MMPP1

SYNOPSIS
ON
“A STUDY ON SUPPLY CHAIN
MANAGEMENT OF PEPSICO”

SUBMITTED BY:
AXAY BHARDWAJ
EN. NO:- 2108258576
MBA (OPERATION)

PROJECT GUIDE:
DR. PUNEET SAXENA

SCHOOL OF MANAGEMENT STUDIES

INDIRA GANDHI NATIONAL OPEN UNIVERSITY,
MAIDAN GARHI, NEW DELHI - 110068
 CONTENTS

 INDUSTRY PROFILE

 COMPANY PROFILE

 REVIEW OF LITERATURE

 RATIONALE OF THE STUDY

 STATEMENT OF THE PROBLEM

 OBJECTIVE OF THE STUDY

 RESEARCH METHODOLOGY

 LIMITATIONS OF THE STUDY

 BIBLIOGRAPHY
 INTRODUCTION

"Supply Chain Management is the procedure of being refined to the point where the client
gets what he calls when he requested and wherever he requires."

An economy can't be focused unless organizations working there are aggressive. More
beneficial business methodologies require all the more profoundly qualified individuals,
enhanced base, better data, better suppliers and exceptional aggressive weight. India, before
1990, works in a secured economy. The quick opening of the Indian economy organizations
gave less time to get ready for global rivalry. The sudden change in the monetary situation
presents expansive difficulties and opportunities. Indian organizations rivaling multinational
players on the upsides of expense and dissemination channels.

One of the essential characterizing qualities of creating nations is the sufficiency of

fundamental inputs that are ordinarily needed to bolster the sorted out financial action. Past
organizations chose to item necessities for clients. Yet, in the globalized universe of today,
clients have ended up effective. They have ended up additionally requesting and need the
greatest estimation of the items. Organizations utilize minimal effort, amazing and mixed bag
as its focused weapon until 1980. In the mid 1990s, the idea of time-based rivalry entered the
photo. The situation has prepared for the noteworthy acknowledgement and usage
Management Supply Chain.

In today's surroundings, organizations confront the thorough rivalry around the world. In the
meantime, business methods have ended up extremely complex because of the consolidated
effect of globalization, the desires of the most elevated client, government regulations and the
WTO. The affectability of economies to outside environment is making procedures eccentric
and questionable business. Makers are under weight to concentrate on giving items and
administrations that meet client norms.

Supply chain management (SCM) oversees and optimizes the processes of acquiring inputs
from suppliers, converting those inputs into a finished product, and delivering those products
—or outputs—to customers. SCM is an umbrella term that refers to a variety of approaches
for the management of natural and human resources from the supplier to the manufacturer or
service provider to the consumer and back . This includes the identification and creation of
new opportunities for products and services in cooperation with upstream and downstream
partners, and the involvement of internal as well as external stakeholders in decision making
on supply chain matters.

Traditionally, a supply chain is:

A network of companies that exchange resources such as materials and information to

deliver products to customers. Supply chains consist of a company, its suppliers, its
distributors, and its customers.

In the traditional supply chain structure resources flow downstream to the consumer. The
supply network consists of a focal company and its suppliers, retailers, and customers. Figure
shows the basic structure of a supply chain.

Supplier Company Retail Customer

A supply chain is the stream of processes of moving goods from the customer order through
the raw materials stage, supply, production, and distribution of products to the customer. All
organizations have supply chains of varying degrees, depending upon the size of the
organization and the type of product manufactured. These networks obtain supplies and
components, change these materials into finished products and then distribute them to the
customer.

Managing the chain of events in this process is what is known as supply chain management.
Effective management must take into account coordinating all the different pieces of this
chain as quickly as possible without losing any of the quality or customer satisfaction, while
still keeping costs down.

The first step is obtaining a customer order, followed by production, storage and distribution
of products and supplies to the customer site. Customer satisfaction is paramount. Included in
this supply chain process are customer orders, order processing, inventory, scheduling,
transportation, storage, and customer service. A necessity in coordinating all these activities
is the information service network.
In addition, key to the success of a supply chain is the speed in which these activities can be
accomplished and the realization that customer needs and customer satisfaction are the very
reasons for the network. Reduced inventories, lower operating costs, product availability and
customer satisfaction are all benefits which grow out of effective supply chain management.

The decisions associated with supply chain management cover both the long-term and short-
term. Strategic decisions deal with corporate policies, and look at overall design and supply
chain structure. Operational decisions are those dealing with every day activities and
problems of an organization. These decisions must take into account the strategic decisions
already in place. Therefore, an organization must structure the supply chain through long-
term analysis and at the same time focus on the day-to-day activities.

Furthermore, market demands, customer service, transport considerations, and pricing

constraints all must be understood in order to structure the supply chain effectively. These are
all factors, which change constantly and sometimes unexpectedly, and an organization must
realize this fact and be prepared to structure the supply chain accordingly.

Structuring the supply chain requires an understanding of the demand patterns, service level
requirements, distance considerations, cost elements and other related factors. It is easy to see
that these factors are highly variable in nature and this variability needs to be considered
during the supply chain analysis process. Moreover, the interplay of these complex
considerations could have a significant bearing on the outcome of the supply chain analysis
process.

SUPPLY CHAIN MANAGEMENT

"Supply Chain Management is the procedure of being refined to the point where the client
gets what he calls when he requested and wherever he requires."

An economy can't be focused unless organizations working there are aggressive. More
beneficial business methodologies require all the more profoundly qualified individuals,
enhanced base, better data, better suppliers and exceptional aggressive weight. India, before
1990, works in a secured economy. The quick opening of the Indian economy organizations
gave less time to get ready for global rivalry. The sudden change in the monetary situation
presents expansive difficulties and opportunities. Indian organizations rivaling multinational
players on the upsides of expense and dissemination channels.
One of the essential characterizing qualities of creating nations is the sufficiency of
fundamental inputs that are ordinarily needed to bolster the sorted out financial action. Past
organizations chose to item necessities for clients. Yet, in the globalized universe of today,
clients have ended up effective. They have ended up additionally requesting and need the
greatest estimation of the items. Organizations utilize minimal effort, amazing and mixed bag
as its focused weapon until 1980. In the mid 1990s, the idea of time-based rivalry entered the
photo. The situation has prepared for the noteworthy acknowledgement and usage
Management Supply Chain.

In today's surroundings, organizations confront the thorough rivalry around the world. In the
meantime, business methods have ended up extremely complex because of the consolidated
effect of globalization, the desires of the most elevated client, government regulations and the
WTO. The affectability of economies to outside environment is making procedures eccentric
and questionable business. Makers are under weight to concentrate on giving items and
administrations that meet client norms.

Supply Chain Strategy for Pepsi

There are three major sustainable advantages that give PepsiCo a competitive edge as they
operate in the global marketplace

1. Big, muscular brands,

2. Proven ability to innovate and create differentiated products and

3. Powerful go-to-market systems.

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 particularly focuses its
competitive strategy as to producing sufficient variety, reasonable prices, and the availability
of the product.
Supply Chain Strategy

Step 1: The Customer and Supply Chain Uncertainty

a) Identifying Customer Needs

Pepsi needs to understand the customer needs for each targeted segment and the uncertainty
the supply chain faces in satisfying these needs. Pepsi 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 taken regularly during winter, with demand
hiking around festivals like New Year, Halloween occasions such as weddings. Pepsi caters
to both cities and rural areas. It understands the needs of both. As demand for beverages is
seasonal, the quantity of product needed for each lot is taken care of with past demand in
mind. 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).

b) Demand Uncertainty and Implied Demand Uncertainty

Demand for Pepsi varies by product. For example there is a greater demand for “Pepsi” as
compared to “Mirinda Apple,” which is new. Hence, Pepsi has a low demand uncertainty as
compared to “Mirinda Apple.” The product “Pepsi” is approaching its maturity stage in the
PLC whereas “Mirinda Apple” is in the introductory stage. Pepsi’s implied demand
uncertainty varies with the product type as well as the customer needs. Due to decreased lead
time (the customer may purchase its competitor’s product if Pepsi is not available at that
time), need for greater variety and higher level of service, implied demand uncertainty
increases. This is true for cities where unmet demand by Pepsi is met by Coca Cola and other
such competitors. Supply uncertainty is also affected by new products. New products have
higher supply uncertainty.

Step 2: Understanding the Supply Chain Capabilities

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.

Step 3: Achieving the Strategic Fit

Making one stage more responsive allows the other stage to focus on being more efficient.
The Pepsi supply chain 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 discussing the Pepsi’s supply 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. At the same time,
multiple beverage types contribute to a broader product portfolio causing Pepsi to adjust its
strategies accordingly; tailoring the supply chain to best meet the needs of each beverage
demand
 COMPANY PROFILE

Pepsi-Cola was first made in New Bern, North Carolina in the United States in the early
1890s by pharmacist Caleb Bradham. On August 28, 1898, "Brad's drink" was changed.

To "Pepsi-Cola" and later trademarked on June 16, 1903. As Pepsi was initially intended to
cure stomach pains, Bradham coined the name Pepsi from the condition dyspepsia
(Stomachache or indigestion). It was made of carbonated water, sugar, vanilla, rare oils, and
kola nuts. Whether the original recipe included the enzyme pepsin is disputed.

In 1903, Bradham moved the bottling of Pepsi-Cola from his drugstore into a rented
Warehouse. That year, Bradham sold 7,968 gallons of syrup. The next year, Pepsi was sold in
six-ounce bottles and sales increased to 19,848 gallons. In 1905, Pepsi received its first logo
redesign since the original design of 1898. In 1906, the logo was changed again.

In 1909, automobile race pioneer Barney Oldfield endorsed Pepsi-Cola in newspaper ads as
"A bully drink...refreshing, invigorating, a fine bracer before a race".

In 1923, PepsiCo went bankrupt due to high sugar prices as a result of World War I, assets
were sold and Roy C. Megargel bought the Pepsi trademark. Eight years later, the company
went Bankrupt again, resulting in a reformulation of the Pepsi-Cola syrup formula. In the

Following years, the drink gained in popularity and in 1934, debuted the 12-ounce drink.

In 1964, the Diet Pepsi variation of the drink debuted, being the United States’ first national
diet soft drinks.

In 1980, Pepsi introduced the Pepsi Challenge marketing campaign where PepsiCo set up a
blind tasting between Pepsi-Cola and rival Coca-Cola. During these blind taste tests the
majority of participants picked Pepsi as the better tasting of the two

soft drinks. Pepsi took great advantage of the campaign with television commercials
reporting the test results to the public.

In the mid-1990s, Pepsi launched the highly successful Pepsi Stuff strategy, its largest
marketing program ever. In its first year, Pepsi Stuff significantly outperformed Coke's
much-anticipated Atlanta Olympic Summer with growth 3 times larger than Coke's and 2
points of share gained by Pepsi. Pepsi Stuff built consumer brand loyalty by allowing people
to collect Pepsi Points from packages and cups and redeem them for high-quality
merchandise and unique experiences. Based on Pepsi Stuff's success, the company expanded
it to include Mountain Dew and into many international markets.
 REVIEW OF LITERATURE

There are numerous studies on consumer preferences but there are only few studies on
consumer preference towards soft drinks in a study done by Dube (2004), For several of the
largest supermarket product categories, such as carbonated soft drinks, canned soups, ready-
to-eat cereals, and cookies, consumers regularly purchase assortments of products. Within the
category, consumers often purchase multiple products and multiple units of each alternative
selected on a given trip. This multiple discreteness violates the single-unit purchase
assumption of multinomial logit and probit models. The misspecification of such demand
models in categories exhibiting multiple discreteness would produce incorrect measures of
consumer response to marketing mix variables. In studying product strategy, these models
would lead to misleading managerial conclusions.

Adriant.Beverly (1998) said that the relative contributions of taste and healthconsiderations
on consumer liking and purchase intent of cola drink. Eight types of commercial cola drinks
were evaluated by 305 adult consumers who also completed a brief questionnaire on food
habits. Data were analyzed using factor analysis. These data suggest that in spite of current
concern about reducing dietary fat, health remainssecondary to taste in the selection of cola
drinks for consumers in this population.
Banumathy and Hemameena (2006), while studying consumer brand preference with respect
to soft drinks, found that after globalization most of the consumers like the international
brands such as Pepsi and coco-cola. Consumers preferred a certain brand or a particular drink
mainly because of its taste and refreshing ability.
Chia-Hsien Chu, (2000), Taiwan, and This article investigates factors of marketing
communications and consumer characteristics that induce reminder impulse buying behavior.
Study 1 applies the antecedent, process and consequence approach to investigate the essential
differences between reminder impulse buying and pure impulse buying. The results of Study
1 reveal that reminder impulse buying significantly differs from pure impulse buying on
motivation, buying goal and decision evaluation. Study 2 further examines how sales
promotion strategy might affect reminder impulse buying, with product appeal and consumer
traits as moderating factors. Both sales promotion strategy and its interaction effects with
product appeal are found to have significant influences on reminder impulse buying.
Specifically, an instant reward promotion promotes stronger reminder impulse buying than a
delayed-reward promotion. Furthermore, both a utilitarian product appeal with a price
discount promotion and a hedonic product appeal with a premium promotion can encourage
greater reminder impulse buying.
Gluckman (1986) studied the factors influencing consumption and preference for wine. The
explicit factors identified were, the familiarity with brand name, the price of wine, quality or
the mouth feel of the liquid, taste with regards to its sweetness or dryness and the suitability
for all tastes. Some of the implicit factors identified through extensive questioning were,
colour and appearance. Most consumers seemed to prefer white wine to red. Packaging,
appearance, colour, ornateness, use of foreign language and graphics were taken as important
clues for quality and price. Consumers preferred French or German made wines to Spanish or
Yugoslavian wines.
Gibson (1998) Sugar-sweetened soft drinks are a special target of many obesity- prevention
strategies, yet critical reviews tend to be more cautious regarding theetiological role of
Sugarsweetened soft drinks in promoting excess body weight.Progress in reaching a
definitive conclusion on the role of Sugar-sweetened soft drinks in obesity is hampered by the
paucity of good-quality interventions which reliably monitor diet and lifestyle and adequately
report effect sizes. We use an alternative microeconomic model of demand for categories that
exhibit the multiple discreteness problems. Recognizing the separation between the time of
purchase and the time of consumption, we model consumers purchasing bundles of goods in
anticipation of a stream of consumption occasions before the next trip. We apply the model to
a panel of household purchases for carbonated soft drinks.
 RATIONALE OF THE STUDY

Supply chain management is the plan and control of material and information flow among
suppliers, facilities, warehouses and customers with the objectives of minimization of cost,
maximization of customer services and flexibility. The supply chain of a business process
comprises mainly five activities viz., Purchase of materials from suppliers, transportation of
materials from suppliers to facilities, production of goods at facilities, transportation of goods
from facilitates to ware houses and transportation of goods from ware houses to customers. In
this paper, a supply chain model is developed for Pepsico industry, located in Dehradun ,
India. The supply chain includes four echelons namely suppliers, plant, warehouse and
customers. In this model, emphasis is mainly on production and distribution activities, with a
view to find out purchase plan of manufactures, production plan of product mix and
transportation plan of the products.
 STATEMENT OF THE PROBLEM

The need for the study was to assess the effectiveness of Supply Chain Management in the
PEPSICO compared with other organization in the same industry. The organization also
needs relevant data as to how it can improve its management policies in order to gain future
market share.
 OBJECTIVES OF THE STUDY

 To explain the current structure of Pepsico supply chain management.

 To explore the critical issues and core activities associated in supply chain
management of Pepsico.

 To examine the informal channel partners roles in Pepsico supply chain management.

 To understand the risk management in Pepsico

 Understanding the importance of supply chain management in the Pepsico.

 RESEARCH METHODOLOGY:

1. RESEARCH DESIGN

A research design is the specification of methods and procedures for acquiring the needed
information. It is overall operational pattern or framework of the project that stipulates what
information is to be collected from which source by what procedure.

There are three types of objectives in a marketing research project:-

 Exploratory Research.
 Descriptive Research.
 Causal Research.

a. Exploratory Research:-

The objective of exploratory research is to gather preliminary information that will help
define problems and suggest hypothesis.

b. Descriptive Research:-

The objective of descriptive research is to describe things, such as the market potential for
a product or the demographics and attitudes of consumers who buy the product.

c. Causal Research:-

The objective of Causal research is to test hypothesis about Causal and effect
relationships.

Based on the above definitions it can be established that this study Descriptive Research
would be used for the study as the attitudes of the customers who buy the products have been
stated.

Descriptive or Survey Research Design due to its enormous advantages will be used in the
project report.

2. SAMPLING DESIGN

An integral component of a research design is the sampling plan. Especially it addresses three
questions: Whom to survey (sample Unit), how many to survey (Sample Size) and how to
select them (sampling Procedure). Making the census study of the entire universe will be
impossible on the account of limitations of time and money. Hence sampling becomes
inevitable. A sample is only his portion of population. Properly done, sampling produces
representative data of the entire population.

i. Through questionnaire
ii. Through personal interview

SAMPLING TOOL:-

Questionnaire will be used as a main tool for the collection of data, mainly because it gives
the chance for timely feedback from respondents. Moreover respondents feel free to disclose
all necessary detail while filling up a questionnaire. Respondents seeking any clarification
can easily be sorted out through tool.

3. DATA COLLECTION:

Data collection is the process of gathering and measuring information on variables of interest,
in an established systematic fashion that enables one to answer stated research questions, test
hypotheses, and evaluate outcomes. The data collection component of research is common to
all fields of study including physical and social sciences, humanities, business, etc. While
methods vary by discipline, the emphasis on ensuring accurate and honest collection remains
the same. The goal for all data collection is to capture quality evidence that then translates to
rich data analysis and allows the building of a convincing and credible answer to questions
that have been posed.

a. Method:

In this study data collection would be collected through:

i. Survey
ii. Interview
b. Sources of data collection

The data for the research will be collected through Primary as well as secondary sources.
 II. SECONDARY SOURCES

Secondary data is the one which is collected through the magazines, newspapers,
shopkeepers’ catalogue and the advertisement. This types of data is known as published data.
Data which is not originally collected is called secondary data. The first step in any research
is the collection of secondary data. In this project, data will be collected from company
records, internet and journals.

Sampling Plan:

A sampling plan is a detailed outline of which measurements will be taken at what times, on
which material, in what manner, and by whom. Sampling plans should be designed in such a
way that the resulting data will contain a representative sample of the parameters of interest
and allow for all questions, as stated in the goals, to be answered.

Sampling Unit : PEPSICO

Sampling Area : Dehradun

Sample Size : 50
 LIMITATIONS

This research has a number of limitations that must be acknowledged.

 First, the sample used for this study consisted mostly of customers.
Therefore, these results may not be applicable to the wider population in
general.
 Secondly, the results of this study are limited to a specialty retail branded
purchasing context.
 Lastly, it must be acknowledged that there may be numerous other variables
that contribute to the development of customer satisfaction, customer loyalty,
and word of mouth communication which are briefly touched upon below.
 To convince the people for a proper interviewing process is also difficult.
 The figures have been taken as approximations.
 REFERENCES

1. Adriant.Beverly (1998), Sources of Customer preferences with soft drinks : A

Comparative Study of Different Customer Segments. Int. Rev. of Retail, Distribution
and Consumer Research, Vol. 16, No. 1, 115
2. Banumathy and Hemameena (2006), Customer satisfaction and customer preferences
towards soft drinks. Total Quality Management & Business Excellence, Jul/Aug, Vol.
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3. Chhabra, T.N., Grover, S.K. (2005). Marketing Management. Dhanpat Rai & Co. Pvt.
Ltd., Third revised edition, 15-20.
4. Chia-Hsien Chu, (2000), Buying behavior of consumers for soft d ri n k s. Ma r k e ti
n g Sc i e n c e Vo l. 2 7 , No . 5 , September–October, ISSN 0732-2399, 811–828.
5. Gluckman (1986), The Influence of Salesperson Selling Behaviors on Customer
Satisfaction with drinks. Journal of Retailing, Volume 73(2), ISSN No. 022-4359,
171-183.
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Management: a south Asia prospective. Pearson Education Delhi, 13th edition, 25-30
& 45-50.
7. Kotler, Philips (2008). Marketing Management. Pearson Education Eastern economy
Delhi, 13th edition, 56-62.
8. Kotler, Philips, Gray, Armstrong (2008). Principle of Marketing. Pearson Education
12th edition Delhi, 450-460.