SUPPLY CHAIN MANAGEMENT AT PEPSICO

PepsiCo's supply chain management had been supported the thought of collaboration
and integration. The corporation take many initiatives to own an additional collaborated and
integrated supply chain, which might become a source of competitive advantage.
Procurement of Raw Materials
The raw materials utilized in producing PepsiCo's beverages/drinkables and food
product were: apple, pineapple juice and different drinkable fruit juice concentrates, corn,
aspartame, corn sweeteners, flour, flavouring, grapefruits, oats, oranges, rice potatoes,
sucralose, sugar, vegetable and different oils, and wheat.
Raw materials additionally included packaging material plastic organic compounds
like synthetic resin terephthalate and polypropene resin used for plastic beverage bottles, film
packaging for snack foods, metallic element aluminium for cans, and in addition fuels and
natural gases.
Manufacturing Operations
PepsiCo utilized several technologies at its production facility while it realized that
production flow wasn't level attributable to the frequent breakdown of machine and
mismanaged inventory. Production at PepsiCo plants began with the unloading of empty
bottles from the trucks via the conveyor and their being moved to the depalletizer.
Distribution Network and logistical Management
PepsiCo used completely different distribution strategies to bring its product to
promote relying upon product characteristics, native trade practices, and customers desires. It
delivered fragile and unpreserved product that were less possible to be impulse purchases,
from its manufacturing plant and warehouses to client warehouses and retail stores. PepsiCo
used third party foodservices and vending distributors to distribute its snacks, foods, and
beverages to restaurants, schools, stadiums, businesses, and different locations.
PepsiCos Relationship with Retailers

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PepsiCo additionally created its supply chain improved by establishing a collaborative

and cooperative relationship with its retailers. One such example was its relationship with
Wegmans retail. PepsiCo approached Wegmans with a proposal for the Frito-Lay line that
controlled two fifth of the world market place for salty snacks and PepsiCo products.
Road Ahead
As of 2011, PepsiCo was continued with its efforts within the direction of getting a
well managed supply chain and of strengthening its relationship with all its supply chain
partners. In January 2011, PepsiCo modified the distribution system of its Gatorade products
from warehouse delivery to Direct to store at convenience stores through each companyowned freelance bottler within the United States and Canada.

PEPSICOS SUPPLY CHAIN MANAGEMENT

DIFFICULTIES WHILE NOT JUST-IN-TIME

When an operation of the corporation wasn't just-in-time based mostly, the demand or
production planner strived to optimize production-oriented goals and objectives like
instrumentality utilization, labour potency, output and time period.

Optimizing these goals usually results in massive batch sizes that reliant on the supply
of raw materials. This optimizes the equipment and labour utilization however the
production planners and managers had not been staring at the expense of the larger
image.

The sourcing or purchasing managers strived towards reducing companys spending

overall. This manager consolidated suppliers giving product or materials at rock
bottom per unit prices through buying in volume.

They even got the shipping and freight cost enclosed within the purchase price, that
led to the rise within the worth of the product.

Purchasing managers are determined on obtaining the best worth, not putting into
consideration the providers performance and reliability.
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The logistics/transportation manager was tacked with obtaining raw materials in and
also the finished merchandise out of the assembly method and seeks to optimize the
transportation and distributing network. This manager focused on lowest value and
reliability of the logistics or transportation solutions. However lowest value may
solely be earned if the buying team negotiates a delivered value package deal with the
provider and also the provider is accountable of the reliability and performance of the
carriers or transporters.

IMPROVEMENT WITH USING JUST-IN-TIME (JIT)

Once it involves delivering high value and perishable product to producing sites, just-intime (JIT) remains one among the foremost efficient supply chain solutions. In JIT method,
on time delivery is an absolute necessity. Just-in-Time (JIT) could be a philosophy that
defines the way during which a manufacturing system ought to be managed. It enhances
client satisfaction in terms of accessibility of choices, assurance of quality, prompt delivery
times, and value of money. The Pepsi brand and different Pepsi-Cola product accounted for
nearly one-third of the entire soft drink sales within the US. So as to confirm that PepsiCos
concentrates reaches bottlers as needed in throughout manufacturing had to achieve them JIT,
they partnered with 3PL provider Penske Logistics to manage its transportation. Penske
additionally provides warehouse management for two Pepsi distribution centres in North
America.

Transportation
Transportation could be a part of end to end solution for designing, execution, and

management of the complete transportation cycle. It is designed to modify a company to

utilize and manage a complete transportation network, furthermore lowered cost while
rising transport performance. Transportation is intended to use restrained optimisation and
information techniques to outline and assess various transportation ways. It is additionally
designed to provide comprehensive information management, analytics, and reportage of
key transportation value and service trade-offs.

Implementation

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PepsiCo set two objectives for transportation management. One was to realize an
on-time delivery rate at 99.1% and another was to decrease the transportation prices. It
empowered with optimized processes and technology that enable the team to perform at
the very best level. With the application of recent technology that gives larger supply
chain visibility, better organized information, and access to higher level of real time or
close to real time information, even the best team will improve their performance.
In 2000, Penske converted Pepsis transportation management technology from
propriety software to i2 transportation optimisation solution. i2 transportation platform was
enlarged with the addition of interface between the two corporations.
In addition, Penskes partnership with Business objects provided comprehensive
supply chain information, from its data-warehouse, analysis and management applications.
Penskes with use of i2 transportation may track performance at each stage within the method
that enhanced flexibility and provided larger management over the transportation operation.
This increase in visibility made it easier to stay track of shipments, revise routes and
schedules to accommodate unforeseen changes and implement various plans to counter
delays. By Penskes putting a solution in place to trace and measure each cargo, Pepsi has
been ready to offer an on-time delivery performance of well over 99%.
Pepsis transportation is consolidated to a central location to lower down the costs.
Penske additionally provided a nationwide carrier rate re-negotiation and service assessment
that improved value structure and reach on-time delivery goal. With this centralization,
permits negotiation in a very massive scale to secure the best rates and services.
Furthermore, Pepsis orders are received electronically and optimized to confirm
lowest transportation value. Advanced technology is deployed to pick lowest value carrier,
realize the best routes and consolidate shipments. Optimal load configuration ensures
maximization of every truckload (2003).

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