David Miller, chief security officer (CSO) at Covisint ponders the potential supply chain impact of the latest move in the cola war between Pepsi and Coca-Cola.
Pop goes the global supply chain!
Just recently, PepsiCo made headlines with its introduction of Spire, a custom-drink dispenser along the lines of Coca-Cola’s pioneering Freestyle. Industry observers immediately heralded the return of the cola wars, being fought, as the New York Times put it, on “an old battleground – the soda fountain.”
But there is much more to this news than just Pepsi and Coke mixing it up – literally and figuratively – at the point of consumption.
Back in the late 90’s there was an enormous buzz about how mass production would soon be replaced by mass customization.
More recently, the talk has been about traditional customer communications giving way to real-time customer interaction and engagement. When Coke introduced Freestyle in 2010, both of these futures arrived with a JOLT, no pun intended.
Coke knows something about consumers, and Freestyle has been a highly successful experiment in their engagement. Suddenly people could create their own custom drinks on the spot, and have fun doing it. As it turns out, Coke may now know even more about consumers and their preferences because of information gleaned from the Freestyle program.
In all of this, Coca-Cola has been a harbinger of what is to come, not only for beverage companies, but for just about every consumer-oriented business.
Customers today demand engagement, choice and immediate gratification, and they have a seemingly infinite number of places to go for it. Smart companies understand this and are delivering on this imperative through a multiplicity of channels and touch points including the web, mobile devices, and increasingly interactive and ever smarter machines, of which offerings like the Freestyle are front runners.
But not only is this a new era for consumers, but also for supply chains.
It’s no surprise, but Coke knows something about supply chains, too, having created one of the very first to span the globe.
The current explosion of choice at the point of purchase and consumption is reshaping supply chain dynamics all the way back to raw materials. Infinite consumer choice translates to infinite SKUs, multiple new suppliers, lots of new materials and combinations of materials, and new and innovative types of packaging.
For example, with Freestyle, a multitude of flavorings are stored in and dispensed from individual cartridges, one for each flavoring, as opposed to the much, much smaller assortment of 5-gallon bags that feed traditional soda dispensers. And more choice for the consumer means more complexity and more urgency across the supply chain. Once you dangle the carrot in front of consumers, you can’t very well say, “oh sorry, we’re out of Vanilla Coke.” If you do, there goes the experience.
What that means is these smart machines need to be hyper connected to both the restaurant they reside in, the company providing them, and any other connection point across the supply chain ecosystem.
The machine will be sending signals back and forth between these entities – from distributors to maintenance repair providers, alerting them to anything from syrups needing to be restocked to when the machine is having some kind of failure.
And with it will come a whole new supply chain infrastructure in which manufacturers, distributors, restaurants and myriad other members of the ecosystem will need to securely and quickly be able to communicate and take action to keep the “experience” running smoothly.
This is the dawn of the Internet of Things meeting the beverage industry, and it will no doubt be an interesting ride.
What are your thoughts on this latest move in the cola wars? And how do you see it impacting the supply chain?