic drinks in the world. Its headquarters is in Atlanta, Georgia where products are
manufactured and sold to bottlers for packaging. Coca cola’s operations are distributed in
more than 200 countries (the UK being one of the biggest markets for the product) and
produce more than 3000 products. It specializes in soft drinks, energy drinks, water and fruit
drinks. Consumers all over the world enjoy over 80 different flavors of soft drink
manufactured by the coca cola Company.

Coca cola has a strong and close relationship between its suppliers and distributors. It has
expanded its markets in the social and cultural contexts and this has contributed to its
success. Coca cola has been using high technology which has been rising over the years
leading to success in all its activities. Most of its products are advertised over the internet
making in easy for all people to access information.
 Coca cola’s innovativeness is facilitated by the use of decentralized structures where
managers are allowed to experiment new products. An effective procedure is followed in
order to establish new and attractive ideas for the success of the organization. Some times it
is not able to make the expected profit margins due to competition. However, it has an
opportunity of merging with global retailers and to expand into other countries. However,
Coca cola is often faced by the threat or intense rivalry, price competition, and government
regulations.

Analysis of Coca-Cola
Coca-Cola drinks come in a variety of different packaging formats including glass, aluminium
cans and plastic bottles (Coca-Cola, 2010). As the company expands its supplier base and
beverage portfolio to meet the increasing demands of developing and growing markets around the
world, regulatory scrutiny and consumer expectations continue to rise. Coca-Cola (2010) states
that “the global nature of its business requires that the Coca-Cola system has the highest standards
and processes to ensure consistent quality – from its concentrate production to its bottling and
product delivery”.

Coca Cola (2011) states that ‘to ensure such consistency and reliability, the Coca-Cola system is
governed by the Coca-Cola Operating Requirements (KORE)’. This system enables Coca-Cola to
address growth plans by creating an integrated quality management program which holds all
operations to the same standards of production and distribution of beverages. The current
management system, KORE, aims to achieve the highest standards in product quality, health and
safety and environmental standards at Coca Cola.

The Production Process

Before production starts on the line cleaning quality tasks are performed to rinse internal
pipelines, machines and equipment. This is often performed during a switch over of lines for
example, changing Coke to Diet Coke to ensure that the taste is the same. This quality check is
performed for both hygiene purposes and product quality. When these checks are performed the
production process can begin.

Coca Cola uses a database system called Questar which enables them to perform checks on the
line. For example, all materials are coded and each line is issued with a bill of materials before the
process starts. This ensures that the correct materials are put on the line. This is a check that is
designed to eliminate problems on the production line and is audited regularly. Without this
system, product quality wouldn’t be assessed at this high level. Other quality checks on the line
include packaging and carbonation which is monitored by an operator who notes down the values
to ensure they are meeting standards.

To test product quality further lab technicians carry out over 2000 spot checks a day to ensure
quality and consistency. This process can be prior to production or during production which can
involve taking a sample of bottles off the production line. Quality tests include, the CO2 and sugar
values, micro testing, packaging quality and cap tightness. These tests are designed so that total
quality management ideas can be put forward. For example, one way in which Coca Cola has
improved their production process is during the wrapping stage at the end of the line. The machine
performed revolutions around the products wrapping it in plastic until the contents were secure.
One initiative they adopted meant that one less revolution was needed. This idea however, did not
impact on the quality of the packaging or the actual product therefore saving large amounts of
money on packaging costs. This change has been beneficial to the organisation. Continuous
improvement can also be used to adhere to environmental and social principles which the
company has the responsibility to abide by. Continuous Improvement methods are sometimes
easy to identify but could lead to a big changes within the organisation. The idea of continuous
improvement is to reveal opportunities which could change the way something is performed. Any
sources of waste, scrap or rework are potential projects which can be improved.

The successfulness of this system can be measured by assessing the consistency of the product
quality. Coca Cola (2011) say that ‘Our Company’s Global Product Quality Index rating has
consistently reached averages near 94 since 2007, with a 94.3 in 2010, while our Company Global
Package Quality Index has steadily increased since 2007 to a 92.6 rating in 2010, our highest
value to date’. This is an obvious indication this quality system is working well throughout the
organisation. This increase of the index shows that the consistency of the products is being
recognised by consumers.

Customer Satisfaction
Coca-Cola controls its customer satisfaction by having a code on the bottles it produces. This
means that if there is a fault, then that code can by entered into the Coca-Cola database and they
can find out what plant it was produced at and where it was distributed to. This helps customer
satisfaction because if there is a faulty group of Coke bottles then they can be recalled before any
other customers find problems with a particular batch of Coke products. They also have an OTIF
rating system for distributors (OTIF stands for ‘on time in full’) (Muirhead, B. 2011). External
customers, such as distributors can rate Coca-Cola’s delivery based on, if it was on time and the
full stock was delivered. Coca Cola also use mystery shoppers to examine the quality of the
products and how satisfied customers are with those products (Muirhead, B. 2011).

Quality Management at Coca-Cola Company

Coca-cola was discovered in 1886 at the soda fountain of Jacob’s Pharmacy in Atlanta. In
1899, the company was introduced to the world when it started selling its products packaged
in glass bottles. By 1916, multiple designs of bottle had been discovered which have evolved
to the contour shape which are now universally recognized. Back then, the company only
produced one brand of product but soon it diversified into many brands and by 1980, it was
producing more than three brands, this includes the Diet Coke and caffeine free Coke. In
early 1990s, Coca-cola expanded extensively in its processes, products, and packaging
designs (The Coca-Cola 4).

From the inception of the company, the executive had realized that quality was the only
significant facet that would place the company away from its competitors. The leaders
emphasized on the management of quality in all its processes. Towards the end of the
1990s, the global market started experiencing structural changes which forced Coca-Cola
Company to review its quality management system. There was need to maintain consistent
quality as well as meet consumer tastes and preferences. To address these changes the
Coca-Cola Quality System (TCCQS) was introduced in early 1995. This technique helped
the company to redefine its environmental standards as well as its quality requirements (The
Coca-Cola 5). This was a decentralized approach to managing quality which was achieved
after operating for about one hundred and nine years.

In 1999, TCCQS was modified to include safety, quality planning, and quality review. It
continued evolving to incorporate business goals and objectives, among other things
required by the global market, such as safety standards. Today, TCCQS has continued to
evolve. It has been branded as the Quality Management System for Coca-Cola. It helps the
company to manage and steer its activities to make sure that quality is achieved in all its
processes. TCCQS has helped Coca-Cola to in all of its processes. It is now able to produce
high-quality products that have helped in to retain its competitive advantage. This has also
helped it to come up with innovative ideas in production of new products

Why does the system keep on evolving?

TCCQS has to develop constantly in order to integrate changes in quality management,
comply with regulations, meet the circumstances in the global market, as well as take on the
best practices to be used in production. For instance, off late food manufacturing companies
have become aware of the importance of maintaining food safety. Because coca-cola has
been quality conscious since its inception, TCCQS has to evolve in order to embody the
most recent practices in the manufacturing sector. Coca-Cola Company focuses more on its
customers by ensuring that all consumers are satisfied, therefore, TCCQS has to
concentrate of customer satisfaction. The quality management system (TCCQS) must
ensure that safety and environmental stewardship is maintained at Coca-Cola because it is a
responsible company

Benefits of Total Quality Management

T.Q.M has a lot of advantage to Coca-Cola Company. There is satisfaction among the
management, the stake holders and the customer. They are deliberate actions that the
company takes to ensure that all its ways are been looked into and made in such a way that
the outcome are favorable to the end customer (Coca-Cola 2). Customer is the most
important asset the company has and his welfare satisfaction should be at the fore front of
any company’s agendas. When the customer is satisfied, then he gives back to the company
in many ways. Remember that a satisfied customer tells another and unsatisfied one tells
two others. If the business attains customer royalty, it becomes a self advertising enterprise.

Many people talk about risk management but rarely do they do anything in connection to it.
The major problem is that many people do not know whose responsibility it is to manage
risk. TQM provides a solution to this since it defines the method of handling risk. This
involves identification of risks, evaluation, and how to deal with identified risk within the
manufacturing process. It also gives an idea of who is accountable for carrying out the
diverse roles implicated in manufacturing process. It sets out the number and types of risks
that an organization can be able to bear. It also recommends that, the probability and the
impact of a risk should be considered to determine whether this varies over time and
whether it has an impact on the quality of products and services.

The purpose of TQM is to ensure that, the products resulting from the company’s processes
are of good standard, that is, they meet the quality criteria. More often than not, this is done
in a quality reassess meeting in which inaccuracies in products are recognized. It is worth
noting that the quality review meeting is not under any obligation to resolve the errors
identified in products, its work is to bring the interested people together and to help the
project team in addressing the identified issues.

Over many years, TQM application systems in the Cola-Cola Company have been in an
increasing trend. So far, TiQM has brought about positive changes in the company.
However, the company is still facing problems in the implementation of TQM. From this
research, four main advantages have been identified for Coca-Cola. These are:

• Organization image and reputation enhancement

• Performance and customers’ satisfaction improvement
• Documentation procedures and instructions establishment
• Constant quality service
Steps to be followed for continuous improvement
Through TQM, the company has been able to develop customer royalty. IT has been able to
surpass other companies to become the world largest distributor of soft drinks. What has
made the company go this far? The answer is in total quality management. For a company
to continuously improve its processes and attain the set goals as well as surpass the
expectations of the customer, it has to follow some steps;

Develop a vision and mission

Developing a strategic vision and mission involves thinking strategically about the following
three questions

• What are the customer’s needs?

• How much is the company offering? Can we do better?
• Where are we now?
• Where do we want to go?
• How will we get there?

A vision is a view of an organizations future and business course: it is a guiding concept for
what the organization is trying to do and become. All must be looked into so as to ensure
that there is no one area that benefits at the expense of the customer.

Setting objectives that are aimed at meeting the gap that the company had not been filling in the
past
The aim of setting the objective is to ensure that the company has embarked on the
fulfillment of the need of the customer. The aim this is to improve the feeling that the
customer will get when he has transacted with the business. The objectives are aimed at
improving all the area of the organization and the measurement is the satisfaction that the
customer will get. A satisfied customer will be a loyal customer and the business stands to
benefit.

Crafting strategies and implementing them

This is all about drafting the way and the objectives that the company has set. The
need to have well set strategies assists the business to attain the targets. In this
stage, the issue of the resources that is required to meet the objectives is also
considered. If the company needs more employees or latest technology, this is the
time to set it. In Coca Cola Company one of the strategies that it has used to attain
the objective of customer satisfaction is continuous improvement.

Total quality management assumes a continuous change, therefore managers must

constantly evaluate performance, monitor the situation and decide how well things
are going and make necessary adjustments. The management should review the
strategies that they had implemented and the feedback that they have gotten from
the customers. In case of any area that is not well addressed, it should be handled.
In TQM the views of employees as well as the feedback from the customers are of
great importance (Sirim 2). There are suggestion boxes that the views of the
customers can be gotten from. At Coca Cola company there is a research
department that has the aim of undertaking the policy of Genchi Genbutsu (go and
see). The section is supposed to survey the market and come up with various
recommendations that are aimed at improving the services.

GAP analysis
A gap analysis is a tool used by managers to decide which tactics and strategies to
use in order to increase production. It is a tool used to link a business vision with its
strategies and goals. It helps in identifying a discrepancy in the performance which
helps in selecting appropriate strategies to fill the discrepancy. It was necessary to
conduct a gap analysis on the implementation and use of TQM in the company.

Organizational culture
The employees have a set of belief that they are static to change. In developing a
total quality management in the organization, change must appear. The people are
sometimes opposing this change and hinder the process.

The management
There are some recommendations that are given by the sector employees but the
management fails to implement them, this hinders how far the company responds to
the demands of the customer.

Funds
Developing T.Q.M. system requires funds that the company may not be having.
These funds may be for adoption of technology or development of Systems

Lack of information
The available information and feedback from the customers may not reach the
company. If a customer encounters a problem with any of the products, they opt to
keep quiet and thus the issue may never reach the company.

The above have consistently been a barrier because of two elements

A. The nature of human beings that is opposed to change. Both the management and
the workforce are not prepared to take in new changes at all the time. The concept
of inertia applies.
B. Lack of information and feedback
The customers are not giving feedback to the company about the areas they would
like improved, but opt to solve by themselves.

Conclusion
One of the discoveries made through technology is quality management systems. Many
organizations have realized the importance of producing quality products and have
established quality management systems in their operations. This is a system that ensures
that all the processes involved in the production of products are appropriate. It also makes
sure that all customers (both internal and external) are contented by the products and services
produced by an organization and that all their needs are fulfilled.

Coca Cola Company is one of the companies that have been using quality management
systems for a long period of time. Since its inception in the late 19 th century, its management
has been aware of the need to produce quality product and this has contributed to its success.
However, back then, it did not have a well defined quality system and it was difficult to maintain
its quality standards. With the introducing of Total Quality Management, Coca-Cola Company
has been able to keep pace with the changes in the market places by producing products
which are not only of high quality but are environmental friendly. It has come to the realization
that, a satisfied customer will always come back and will come along with friends thus
facilitating growth. Focus is aimed at the requirements of the external customers by
guaranteeing that all their needs are met. However, this does not mean that it has neglected
its internal customers as they too are given proper consideration.

Some of the benefits that Coca-Cola has gained because of the adoption of TQM are a good
reputation, strong brand name, high number of customer, and global recognition. Because of
the production of high quality products, Coca-Cola has remained to be the largest
manufacturers and distributor of soft drinks all over the world. Its brand is recognized in every
part of the world and this has resulted in an increase in its sales volume. There is no single
company that has been able to imitate its flavors although many companies have been trying
to compete with it. TQM especially the adoption of ISO 9001:2000 as its excellence model has
contributed to this success. This model ensures that the company complies with all rules and
requirements at the same time meet the highest standards of quality.

Total Quality Management is technique used to ensure that organizations produce products
of high quality which are also friendly to the environment. For a long period of time, many
organizations have been focusing on the quantity of the products produced but not the quality.
However, because of the ever changing global market place, many practices have come up
and are being adopted by many organizations. Moreover, customers have been quality
conscious and they are now demanding for high-quality products. Technology advancement
has brought about this changes and it seems it going to bring even more changes as time
goes by.

Nevertheless, the company faced some problems in the implementation of TQM. Some of
these problems are lack of awareness in benefits of QMS, lack of TQM exposure among
workers, and lack of understanding of TQM. Another problem is inadequate monitoring of TQM
and training. In order to ensure the success of implementation of ISO 9001:2000 QTM
standard in the Coca-Cola Company, the management should endeavor towards being
focused and systematic.

The recommendations to solve this problem are extracts of respondent’s opinions and
established organization suggestions. The recommendations are to increase management
effort, to train all organization management levels, to ensure proper documentation system is
in-place, to increase the level of TQM understanding, to promote and monitor levels of
management participation in training and monitoring programs and to provide guidance for
ISO 9001:2001.