SUPPLY CHAIN

MANAGEMENT
By:
Sweta(16/IMB/034)
Shyamveer(16/IMB/ )
Rohit Gupta(16/IMB/ )
Aman singh(15/IMB/010 )
Table of contents:
 Company profile
 Pepsico’s Supply chain management
 SCM main components in pepsico’s
 Supplier standards
 Pepsico SCM case study 2010 review
 Company profile
PepsiCo, Inc. is an American multinational food, snack,
and beverage corporation headquartered in Harrison New
York, in the hamlet of purchase. PepsiCo has interests in the
manufacturing, marketing, and distribution of grain-based
snack foods, beverages, and other products.

PepsiCo was formed in 1965 with the merger of the Pepsi-Cola

Company the largest of which included an acquisition
of Tropicana products in 1998 and the Quaker oats
company in 2001, which added the Gatorade brand to its
portfolio.
As of January 26, 2012, 22 of PepsiCo's brands generated
retail sales of more than $1 billion, and the company's
products were distributed across more than 200 countries,
resulting in annual NR of $43.3 billion.
 SUPPLY CHAIN MANAGEMENT
PepsiCo is one of the biggest Beverage and Snack Companies in
the world. Due to that, many factors have to come into
consideration in the production planning, distribution planning
and execution process.
After manufacturing the products are then delivered in bulk. To
manage that, PepsiCo’s supply chain management and product
flow has these main components;
• Direct to store delivery model, and
• the idea of collaboration and integration
•Disregarding the direct to store delivery model, taking
initiative to have a more collaborated and integrated supply
chain becomes a source of competitive advantage.
PepsiCo employed many technologies.

•Distribution strategies are used to bring products to the

market depending on the product characteristic, local trade
practices and customers’ needs. Fragile and perishable
products are delivered from its manufacturing plant and
warehouses to customer warehouses and retail stores.

•Third parties and food services and vending distributors

are used to distribute its snacks, foods, and beverage to
restaurants, schools, stadiums, businesses and other
locations..
•All of these technologies are controlled by integrated
systems that keep all information such as; delivery dates,
products types and product amounts. Taking initiative to
have a collaborated supply chain, PepsiCo establish a
relationship with their retailers and customers by proposing
them better product lines

•The goal of the company is to keep the Pepsico brand

safe and highly reputable. Pepsico has translated the
SCoC into more than 25 languages to make it globally
accessible for all suppliers.
•Products of Pepsico are dependable on raw agricultural
materials to meet our demands and consumers'
expectations in which they are inexpensive and premium
quality. With new opportunities always rising, the company
has to stay on top of greenhouse gas management and
worldwide food supplies.

•These include an international supply chain which includes

independent farmers, intermediaries and also farms which
are company owned.

The company has their own code of conduct for suppliers

called The Pepsico Global Procurement Supplier Social
Capability Management Program. It is to make sure all their
suppliers understand and abide by the terms of the conduct.
SUPPLIER STANDARDS
There are four dimensions -Pepsico has for supplier
standards:
1. Accountability for Supplier Code of Conduct (SCoC)
2. Engaging through code training
3. Reviewing of CSR risks
4. Improvement through third party audit/corrective
management

To meet the code of conducts, all suppliers are given the

Supplier Code of Conduct (SCoC) in the initial contracts to
guarantee accountability. The company also engages each
supplier in proper training so there is no confusion with the
SCoC and suppliers manage to do business properly. This is
done through meetings face-to-face, videos or online. .
PEPSICO SCM CASE REVIEW 2010
 In 2010, PepsiCo Beverage Company (PBC), an
operating unit of PepsiCo Inc. (PepsiCo), the second
largest food and beverage company in the world , received
the supply chain innovation award from the Council of
Supply Chain Management Professionals.

 PBC was formed on February 26, 2010, when PepsiCo

acquired two large bottlers, PepsiCo bottling Group and
PepsiCo America Inc for US$7.7 billion and named the
combine PepsiCo Beverage Company.
 Experts opined that the formation of PBC reflected an
effort on PepsiCo’s part to streamline its operations and
facilitate faster and more integrated product delivery to create
a more integrated supply chain, strengthen its distribution
channel, and enhance revenue growth.
PepsiCo was given the award for its innovative distribution
strategy,

the “Direct to Store Delivery model”, that reduced system-

wide inventory, eliminated warehouse space constraints,
enhanced the potential for unlimited SKU growth, and
delivered warehouse cost savings. After showing spectacular
growth in the 1990s and early2000s, PBC found it difficult to
manage its distribution centers and warehouse.

The case looks at how the company tried to optimize cramped

warehouses and how it revived its distribution strategy using
automation technology. The case also highlights the benefits
of total supply chain transformation for PepsiCo. This case can
be used by MBA / MS students studying Operations
Management as part their curriculum.
 MAIN ISSUES
To understand the supply chain process of
PepsiCo.
» To understand and discuss PepsiCo’s innovative
distribution strategy, the “Direct to Store Delivery
model”.
» To examine the benefits of the “Direct to Store
Delivery model";.
» To discuss PepsiCo’s collaborative supplier
relationship.
SUPPLY CHAIN MANAGEMENT
•PepsiCo's supply chain management had been based on the
idea of collaboration and integration. The company took
several initiatives to have a more collaborated and integrated
supply chain, which would become a source of competitive
advantage.
•PepsiCo found opportunities to re-apply the formulas to other
emerging product categories with supply challenges, such as
Naked juice probiotic smoothies.
These beverages have an even shorter shelf life - as low as 20
days - compared to other items in pepsico’s portfolio of premium
juice beverages.
Once again, adapting the formulas for the product-specific
characteristics of probiotic beverages allowed PepsiCo to find the
best balance for that product group.
Long lead time , long self product
 Distribution network and logistics
management:
PepsiCo used different distribution strategies to bring its
products to market depending upon product
characteristics, local trade practices, and customers’
needs.

 It delivered fragile and perishable products which were

less likely to be impulse purchases, from its manufacturing
plant and warehouses to customer warehouses and retail
stores.
 PepsiCo used third party foodservices and vending
distributors to distribute its snacks, foods, and beverage to
restaurants, schools, stadiums, businesses, and other
locations.
 ROAD AHEAD
As of 2011, PepsiCo was continuing with its efforts in the
direction of having a well managed supply chain and of
strengthening its relationship with all its supply chain
partners.
In January 2011, PepsiCo changed the distribution
system of its Gatorade products from warehouse delivery
to “Direct to store” at convenience stores through both
company-owned independent bottlers in the US and
Canada.
THANKYOU