2019 Year in Review | CONA Services, LLC
2019 ANNUAL REPORT
TABLE OF
CONTENTS
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CONA SERVICES OVERVIEW
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HOW WE WORK
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OUR BOTTLERS
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YEAR-END FIGURES
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MESSAGE FROM OUR CEO
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PEOPLE & CULTURE
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INNOVATION AT CONA
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BOARD OF DIRECTORS
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LETTER FROM OUR PARTNER
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BOTTLING COMMUNITY
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UPDATE FROM OUR CFO
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AUDITOR OPINION LETTER
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STATEMENT OF FINANCIAL POSITION
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STATEMENT OF OPERATIONS
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STATEMENT OF MEMBER’S EQUITY
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STATEMENT OF CASH FLOWS
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NOTES TO FINANCIAL STATEMENTS
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2019 ANNUAL REPORT
CONA SERVICES OVERVIEW What is CONA? As our company name reveals “CONA Services” is mainly about 2 things: CONA = (Coke One North America) is an IT Platform for the North American Coca-Cola bottling business. It provides our participating bottlers a common set of processes, data standards, manufacturing and customer solutions. We provide Services to our bottlers that enable a superior customer experience and digital business innovation.
Our Vision To support growth of our Coca-Cola Bottlers with value driven information technology, anticipating the needs of tomorrow. We want to be our bottlers’ top-rated solution and IT service provider by 2020.
Our Mission To provide advantaged business processes and IT services to its members at the right costs to ultimately support those who are selling Coca-Cola products everyday – “By the bottlers for the bottlers” In short, we pair powerful information technology skills with the equally strong understanding of our bottlers’ businesses to:
Make IT Better!
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HOW WE WORK CONA Services is building on a history of success. We have defined our strategic roadmap to align our vision, plans and strategies with what success looks like for our bottling partners.
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STRATEGIC BUSINESS PARTNER Enabling each Bottler to drive growth and efficiencies in the market. “BIG BETS” OF NORTH AMERICA MARKET Driving overall growth of our Bottling partners and The Coca-Cola North America System. FUTURE CONA SOLUTION ARCHITECTURE Delivering nimble and flexible platform solutions that build for a better future. VALUE OPTIMIZATION & INNOVATIONS Listening, learning and leveraging our partnerships to use existing CONA solutions in the best possible way as well as driving innovation projects to drive revenue growth and cost efficiency. BI-MODAL DELIVERY MODE By improving our system functionality, delivering stable platform solutions and flexible applications, we continue to provide stability, speed & agility. STABLE OPERATIONS Providing stable operations continues to be our utmost priority building the basis for our bottlers’ successful business strategy execution. We are doing this with the best proven technologies, processes and people.
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OUR BOTTLERS CONA Services was formed, and continues to be owned and governed by, our participating bottlers. These bottlers are also our customers, who we serve with the best IT solutions and services possible, and our partners working alongside us every day.
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CONA END OF YEAR FIGURES - 2019
26,010
466
99.96%
$0.052
Average Number of Active Users
Territory Served - Sites
System Availability
End of year Cost Per Case
1.37%
215 CRs
$32M
$21M
Total IT TCO in % of NSR
New CRs / Capabilities Delivered
New Business Value by CONA Innovation Forum
Value Optimization
Est. Average System Transactions Per Day Sales Orders ......................................................................... 69,335 Routes ......................................................................................... 9,028 Service Tickets ...................................................................... 11,891 Revenue Involved ............................................................ $159 M Cases Produced ............................................................ 5,187,334
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MESSAGE FROM OUR CEO
T
o our stakeholders, partners and valued employees,
Looking back at the results of 2019, I can say with pride that CONA Services closed another year better than the one before. The business plan for year was aggressive and set challenging targets across teams. Building off the momentum of 2018, the team increased efforts to deliver on new initiatives, accelerate innovation, look for opportunities to streamline processes and create value for our bottlers. As you will see in the end of the year results, the team delivered on these commitments and more. Key accomplishments of 2019: 1. The Board of the 11 CONA bottlers aligned on the new generation of CONA solutions and approved the CONA 2.0 architecture, which in the future is based on Salesforce, BlueYonder, SAP and Snowflake platforms. 2. The CONA team established capability roadmaps and business cases for the CONA 2.0 initiatives and started building the foundation for: • ICEP - Integrated Customer Engagement Platform (ICEP) based on Salesforce • IPP – Integrated Product Planning based on BlueYonder • Snowflake – new self-service BI/Analytics platform • Lydia – replacement of Voice Pick solution and more • SAP SuccessFactors / Employee Central – new integrated HR solutions 3. CONA transitioned to agile development cycles, which enables faster availability of new business capabilities 4. We optimized our Operations Cost in streamlining processes, with automation and managing our partners to higher SLAs. We took these savings and invested them successfully into Innovation products, such as NexBestSKU, VendPrime, Ordersmart and Blockchain. These are just a few of new profitable growth tools which CONA has made available to the bottling business. 5. Our system stability and performance continued to improve and provided the highest systems availability (99.9%) ever for the bottling business. 6. Increased focus on Cyber Security and Risk Management capabilities 7. Besides new Innovation tools and the CONA 2.0 initiatives, the CONA team developed and applied a continuous improvement toolkit, called Value Optimization, which helps bottlers to improve the usage and drive value of available CONA capabilities. 8. We achieved higher bottler engagement and better customer satisfaction scores in 2019. 9. And on top of it we could lower the cost per case by end of the 2019 from $0.056 to $0.052.
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There was a lot of good news on the CONA Services journey in 2019. We experienced improvements in CONA’s skills and solutions that enabled us to create profitable bottler growth. Our year-end financial results show continued stability and strength as outlined in the audit results in this report. I would like to take this opportunity to say Thank You to Eric Steadman, Chair of the CONA Board, to Scott Bedows, Vice-Chair of the CONA Board and to all Board Directors for their tremendous support and trust in our organization. It is fun leading this company and working together with such a talented team to enable growth for the North America bottling business.
R. Meister Reinhard Meister CEO
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PEOPLE & CULTURE Employee Engagement CONA Services LLC continued its growth in 2019 hiring 10 additional team members. CONA continues to maintain an above average retention rate. Seeking to continually improve the employee engagement and morale, CONA partnered with an engagement firm, Emplify, that specializes in surveying employee engagement and helping to develop actions for continual improvement. An Employee Engagement Council was created to help develop and track plans to improve employee engagement to an even higher level. The work this team has done is very exciting. As with many companies, CONA seeks to improve basic team and business skills and focused on communication by partnering with Lisa Fey Speaks, a communication training company that provided fun and engaging training for the entire CONA team. In 2019, CONA Services LLC continued its commitment to inspiring the next generation of workers by providing an intern program for its 4th year. CONA was excited to invite back in intern for the 2019 season that has been making contributions to the cutting-edge innovative solutions CONA is developing.
Culture and Community Services As part of CONA Services LLC culture, our team seeks opportunities to help the community. In 2019, the CONA team participated in the Bytes for Bites campaign, Ronald McDonald Food Preparation, Ronald McDonald Charity Golf Tournament, Habitat for Humanity, Bytes for Bites, Metrohacks Women and toy collection for foster children in Georgia during the holidays. CONA Services LLC truly values its team members and the talent they have. We are very fortunate to have a highly engaged team that take pride in their work as well as their community. CONA looks forward to a successful 2020.
This year CONA Services raised $5,927 for Georgia Food Banks, exceeding our corporate goal of $5000. This donation provided almost 24,000 meals!
This was the 3rd year that CONA participated in the Ronald McDonald Golf Tournament. CONA was a large contributor to this charity providing 23 players along and 22 CONA suppliers. Additional sponsors were The Coca-Cola Company and Coca-Cola Bottling Company UNITED, Inc. This one event provided 1,600 nights of accommodations and support for families with sick children at hospitals in Atlanta.
Metrohacks Women is MetroHack’s third 12 hour hackathon at the Microsoft Offices in Alpharetta, GA devoted to bringing more female high school students into STEM fields. CONA had the honor of judging the event.
The CONA team continued working with Habitat for Humanity in 2019 volunteering two times. This is a great organization that helps families achieve the goal of home ownership through their home builds.
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INNOVATION AT CONA Blockchain CONA Services collaborated with EoStar by Rutherford and SAP to address the need for better collaboration, increased transparency, and trust between Coca-Cola bottlers. What we developed was a Blockchain solution built on Hyperledger Fabric that allows the bottlers to have seamless IT system integration for Bottler-to-Bottler sales processes. The solution brings immediate benefits to the seller (United) and buyer (C.C. Clark) by automating order creating, order receiving and reconciliation processes. We believe that Blockchain will allow us to build a better ecosystem of distributed applications for all bottlers and enable them to communicate and transact more efficiently.
OrderSmart & VendPrime • VendPrime is a recommendation and optimization system for vending machines that suggests new products and their corresponding quantity to be stock in these vending machines. In 2019, CONA was an award finalist for the TAG Innovation awards. • OrderSmart won the Aegis Graham Bell Award in India on July 10th, 2019. • CONA Innovation also hosted an Internal Hackathon on August 26-27th, 2019. Five teams worked on a problem statement and had 24-hours to present their solution.
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“The innovation work stream has provided a lot of value on many different fronts. The collaboration amongst the bottlers and our CONA partners is invaluable. The projects have also helped us identify strategic opportunities that we should work against regarding data enablement and analytics tools. And, finally, the work that they have delivered so far has been focused on action that be taken in the field to drive revenue growth.�
Beeland Nielsen
Senior Director of Commerical
Coca-Cola Bottling Company United
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BOARD OF DIRECTORS The CONA Board of Directors oversees the strategic, financial, and operational success of the company. The Board consists of an executive leader from eight of the participating bottlers and an At-Large seat representing the remaining bottlers. These leaders each bring a unique perspective, deep industry knowledge, and diverse business experience. Eric Steadman
CHAIRMAN OF THE BOARD Coca-Cola Bottling Company United
Scott Bedows
VICE-CHAIR OF THE BOARD Coca-Cola Canada Bottling Limited, Heartland Coca-Cola Bottling Company
Jeff Turney
Coca-Cola Consolidated
Michael Kennaugh Reyes Holding
James Sloan
Swire Coca-Cola, USA
Terrence Gee Coke Florida
Simon Parkinson
Coca-Cola Southwest Beverages
Paul Mulligan
Liberty Coca-Cola Beverages
Paul Herring
Coca-Cola Northern New England
Leigh Crum
Abarta Coca-Cola Beverage
Dear CONA friends and colleagues, It is hard to believe that another year is behind us on our CONA journey. We started this undertaking over six years ago and time is passing by very quickly. Our Coca-Cola bottling businesses and technology are evolving rapidly in all aspects of our daily work processes and we look to CONA to help us adjust through these changes with world class IT solutions and support. 2019 was an amazing year for CONA and our bottling system. The strengthening of our CONA employee base with new hires, improving financial stability and lowering our cost per case, creation and approval of our CONA 2.0 architecture and systems roadmap, all work together to lay the foundation for CONA to succeed in years to come. CONA continues to provide best in class innovation, support and new IT solutions for our bottling system. I am very honored and privileged to be working with such a dedicated CONA Team and our Board is very excited about the future of CONA Services LLC. Thank you for all you do and I look forward to you continuing to drive innovations and efficiencies in our bottling business for years to come.
Eric Steadman Chairman of the Board
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PARTNER LETTER CONA Services leadership has fostered high-level engagement with Microsoft’s senior engineering executives over a number of years. The collaboration has delivered strategic outcomes for CONA bottlers through Microsoft technology and people investments. Microsoft and CONA colleagues are working together to re-imagine business through cloud capabilities, data insights, collaboration software and productivity platforms. In the past year, CONA’s employees have engaged with Microsoft engineering on two principle endeavors. In May, we completed the migration of SAP Business Warehouse instances from dedicated hardware in our Colocation facility to virtual machines running in native Azure, unlocking the true flexibility and scalability of the cloud and resulting in significant savings. Microsoft has also engaged closely with CONA to gain efficiencies in the Azure environment. Through this exercise, CONA has been able to achieve significant savings in operating costs; create best practices for deployment, security and governance; and enable centralized management across Azure, on-premise and cloud-based Software as a Service (SAAS) applications. In broad terms, our collaboration extends from new technical platform offerings to ensuring resilience and optimization of our existing technologies in the CONA ecosystem. In the coming year, we are planning to support CONA’s broader initiatives in innovation and modernization, and are continuing to evolve as we jointly architect the future.
Jack Auld
Dima Kouznetsov
Microsoft Account Director
Microsoft Technology Strategist
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BOTTLING COMMUNITY Summits In 2019 CONA supported and participated in Cross Bottler Summits. These sessions, led and hosted by a Bottler, are designed to promote collaboration and idea sharing across teams. Summits also provide opportunities for relationship building and networking among participants and team members. The first Cross Bottler Summit was in February and hosted by Coca-Cola Consolidated in Charlotte, NC and focused on Warehouse processes.
Summits
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“The Enggagement Forum proivdes a terrific opportunity for our frontline teams at the bottler and at CONA - to come together as one team to recieve communications on our most significant initiatives, to share best practices, and to table opportunities”
Paul Herring CIO
Coca-Cola Beverages Northeast
567
Opportunities found to improve processes and solutions
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Bottlers
15
Process Areas
$5.2MM Savings/year
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Engagement Forum Having it’s inaugural year in 2019, the CONA Engagement Forum is a bi-monthly meeting designed to bring teams in our CONA Community together to interact, share best practices and learn more about what is going on across the system. The forum is only successful with the participation of our partners in the business across the bottling system. In 2019 we had contributions from United, Liberty, Swire, Coca-Cola Southwest, Coke Northeast, and Consolidated.
Value Optimization Value Optimization seeks to answer Leadership’s request that Bottlers get every opportunity to exploit the CONA solutions for the greatest gain. We do this by working side by side with Bottlers in workshops using CONA derived system analytics, cross bottler benchmarking and shared best practices. Emphasis is placed on using technologies already paid for and available or near-term options made possible with limited investment.
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UPDATE FROM OUR CFO CONA Services LLC is now in its fifth year of providing best in class IT products and
services for our CONA North American Bottlers. From a financial perspective we have continued to grow and mature as an IT services organization, with our key financial metrics of operating expenses and cost per case for the bottlers coming in favorable to our business plan targets. Our net income for the year came in at $278k which was within our target range of breakeven from an overall P&L perspective. We also continued to improve and strengthen our balance sheet and cash flow positions during the year. 1.
CONA Financial Results Favorable to Plan
CONA Services LLC continued its positive cost per case trend in 2019 – achieving an actual cost per case rate of $.052 per case vs $.054 in our 2019 Business Plan target. This was achieved due to two key factors including successful CONA operating expense cost management and favorable bottler volumes in Q4. Since our inception, we have continued to prove out that we can deliver world class IT solutions while driving down our cost per case for our CONA bottlers. We achieved our original business case target of breaking the $.058 cents cost per case barrier in June 2018 and continued to improve on that metric in 2019. 2. Innovation for our Bottler Finance Customers During 2019, we introduced two key finance innovations that helped to improve the services that we are providing for our bottler owners: a) Introduction of our CONA Finance Portal – this one stop bottler self-service portal provides access to all CONA invoices, contracts, forecasts, and reporting. b) During our 2019 Business Plan activities, we implemented a new Power BI Reporting Tool to capture plan data across a variety of metrics and characteristics. This has helped to drastically improve our analytical capabilities regarding our plan and actual results across all categories of data.
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3. Implementation of CONA 2.0 Vendor Contracts During 2019, CONA implemented a new round of investment activities targeting our CONA 2.0 roadmap plan including major investments in our Salesforce customer, BI Snowflake and Blue Yonder planning platforms. To support that activity, the CONA finance team played in key role in supporting and executing on the new legal contracts in place related to these new major platform changes. 4. Improved Cash Flow and Balance Sheet stability We continued to strengthen our tax, treasury, and balance sheet activities in 2019. Some key highlights included implementation of overnight sweeping activity of our cash balances, approval of a $3mm line of credit with our banking partner Wells Fargo, and implementation of a regular two month cash forecast plan to help manage our cash activities. On the balance sheet front, we continued to pay down our Note Payable to CCNA and increased our cash on hand by December 31. Finally, we continued to make good progress on the tax front including hosting the inaugural CONA tax summit hosted by our Liberty Bottler in New York in November. We continue to focus on the taxability of sales and use taxes in our various bottler states related to IT services to ensure we have proper coverage across CONA and our bottlers.
Scott Armstrong CFO
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MAGAZINE NAME
CONA Services LLC 10 10th Street NE, Suite 1100 Atlanta, GA 30309 MAGAZINE NAME &OR URL
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