PepsiCo Inc.

Submitted by:Sanket BhawarkarSarang BanubakdeSaurabh Mhase

PepsiCo.• Its an American multinational food & beverage

headquarter in Purchase, NY, USA.• It was formed in 1965with merger of Pepsi Cola &

Frito lay Inc.• Acquired Tropicana in 1998 & Quaker oats in 2001.• It has mainly 22 product lines generating $1 billion

revenue each year.• In 2012 it has annual net revenue of $ 43.3 billion.

Seasonalitysubject to seasonal variations.• Beverage sales are higher during the

warmer months and certain food sales are higher in the cooler months

• Weekly beverage and snack sales are

generally highest in the third quarter due to seasonal and holiday-related patterns, and generally lowest in the first quarter

• However, taken as a whole, seasonality does not have a material impact on our business.

Focus market

youth

Go getters

girls

Focus productionpepsi

Diet pepsi

Pepsi max

These three together generates a revenue of ……

$ 15 billion in sales from retail.

Facts and Logos

PepsiCo

Asia Europe America Africa

New yorkUSA

Organizational Structure

Raw materials

Raw material for Beverages:• For drink: Water, sugar, color, caffeine• For packaging: Tin, aluminum, PET plastic

Sources:• More than 30% raw material of PET bottle

comes from organic waste• 10% of packaging is done through recycled

products

Raw materials

Raw material for chips and juices :• Potatoes, oats, apples and milk

Sources :• European organic farms • Pepsi looks after the requirements of

farmers and also trains them to get desired size, color etc.

Inventory management

Inventory accounting policy: • Inventories are valued at the lower of

cost or market. Cost is determined using the average; first-in, first-out (FIFO) or last-in, first-out (LIFO) methods.

Inventory management• The Pepsi Bottling Group’s Detroit plant reduced

its number of sensors from 180 to 46• A decrease of 66 percent, by standardizing it

sensors• Reduced downtime and inventory costs.

Inventory Management

  Category 

Dec 29, 2012

Dec 31, 2011

Dec 25, 2010

Dec 26, 2009

Dec 27, 2008

Raw materials1,87

5 1,88

3 1,65

4 1,27

4 1,22

8 

Work-in-process 173  207  128  165  169 

Finished goods1,53

3 1,73

7 1,59

0 1,17

9 1,12

5 

Inventories3,58

1 3,82

7 3,37

2 2,61

8 2,52

2 

Inventory disclosure:(USD $ in millions) 

Source: Based on data from PepsiCo Inc. Annual Reports

Material handling

• Applying manufacturing principles• Take the work back to where it naturally

belongs— in distribution, Use manufacturing-like systems and technology to create custom orders- Shekar Natranjan ( Director – SCM)

• People, process, technology

Types of Material handling equipmentused

• Fork lift truck for shipping, production and sugar godown• Chain conveyer• Belt conveyer• Plastic chain conveyer• Pumps- Water treatment• Roller conveyer- PET line• Caser machine- Puts 96 bottles at a

time in crate

Transportation & Logistics • PepsiCo manages 3

million shipments annually • Private fleets, dedicated carriage, direct store delivery, refrigerated trucks and straight truck load shipments

• Uses various logistic techniquesDirect Store DeliveryBroker Warehouse DistributionVending & Food Service System

Major Distribution

System

Vending and food Service Systems

Broker warehouse distribution

Direct Store Delivery DSD

Pepsi

Water

Sugar

Flavorings

sparkling soda

Components of Process

04/11/2023

Clarifying the water

Filtering, sterilizing, and dechlorinating the water

Mixing the ingredients

Carbonating the beverage

Filling and packaging

Quality Control

Process Pyramid

LAY’S

•plants are certified according to the ISO 9001:2008 and ISO 22000:2005 standards•internal and external inspections, conducted either by PepsiCo-Ivi or by the U.S. headquarters of PEPSICO

Quality Process

•PLI (Pepsi Lipton International) • EFET, the national Hellenic Food Authority •other state or non-governmental organizations.

Quality Process contd…..

•Quality is spelled as “Q”UALITY•Pepsi sabotage •Strategy by Indra Nooyi

Supply Chain Management

• It is the management of a network of interconnected business

• It spans all movement and storage of raw materials, work-in-process inventory, and finished goods.

• It encompasses the planning and management of all activities involved in sourcing, procurement, conversion and logistics management activities

• It also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, third-party service providers and customers

• In essence, Supply Chain Management integrates supply and demand management within and across companies

A Supply Chain Flow

Raw Materials

Supplier

Manufacturing

DistributionCustomerConsumer

Customer Order Cycle

Replenishment Cycle

Manufacturing Cycle

Procurement Cycle

Customer

Retailer

Distributor

Manufacturer

Supplier

• Clearly defines processes involved and the owners of each Supply Chain process.

•Specifies the roles and responsibilities of each member and the desired outcome of the each process.

Cycle View of Supply Chain:There are five stages in a supply chain (Supplier Manufacturer Distributor Retailer Customer) and four supply chain process cycles (customer order, replenishment, manufacturing, procurement cycle).

Supplier Manufacturer

Distributor Retaile

rCustomer

Push-Based Model

Supply to Order

Produce to order

Automatically replenish warehouse

Automatically replenish Stock

Customer Orders

Pull-Based Model

Supply to forecast

Production based on forecasts

Inventory based on forecasts

Stock based on forecasts

Purchase what is on shelves

The difference between push and pull-based model is summarized by the slogan “Make what we sell, not sell what we make”.

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

Push/Pull View of Supply Chain:

Supply Chain Flow-Pepsi

Manufacturing plants in Maharashtra

Chembur Roha Paithan

One truck carries 9 tonnes which includes 550-700 crates (Primary Truck)

Pepsi 300ml GLASS BOTTLE

Supply Chain Strategy

1. The Customer and Supply Chain Uncertainty

i. Identifying customer needs

ii. Demand uncertainty and implied demand uncertainty

iii. Uncertainty for the capability of the supply chain

2. Understanding the Supply Chain Capabilities

3. Achieving the Strategic Fit

Organized Sales• CnF (group of workers namely loaders, de-loaders, salesmen work per CnF)

There are 13 CnFs in Pune

• Distributor -70 manpower with distributor 

-Distributor supplies to 4000-4500 outlets

i. He supplies in 11 routes with the help of 11 vehicles

ii. 10 vehicles for organized sale

iii. 1 for direct sale

iv. Secondary trucks under the supervision of the driver deliver the material to the retailer

v. Distributors have 3 days stock as back up with them in order of any malfunctioning of the plant or other such external factors.

• Retailers

Direct Sales

• From CnF the secondary trucks leave for the semi urban and rural areas for the direct sales of the materials . For each day truck consumes 6-7 L of diesel per day. This kind of selling is not used for demand forecasting but still generates huge amount of revenue that is why this practice is being followed despite having various loopholes.

• One truck carries 3 tonnes which includes 144 crates• Each crate consists of 24 bottles• Crate weighs 14.4 kg in case on 200ml full bottle• Crate weighs 18 kg in case on 300ml full bottle• Height of 300ml bottle -22cm• Weight of 300ml bottle-700gms when full• Weight of 300ml bottle-400gms when empty

Thank you !