Customers Drive Location: An Investigation Into Logistics Research Paper

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Customers Drive Location: An Investigation into Logistics Planning

Most people believe that a company's location strategy is internally driven, because the company itself chooses its location. However, this approach to location ignores the fact that companies choose locations with their customers in mind; businesses are located where the company believes it will find customers to frequent the business. Furthermore, businesses tend to be either located in close proximity to suppliers, or where they can have ready access to supplies. This paper will look at a specific industry, beverage manufacturing, specifically The Coca Cola Company, and compare the location decisions of the manufacturing company, distributors, and retail locations. It is important for the company to have defined objectives that it can break into pieces that can be accomplished, rather than trying to run a global company from a single location; instead, the company must identify quantitative, measurable results (Hill, 2000). It will examine how much influence the customer of each of these types of businesses has on the location decision, and how those locations affect the logistics at each level.

Discussion

The Coca Cola Company is a major global corporation. It is among the top three most widely recognized brands in the world and has either an established or a developing presence in literally every nation in the world. While the company is very proud of its Atlanta roots, it would obviously be impractical to produce all of its products at its Atlanta facility. Shipping charges alone would make Coca Cola unaffordable outside of the United States and very expensive in many parts of the United States.

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Therefore, what The Coca Cola Company has had to consider is: "What is the most cost-effective and service effective way to provide service?" (Cohen et al., 2006). Coca Cola's solution is to use both company-owned and independent bottling plants to produce the product in various locations, and then ship product to local distributors, who take product to the retailers. Proximity is important at every level of the process.

In fact, "closeness to market is now of major importance to corporations as they consider where to locate their facilities" (Cranmer & Wegfahrt, 2006). Of course, proximity has different meanings for different levels of the distribution process. "Proximity to major markets will have a different connotation depending on the function or facility type being located, as follows: Manufacturing facilities may interpret proximity to market as a close physical presence to the consumer, or close to another manufacturer producing finished goods for their just-in-time inventory delivery. Warehouse/distribution facilities may view proximity to market as meaning closeness to a certain shipping port for exporting/importing goods on a more direct basis. Office facilities could interpret proximity to market as the same time zone for delivering service-oriented activities" (Cramner & Wegfarht, 2006).

There are a number of reasons that proximity is so important when choosing facilities location, but the two major factors are time and money. Transporting products takes time and increases the likelihood of temporary local shortages if there are delays in the transportation process. Perhaps even more important is that transportation….....

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