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PepsiCo, Inc. is one of the worlds top consumer product companies with many of the worlds most important and valuable trademarks. Its Pepsi-Cola Company division is the second largest soft drink business in the world, with a 21 percent share of the carbonated soft drink market worldwide and 29 percent in the United States. Three of its brands--Pepsi-Cola, Mountain Dew, and Diet Pepsi&mdashe among the top ten soft drinks in the U.S. market.Â Pepsico is the world leader in convenient snacks,foods and breverages with revenues of more than $39 billion and over 185,000 employees. On a worldwide basis, PepsiCo's product portfolio includes 16 brands that generate more than $500 million in sales each year, ten of which generate more than $1 billion annually. Overall, PepsiCo garners about 35 percent of its retail sales outside the United States, with Pepsi-Cola brands marketed in about 160 countries.
Sales:Â $20.37 billion (1999)Â
Ticker Symbol:Â PEP
PepsiCo's overall mission is to increase the value of our shareholder's investment. We do this through sales growth, cost controls and wise investment of resources. We believe our commercial success depends upon offering quality and value to our consumers and customers; providing products that are safe, wholesome, economically efficient and environmentally sound; and providing a fair return to our investors while adhering to the highest standards of integrity.
SUPPLY CHAIN MANAGEMENT OF PEPSICO
âž¢ Manufacturer âž¢ Distributorâž¢Agency Holders âž¢ Retailer âž¢ Consumer
The objective of pepsico supply chain management is to maximize the overall value generated.The value of a supply chain generates is the difference between what the final product is worth to the customer and the costs the supply chain incurs in filling the customer's request.During the later phase company decided that how to structure the supply chain management and widens its distributor network.
1.Production capacity(180,000 converted 250ml crates per day) for an average capacity Pepsico bottling plant.
2. Storage (Raw and Packing(80,000sqft)
3.Storage (Finished goods(120,000 sqft)
Source :Firstly the basic requirement arises for company is source of their needs and how they can be fulfilled which will be resources which are needed basically to carry on the whole manufacturing process further.As they are in the food process manufacturing so dealying in the initial process will cost to the company very much higher value of loss and the overall quantity and quality of the material used in pepsico manufacturing divisons.
Return : In returning aspect of the resource material it is being used to return to the main suppliers of pepsico in case that the quality would not be preferable and of good quality.So in case it is due to the fault of first suppliers to the company.
Make : For making any material usable it is moulded and redefined in the manufacturing divison so that it must be up to the mark in quality and prortise by the company to carry on the further manufacturing process to utilize their needs of the capacity produced in their manufacturing divison.
Deliver : These suppliers are basic delivery providers for Pepsico as they are responsible for delivering them the basic raw materials to the company for the various products that they are manufacturing. These suppliers are directly connected to the company without any mediator and when the company order it then these suppliers deliver the material at the proper time and at proper place.
Make and Deliver
The products that are to be manufactured just brought up in the time level to depot of manufacturing divison so that the overall process would not be delayed and to carry on the process further to distribute the products as per the requirements.Then this stock is send to either retailers or wholesalers, according to the channel followed by them. From there it reaches to the consumers.
Then carried further to to C&F agent, there the stocks are allocated to the distributors based on their quotations and transported the respective distributors in the respective markets and then it reaches to the final consumers.
PUSH/PULL VIEW OF SUPPLY CHAIN OF PEPSICO
With push process execution is initiated in anticipation to a customer order to pepsico.pepsico sales order and processing: The shipping manager receives sales order from sales team distributors through telephone,fax and email one day before the material dispatch>the sales are made to base distributors an advance payment against orders then shipping manager plans according to the demand of distributor on daily basis.
There are three major sustainable advantages that Pepsico having a competitive edge as they are operating in a global market place.
1.Big muscular brands
2.Proven ability to innovate and create differentiated products
3. Powerful go to market systems.
key suppliers of Pepsico in Ncr region:
B M Suppliers
Shriya Foods & Bervage Pvt Ltd
Pearls Drinks Ltd
JAI Beverages Pvt Ltd
SupplyÂ ChainÂ Planning
As the above configurations have been set, planning must be done within the above stated constraints. The goal of planning is to maximize theÂ supplyÂ chainÂ surplus. Planning establishes parameters within which aÂ supplyÂ chainÂ will function over a period of time. As Pepsico started the planning phase with a forecast for the coming year of demand. Pepsi carries out sales forecasting for local demand as well as for export purposes to various countries. Planning is carried out on a monthly, weekly and daily basis at different major locations of pepsico units.The processes in aÂ supplyÂ chainÂ are divided into a series of cycles each performed at the interface between two successive stages of aÂ supplyÂ chain. Cycle View ofÂ SupplyÂ Chain: There are five stages in aÂ supplyÂ chainÂ (Supplier Manufacturer Distributor Retailer Customer) and fourÂ supplyÂ chainÂ process cycles (customer order, replenishment, manufacturing, procurement cycle).
PEPSICO DISTRIBUTION NETWORK
The efficiency and responsiveness varies according to the consumer needs, implied demand uncertainty, product type and market segments. In remote areas the company focuses on being somewhat efficient as other modes of transportation could turn the product to be highly expensive. According to the company it does not deal with distributors who do not have 20 to 25 vehicles, therefore as the company has focus on cost reduction, uses slow and inexpensive modes of transportation, the demand is certain, and uses economies of scale in production, the product Pepsico is more inclined towards being somewhat efficient. In cities, the company focuses its attention on being highly responsive as Pepsi has to meet short lead time, meet a high service level, handle a large variety of products and respond to wide ranges of quantity demanded especially at the retail stage.
Achieving the Strategic Fit Making one stage more responsive allows the other stage to focus on being more efficient. The PepsiÂ supplyÂ chainÂ assign different roles to its different stages, the company has to decide either to transfer the responsiveness to the manufacture stage or to the retailer stage.
While initializing the facts about Pepsi'sÂ supplyÂ capability it is seen that Pepsi tends to be more responsive in the cities and a bit less in towns. Therefore, transferring the responsiveness to the retailer and distributor, allowing them to face the higher implied demand uncertainty. This in return allows the manufacturer and supplier to be more efficient.
Distributors or dealers have a similar role to wholesalers - that of taking products from Pepsico and selling them on. However, they often sell onto the end customer rather than a retailer. They also usually have a much narrower product range. Distributors and dealers are often involved in providing after-sales service.
PepsicoÂ products,Â areÂ distributedÂ throughÂ aÂ networkÂ ofÂ 4,500Â redistributionÂ stockists,Â coveringÂ 9.3Â millionÂ retailÂ outletsÂ reachingÂ theÂ entireÂ urbanÂ population,Â andÂ aboutÂ 450Â millionÂ ruralÂ consumers.Â Â ThereÂ areÂ 90Â C&FAsÂ inÂ theÂ countryÂ whoÂ feedÂ theseÂ redistributionÂ stockistsÂ regularly.Â
Â ItÂ hasÂ developedÂ customerÂ managementÂ andÂ supplyÂ chainÂ capabilitiesÂ forÂ partneringÂ emergingÂ selfâ€serviceÂ storesÂ andÂ supermarkets.Â AroundÂ 4,000Â suppliersÂ andÂ associatesÂ serveÂ PepsicoÂ 60Â manufacturingÂ plantsÂ whichÂ areÂ decentralizedÂ acrossÂ 6Â millionÂ squareÂ milesÂ ofÂ territory.Â Â
SUPPLY CHAIN FRAMEWORK: The framework is based on a motive to create strategic fit between the competitive andÂ supplyÂ chainstrategy. Pepsi Competitive strategy stands to provide a large variety of products very quickly simultaneously theÂ supplyÂ chainÂ strategy stands to materialize the availability of that variety of products. Pepsi mainly follows a responsiveÂ supplyÂ chainÂ strategy. Alignment of Pepsi's business strategy to a correspondingÂ supplyÂ chainÂ strategy is achieved through proper deployment ofÂ supplyÂ chainÂ drivers. Pepsi has to deal with different set of market segments simultaneously. Most of the time the approach needs to be responsive enough to grow substantially to be able to compete with uncertain demand, while in many areas demand is certain and very much predictable, so there it incorporates an efficientÂ supplychainÂ strategy.
This is usually done through taking over key revenue areas in supply chain system. If the distributor does not achieve its sales target, the distribution is taken back and an addition of new distributor is done in their network. Therefore Pepsi'sÂ supplyis lowÂ supplyÂ uncertainty. Some of itsÂ supplyÂ prospects are
High quality Products
Mature production process and Demand fulfill capacity