II.

Statement of the Problem

What are the difficulties that the PepsiCo (CDO Branch) encounter with
regards to their supply management? When a company enters into different
locations, widening its reach, the keys to its success would be its distribution
strategy. Knowing the channel it uses as well as market know-how and customer
knowledge and understanding. Despite the fact that PepsiCo supply chain
management has led them to gain local fame and popularity or getting their brand
known, PepsiCo is inefficient in terms of cost resulting in reducing their chances in
earning higher profits. PepsiCo has to reconsider or reevaluate their supply chain
strategy to meet the challenges faced in the market and sustain its position in the
area or the country especially as there huge competitors (f.e Coca – Cola) ome
possible solutions for Pepsi, if they want to gain competitive advantage in the
market, is to invest further in its supply-chain management. Emphasis in research
has been placed upon global supply-chain management, where the notions of
channel strategies have been drawing the interest of all. Pepsi needs to incorporate
these concepts and tools into its marketing strategy in order to enable efficiency in
supply-chain management. Its focus needs to be on customer satisfaction in the
market and cost efficiency along with a leadership strategy that takes into account
cultural gaps that are affecting its ability to reach all customers.

 Partnering relationships among suppliers are short term and not well
established. PepsiCo (CDO Branch) encounter such problem because there
are many instances that suppliers
 Uncertainty in Supply Chain Management
Inventory Management System

Decentralized Design

An inventory system that stands on its own significantly increases the chances it will be inaccurate. While
a decentralized design might initially be a less costly option for a small business on a tight budget, it can
prove to be more costly over the long run. For example, designing an inventory system that integrates with
point-of-sale software provides options for perpetual, real-time inventory management that increases not
only ordering accuracy but also the timing of inventory purchasing. In contrast, a decentralized system --
whether it’s a manual or computerized system -- not only relies on timely and accurate data entry to
determine inventory levels but is also more likely to cause bottlenecks in purchasing that may delay critical
purchases.

Lack of System Optimization

Lack of optimization is a common design problem that makes it more difficult to accurately plan and
forecast future inventory needs. A well-designed inventory system must capture the right data at the right
time to avoid ordering mistakes that result in inaccurate inventory levels. Optimization is especially
important as a cost-control measure in a manufacturing business, because it functions both to reduce waste
and improve serviceability. For example, an optimized inventory system not only provides information on
quantities of raw materials used in production but can also identify and account for raw materials that
become scrap or waste during production. This data not only can assist in maintaining accurate inventory
levels but also signal when it might be time to look for another supplier due to inferior raw material
quality.

Perishable

In Pepsi-Cola Company, holding cost can be much higher because the raw materials
are perishable. In the beverage industry, inventory spoils due to some environmental
factors such as the too much exposure of sunlight, and some leakage of its
packaging. So poor inventory management is not only expensive but can also yield
an unsatisfactory product that in the extreme ruin market acceptance. Using pepsi to
illustrate rapid inventory flow: beverages such as bottled pepsi from the plant, to
warehouse, to the retail store. This happens in a matter of hour- not days or weeks.
With delivery of over 40,000 cases a day, this keeps freshness high and holding
costs low.