Professional Documents
Culture Documents
Pepsi - Logistics Pepsi - Logistics
Pepsi - Logistics Pepsi - Logistics
Pepsi - logistics
Supply chain
Management
Pepsi Co
Sir Abdul Quddus
BBA-6B
GROUP MEMBERS
Rameen Kamran (078)
Anum Gul (010)
Yawer Shafique (125)
Syed Suheer Haider (102)
Sherazhar (094)
Contents
History.........................................................................................................................................................2
PepsiCo Headquarters................................................................................................................................2
Understanding the Supply Chain of Pepsi..................................................................................................3
Supply Chain Strategy or Design:.............................................................................................................3
Supply Chain Planning.............................................................................................................................3
Supply Chain Operation:..........................................................................................................................4
Process views of a supply chain:.................................................................................................................4
Cycle View of Supply Chain......................................................................................................................4
Push/Pull View of Supply Chain:..............................................................................................................4
Supply Chain Strategy.................................................................................................................................5
Step 1: The Customer and Supply Chain Uncertainty..............................................................................5
Step 2: Understanding the Supply Chain Capabilities..............................................................................6
Step 3: Achieving the Strategic Fit...........................................................................................................7
Drivers of Supply Chain Performance.........................................................................................................7
Connecting the drivers with PLC Supply chain strategy:..........................................................................7
Framework for Structuring Drivers:.........................................................................................................8
The Transportation Driver:..............................................................................................................8
The Information Driver....................................................................................................................8
Distribution Channels.................................................................................................................................9
Review and Revise Distribution:....................................................................................................10
Factors Influencing Distribution Network Design..................................................................................10
Design Options for Distribution Network:.............................................................................................11
Distributor Storage with Carrier Delivery:...................................................................................11
Value of Distribution System:.........................................................................................................12
Pepsi
History
PepsiCo is a world leader in convenient snacks, foods and beverages, with revenues of more than
$39 billion and over 185,000 employees. The company consists of PepsiCo Americas Foods
(PAF), PepsiCo Americas Beverages (PAB) and PepsiCo International (PI). PAF includes Frito-
Lay North America, Quaker Foods North America and all Latin America food and snack
businesses, including Sabritas and Gamesa businesses in Mexico. PAB includes PepsiCo
Beverages North America and all Latin American beverage businesses. PI includes all PepsiCo
businesses in the United Kingdom, Europe, Asia, Middle East and Africa. PepsiCo brands are
available in nearly 200 countries and generate sales at the retail level of more than $98
billion. Some of PepsiCo's brand names are more than 100-years-old, but the corporation is
relatively young. PepsiCo was founded in 1965 through the merger of Pepsi-Cola and Frito-Lay.
Tropicana was acquired in 1998 and PepsiCo merged with The Quaker Oats Company, including
Gatorade, in 2001.
PepsiCo offers product choices to meet a broad variety of needs and preference -- from fun-for-
you items to product choices that contribute to healthier lifestyles. PepsiCo’s 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)
PepsiCo Headquarters
PepsiCo World Headquarters is located in Purchase, New York. The seven-building headquarters
complex was designed by Edward Durrell Stone, one of America's foremost architects.
Haidiri Beverages Private Limited, Pakistan
The Haidiri Beverages Group was set up in 1979 and is Pepsi's sole selling agent for District
Rawalpindi and Islamabad. It is based in the CDA Industrial Triangle, Kahuta Road, Islamabad.
It manages the supply for several wholesalers, retailers, restaurants, hotels and other such food
outlets. In order to achieve the projected sales targets effectively, the organization ensures a
comprehensive strategic alignment with the overall Pepsi Cola’s business strategy. Haideri
Beverages’ primary functions are to conduct a systematic manufacturing and supply of the
product without any tactical 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 sophisticated manufacturing and storage plant in
Rawalpindi with multiple production units and huge production capacity. Haidiri Beverages has
different management departments dealing with specialized Marketing, Human Resource,
Information Technology and Supply Chain 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 against orders then shipping manager plans according to the
demand of distributors on daily basis.
PepsiCo's overall mission is to increase the value of shareholder's investment. They do this
through sales growth, cost controls and wise investment of resources. They believe their
commercial success depends upon offering quality and value to their consumers and customers;
providing products that are safe, wholesome, economically efficient and environmentally sound;
and providing a fair return to their investors while adhering to the highest standards of integrity.
A customer while purchasing a bottle of Pepsi will consider product quality, price and
availability of the product. Thus, Pepsi in Pakistan particularly focuses its competitive strategy as
to producing sufficient variety, reasonable prices, and the availability of the product.
Predictable Highly
supply & uncertain
Predictable uncertain supply &
supply and demand or demand
demand uncertain supply
& predictable
PEPSI
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
Pepsi 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.
between them. The major considerations in the design are the supply chain responsiveness and
profitability.
on demand to create a schedule that allows Haidri Beverages to produce the right amount of
product. The warehouse incharge uses this information to create visibility of the warehouse’s
inventory items. Information sharing helps this firm improve its responsiveness within the
market. It helps to accurately forecast demand and realize frequency of updates, measurements
of the effects of seasonal factors influencing the production, measurements of variances from the
plan and the ratio of demand variability to order variability. Timely and accurate information
enables the distribution managers to fix potential stock out or oversupply problems.
The Facility Driver
In order to ensure the responsive strategy implementation, the role of facilities is of prime
importance in the supply chain of Haidri Beverages. Pepsi has established a flexible and a
product-focused production facility in order to respond effectively to the variability in demand.
The storage facilities are designed in order to provide maximum possible capacity for the
inventory. The large amount of excess capacity allows the facility to be very flexible and to
respond to wide surges in demands placed on it. In alignment with the responsive supply chain
strategy the facilities have been geographically located close to the market.
The pricing driver
Pepsi keeps its pricing strategy with the comparison of its competitors for example Coke. And
the demand is seasonal so during the season on period the pricing is done on the fixed basis i.e.
summers. And during winters which is the off season period the pricing is done on menu basis
for example Rs 2 to Rs 5 rupees off per 1.5 liter bottle etc.
Distribution Channels
Direct distribution:
o Delivery of post mix cylinders & handling of key accounts: The key accounts are
different wholesalers, restaurants and hotels like Pizza Hut, KFC, Metro which
serve as a place for key sale. These are known as national key accounts and are very
important in terms of competition.
o Export Parties
Indirect distribution:
Haidri 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 Non-seasonal period and not
applicable in the seasonal period.
Review and Revise Distribution:
This is usually done through taking over key revenue areas. If the distributor does not achieve its
sales target, the distribution is taken back, and an addition of new distributor is done. Therefore,
Pepsi’s supply is low supply uncertainty. Some of its supply source capabilities are:
Less breakdowns
High quality
Flexible supply capacity
Mature production process
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includes beverages ranging from the water Aquafina to Mountain Dew, Pepsi, Pepsi Max, 7 Up,
Mirinda, Mirinda Apple & Fountain Fresh.
Customers Desire Pepsi and Mountain Dew the most; Mountain Dew has the highest
consumption in Gujranwalla. Recently, the sales for 250 ml bottles has decreased but they are
trying to increase it as it gives the company higher profits.
Availability of Pepsi is very high, and the product is always available in stock whenever an
order arrives. Whenever the distributors feel that after one loading there could be a stock out,
they place an order to Haidri Beverages in advance just to keep the floor with enough stock in
hand. The Distributors have 3 days stock as back up with them in order of any malfunctioning of
the plant or other such external factors.
Customer Experience for Pepsi has always been positive as they receive the product with ease
and on time. The retailers are the direct customers as they place an order to the distributors.
There has never been a shortage or a delay for Pepsi in Metro or Pizza Hut which are the key
accounts for the company.
Order Visibility in Pepsi is not really an electronic phenomenon where you can track your order
through computer. It is more of person-to-person contact and one can easily track down their
orders through the designated staff in each sector of Islamabad and RawalPindi or for that sake
all over Pakistan.
Returnability of Pepsi has always been very strong in a sense that unsatisfactory items can be
returned and changed on the spot. This is true for both the consumers and the retailers. Pepsi has
laid down a system through which they can effectively manage this requirement. The retailers
are told to take down the comments and the address or phone numbers from the person who is
returning the bottle. It seems at first that a customer always wants the highest level of
performance along all these dimensions, in practice however this is not always the case.
Design Options for Distribution Network:
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Haidiri have nine distributors in Islamabad and Rawalpindi, namely: Shan distributors, Awan
distributors and Arbab Distributors. To support this distribution network, they have a transport
department which consists of more than 30 ten wheeler trucks in Islamabad alone. Each truck has
a capacity of 1572 Pepsi cans. Rawalpindi distribution is made possible through Shehzore and
Suzuki because of the narrow and congested roads. The distribution department is in direct
contact with the manufacturers and keeps updating inventory levels. They keep in stock spare
three days stock to combat external uncertainty. The distribution department is responsible for all
the variety of the products in their portfolio. PepsiCo’s overall distribution network spreads
throughout Pakistan connecting the remotest of places and providing great customer service.
Globalization has increased the competition that Pepsi is constantly coming up with new
projects, campaigns and distribution. Pepsi with more than 180% of profits this year and with the
annual review of their rates (last revised on 14 th November 2007) is looking more and more
competitive and as the logo says: “Ye Dil Maangay Aur!”
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