National College of Business Administration &

Economics
Course:
Supply chain management

Submitted by:
Iqra Dilshad
Munazza Tahir
Kamran Peter
Muhammad Usman Butt
Submitted to:
Sir Sikender Aziz

2143833
2123252
2143626
2143436

Table of Contents
Introduction 2
Product Details

Parties Involved

12

Internal Cycle of each party

16

Link between each party 16

Customers or Consumers
Problems in the chain

27
29

Suggestions 31
References 32

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An Overview
Pepsi was first introduced as "Brad's Drink", in New Bern, North Carolina, United States, in
1893 Caleb Bradham, a young pharmacist from New Bern, North Carolina, begins
experimenting with many different soft drinks. In 1898, one of Caleb's formulations, known as
"Brad's Drink" a combination of carbonated water, sugar, vanilla, rare oils and cola nuts, is
renamed "Pepsi-Cola". On August 28, 1898, Pepsi-Cola received its first logo.
In 1902, he applied for a trademark with the U.S. Patent Office, Washington D.C., and formed
the first Pepsi-Cola Company. In 1905 Pepsi-Cola's first bottling franchises were established in
Charlotte and Durham, North Carolina. Pepsi-Cola's first bottling franchises were established in
Charlotte and Durham, North Carolina. In 1906, Pepsi gets another logo change, the third in
eight years. The modified script logo is created with the slogan, & quot;The Original Pure Food
Drink". In 1920, Pepsi theme line speaks to the consumer with "Drink Pepsi-Cola, it
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will satisfy you". In 1923, Pepsi-Cola Company was declared bankrupt and its assets were
sold to a North Carolina concern, Craven Holding Corporation, for $30,000.
FORMATION OF PEPSI COLA AS CORPORATION
Roy C. Megargel, a Wall Street broker, bought the Pepsi trademark, business and good will from
Craven Holding Corporation for $35,000, forming the Pepsi-Cola Corporation. In 1928, after
five continuous losing years, Megargel reorganized his company as the National Pepsi-Cola
Company.
PEPSI COLA AS INCORPORATION
In 1965, Expansion outside the soft drink industry began. Frito-Lay of Dallas, Texas, and PepsiCola merged, forming PepsiCo, Inc. Pepsi Cola Company operates in beverages industry. Pepsi
Cola international is well reputed multinational company which is doing its business in almost
every country of the world. The company is registered in New York stock exchange U.S.A. to
make a better control over the business the company has given the manufacturing rights to
different companies. Now these companies are producing the products on the behalf of the
company by using companys trademark. To maintain their goodwill in the market the company
has a strict policy of granting manufacturing rights. Pepsi Cola have standardized products all
over the world (e.g. same in size, shape and quality). The franchises have to follow all the
standards given by the company.

SETUP OF PEPSI COLA

The head office is situated in New York (USA) with
units operating in different regions of the world.
These are called Business Units and Pakistan is in
MENA Pak (Middle East, North America and Pakistan). The head office of MENA Pak is
situated in Dubai (UAE). The local head offices for each country are situated in the respective
capitals.

Pepsi cola at present:

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PepsiCo Inc. is among the most successful consumer product companies in the world with
annual revenues of $39 billion and approximately 140,000 employees. Some of PepsiCo's brand
names are nearly 100 years old but the corporation remains relatively young. PepsiCo divisions
operate in two major domestic and international businesses: beverages and snack foods. Through
our divisions PepsiCo has achieved a leadership position in each of these business segments: we
are world leaders in beverage bottling and we are the world's largest producers of snack chips.
PepsiCo's brand names are some of the best known and most respected in the world and our
restaurants are named as favorites by millions of people. PepsiCo has achieved a continuing
record of growth. This record is based on high standards of performance, distinctive competitive
strategies which are superbly executed, the personal and professional integrity of our people,
business practices and products.
PepsiCo International (PCI) soft drink operation and includes the business of Seven-Up
International. PepsiCo beverages are available in about 195 countries and territories. PCI
organization consists of three geographic business units, each with self-sufficient operations and
broad local authority. The three units are:

- Pepsi-Cola Europe
- Pepsi-Cola Latin America
- Pepsi-Cola Asia
PCI beverages are produced by a combination of independent franchised bottlers, jointventure bottling operations and company-owned bottling plants. PCI is the soft drink
market leader in more than 50 countries and territories including Saudi Arabia, Venezuela,
Russia, Pakistan, Hungary and Vietnam. Other key markets include Mexico, Saudi Arabia,

Venezuela and Argentina. PI also focuses on high potential, underdeveloped markets,

such as China and India

Vision
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PepsiCos responsibility is to continually improve all aspects of the world in which we operate
environment, social, economic creating a better tomorrow than today Tomorrow > Today
We believe Sustainability lives at the intersection of public and corporate

interest. It

encompasses citizenship and corporate social responsibility, which are about doing the right
things for society and for the business. It encompasses the health of the Company, which is about
fulfilling our mission of creating financial rewards and growth.

Mission
PepsiCos mission is: To be the world's premier consumer Products Company focused on
convenient foods and beverages. We seek to produce healthy financial rewards to investors as
we provide opportunities for growth and enrichment to our employees, our business partners and
the communities in which we operate. And in everything we do, we strive for honesty, fairness
and integrity. (www.pepsico.com)

PEPSI-Pakistan:
The market in Pakistan is surely dominated by Pepsi. It has proven itself to be the No.1 soft drink
in Pakistan. Now days Pepsi is recognized as Pakistanis National drink. In 1971, first plant of
Pepsi was constructed in Multan, and from there after Pepsi is going higher and higher. Pepsi is
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the choice soft drink of every one. It is consumed by all age groups because of its distinctive
taste. Compared with other Cola in the market, it is a bit sweeter and it contributes greatly to its
liking by all. Consumers survey results explain the same outcome and Pepsi has been declared
as the most wanted soft drink of Pakistan.
When Pepsi was introduced in Pakistan, it faced fierce competition with 7up, lemon and lime
drinks, which was established during 1968, in Multan. Pepsi introduced its lemon and lime,
"Teem" to compete with 7up. It successfully, after some years, took over 7up, and this enhanced
Pepsi's profits and market share. In Pakistan, Pepsi with 7up enjoys 70% of the market share
whereas the coke just has 20% markets share.
Pepsi is operating in Pakistan, through its 10 bottlers all over Pakistan. These bottlers are Pepsi's
strength. Pepsi has given franchise to these bottlers. Bottlers, produce, distribute and help in
promoting the brand. Pepsi also launched its fast food chain KFC i.e. "Kentucky Fried Chicken.
Some of territories where the franchised units are produce and sell by Pepsi-Cola are:
Bottlers in Pakistan
1. Punjab Beverages Co. (Pepsi)

City
Faisalabad

2. Shamim & Co. (Pepsi)

Multan

3. Bolan Beverages Co. (Pepsi)

Quetta

4. Haidri Beverages Co. (Pepsi)

Islamabad

5. Noubahar Bottling Co. (Pepsi)

Gujranwala

6. Northern Bottling Co. (Pepsi)

Peshawar

7. Pakistan Beverages Co. (Pepsi)

Karachi

8. Sukkur Beverages Co. (Pepsi)

Sukkur

9. Raiz Bottlers Co. (Pepsi)

Lahore

10. Pepsi bottlers Hattar industrial Estate

Hatter,KPK
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11. Other small bottlers in different cites

2. Details of Products or Services:

A product is anything that can be offered to a market to satisfy a want or need and a service is an
act or performance that is essentially intangible and does not result in the ownership of anything.
What products or services have to be offered to the target market depends on the market
requirement and also the organizations profits. The organization will offer those products and
services, which result in maximum profits and minimum costs.
There are following contents according to which types of PEPSI are described.
Product Line of Pepsi Pakistan
Beverages

Water

Juices

Snacks

Pepsi

Aquafina

Tropicana

Kurkure

Slice

Cheetos

7UP
Mirinda

Lays

Teem
Mountain Dew
Diet Pepsi
Lemon 7UP (sugar free)
Sting Energy drink

Product Packing Details:

BRANDS
PEPSI

PACKING

UNITS

VOLUME

250 ML

24 bottles per case

250 ML per bottle

1000 ML

12 bottles per case

1000 ML per bottle

1500 ML(PET)

6 bottles per case

1500 ML per bottle

175 ML

24 bottles per case

175 ML per bottle

1 Cylinder

114000 ML

1000 ML(PET)

6 bottles per case

1000 ML per bottle

330 ML CAN

12 bottles per case

330 ML per bottle

300 ML(NR)

12 bottles per case

300 ML per bottle

250 ML

24 bottles per case

250 ML per bottle

1000 ML

12 bottles per case

1000 ML per bottle

POST MIX

MIRINDA

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1500 ML(PET)

6 bottles per case

1500 ML per bottle

1 Cylinder

96000 ML

1000 ML(PET)

6 bottles per case

1000 ML per bottle

330 ML CAN

12 bottles per case

330 ML per bottle

300 ML(NR)

12 bottles per case

300 ML per bottle

250 ML

24 bottles per case

250 ML per bottle

1000 ML

12 bottles per case

1000 ML per bottle

1500 ML(PET)

6 bottles per case

1500 ML per bottle

1 Cylinder

114000 ML

1000 ML(PET)

6 bottles per case

1000 ML per bottle

300 ML(NR)

12 bottles per case

300 ML per bottle

250 ML

24 bottles per case

250 ML per bottle

1500 ML(PET)

6 bottles per case

1500 ML per bottle

330 ML CAN

12 bottles per case

330 ML per bottle

250 ML

24 bottles per case

250 ML per bottle

1000 ML

12 bottles per case

1000 ML per bottle

1500 ML(PET)

6 bottles per case

1500 ML per bottle

1 Cylinder

114000 ML

1000 ML(PET)

6 bottles per case

1000 ML per bottle

330 ML CAN

12 bottles per case

330 ML per bottle

24 bottles per case

250 ML per bottle

1500 ML(PET)

6 bottles per case

1500 ML per bottle

330 ML CAN

12 bottles per case

330 ML per bottle

250 ML

24 bottles per case

250 ML per bottle

1500 ML(PET)

6 bottles per case

1500 ML per bottle

330 ML CAN

12 bottles per case

330 ML per bottle

300 ML(NR)

12 bottles per case

300 ML per bottle

POST MIX

TEEM

POST MIX

7UP DIET

7UP

POST MIX

MOUNTAIN DEW 250 ML

PEPSI DIET

Aqua Fina

500ml
250ML

12bottles per
case
12 bottles per case

500mL per
bottle
250 mL per bottle

Sting
Slice mango

250ml

12 bottler per case

250ml per bottle

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Beverages-Products
Pepsi Cola
Pepsi is a carbonated soft drink produced and manufactured by PepsiCo. The market in Pakistan is surely

dominated by Pepsi. It has proven itself to be the No.1 soft drink in Pakistan. Now days Pepsi is
recognized as Pakistanis National drink. It is consumed by all age groups because of its
distinctive taste. Compared with other Cola in the market, it is a bit sweeter and it contributes
greatly to its liking by all. Consumers survey results explain the same outcome and Pepsi has
been declared as the most wanted soft drink of Pakistan and is available in different packaging
and sizes like tin packaging & PET bottle packaging of different quantities.

Miranda

Miranda has been owned by PepsiCo since 1970. It is available in fruit varieties
including orange, citrus, grapefruit, apple, strawberry, raspberry, pineapple, pomegranate,
banana, passionfruit, lemon, hibiscus, guarana, tangerine, watermelon and grape flavors as well
as tamarind. A "citrus" flavor is also available in certain areas of the Middle East. It is part of a
beverage area often referred to as the flavor segment, comprising carbonated and non-carbonated
fruit-flavored beverages. The orange flavor of Miranda now represents the majority of Miranda
sales worldwide following a major repositioning of the brand towards that flavor in the early
1990s.
It competes with Coca-Cola's Fanta and Dr Pepper's Orange Crush or Sunkist (soft drink) brands,
with flavor brands localized to individual countries. As with most soft drinks, Miranda is
available in multiple formulations of flavor, carbonation and sweetener depending on the taste of
individual markets.

7uP
7 Up is a brand of lemon-lime flavored, non-caffeinated soft drink owned by PepsiCo, The rights
to the brand are held by Dr Pepper Snapple Group in the United States, and PepsiCo (or its
licensees) in the rest of the world. The U.S. version of the 7 Up logo includes a red cherry
between the "7" and "Up"; this red cherry has been animated and used as a mascot for the brand
as Cool Spot.
There exists a myth that the 7 Up name comes from the drink having a pH over 7. That would
make it neutral or alkaline on the scale; however, this is not the case, as the 7 Up pH is close to
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3.79, similar to other drinks of the type. The real origin of the name is
unclear, though Britvic claims that the name comes from the seven main ingredients in the drink,
while others have claimed that the number was a coded reference to the lithium contained in the
original recipe, which has an atomic mass of approximately.

Variations in 7uP
7 Up Ten
Introduced in 2013, along with "Ten" variations for most of the major Dr. Pepper/SevenUp brands, this contains 10 calories.
Tropical 7 Up
Introduced in 2014 for a limited time, this is a pineapple/mango-flavored 7 Up 7 Up
Retro It is also available in 12 oz. glass bottles with a label inspired by 7 Up's original
logo.
Diet 7 Up
This diet soda was originally introduced in 1963,it was discontinued in 1969 due to the
U.S. government ban of cyclamate sweetener. After reformulation, it was reintroduced
as Diet 7 Up in 1970. It was renamed Sugar Free 7 Up.
Cherry 7 Up
Cherry 7 Up flavor, with these ingredients listed: Carbonated water, high fructose corn
syrup, citric acid, natural and artificial flavors.
Diet Cherry 7 Up
Diet Cherry 7 Up has recently been re-introduced due to popular demand after having
been missing due to the existence of 7 Up plus Cherry flavor.
7 Up Free
7 Up Free is sold in the UK, Ireland, Spain, Norway, Argentina, Iceland, Finland,
UAE, Uruguay and Pakistan. It contains no caffeine, sugar, colorings or preservatives and
is marketed as "Natural Lemon and Lime flavor" similar to the "100% natural" American
version. It contains a combination of artificial sugars, and for eight years was the only
variety on the Norwegian market.
7 Up Light
In International markets, PepsiCo sells 7 Up Light as the diet version of 7 Up.
7 Up Lime
7 Up Lime is sold in the U.S. and in Argentina. In the U.S. it is not as strong and is less
carbonated. In Argentina it is much more carbonated and is 5% lime juice.

Mountain Dew

Mountain Dew (currently stylized as Mtn Dew in the United States) is a carbonated soft
drink brand produced and owned by PepsiCo. The original formula was invented in 1940 by
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Tennessee beverage bottlers Barney and Ally Hartman and was first marketed in Marion,
Virginia; Knoxville, Tennessee and Johnson City, Tennessee with the slogan "Ya-Hoo! Mountain
Dew.

Slice (Soft Drink) by PepsiCo

Slice is a line of fruit-flavored soft drinks manufactured by PepsiCo and introduced in 1984. In
early 2006, Pepsi resurrected the Slice name for a new line of diet soda called Slice ONE.
Marketed exclusively at Wal-Mart stores, Slice ONE was available in orange, grape and berry
flavors, all sweetened with Splenda.
As of 2009, Slice (orange, diet orange, grape, strawberry and peach flavors) was available solely
from Wal-Mart Stores. In India and Pakistan, Slice is a mango flavored soft drink under
the PepsiCo brand.

Sting Energy Drink by PepsiCo

Sting Energy Drink is a carbonated energy drink from PepsiCo International and is available in
different flavors, such as original Gold Rush, Gold (with Ginseng), Power Lime
(Kiwifruit/Lime) and Berry Blast (Strawberry). Such as original Gold Rush, Gold (with
Ginseng), Power Lime (Kiwifruit/Lime) and Berry Blast (Strawberry).
After the launch of sting in Pakistan, PepsiCo started a widespread campaign, which included
road advertising and TV commercials. Starting from Karachi, the Hummer (advertising vehicle)
travels through different areas and offers free Sting energy drink to people on the roads.

Aquafina Mineral Water by PepsiCo

Aquafina is a brand of purified bottled water products produced by PepsiCo, Aquafina Pure
Water, the primary unflavored product produced under the Aquafina brand, is derived from local
municipal tap water sources and goes through a purification process that incorporates reverse
osmosis, ultraviolet and ozone sterilization.
The packaging has evolved from its original iteration for the purpose of partially offsetting
environmental impacts of production and shipment. This has primarily involved packaging
weight reduction. The weight of Aquafina bottles was reduced by approximately 50%, to 10.9
grams (0.38 oz), with a packaging redesign in 2009 which, according to the company, resulted in
the use of 75 million fewer pounds of plastic during the production process. Aquafina is
distributed in 500 milliliters, 1 liters and 1.5 liters bottles.

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Understanding the Supply Chain of Pepsi

The objective of every supply chain should be 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 customers request. (Chopra,
Meindl)

Supply Chain Operation:

Company makes decision regarding individual customer orders. The goal of supply chain
operations is to handle incoming customer orders in the best possible manner. During this phase,
firms allocate inventory or production to individual orders, set a date that an order is to be filled,
generate pick lists at a warehouse, allocate to shipping, and set delivery and so on. There is less
uncertainty about demand.

Process views of a supply chain:

The processes in a supply chain are divided into a series of cycles each performed at the interface
between two successive stages of a supply chain.
There are five stages in a supply chain:
Supplier
Manufacturer
Distributor
Retailer
Customer
Supply chain process cycles:
customer order
replenishment
manufacturing
procurement cycle

Parties Involved
The company operates through a well-established network of a number of distributors. The
company has two types of delivery systems i.e.
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 Direct delivery system

Indirect delivery system
The basic difference between the direct and the indirect delivery system is that in a direct
distribution system, the company spends its own resources while in an indirect distribution; the
dealer spends his own resources on all the factors which increases the sales volume:
Direct Delivery System
Manufacturer

Retailers

Customers

Delivery of post mix cylinders & handling of key accounts: The key accounts are different
wholesalers, restaurants and hotels like Pizza Hut, KFC, and Metro which serve as a place for
key sale. These are known as national key accounts and are very important in terms of
competition.

Indirect Delivery System

Manufacturers

Distributor

Retailers

Customers

o Through Base market distributors

o Through Outstation distributors
Before delivering the product some certain guiding principles are followed for the assessment of
Distributors capability by RBL.
Applicant must have 30 to 40 vehicles (depending on the area). Applicant must have 40,000
cases of empty bottles.
Applicant must deposit Rs.5, 000,000 as a security.
RBL-Riaz Bottler limited uses light and heavy vehicles for safe delivery of goods to the
distributors for timely delivery. It follows the just in time concept which is applicable in Nonseasonal period and not applicable in the seasonal period.

Suppli
er

Manufacture
r

Distribut
or

Retaile
r

Custom
er
13 | P a g e

The basic difference between the direct and the indirect delivery system is that in a direct
distribution system, the company spends its own resources while in an indirect
distribution, the dealers spends their own resources on all the factors which increased the
sale. The company also has its depots in different cities. Which helps a lot in increasing
its sale and directing the distribution system.

Supply Chain of Pepsi Riaz Bottlers Lahore

Supply Chain Design of PepsiCo Pakistan

Supplier & Manufacturers:

The suppliers to Pepsi Co are franchise operative (RBL-Raiz Bottler Limited Lahore) as well as
company operative (LAYS chips) system and are located in eight cities of Pakistan. The cities are
Lahore, Islamabad, Karachi, Peshawar, Hyderabad, Sukkhar, Gujranwala and Faisalabad.
PepsiCo has its Plant, Factory, Workshop and Warehouse at the same place in Lahore. The
Address is: Guru Mangat Road, Gulberg Lahore
For Pepsi, outsourcing results in the supply chain function being performed by a third party. It is
in fact one of the most important factors facing the firm. Raw material for production and
packaging is being outsourced through contracts. Inbound and outbound transportation of
14 | P a g e

products from the manufacturing place to the distribution center and then to the final customer is
also being outsourced to a third party. The basic considerations are:
Pointing out sources of supply and negotiate with suppliers
Sourcing of raw material from local and foreign suppliers
Deciding terms and conditions with supplier
Coordinating activities and documentation with suppliers
Cost comparisons and quality assurance
.
Pepsi makes the decision from where to outsource by inviting bids for tenders in the local
newspapers. The tender works as a general offer to all the interested parties whether they are
related to the provision of raw material or distribution vehicles. Sourcing process of the company
includes the selection of supplier, design of supplier contracts, product design collaboration,
procurement of material and services and evaluation of supplier performance in case of raw
material procurement.

Distributors:
Selection of distributors is a critical step, because the majority of supply to the retailers is
handled by the distributors. Efficient and well-placed distributors are essential for ensuring
product availability, which is the main target of the company
Distributor located throughout the country; every city has its distributors. The distribution is
done on direct and indirect ways that would be discussed in the distribution section of the report.
Retailers :
Retailers outlets are all sort of shopkeepers, malls , hotels etc to whom the distributors provide
the stock via transportation i.e. trucks etc which carries distribution from point to point in
different allocative routes.
Incentives
Mainly two types of incentives are given by the Pepsi Cola:
Pepsi Cola provide various incentives to retailers on the best sales and achieving the
predetermined sales targets. These incentives are in the shape of:
Deep Freezers
Return Tickets
Free Transportation Services
Customers:
Its customers are all sort of target markets from social class A to C and range within all
demographical and pyschographical parameters.
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RIAZ BOTTLERS AND SUPPLY CHAIN MANAGEMENT:

RBLs primary functions are to demeanor a methodical manufacturing and supply of the product
without any tactical and strategic flaws. Backed by a powerful competitive strategy and
empowered by some effective supply chain strategies, the group has been managing an effective
supply chain throughout the region. It has set up a urbane manufacturing and storage plant in
Lahore with production units and huge production capacity.
RBL has different management departments dealing with specialized Marketing, HR, IT and
Supply Chain Processes. In this report we conducted the process of the basic supply chain
management functions of RBL by Pepsi co.

SUPPLY CHAIN OPERATION:

In RBL, the production, sales and supply chain departments get united to decide the inventory on
weekly basis. There is always less uncertainty about the demand. The operation process includes
customer orders in the best possible manner. During this RBL, allocate inventory or production
to individual orders, set a date (which is always according to the will of customers and they dont
get disappointed) that an order is to be filled, generate a proper pick lists at a warehouse in
gulberg , allocate to shipping, set delivery and so on.

4. Internal Cycle Details of Parties & Link between Each Party:

PUSH AND PULL VIEW OF SUPPLY CHAIN:
The push process implementation is commenced in anticipation to a customer order. Just in time
concept is pertinent in non-seasonal period and not pertinent in seasonal period. All processes
that are part of the procurement cycle, manufacturing cycle, replenishment cycle, and customer
order cycle are push processes.

Supply Chain Management at Pepsico

PepsiCo's supply chain management had been based on the idea of collaboration and integration.
16 | P a g e

The company took several initiatives to have a more collaborated and integrated supply chain,
which would become a source of competitive advantage...

Procurement of Raw Materials

The raw materials used in manufacturing PepsiCo's beverage and food products were: apple,
pineapple juice and other fruit juice concentrates, corn, aspartame, corn sweeteners, flour,
flavoring, grapefruits, oats, oranges, rice potatoes, sucralose, sugar, vegetable and other oils, and
wheat.
Raw materials also included packaging material plastic resins such as polyethylene
terephthalate and polypropylene resin used for plastic beverage bottles, film packaging for snack
foods, aluminum for cans, and also fuels and natural gases.

Raw material Procurement

For the manufacturing of Pepsi products, raw materials procured are like packaging materials,
bottles, cans, sugar and concentrate etc. from both local and foreign suppliers. The materials used
in the manufacture of beverages are primarily being procured from various parts of the country.
Sugar is purchased from several different suppliers chosen from a list already selected by
PepsiCo International. The concentrate is obtained directly from PepsiCo International. The
management usually advertises in the newspaper to invite tenders for the supply of these raw
materials. The basic components of raw material are: concentrate, CO2, sugar and gas.

Manufacturing Operations

PepsiCo employed many technologies at its production facility when it realized that production
flow was not smooth due 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 DE palletizer.
PepsiCo in Pakistan have manufacturing setup in Islamabad region in which they sales and
distributes all over distributor in Islamabad / Rawalpindi region including Peshawar and azad
Kashmir.

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Logistics Network of Pepsi Co

Distribution Network And Logistic 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. PepsiCo Pakistan have three major actors involve in re
-logistics channel first is Depot sales point, second is distributor and third one whole
seller/retailer
In Pepsi Co inventory is not held by the manufacturers at the factories but is held by distributors/
retailers in intermediate warehouses and package carriers are used to transport the products from
the intermediate location to the final customer. This requires distributor storage to keep high
levels of inventory because distributor/retailer aggregates demand uncertainty to a lower level
than the manufacturer.

The Transportation Driver:

Transportation driver has a large impact on the responsiveness of the business. Faster
transportation of the products allows to maintain sufficient levels of stock on the shelves.
PepsiCo Pakistan transportation network is the collection of routes, modes and locations along
18 | P a g e

which the product can be shipped. With the help of several distributors the product is being
supplied to the market. There are multiple supply and demand points within the twin cities
(Rawalpindi & Islamabad) which cater to the market demand. PepsiCo decides and selects
different modes of transportation having different characteristics with respect to the speed and
size of shipment. The transportation network has been designed with a view to ensure
responsiveness and boost the availability of the product. For PepsiCo Haidri using fast mode of
transport increases responsiveness as well as the transportation cost but lowers the inventory
holding cost. Transportation costs for Pepsi are somewhat lower because an economic mode of
transportation (e.g. truckload) can be employed for inbound shipments to the warehouse, which
is closer to the customer. Facility cost is high because of a loss of aggregation and often end up
with higher processing costs.
The distribution warehouse serves as a buffer between manufacturer and customer. Real time
visibility between customers and warehouse is needed whereas as visibility between customer
and manufacturer is not required. Response time is also reduced.
Customer convenience is high and order visibility with manufacturer storage becomes easier.
Distributor storage is well suited for medium to fast moving goods and it can also handle higher
level of variety than retail stores

PepsiCos Relationship with Retailers

PepsiCo also made its supply chain better by establishing a collaborative relationship with its
retailers. One such example was its relationship with Wingmans retail. PepsiCo approached
Wingmans with a proposal for the Frito-Lay line which controlled two fifth of the world market
for salty snacks and PepsiCo products.

Push/Pull View of Supply Chain:

With push process execution is initiated in anticipation to a customer order. Pepsi has a seasonal
demand. Just in time concept is applicable in non-seasonal period and not applicable in seasonal
period. All processes that are part of the procurement cycle, manufacturing cycle, replenishment
cycle, and customer order cycle are push processes.
Pepsi Sales order and processing:
The Shipping Manager receives sales order from Sales Team, distributors through telephone, fax
& email one day before dispatch. The sales are made to base distributors on advance payment
19 | P a g e

against orders then shipping manager plans according to the demand of distributors on daily
basis.

Purchase & Procurement Department & Process for PepsiCo NbcNAUBAHAR BOTTLING (PVT) LIMITED
As oppose to its meaning the root purpose of the purchase department is savings. Purchase
department is very important because it has to get the cost efficiency. NBC does not rely on one
supplier because it will create the monopoly of that supplier that creates problems for the
company. To avoid such kind of monopoly of the supplier, company always prefers to have more
than one supplier in their supplier list.

PURCHASING PROCESS
When store informs the purchase department about the purchase of a particular item, the
purchase department gets information about the prices of desired items. At this level quotations
are required by the department from its different suppliers. On receiving these quotations the
selection of supplier is based on the low price and high quality. Another procedure is the
negotiating the prices with the supplier. In this case the prices are settled at the desired level.
After setting the prices, the order is placed to the supplier. When the goods are received their
physical verification is done and in case of any shortage or poor quality product the respective
supplier is informed. In this case the supplier has to bear the charges of shortages or low quality.
In case of events like 14th August, Eids, Festivals Purchase department had to manage the supply
at least 15 days before the occurrence of the event, because the production increases in these
days due to high demand in the market.

SUPPLIERS
NBC has both local and international suppliers of glass and pet bottles who are approved by the
Pepsi Cola International.
These are

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Balochistan Glass Factory Karachi

Standard Manufacturers Lahore
Plasco Plastics Hattar
Ghani Glass Peshawar
Concentrate from PCI
Crystallite Products (pvt) Ltd
Kaas-ul-Musaffa Karachi

Supplier selection
Supplier selection is made mostly according to their quotations in which the two factors have
main focus. These are

Quality
Price

No.

Material

Manufacturer/ Supplier(s)

Approved from

1.

Pepsi Concentrate

PepsiCo Inc. Ireland & PepsiCo

Factory in Hattar Estate.

Approval at the factory

2.

Caps & Closures

Gatron Pakistan Limited

Approved form
PepsiCo China.

3.

Plastic Bottles

Galtron Pakistan Limited

Approved from
PepsiCo China.

4.

Glass Bottles

Baluchistan Glass Mills

Tariq Glass Limited

Approved by PepsiCo
China.

5.

Carbonated Water

Pakistan Bottlers (Pvt) Ltd.

Approved from
PepsiCo U.A.E, Dubai.

Domestic and Foreign purchases

The purchases in NBC beverages Pepsico are made from two sources;
Domestic Markets
Foreign Markets
Domestic purchases
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The purchase made from the country is called domestic purchase. It includes the purchase of
sugar, co2, and for the factory it includes office stationery, vehicles spare parts, glass bottles, pet
bottles, spare parts of production machinery and vehicles for transportation.
Foreign purchases
The purchases made from the international markets are called foreign purchases. Concentrates
are provided to NBC by the Pepsi Cola International, crowns and heads of the bottles are also
imported from Turkey and Dubai. The machinery is also purchased from the foreign markets.

PRODUCTION/ MANUFACTURING PROCESS

Company is having flexible production plants. Company can change production according to
demand fluctuations. Process is same for all products i.e. Pepsi Cola, 7-up, Mirinda and
Mountain Dew. No plant is fixed for a specific product.
1st Stage (Getting Treated Water)
Lime, Farris Sulphate (for iron) & chlorine are added to raw/hard water & it goes in
chemical tank where carbonate and bi-carbonate are settled down, & they get
treated/soft water.
2nd STAGE (PREPARATION OF SIMPLE SYRUP)
Simple syrup is made by mixing up sugar into water after pasteurization of water at 80
C. After some time, this simple syrup is filtered & then cooled down at 19 C. Water is
boiled at normal temperature like 32 C to 35 C to kill germs.
3rd STAGE (PREPARATION OF FINISHED SYRUP)
Now this simple syrup goes into syrup storage tanks. Concentrate & flavor are added to
simple syrup & it is called finished syrup.
4th STAGE (WASHING EMPTY BOTTLES)
Empty returned bottles pass through steam under 57 C to 77 C, and then those bottles
are dried. This stage takes 45 minutes. Now bottles are washed by Caustic-Soda, TSP and
water. Now a light-test is conducted for washed bottles, where the bottles pass through a
light.
5th STAGE (FILLING SECTION)

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Now finished syrup & treated water come to Carbo Cooler in which NH3 (Ammonia)
chips are used for cooling purpose. CO2 gas also comes in Carbo Cooler. After a flowmix in Carbo Cooler, the resultant drink comes into filler where empty washed bottles are
filled.
6th STAGE (CROWN FITTING)
Now bottles come to Crowner where they are crowned and then bottles pass through a
light test to have a check for over filled, under filled or any deficiency.
7th STAGE (PACKAGING)
After passing through packager, the boxes of bottles are packed.

Transportation/shipping:
Shipping is a very critical area for any organization. It serves the role of coordinator or
middleman between production and sales. Ensuring appropriate quantity and on time availability
of empty & liquid stock is utmost important. Any malfunction in empty receiving, storage and
supply to plants, liquid stock and distribution directly affects sales. This is a complete chain or
cycle and any weak link, bottle neck or disturbances will slow down the whole operations.
The Shipping System of NBC-PepsiCo is responsible for the management of the
Following tasks:
Shipping is responsible for managing the empties that are required for production.
Shipping is responsible for receiving the liquid clearance from excise to dispatch it
further to Depots & distributors or parties.
Shipping is also responsible for maintaining proper stock of liquids and empties as they
appear in the liquid and empties stock register, so as the stock appears in the registers, it
should also be physically present in the depots.
Shipping is also responsible for proper management of empties and liquid vehicles
loading and off-loading i.e. time management is very important in this case.
Shipping also receives new empties of both RB and NRB and manages their storage and
handling and their proper supply to production as they are required by the production for
filling purpose.
The management of other empty stock is also the responsibility of Shipping Department
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and its exchange is especially important in this case.

FINISHED GOODS STORAGE

Finished goods storage should be secured against sunlight, rainfall, moisture and other
intimidation.

Issued on FIFO (first in, first out) basis via validity of production dates. It ensures that

product is not expired, bad taste and visually unattractive.

Shift wise record of daily transactions is maintained.
These are physical stock taking for physical but not for expiry dates.

Handling & Packaging

Forklifts are used for transferring FG shells I cases from production area to shipping hall or not
delivery ducks to ensure product do no get damaged.
All Pepsi Cola carbonated soft drinks are packed in glass/PET bottles or

post mix tanks. This

is called primary packaging. Filled glass/PET bottles are further secured by means of plastic or
wooden shells/cases called secondary packaging.

INVENTORY MANAGEMENT
Pepsi Cola is handling four types of inventories which are

Raw Material
Raw material like syrup, sugar, filter papers, CO2, Ammonia, Empty bottles, packaging
material, Bottle cases, Chlorine, Corks and Crowns etc.

Work In Process
Work in process will contain all those bottles which are under the process of the filling
and packaging. At the end of shift work in process inventory of is transferred to other
shift.

End Products

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End products are in the form of cases containing 24 bottles. End product inventory is
managed in two ways
1. Production department after production stores their finished goods in their
godown which is located in the premises of factory.
2. Sales department transfer their needed inventory in their godown and issue
required amount of cases to distributors.

Spare Parts
Spare parts inventory will contain items like Gear boxes, Belts or conveyers, Motors and
Switch boards etc.

DECISION PHASES IN SUPPLY CHAIN OF PepsiCo Pakistan-Riaz Bottlers

Lahore
SUPPLY CHAIN DESIGN:
A proper decision regarding how to structure the supply chain over next upcoming years is made
both short term as well as the long term decisions have been made by the company in regards to
location and capacities of production and warehousing facilities, the products to be manufactured
or stored at various locations, the modes of transportation to be made, information systems and
so on.
Supply chain design is expensive to alter on short notice and supports the companys strategic
objectives. In order to ensure a good supply chain strategy, Riaz Bottlers plans one to two years
in advance. It has several contracts with manufacturers, and receives raw material on a
convenient basis. The company also decides where production plants are to be placed. RBL has
production plants at Lahore. The production process is 80% automated.
The company has to provide and manage transport for the delivery of products as well as the
arrangement of third party services for the procurement of products. The shipping department
handles orders and the transport department decides the vehicles for safe delivery. Material
planning and sourcing is carried out as well. Sources of supply of raw material both local and
foreign are identified and terms and conditions are negotiated. Capacity planning is also done at
this stage.
Sales forecasting and production planning depends upon the capacity of the organization with
respect to: Production, Storage: Raw and packing. Storage: Finished goods.
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Riaz bottlers Lahore has a procurement budget of nearly Rs 10 billion. Approved suppliers
cannot go beyond this budget. The supplier is audited by the most cost efficient quality control
department. Distributors are also decided by the company, keeping in mind past performances.
The company has increased its distribution capacity from one to ten filling lines during the last
few years lending it a competitive edge over Coca Cola.

Pepsi Processing Model

Input Processing Output Model

Inputs

Supply
i. Manage supply ingredients to ensure availability to produce products.
ii. Maintain purified water supply for quality and availability to produce
products.

Manufacturing
i. Ensure best technology is available to produce products and mix
ingredients.
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ii. Ensure quick storage and inventory processes to maintain freshness and
quality.

Sales
i. Determine demand by past sales and future marketing.
ii. Adjust quantities produced in real time to meet appropriate demand.

Output

Supply
i. Determine inventory of ingredients to order new supplies.
ii. Maintain purified water supply so ensure continuance of production.

Manufacturing
i. Ensure proper packaging to ensure quality and freshness in products.
ii. Maintain quick local distribution to ensure freshness and quality products.

Sales
i. Keep positive distribution levels to all sales outlets to maintain positive
sales.

6. Description of Customers /Consumers

The Customer and Supply Chain Uncertainty
Identifying customer needs:
PepsiCo needs to understand the customer needs for each targeted segment and the uncertainty
the supply chain faces in satisfying these needs. As PepsiCo-Riaz Bottlers deals with beverages,
which are a fast moving consumer good, it knows the requirements of consumers. Pepsi is
considered as a drink which is refreshing during summer, and winter. As demand for beverages is
seasonal, the quantity of product needed for each lot is taken care of with past demand in mind.

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Consumers generally require a small response time, high service level, reasonable price and
some variety (for example health conscious people favor diet versions of sodas).

Description of Customers
Our customers include authorized bottlers and independent distributors, including foodservice
distributors and retailers. We normally grant our bottlers exclusive contracts to sell and
manufacture certain beverage products bearing our trademarks within a specific geographic area.
These arrangements provide us with the right to charge our bottlers for concentrate, finished
goods and Aquafina royalties and specify the manufacturing process required for product quality
Since we do not sell directly to the consumer, we rely on and provide financial incentives to our
customers to assist in the distribution and promotion of our products. For our independent
distributors and retailers, these incentives include volume-based rebates, product placement fees,
promotions and displays. For our bottlers, these incentives are referred to as bottler funding and
are negotiated annually with each bottler to support a variety of trade and consumer programs,
such as consumer incentives, advertising support, new product support, and vending and cooler
equipment placement. Consumer incentives include coupons, pricing discounts and promotions,
and other promotional offers. Advertising support is directed at advertising programs and
supporting bottler media. New product support includes targeted consumer and retailer
incentives and direct marketplace support, such as point-of-purchase materials, product
placement fees, media and advertising. Vending and cooler equipment placement programs
support the acquisition and placement of vending machines and cooler equipment. The nature
and type of programs vary annually.

Types of customers at PepsiCo-Pakistan

1. Consumers (Public)

2. Business (Companies)
3. Government (Govt Offices)

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Pepsi Perfect main focus is the consumers which are the end users. Company has to make its
marketing strategies keeping in view the consumer buying behavior. To forecast the behavior of
the consumer is a business problem. Physical aspect of the consumer can be satisfied but it is
difficult to satisfy the consumer psychologically. Consumer buying behavior is affected by
certain factors like Cultural factors, Social factors, Personal factors and Psychological factors. So
the producer should keep these factors in Mind while promoting their product so that they can
acquire the customer and increase their market share.
There are different consumers in a society whose behavior is not the same. Every consumer has a
different perception of different products. Some consumers are impressed by one quality of the
product which may be in the view of other consumer not that impressive. So to deal with
different consumers in a society one should know about the consumer buying behavior process
which may help in making a true picture of their product in the mind of the consumers.

Customers Demographic Segmentation:

Company study PEPSI PERFECT market at the different aspects of population. Markets can be
divided on demographic factors like age, gender, education etc. The various demographic factors
are :
Age: Analysing markets by age is to divide the total population into age groups and
analyse the wants and needs of each group.
Income: PEPSI PERFECT Buying patterns depends on income of the consumers. No
two individuals or families spend money in exactly the same way thats why company
launch economy packs of PEPSI PERFECT.
Family Size: The consumption patterns of PEPSI PERFECT definitely vary with the
number of people in the household thats why company introduce 1.5 ltr & 2.25 ltr bottles
in the market.
Race: Consumption patterns of PEPSI PERFECT differ on the basis of race because
market research if first 15% peoples purchased & used your product which have
company launch others 85% peoples follow them.

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7. Problems in Supply Chain:

Difficulties without Just-in-Time

When an operation of the company was not just-in-time based, the demand or production
planner strived to optimize production-oriented goals and objectives such as equipment

utilization, labor efficiency, throughput and uptime.

Optimizing these goals often leads to run large batch sizes that are dependent on the
availability of raw materials. This optimizes the equipment and labor utilization but the
production planners and managers had not been looking at the expense of the bigger

picture.
The sourcing or purchasing managers strived towards reducing companys spending
overall. This manager consolidated suppliers offering products or materials at the lowest

per unit costs through buying in volume.

They even got the shipping and freight costs included in the purchase price, which led to

the increase in the price of the commodity.

Purchasing managers focused on getting the best price, not putting into consideration the

supplier performance and reliability.

The logistics/transportation manager was tacked with getting raw materials in and the
finished goods out of the production process and seek to optimize the transportation and
distributing network. This manager focused on the lowest cost and reliability of the
logistics or transportation solutions. But lowest cost could only be attained if the
purchasing team negotiates a delivered cost package deal with the supplier and the
supplier is responsible of the reliability and performance of the carriers or transporters.

Energy Crises:
As there are energy crises in Pakistan, Pepsi also facing and effected due to it. As there is
shortage of electricity and there is huge consumption of electricity to run the operations and

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maintaining temperatures in the factory while manufacturing, Pepsi is fulfilling it through

generators which take their costs higher and reduces profit margins.
Same as there is the shortage of natural gas as well. Pepsi needs natural gas to run the boilers for
the operations, due to the shortage of natural gas which is the cheapest mean of energy, Pepsi is
now using alternate means like coal and oil, which are more expansive than the gas, to run their
operations.

Feed Back

For feedback there should be a lean connection between major actors of distribution channels
,and this feedback should cater for under CRM customer relationship management ,at the same
time CRM should be updated their feedback from customer, distributor and whole seller.

8. Recommendations / Suggestions
RBL doesnt have proper enabling technologies such as EDI , ERP , RFID and EDD . they
should be having that for the better performance of its supply chain activities. These
engagements would
Identify specific opportunities to improve operational performance and reduce costs within your
manufacturing, assembly, supply chain, and customer support processes
Define specific process changes and the auto-id technology required to streamline each process
step
Address the business, manufacturing, logistics, information technology, and financial
implications of RFID -- including starting points and scale-up plans

When integrated with enterprise resource planning (ERP) system, demand

planning applications can help:

Compare calculated forecasts to actual results over time for trend analysis. Focus on "hot
spots" to prepare for what's coming into high demand.
Share forecast information securely via the Web through role-based portals. Reduce
operating costs.
Streamline production.
The end result: lower inventory costs, fewer stock outages, faster time to market, and
happier customers.

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References

http://en.wikipedia.org/wiki/Pepsi
https://www.scribd.com/doc/8021114/supply-chain-management-of-pepsi-cola-pakistan
http://www.wikinvest.com/stock/Pepsico_(PEP)/Customers#toc
http://www.icmrindia.org/casestudies/catalogue/Operations/Supply%20Chain
%20Management%20of%20PepsiCo-Excerpts1.htm
http://vustudents.ning.com/group/mgt619finalprojectmanagement/forum/topics/projectinternship-report-of-management-total-quality-managementhttp://www.haidribev.com/point/products.html
https://www.scribd.com/doc/61830380/Consumer-Behavior-Completed-Report
http://www.euromonitor.com/soft-drinks-in-pakistan/report
https://www.scribd.com/doc/46406818/Organizational-Design-and-Analysis-PEPSICola-Riaz-bottler-Lahore-and-haidri-beverages-Islamabad
http://www.slideshare.net/avkoo7/pepsi-cola-pakistan
https://www.scribd.com/doc/15005409/Report-on-Pepsi

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