Supply Chain

Supply chain overview

Our supply chain plays a central role in our business, ensuring that, in all our processes, we minimise our environmental impact and ensure sustainability in our value chain.

We produce and distribute more than 2 billion unit cases of our products annually across our territories. Our supply chain organisation, which is responsible for the company's procurement, planning, manufacturing and engineering, and sustainability, plays a central role in managing this responsibly, making sure that in all our processes we minimise our environmental impact and consider sustainability in our value chain - from sourcing raw materials and manufacturing the end product to distributing it to our customers. 

Our success lies with our people's expertise, our absolute focus on quality and our continuous investment in advanced technologies.

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Our mission is to become the leading supply chain function in our industry in terms of customer service and cost efficiency. To achieve this, we focus our efforts on keeping our people engaged, excelling in sustainability, reducing our costs and building best-in-class customer service and responsiveness.

Marcel Martin Coca-Cola HBC Supply Cain Director

Top-in-class quality assurance

In our own business, we are developing a culture where quality is a core value across the entire organisation. We have re-stated our zero tolerance for failure to meet standards and deployed a maturity continuum measurement to enable us to move our quality and food safety-focused culture to the next level.

This approach extends to our suppliers, too. Coca‑Cola HBC requires tier 1 suppliers to gain certification to the following standards: ISO 9001 (quality), ISO 14001 (environment) and OHSAS 18001 (health and safety). Ingredient and packaging suppliers must also achieve certification to FSSC 22000 for food safety and the Global Food Safety Initiative (GFSI).

Quality and food safety remain our top priorities, to make sure we meet customer and consumer expectations while delivering against our cost leadership commitments.

We have stringent processes in place to minimise the occurrence of quality issues. However, when they do arise, we have robust processes and systems in place so we can deal with them quickly and efficiently, ensuring that our customers and consumers retain confidence in our products.

Investing in advanced technology to optimise infrastructure

We operate in a vast territory that stretches from County Kerry, Ireland, to Russia’s Pacific coast and from the Arctic Circle to the tropics of Nigeria. While providing us with great opportunity, this footprint also challenges us to constantly optimise our operational infrastructure.

Our aim is to build a borderless supply chain than will supply our territory at optimum cost and have the capability to imbed innovative technologies, fast.

We’re investing in advanced technology to optimise our infrastructure, aiming to build or transform our existing plants into efficient mega-plants that can effectively serve a country or an entire region. Optimisation like this takes into consideration the Group supply chain as a whole, from the number of plants and the number and nature of our filling lines to how many distribution centres and warehouses we have.

Related information

How we work with our suppliers

 

Our suppliers

We consider our suppliers as critical partners, contributing to the ongoing and sustainable success of our business.

As a critical part of our value chain, the performance of our suppliers directly impacts the sustainability performance and commitments of Coca‑Cola HBC.

Under a unified procurement framework, we segment our supply base universe of around 32,000 registered suppliers into direct and indirect spend suppliers (18,835 suppliers were actively used for purchasing transactions in 2018).

Direct spend suppliers include ingredients and packaging suppliers.

Indirect spend suppliers include categories such as IT, production equipment, spare parts, maintenance services, logistics providers, fleet vehicles, utilities, real estate, facilities management, professional and other consultancy services, personnel and temporary labor.

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Coca‑Cola HBC also segments suppliers into three categories based on criticality and potential opportunities:

Group Critical Suppliers are those that fulfil any of the following criteria: high percentage of spend, critical components (Sweeteners, Juices, Resin, Cans, Glass, Preforms, Closures, Aseptic Packaging), limited alternatives and partnership supporting our business strategies.

Country Strategic Suppliers are those which have strategic importance at a local or regional level.

Both Group Critical & Country Strategic suppliers are considered critical to the overall competitiveness and success of Coca‑Cola HBC.

Tactical Suppliers represent low-volume and/or low-spend suppliers, supplying goods or services where there are many alternative sources available, enabling a flexible supply base.

 

 

 Supplier Category Suppliers with Spend in 2018
No. of Suppliers % of total Suppliers % of total 2018 Spend
Group Critical 375 2.0% 64.5%
Country Strategic 2,714 14.4% 26.8%
Total Critical Suppliers 3,089 16.4% 91.2%
Tactical 15,746 83.6% 8.8%
Total Suppliers 18,835 100.0% 100.0%
       
 Suppliers Evaluated Suppliers with Spend in 2018
No. of Suppliers % of total Critical Suppliers % of Critical Suppliers' spend
Annually 1,047 33.9% 75.8%
3-year plan 2,042 66.1% 24.2%
Total Evaluated in last 3 years 3,089 100.0% 100.0%
       
 Supplier Evaluation Coverage 2018 Suppliers
Suppliers Spend
Evaluated Suppliers: % of Total Critical Suppliers & Spend 100.0% 100.0%
Evaluated Suppliers: % of Total Suppliers & Spend 16.4% 91.2%

We place significant focus on forming partnerships with suppliers that have supply points located within our countries, both multinational and local while also developing strong local suppliers across our territories. These efforts support our strategy for local sourcing and contributing to socioeconomic development in the countries where we conduct business. These suppliers significantly contribute to our business and include key markets such as Russia, Nigeria, Italy, Romania and Poland. Coca‑Cola HBC annual spend with suppliers in 2018 reached 3.24 billion euro and 4.89 billion euro including concentrates, cold drink equipment and traded goods. Our practice is to source locally, provided that goods and services are available to meet our requirements and quality standards in an economically viable way.

Over 95% of our spending is local in our countries of operation or from within the European Union, which is considered local for EU countries

Engaging with our suppliers.

We work with our suppliers to build a responsible and sustainable supply chain.

We partner with our suppliers to provide new technologies for equipment, packaging, cold drink equipment, vending machines and with our logistics providers to minimize our impact and environmental footprint, and improve our performance. Given the diversity of countries from which we source, we are aware that the labor, human rights and ethical business practices of our suppliers reflect on the reputation of the Coca‑Cola System.

At Coca‑Cola HBC, we are committed to high standards of performance related to human rights, labor practices, minimizing environmental impact, ensuring health and safety, ethical business and unsurpassed quality in our supply chain. Our supplier partners play a critical role in ensuring that we deliver against these standards.

To ensure proper governance and that our suppliers meet our standards, we have implemented policies including our Coca‑Cola HBC Supplier Guiding Principles (SGP) and Coca‑Cola HBC Sustainable Agriculture Guiding Principles (SAGP). In addition, we have developed an environmental, social and governance supplier pre-assessment process for our strategic buy segment which includes criteria for supplier selection. We monitor compliance of our critical suppliers by utilizing The Coca‑Cola Company Supplier Guiding Principles compliance audits and EcoVadis CSR Platform. We also recognize supplier certifications as per international standards including ISO 9001, 14001, 50001, FSSC 2200 and OHSAS 18001. For agricultural commodities, we recognize the Rain Forest Alliance, Fairtrade International, Bonsucro, Sustainable Agriculture Initiative Platform (SAI Platform), GlobalG.A.P.  & GRASP certifications.

"By following our Supplier Guiding Principles, our suppliers are expected to comply as a minimum with applicable environment and local labor laws and core international conventions. We work collaboratively with our suppliers on the journey to meet the expectations of our customers and consumers and enable sustainable mutual growth." Yannis Leousis, Chief Procurement Officer

Adhering to our SGPs involves, at a minimum, complying with applicable environment and labor laws and core international conventions. These principles also communicate our values, and our expectations for responsible business practices.
We aim to achieve 100% of our suppliers accepting our SGPs by utilizing our ‘SGP Coverage Triangle’ with three checkpoints throughout the Procure-To-Pay process:

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In our own business, we are creating a 100 percent quality culture with zero tolerance for failure to meet standards.
This approach extends to our suppliers, too. We monitor compliance of our critical suppliers through third party’s compliance audits (TCCC and SEDEX SMETA 6.0 ), EcoVadis CSR assessment platform and our internal annual supply base assessments. All suppliers are required to submit corrective actions to the 3rd party audit bodies when a non-conformance is identified during the audits.

We also engage with our suppliers through our joint value creation initiatives, supplier awards and sustainability events, industry associations, workshops on sustainable supply, Annual Stakeholder Forum, materiality survey and CSR platform for ethical and sustainable supply chains. We invest in joint value creation programs, ranging from developing climate-friendly cold drink equipment to increasing local beet sugar production.

Our critical suppliers are invited to subscribe to EcoVadis, a third-party CSR assessment platform, hosting a collaborative network to manage the sustainability performance of suppliers. The platform monitors CSR risks utilizing 21 criteria divided in 4 themes based on international standards as UN Global Compact, ISO 26000, GRI, ILO etc. In 2017 we piloted 140 critical suppliers at the platform reaching more than 290 of our Critical Suppliers assessed currently with EcoVadis.

To increase awareness of sustainability, engagement with strategic suppliers and the development of our people, we introduced new events, workshops and tools in 2017. We piloted three sustainability day events in 2017 with country strategic suppliers in Zurich, Belgrade, Moscow, Poland and Greece in 2018. This creates an opportunity to share information about our Company’s corporate social responsibility policy and sustainability commitments, share achievements and best practices, and begin working together on joint targets and initiatives.

Supplier sustainability events

We are planning to cover more of our countries in 2019.

Becoming a Coca‑Cola HBC supplier

Coca‑Cola HBC requires critical suppliers to gain certification to the following standards:

  • ISO 9001 (quality)
  • ISO 14001 (environment)
  • OHSAS 18001 (health and safety).

Ingredient and packaging suppliers must also achieve certification to FSSC 22000 certification for food safety and the Global Food Safety Initiative (GFSI).

A prerequisite to become listed as a Coca‑Cola HBC new supplier is to commit to the Coca‑Cola HBC Supplier Guiding Principles, as well as, to the extent these apply to supplier, Coca‑Cola Hellenic Code of Business Conduct and Anti-Bribery Policy. These Policies make clear the values and behavior we expect and audit in our value chain.