5/19/24, 11:04 AM Analysis of PepsiCo Supply Chain Management | Free Essay Examples

NEED A PERFECT PAPER? PLACE YOUR FIRST ORDER AND SAVE 5% WITH THIS CODE:
SAVE5NOW

ORDER NOW

Home › Business › Analysis of PepsiCo Supply Chain Management

Analysis of PepsiCo Supply Chain

Management

Executive Summary
PepsiCo Inc. is an American international snack, food, and beverage company
whose headquarters are based in Harrison, New York. PepsiCo’s business
involves all elements of the food and beverage industry. The company
supervises the manufacturing, marketing, and distribution of its products. The
company was established in 1965 with the union of Frito-Lay and Pepsi-Cola
Company. The company has since extended from Pepsi Cola, its namesake
product, to a massively diversified variety of beverage and food brands. The
most recent and largest acquisition was Pioneer Foods in 2020, which cost
$1.7 billion, and before this, the company had bought Quaker Oats firm in
2001.

By January 2021, PepsiCo will have 23 brands that make more than $1 billion in
sales yearly. The company has operations globally, and its products are sold in
more than 200 countries leading to a yearly net income of more than $70
billion. The company is the second-biggest food and beverage business
globally based on total revenue, market capitalization, and profit after Nestle.
PepsiCo has been involved in a rivalry for years with Coca Cola commonly
known as the cola wars. Though Coca-Cola outperforms Pepsi-Cola in the US,
PepsiCo is the biggest food and beverage firm in the North American market
by net income. The company’s beverage bottling and distribution are carried
out by PepsiCo and by licensed bottlers in various regions. This paper focuses
on various aspects of PepsiCo’s business, including its strategy, supply chain
management, key supply chain performance metrics, and how the supply
chain has contributed to the company’s success.

We use cookies to provide you with the services at our best. By continuing to browse
I agree
the website, you accept it. More.

https://samples.freshessays.com/analysis-of-pepsico-supply-chain-management.html 1/13
5/19/24, 11:04 AM Analysis of PepsiCo Supply Chain Management | Free Essay Examples

NEED ACompany Strategy,

PERFECT PAPER? Supply
PLACE YOUR Chain
FIRST ORDER ANDStrategy,
SAVE 5% WITHand
THIS CODE:

Alignment
SAVE5NOW

ORDER NOW
PepsiCo is the second-largest player in the worldwide food and beverage
market. The firm provides a wide range of products (Lau, 2022). The
company’s generic competitive strategy is founded on the need to counter
market pressure emanating from its biggest competitors, such as Coca Cola
Company. A company’s generic strategy describes the primary strategy
utilized to maintain a competitive edge. Contrarily, PepsiCo’s intensive growth
approaches aim to respond to the increasingly global market conditions for
food and beverages. Intensive growth approaches describe how companies
sustain their growth. The generic strategy for PepsiCo for competitive edge
aligns with its intensive strategy of ensuring long-term growth (Ferguson,
2017). Notably, the company’s growth tactics will enable it to effectively utilize
its generic strategy to sustain a long-term competitive advantage. The success
of the company is an indicator of the suitability of these strategic tactics,
particularly how the generic approach supports competitiveness.

PepsiCo’s Generic Strategy

PepsiCo uses various generic competitive approaches because of the

company’s broad range of products. Still, the main generic strategies that
offer the company a competitive advantage are cost leadership and broad
differentiation (Ferguson, 2017). The company utilizes cost leadership as its
main generic competitive approach. This generic approach focuses on
minimizing costs with the aim of improving the company’s financial
performance and general competitiveness. For instance, to outperform Coca-
Cola products, the company sells products at low prices following low
operating costs. Also, the company has unique promotional offers at
discounted prices. Subsequently, the company utilizes broad differentiation as
its secondary broad competitive strategy. This generic approach offers the
company a competitive edge by attracting customers of certain unique
features of the company’s products. For instance, PepsiCo potato chips are
sold as healthy snack products since they have a low content of saturated fat.
Such products with unique features tend to attract more customers. The
strategic goal for the cost leadership business strategy is to mechanize
production processes to reduce the company’s operating costs. On the other
hand, the strategic goal for the broad differentiation strategy is innovating
products to address the health concerns related to the company’s products.

Supply Chain Management

PepsiCo represents a perfect supply chain strategy that is driven by demand.

Such a supply chain strategy aligns with the current market. The company
operates in a very competitive market where there are other big suppliers like
Coca-Cola offering
We use cookies stiff
to provide youcompetition.
with the servicesPepsico management
at our best. By continuing tohas discovered that
browse
it the
should employ
website, better
you accept tactics in its supply chain strategies to overcome the
it. More.

https://samples.freshessays.com/analysis-of-pepsico-supply-chain-management.html 2/13
5/19/24, 11:04 AM Analysis of PepsiCo Supply Chain Management | Free Essay Examples

competition. The company is being pressured to ensure the products reach

NEED A PERFECT PAPER? PLACE YOUR FIRST ORDER AND SAVE 5% WITH THIS CODE:
retailers in a reliable manner to ensure the stores don’t run out of stock.
SAVE5NOW
In the current market environment, companies have discovered that achieving
ORDER NOW
a competitive edge in the market does not necessarily entail offering products
of high quality. The need to make sure that consumers can access the
products whenever they want them has compelled the company to restructure
its approaches in supply chain management to maintain reliability and
efficiency. Thus, PepsiCo has developed a supply chain management that is
centered on customers.

PepsiCo has perfected various areas of supply chain management, among

them purchasing. The company discovered that obtaining the right materials
at the ideal time is crucial to realizing success. Notably, a company’s
management team should ensure it has enough suppliers for the timely
delivery of raw materials. The company has adopted a decentralized
purchasing approach to enhance its efficiency. It operates different production
plants in various locations. At every branch, the regional manager is in charge
of making the purchasing decision depending on the local environmental
factors in that area. Devolving the purchase of raw materials is an ideal way of
empowering plants in various locations. By permitting the branches in various
nations to work semi-autonomously, the top management has ensured that
managers from local regions operate based on the forces of those regions.

Further, maintaining a positive relationship with the supplier is necessary to

realize success in the food and beverage industry. PepsiCo is among the
companies that have maintained a good relationship with their suppliers. The
company has established close relationships with the suppliers to a point
where the majority of the suppliers feel like they are business partners rather
than just suppliers. This close relationship is maintained by providing different
benefits to the suppliers, such as loans when the need arises or organizing for
sporting activities to strengthen the bonds. This approach has helped to
sustain a group of loyal customers, addressing most of the problems faced by
other companies in the industry.

Further, strategic outsourcing plays a crucial role in improving purchasing

strategies in a company. PepsiCo management appreciates the significance of
ensuring strong purchasing strategies to sustain the movement of raw
materials into the company. Notably, the raw materials required in the
manufacturing the beverage products entail fruits like mangoes, oranges,
apples, and pineapples, among others. There are other raw materials such as
preservatives, flavor, and sugar. The raw materials can be sourced in various
regions where the company operates. The management in these regions is
supposed to collaborate with the farmers supplying these products to the
company. This eases the process of acquiring raw materials and ensures a
steady supply.
We use cookies to provide you with the services at our best. By continuing to browse
Inthe
terms of operations, PepsiCo management is still struggling with the issue
website, you accept it. More.
of overcoming competition from local and global markets. Operational
https://samples.freshessays.com/analysis-of-pepsico-supply-chain-management.html 3/13
5/19/24, 11:04 AM Analysis of PepsiCo Supply Chain Management | Free Essay Examples

efficiency is among the most critical factors that can enable a company to
NEED A PERFECT PAPER? PLACE YOUR FIRST ORDER AND SAVE 5% WITH THIS CODE:
realize success in the current demanding market. The management of the
company knows the importance ofSAVE5NOW
maintaining the best operational strategies
to help reduce the cost and time operation hence reducing overhead ORDERcosts
NOW
and offering the company a competitive advantage over the others in the
market. The company has adopted a globalization strategy by extending its
operational networks across various countries. Essentially, PepsiCo has
developed a supply chain strategy to influence business development and
growth in different regions. In addition, in a quest to improve its business
sustainability and growth, PepsiCo had diversified into selling other products
like fruit juices and grains to meet the customers’ dynamic needs. The firm
could attain more benefits by restructuring its worldwide supply chain to align
its sourcing and communication strategy with its procurement strategy.
Importantly, PepsiCo should obtain information and communication
technology tools and devolve its procurement activities to the local levels.

Key Supply Chain Performance Metrics and Historical Trends

PepsiCo utilizes various tools to monitor the performance of its supply chain
management. The metrics used by the company include internal metrics,
external metrics, and financial metrics. The company uses internal metrics that
illustrate what is going on in the entire Pepsi system, including measuring
sales, inventory turnover, and throughput. Also, the company reports the
external metrics to customers, who are later utilized for benchmarking
purposes. These entail the performance of on-time delivery and service level
agreements. Further, the financial metrics reveal the impact of the supply
chain management on the firm’s financial performance, including net income,
return on investment, and return on assets.

Analyzing and measuring performance is the only way of getting an accurate

picture of whether supply chain management is effective. PepsiCo utilizes
various metrics to obtain the most accurate performance measurement. This
enables the management to make the necessary changes to address the
customers’ needs while exercising maximum control and keeping the
operations sustainable and cost-efficient.

In 2016, the company launched its 2025 sustainability agenda after a detailed
analysis of its business model that focused on people, the planet, and
products. The company supported all its strategic goals with key performance
indicators and described its targets. Afterward, the company published its
results. One of the objectives of the 2025 sustainability agenda is to focus on
healthier products. The company aims to decrease added sugar in beverages
containing 100 calories. Also, the company aims to decrease saturated fat to
ensure it is less than 1.1 grams per 100 calories. In addition, the company aims
to reduce salt to ensure it is less than 1.3 milligrams of sodium in each calorie.
These strategic goals are informed by the company’s performance measures;
hence
We usethey areto in
cookies line you
provide withwith
thethecompany’s
services at ouraim
best.of
Byachieving
continuing tosustainable
browse growth.
the website, you accept it. More.

https://samples.freshessays.com/analysis-of-pepsico-supply-chain-management.html 4/13
5/19/24, 11:04 AM Analysis of PepsiCo Supply Chain Management | Free Essay Examples

Notably, the key performance measures of PepsiCo are time-bound, relevant,

NEED A PERFECT PAPER? PLACE YOUR FIRST ORDER AND SAVE 5% WITH THIS CODE:
measurable, and specific. Simply put, they are aligned with the popular
SAVE5NOW
SMART approach. The KPIs influence the company’s success since the
company’s differentiation strategy and offering of healthier products
ORDERhave
NOW
resulted in the organic growth of income by 3.1% as of 2017 (“PepsiCo’s
competitive strategy turned into KPIs,” 2017). The firm divided its products
into fun-for-you and good-for-you groups and implemented the practicing the
content of the product on the packaging in a bid to achieve their KPIs. The
good performance outcomes and the progress of the key performance
indicators are related. In 2017, the firm reported that above 45% of its income
was contributed by its good-for-you snack and beverage division (“PepsiCo’s
competitive strategy turned into KPIs,” 2017). These are the beverages with
less than 70 calories for each 12 oz and snacks with fewer amounts of
saturated fat and salt. Consequently, PepsiCo’s business strategy, KPIs, and
targets are clear and transparent.

As the world’s second-best performing snack food and beverage firm,

PepsiCo’s efficient supply chain is a critical element of the company’s success.
To maintain stable growth, the company mainly focuses on acquisition,
making the company become more than just a signature drink; it currently
owns Quaker Foods, Lipton, Tropicana, Gatorade, and Frito-Lay, among others.
In current years, consumers are more interested in more nutritious and
healthier snacks; hence the company has made an effort to reduce the amount
of saturated fat and sugar in its products while still maintaining their tastes.
Also, the company has increased its product range to include coconut water
and juices (Lau, 2022). As the company continues to evolve and grow,
addressing the changes in the market environment and fluctuating consumer
needs, its supply chain management has also evolved.

There are various features that differentiate the company’s supply chain
management approaches. PepsiCo’s general philosophy of innovation,
integration, and cooperation helps to ensure its complex and varied supply
chain remains flexible, resilient, and stable (“How the PepsiCo supply chain
uses cooperation, integration, and innovation to streamline operations,” 2020).
As a large international firm, Pepsi must analyze, input, and act on the
different types of data to ensure effective management of the flow of its
beverage and food products and supply the needs of each. For instance,
certain products need cold chain logistics, whereas others need ingredients
sourced from various regions across the world. Besides coordinating
numerous retailers, warehousing managers, shippers, manufacturers, and
suppliers, the company should prepare for potential disruptions caused by
changes in demand, climate and weather change, and seasonal sourcing
necessities. The ensure adaptability and agility, the company should focus on
various areas, including human rights, technology and digitization,
sustainability, and the environment.

The
We company has
use cookies to various
provide standards
you with and
the services policies
at our best. Byin place to
continuing to protect
browse the health,
the website, you accept it. More.
safety, and well-being of each supplier. Also, the company has heavily invested

https://samples.freshessays.com/analysis-of-pepsico-supply-chain-management.html 5/13
5/19/24, 11:04 AM Analysis of PepsiCo Supply Chain Management | Free Essay Examples

in advanced technologies and digital tools to develop a more streamlined and

NEED A PERFECT PAPER? PLACE YOUR FIRST ORDER AND SAVE 5% WITH THIS CODE:
efficient supply chain. Particularly, the company has zeroed in on data
SAVE5NOW
integration to establish a clearer illustration of the household and individuals
buying the company’s products. Thus, supply chain strategy enables ORDERthe
NOW
company to address consumer needs and enable better long-term forecasting
and strategizing. Further, more complicated data analytics enable the
company’s retailers and distributors to track inventory. By enhancing ordering
algorithms, the company’s stores can put more effort into purchasing trends,
accounting for sales histories, and accurate orders. This helps in creating a
cost-efficient and streamlined chain and enhanced productivity for the
company.

The supply chain has coordinated forecasting (Lau, 2022). The forecasts are
carried out on a monthly and consider the present inventory levels, present
demand, and anticipated. The company works with beverage and food
factories to determine the raw materials required. This entails packaging and
components such as bananas, sugar, and corn syrup. The outcomes of this
process are shared across the whole supply chain management system to
ensure the company is planning for its production needs.

Also, the supply chain process has coordinated distribution where products
are distributed from twenty distribution centers to wholesalers and retailers
globally. All distribution centers focus on a certain zone in North America or a
certain zone in Europe based on the location they serve (Lau, 2022). The
company collaborates with retail customers to establish joint distribution
initiatives to deliver products from various third-party suppliers. The supply
chain management of the company works perfectly because all members of
the process can access accurate and current information regarding product
pricing and availability. The supply chain management utilized a centralized
information technology strategy known as enterprise information portfolio
that offers real-time access to pertinent. Notably, the supply chain integrates
electronic data interchange.

In conclusion, the supply chain focuses on customer service. In PepsiCo

system contributes significantly to maintaining strong ties with customers,
both small and large (Lau, 2022). The firm utilizes feedback surveys from
various customers yearly to determine the customers’ needs and wants.
Further, the company has developed a forecasting process and integrated
planning associated with its information technology system to ensure the
whole supply chain management works together. This collaboration enables
the company to plan more effectively and save on operational costs and
money.

References
Ferguson, E. (2017, February 6). PepsiCo’s generic and intensive growth
strategies . Panmure
We use cookies Institute.
to provide https://panmore.com/pepsico-generic-strategy-
you with the services at our best. By continuing to browse
intensive-growth-strategies
the website, you accept it. More.

https://samples.freshessays.com/analysis-of-pepsico-supply-chain-management.html 6/13