Bangladesh University of Professionals

Department of Business Administration in Marketing

Term paper on
Supply Chain Management

Company: Pepsi CO.

Submitted By

Saqlain Morshed (17251010)

Anika Tahsin (17251004)

Shadman Sakib (17251070)

Section: B

Session: 2016-17

Submitted To
Dr. Mohammad Anwar Hossain

Associate Professor

Bangladesh University of Professionals

 Index

Introduction........................................................................3

Executive Summary……………………………………....3

Pepsi Co History................................................................4

PepsiCo's Mission..............................................................4

Competitive and Supply Chain Strategies..........................5

PepsiCo's Supply Chain Management...............................6

Difficulties without Just -in-Time......................................6

Improvement with using Just-In-Time (JIT)......................6

I2 Transportation................................................................6

Implementation..................................................................7

I2 Supply Chain Visibility.................................................7

E-solution by Hewlett Packard (HP)..................................9

Pepsi Bottling.....................................................................9

The challenge...................................................................10

The solution......................................................................10

The results........................................................................11

Packaging as a tool for Supply chain management..........11

Pillarization Roadmap......................................................12

PepsiCo's Frito Lay Supply Chain...................................13

Strength............................................................................13

Transportation..................................................................13

Retailers............................................................................13

Competitive advantages...................................................14
Pepsi Tropicana Supply Chain.........................................15

Background......................................................................16

Problems...........................................................................17

Solution............................................................................18

Limitations of Pepsi Supply Chain over Coke.................20

Conclusion………………………………………………22
Introduction:
Supply Chain Management is the process of planning, implementing, and controlling the
operations of supply chain with the purpose to satisfy customer requirements as efficiently as
possible. Supply chain management spans all movement and storage of raw materials, work-in-
process inventory, and finished goods from point-of-origin to point-of-consumption. It is a
cross functional approach to managing the movement of raw materials into an organization and
the movement of finished goods out of the organization toward the end consumer. Supply Chain
management is also the combination of art and science of improving the way company finds the
raw components it needs to make a product or service and deliver it to customers. It seeks to
enhance competitive performance by closely integrating the internal functions within a
company and effectively linking them with external operations of suppliers and channel
members. Moreover, this has been a prominent concern for both large and small companies as
they strive for better quality and higher customer satisfaction.

The complexity involved in managing supply chains that span continents and dominate markets
demands strategies and systems that are adaptable. Managing Supply Chain for Global
Competitiveness takes a strategic look at all of the core functions of global supply chain
management which includes product design, planning and forecasting, sourcing, outsourcing,
manufacturing, logistics, distribution, and fulfilment. An example to illustrate this theory on the
supply chain management is the PepsiCo, Inc.

Methodology

Primary data:

1) We couldn’t collect any data from primary source.

2) We mainly focused on secondary data.

Secondary data:

1) We have collected our secondary data from the Internet. The links are given in the reference
part of the report.
Executive Summary:

The PepsiCo Company is currently the leading beverage provider in the United States and

around the world. The PepsiCo Company has been able to do this because of their core mission,

which is to refresh the world, to inspire moments of optimism and happiness, and to create

value and make a difference (Company Mission Statement). Being on top and outperforming

competitors is PepsiCo’s main goal. In recent years, however, PepsiCo’s main competitors

Cocacola and Dr Pepper Snapple Group have been doing their best to take PepsiCo’s top spot,

specifically Cocacola. Some of the reason for PepsiCo’s success is through its efforts in the

snack food manufacturing industry with its partnership with Frito-Lay. In recent years PepsiCo

has generated more than 40% more revenue than Coca Cola. PepsiCo’s net revenue after 2010

was at $60 billion while The Coca Cola Company’s was at $38 billion. Part of the reason

PepsiCo has experienced a greater revenue is largely due to their presence in the snack foods

manufacturing industry. Therefore The PepsiCo Company should increase their presence in the

snack food manufacturing industry in order for them to keep up with PepsiCo.

We propose that PepsiCo partner with ConAgra Foods, which is currently fourth in the

snack food manufacturing industry behind PepsiCo Frito Lay, Kraft Nabisco, and Procter and

Gamble (Hoovers). Currently The Coca Cola Company already is partnered with Procter and

Gamble, which has already allowed them to enter into the snack foods manufacturing industry.

The PepsiCo needs to further its efforts by partnering with ConAgra Foods so it can continue to

expand and compete directly with PepsiCo in the beverage and snack food manufacturing

industry. Partnering with ConAgra Foods will be greatly beneficial because of their experience

within the snack food manufacturing industry. The Coca Cola Company and ConAgra Foods

will be able to benefit from each other in this possible joint venture. The Coca Company will

further benefit from the experience ConAgra Foods already holds within the snack foods

manufacturing industry whilst at the same time ConAgra Foods will benefit from the structural

and financial strengths provided by The Coca Cola Company. I want to use PepsiCo’s mission
to inspire happiness and refreshing the world in order to influence consumers to purchase both

Coca Cola and ConAgra Foods Food’s products, which will also help increase net sales and

market share.

Pepsi Co History

PepsiCo, a Fortune 500, American Multinational Corporation is under the food consumer
product industry and is the world leader in convenient foods and beverages. The Pepsi brand
and other Pepsi Cola products account for nearly one-third of the total soft drink sales in the
United States. In order for the company to make sure that their products reach the customers,
the company needs a efficient supply chain solutions.

It was founded in 1965 through the merger of Pepsi-Cola and Frito-Lay. Tropicana was
acquired in1998 and PepsiCo merged with The Quaker Oats Company, including the
Gatorade in 2001. Pepsi Co 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 owns some of the world's most popular brands, including Pepsi-Cola, Mountain
Dew, Diet Pepsi, Lay's, Doritos, Tropicana, Gatorade, and Quaker. Coca-Cola Company in
market value for the first time in 112 years since both companies began to compete. Other
brands include Caffeine-Free Pepsi, Diet Pepsi/Pepsi Light, Caffeine-Free Diet Pepsi,
Caffeine-Free Pepsi Light, Wild Cherry Pepsi, Pepsi Lime, Pepsi Max, Pepsi Twist and Pepsi
ONE,7 Up,Aquafina (Flavour Splash, Alive, and Twist/Burst),Propel Fitness Water, So Be,
Quaker Milk Chillers.

The Frito-Lay brands are: Cheetos, Fritos, Go Snacks, James' Grandma's Cookies, Hamka's,
Lay's, MissVickie's, Munchies, Sandora, Santitas, The Smith's Snackfood Company, Sun
Chips, Kurkure, Tostitosand some of the Quaker Oats brands include Aunt Jemima, Capone
Crunch, Chewy Granola bars, Coqueiro, Crisp'ums, Cruesli, Fresc Avena, King Vitaman,
Life, Oatso Simple, Quake, Quisp, Rice-ARoni and Spudz
 PepsiCo's Mission

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

Pepsi Ceo

Indra Krishnamurthy Nooyi has been the chief executive of PepsiCo since 2006. During her
time, healthier snacks have been marketed and the company is striving for a net-zero impact
on the environment. This focus on healthier foods and lifestyles is part of Nooyi's
"Performance with Purpose" philosophy. In 2007, Nooyi spent $1.3 billion on healthier-
alternative brands like Naked Juice, a California maker of soy drinks and organic juice.

Today, beverage distribution and bottling is undertaken primarily by associated companies

such as The Pepsi Bottling Group and Pepsi Americas. PepsiCo is a SIC 2080 (beverage)
company.

PepsiCo has also recently acquired a so% stake in U.S.-based Sabra Dipping Company

PepsiCo also has formed partnerships with several brands it does not own, in order to
distribute the market them with its own brands.
Competitive Supply Chain Strategy

 In its business, diversity and inclusion provide a competitive advantage that drives
business results.
 Its brands appeal to an extraordinarily diverse array of customers and they are sold by an
equally diverse group of retailers.
 It understands the needs of our consumers and customers Uses diversity in our supplier
base and in everything we do.
 Commitment to purchase from a supplier base representative of our employees,
consumers, retail customers and communities.
 Developing partnerships with minority-owned and women-owned suppliers helps us
build the world-class supplier base we need.
 Creates mutually beneficial relationships that expand PepsiCo's sphere of activity. It
helps build community infrastructure by providing employment, training, role models,
buying from other minority and women-owned business and supporting community
organizations
Figure 1

Thus the 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 Supply Chain Management

When an operation of the company was not just-in-time based, the demand or
production planner strived to optimize production-oriented goals and objectives such
as equipment utilization, labor efficiency, throughput and uptime.
Optimizing these goals often leads to run large batch sizes that are dependent on the
availability of raw materials. This optimizes the equipment and labor utilization but
the production planners and managers had not been looking at the expense of the
bigger picture.
The sourcing or purchasing managers strived towards reducing company's spending
overall. This manager consolidated suppliers offering products or materials at the
lowest per unit costs through buying in volume.
They even got the shipping and freight costs included in the purchase price, which led
to the increase in the price of the commodity.
Purchasing managers focused on getting the best price, not putting into consideration
the supplier performance and reliability.
The logistics/transportation manager was tacked with getting raw materials in and the
finished goods out of the production process and seek to optimize the transportation
and distributing network. This manager focused on the lowest cost and reliability of
the logistics or transportation solutions. But lowest cost could only be attained if the
purchasing team negotiates a delivered cost package deal with the supplier and the
supplier is responsible of the reliability and performance of the carriers or
transporters.
Improvement:

When it comes to delivering high cost and perishable products to manufacturing sites,
just-in time (JIT) remains one of the most cost-effective supply chain solutions. In JIT
process, on time delivery is an absolute necessity.
Just-in-Time (JIT) is a philosophy that defines the manner in which a manufacturing
system should be managed. It enhances customer satisfaction in terms of availability
of options, assurance of quality, prompt delivery times, and value of money.
The Pepsi brand and other Pepsi-Cola products accounted for nearly one-third of the
total soft drink sales in the United States. In order to ensure that PepsiCo's
concentrates reaches bottlers as needed during the production had to reach them JIT,
they partnered with 3PL provider Penske Logistics to manage its transportation.
Penske also provides warehouse management for two Pepsi distribution centers in
North America.

Transportation:

I2 Transportation is a part of end to end solution for planning, execution, and

management of the entire transportation cycle.
It is designed to enable an organization to utilize and manage an entire transportation
network, as well as reduce cost while improving transport performance

I2 transportation is designed to employ sophisticated optimization and data techniques to

define and evaluate alternative transportation strategies. It is also designed to provide
comprehensive data management, analytics, and reporting of key transportation cost and
service trade-offs.
Implementation:

PepsiCo set two objectives for transportation management. One was to achieve an on-time
delivery rate at 99.1% and another was to reduce transportation costs. It empowered with
optimized processes and technology that enable the team to perform at the highest possible
level. With the application of new technology that provides greater supply chain visibility,
better organized data, and access to higher level of real time or near real time information,
even the best team can improve their performance.

In 2000, Penske converted Pepsi's transportation management technology from propriety

software toi2 transportation optimization solution. I2 transportation platform was enhanced
with the addition of interface between the two companies.

In addition, Penske's partnership with Business objects provided comprehensive supply chain
data from its data warehouse, analysis and management applications. Penske's with use of i2
transportation could track performance at every stage in the process which increased
flexibility and provided greater control over the transportation operation. This increase in
visibility made it easier to keep track of shipments, revise routes and schedules to
accommodate unforeseen changes and implement alternative plans to counter delays. By
Penske's putting a solution in place to track and measure every shipment, Pepsi has been able
to provide an on-time delivery performance of well over 99percent.

Pepsi's transportation is consolidated to a central location to reduce costs. Penske also

provided nationwide carrier rate re-negotiation and service assessment which improved cost
structure and achieve on-time delivery goal. With this centralization, allows negotiation in a
large scale to secure the best rates and services.

Furthermore, Pepsi's orders are received electronically and optimized to ensure lowest
transportation cost. Advanced technology is deployed to select the lowest cost carrier, find
the best routes and consolidate shipments. Optimal load configuration ensures maximization
of each truckload (2003).
In summary, PepsiCo used the JIT process to its supply chain management. To make this
possible, Pepsi partners with Penske that has provide them with i2 transportation optimization
solutions which has satisfies their consumer with the on-time delivery and with the benefit to
the company for it has also reduce transportation cost.

Supply Chain Visibility

With shorter lifecycles and lead times-to customers demanding faster results and more
responsive service. Globalization and outsourcing have added to the complexity, resulting in
more diversified supply chains. The number of supply chain partners, as well as the amount
of geographic dispersion, has increased dramatically as a result.
To ensure that their order-to-delivery performance is not impacted, companies need to have
greater coordination and visibility into the material flow across the supply chain.

Increase Global Visibility

With Companies have access to global visibility into all of their critical supply chain
activities and partnerships. It allows organizations to respond more quickly and effectively to
a wide range of unplanned and potentially disruptive supply and demand events. Supply-
related events can include production bottlenecks, fulfilment delays such as port strikes and
customs delays, and supplier shortages. Demand-side events might include customer orders
that are greater than forecasts or changes to orders that have already been placed.

I2 Supply Chain Visibility is designed to manage these events, assess their impact, and
orchestrate a rapid and practical resolution while providing a unified view of the supply
chain. The solution can also incorporate packaged business process packs for replenishment,
fulfilment, and manufacturing, and these packages can be configured to meet customer-
specific requirements.

i2 Supply Chain Visibility also enables companies to close the loop between traditional
planning and execution processes. It enables better understanding of orders, inventory, and
logistics data.
Powerful Functionality

This solution incorporates pre-built workflows that integrate data across order management,
warehouse management, logistics, and inventory applications for the flow of both domestic
and international goods. A series of predefined, extensible events and exceptions support
each work flow and a visual "studio" allows workflows and events to be extended,
configured, and customized to meet specific enterprise requirements. I2 Supply Chain
Visibility delivers a robust technology that is scalable and extensible, and that operates
smoothly in a distributed computing environment.

Extensive Capabilities

• Inbound and outbound tracking of order, inventory, and logistics flows.

• Domestic and international flows that track multi-leg and multi-modal
shipments.
• Visibility into exceptions and events across orders, inventory, and shipments.
• Role-based views for buyers, suppliers, analysts, and 3PL vendors.
• High degree of permissibility and privacy controls.
• Track-and-trace inventory across multiple locations.
• Configurable event detection mechanism and customizable event management
workflows.
• Event chaining such as linking of related events, audit trails, context-based
problem prioritization and extensive notification options including e-mail,
e-mail digest, pagers, and cell phones.
• Calendars, internationalization (i18n), and multi-time zone support enabled.
• Root-cause, event trend, and performance analysis capabilities.
• Rich event library with over 100+ out-of-box events supported.
• Fast, web-based supplier enablement and transaction support.
Benefits

• Exception-based management.
• End-to-end supply chain visibility and event management tools.
• Customer-specific solutions for replenishment, fulfillment, and manufacturing.
• The ability to forecast and respond to supply/ demand events.
• The option to move from calendar-based to event-driven planning and re-
planning.
• Increased employee productivity.
• Reduced process, personnel, and expediting costs.
• Improved customer, supplier, and partner communications.
• Real-time decision support.

E-solution by Hewlett Packard (HP)

PepsiCo signed a deal with Hewlett Packard in 2006 to help improve its supply chain
management and increase overall efficiency. The seven year deal involved the overhaul of
current IT solutions with PepsiCo and focused on updating server environments as well as
ensuring a new infrastructure which benefitted operations and increased overall cost-saving.

In particular, HP introduced a number of new solutions which helped to encourage stronger

customer relationship management and supply chain management. PepsiCo had also opted
for BT as its network provider to ensure thee-solution is fully implemented.

The supply chain management solution reduced costs as well as enhanced current service
provision online and via its communications networking system. By standardizing and
optimizing its server environment, PepsiCo International is better flex to meet its changing
business needs and in turn provide better service to customers anywhere in the world.
Pepsi Bottling

Pepsi Bottling Group is the world's largest manufacturer, seller and distributor of Pepsi -Cola
beverages. With annual sales of nearly $11 billion, the company's fastest growing segment is
non- carbonated beverages, including the number one brand of bottled water in the U.S.,
Aquafina, as well as Tropicana juice drinks and Lipton Ice Tea. As part of a 24/7 production
operation, the company's Detroit plant ships about 27 million cases per year.

Production at the plant begins as empty bottles are unloaded from trucks via conveyor and
transported to a depalletize. From there, they are, rinsed, dried and sent to a filling machine
(filler speeds at the plant vary based on bottle size, ranging from 350 to 1,000 bottles per
minute). The bottles leave the fillers and make their way to a packaging machine, and then to
a palletizer. Each pallet is wrapped for distribution and moved to the warehouse for shipping.

The challenge
The plant uses a variety of sensors to monitor bottles as they travel through the sequence of
steps and to manage the flow to the individual stations. Line sensors match the speed of the
conveyor. The company's inventory of sensors swelled over the years to include more than
120 different varieties. Many of these included multiple styles of the same product stocked
under different brands. A similar problem was developing with its drives inventory, which
had grown to over 50 different part numbers.

The wide variety of sensors made it progressively more complex and time-consuming to
replace a faulty device. Despite its fast, high-performance machinery, the increasingly
lengthy and more frequent downtime was beginning to impact the company's ability to meet
its productivity goals. In addition, operating costs were on the rise due to the excess spares
inventory. Because of the extensive number of sensors they had in inventory, including
multiple styles and brands, simply finding the right replacement resulted in an hour of
downtime.

A more strategic approach to maintenance was necessary, as even the smallest of delays
could cost the plant thousands of dollars in lost production and overtime. Knowing that
effective parts management and fast, reliable equipment repair lies at the heart of efficient
manufacturing, the company explored ways to get its inventory and maintenance processes
under tighter control. That's when it decided to turn to Rockwell Automation for help.
The solution
The first task undertaken by Rockwell Automation was to conduct an Installed Base
Evaluation – a plant-wide inventory assessment to determine the exact number of sensors and
drives the plant currently had in stock. Next it needed to figure out what products were
actually needed and which ones

could be eliminated. To streamline its operation, Rockwell Automation recommended that

Pepsi standardize its entire sensors inventory on Allen-Bradley products. The local
distributor, Mc Naughton Mc KyElectric Company (Mc&Mc), helped design a migration
plan to help ease the cost of this inventory conversion.

Although all the drives employed at the plant were Allen-Bradley brand, many were older
models representing a multitude of drive families. To simplify its drives inventory and
upgrade its technology at the same time, Pepsi converted all of its drives to the Allen-Bradley
Power Flex family of AC drives. A detailed cross-reference chart developed by Rockwell
Automation now provides technicians with a quick and easy way to identify failed and
replacement parts, as well as installation instructions.

To ensure reliable availability to spare parts, Pepsi set-up a Rockwell Automation Services
Agreement that included parts management. With the agreement, Pepsi pays a fixed monthly
cost for their spare parts, which are owned and managed by Rockwell Automation but
stocked on-site. The agreement allows Pepsi to reduce its upfront expenses, have immediate
access to spares, reduce carrying costs, and update its control technology cost-effectively.
The agreement also includes an in- service warranty, so the parts don't go out of warranty
until they are actually used for the warranty period.

To help the company better utilize its internal resources and reduce costly troubleshooting
delays, the Rockwell Automation Services Agreement included Tech Connect Support. This
remote support service provides the plant with 24/7 access to Rockwell Automation technical
specialists. When a problem occurs, Pepsi technicians can call for immediate troubleshooting
assistance to resolve it as quickly as possible. To help facilitate problem resolution, Rockwell
Automation technical specialists can also perform remote system diagnostics through an
Allen-Bradley modem installed at the Pepsi facility. This helped Pepsi minimize risk and
reducing long term costs.
The results

Leveraging Rockwell Automation Services & Support has proved to be a smart decision for
Pepsi Bottling Group. The improved inventory and parts management capabilities helped
reduce downtime and inventory costs, and standardizing on Allen-Bradley products eased
training requirements and minimized the technology learning curve. These benefits have
ultimately enhanced productivity by 8percent and reduced the overtime required to fill orders.
In addition, the plant was able to reduce the number of sensors it uses from 180 to 46, a
decrease of 66 percent. Likewise, it was able to reduce the number of drive styles from
several hundred to 14.

Packaging as a tool for Supply chain management

• GS - 1 standards (bar codes)

• RFID tags for real-time stock replenishments
• Commercial Security offerings
• Counterfeit &pilferage
• Online supply chain visibility across the chain
• Pack safety for the consumer

Pepsi-Cola Saved $44 million by switching from corrugated to reusable plastic shipping
containers for one liter and 20-ounce bottles, conserving 196million pounds of corrugated
material.

Palletization - cost vs. value creator

Key supply chain cost optimizer through an integrated supply chain approach

• Drive standards -pallets/ trucks

• Pallet pooling services
Palletization Roadmap

PepsiCo's Frito Lay Supply chain

Frito-Lay is the snack food division of PepsiCo and the largest supplier of potato and corn
chips in the world, currently holding 40% of the market share globally, and selling its products
in 120 countries.
Strength
Frito-Lay is succeeding against a multitude of competitors in a fierce, yet slow-growth
industry, selling approximately 4-5 billion packages of snacks per year.

In order to achieve this, the company has learned how to masterfully create, innovate and
manage all aspects of its supply chain using high -tech IT systems that allow it greater control
over its production processes and distribution network.

Supply chain in USA:

Supplier Base: Frito-Lay's supplier network for potato chip production has fewer than
100individual suppliers.

Strategy Used:

• Several years ago, Frito-Lay approached its potato suppliers to seek those
farmers willing to concentrate on cultivating a limited number of potato
varieties, with a focus on producing the most appealing taste and quality
potato chip for the consumer.
• Frito-Lay then offered these farmers long-term contracts, which made it easier
for the farmers to get financing and for Frito-Lay to achieve more efficient,
profitable economies of scale in other areas of the value chain.
• It is noteworthy to mention that steps like these that insure a stable supply of
raw material are important to a company who purchases 2.3 billion pounds of
potatoes and 775 million pounds of corn annually.

From supplier to retailer

• Frito-Lay traditionally relied upon its in-house fleet of trucks to transport

products from its plants to its 1,900 warehouses or 200 distribution centers.
• However, as the company expanded, operations managers realized that it was
not economical to produce every product at every plant, and thus began
specializing at particular locations.
• On the other hand, logistics became increasingly difficult and distances grew
longer, and thus, Frito-Lay learned to exploit the benefits of truck carrier
 services, employing Menlo Logistics to handle route planning. Menlo was able
to reduce the carrier base by so% and negotiate nationwide discounts with
other carriers.

Retailers

• The last stop involved is the 400,000 stores across the nation that carries Frito-
Lay's snack food products. The company utilizes their own technological
systems to show stores how reallocating shelf space, for example, can produce
larger profits.
• Retailers are also provided with Frito-Lay's "Profit-Vision Program", which
allows retailers to analyze their sales and compare it to national performance
statistics.
• At the same time, Frito-Lay benefits from the program because it convinces
retailers to allocate more shelf-space to their products.

Strengths of IT Corporation

• Tracks the logistical movement of products throughout the supply chain, from
acquiring the raw materials to final delivery, by utilizing its 848 tractors, 2,251
trailers, and a fleet of thousands of local computer-equipped delivery trucks.
• Empowers its regional managers with access to vast amounts of information
on their databases that can be used to effectively guide them in their
distribution decisions.
• It is able to correctly assess demands across all of its products due to the
availability of point-of sale data and an impeccable IT system, giving planners
the ability to discern consumer trends and appropriately prepare production
plans.
• Its managers can be proficient in determining levels of inbound supplies, raw
materials, the allocation of the company's production capacity, and logistical
details for truck routing.
 • The company's ability to target local demand patterns with effective
promotion and delivery systems results in continuously optimizing profit
margins and reducing inventory and unneeded costs.

Competitive advantages

• The company tries to captivate its customers by developing extensive

databases that record who their customers are and exactly what they want.
• They focus on being the most reliable, quality-driven suppliers who provide
services through the retail channel by means of collecting as much information
along the way and utilizing it to address their weaknesses and capitalize on
their strengths.
• Despite only delivering potato and corn chips, relies on its ability to add
unparalleled value in its distribution channel. Its customers know that when
they do business with
Supply chain in Bangladesh

Horticulture produce in Bangladesh is largely marketed through traditional channels. A

typical marketing chain for horticultural produce consists of several players as shown in
Figure

PepsiCo is one of the pioneers of contract farming in Bangladesh since 2001 Their experience
in contract farming has covered many crops - potato, basmati rice, tomato, chili, peanut,
oranges and more recently sea weed. PepsiCo's operations started in Bangladesh started in the
region of in collaboration with state government. PepsiCo Bangladesh's project with the
Punjab Agro Industries

Pepsi Tropicana Supply Chain

Background

Of the four principal Distribution Centers (DC) in the U.S. the Jersey City, N.J. DC is
responsible for the supply of Tropicana juices in all states in the Northeast U.S., and all
Canadian provinces. Jersey City houses a unit load capacity Automated Storage and Retrieval
System (ASRS) that is fully integrated into an Automated Warehouse System (AWS). The
center handles chilled premium orange juices, and blended juices from concentrate as well as
shelf stable juice products from either Florida or local co-packers. Products vary according to
package size, and juice type and style, giving rise toapproximately200 Stock Keeping Units
(SKU), each facing random demand from customers. Juices arrive already palletized and
variously pre-packaged, and are unloaded according to demand, and moved into the ASRS
area.
 The Jersey City Distribution Centre (DC) of Tropicana is responsible for the supply of
Tropicana juices in all states in the Northeast U.S., and all Canadian provinces. Premium
orange juice from Florida represents approximately 65% of the shipments, and has an
approximate shelf life of 65 days. The Jersey City DC receives five Tropicana Unit trains
from the production facility in Florida weekly. Each train has approximately 45
refrigerated cars. Juices arrive already palletized and pre- packaged in paperboard
containers and plastic and glass bottles. Two types of unloading procedures are currently in
practice: cross-docking and warehousing. Cross docking normally is used for customers
receiving a single product types or transfers to a smaller distribution center in Whitestone,
NY. Each train usually contains 8 to 10 railcars that can accommodate cross-dock delivery.

Problems

There are three major problem areas related to the current practices in Tropicana.

1. Ordering policy of the individual retailers.

At the moment, Tropicana manages the inventory orders for about 10% - 20% of the
retailers. This process is called CRP or continuous replenishment program. The Tropicana
customer service department administers the ordering of those individual customers. From
the supply chain perspective, this is mutually beneficial for both the customers and the
warehouse. The advantage of the warehouse is that it is able to centralize the demand
information of individual stores in its replenishment decisions of juices shipped from
Florida to Jersey City. The retailers benefit from in time delivery and less stock out cost.
Individual stores contribute the other 80% - go% of the orders, which are not under
Tropicana's control. This is subject to random variation and hence uncertainties of demand
on the warehouse. One approach would be to create an incentive for the customers to
entrust their ordering function to Tropicana. This is the so-called supplier-retailer
coordination problem. A carefully designed coordinated system will benefit each and every
player in the supply chain network. This may require the design of contracts or cost sharing
agreements with the customers.

2. Central ordering of juices that are shipped to the distribution center.

Currently there are five trains of juices scheduled to arrive weekly from Florida. The
company never ships partially filled trains from Florida. The Jersey City distribution center
sometimes builds up inventory of certain classes of juices that are close to their expiration
date, and the company has to get rid of them either at a very low price with sales promotion
or donate them to charity. A carefully designed and sophisticated coordination of ordering
policies will reduce the chances for these problems and result in savings. At the same time
it will increase the fill rate because the additional capacity gained from more reasonable
ordering can be used for ordering more juices of the type that cause trucks to wait in the
yard.

3. Combining marketing strategies with inventory levels and other factors.

Marketing strategies such as sales incentives can influence demand. Foreseeing an

inventory build- up problem, the company can use marketing (and mainly pricing) as a tool
to either increase demand (when certain items build up) or reduce demand (when
insufficient inventory is available).

Solution

1. Tropicana, a unit of PepsiCo, implemented i2 Supply Chain Strategist to model

manufacturing logistics operations to include co-packer operations.
2. The model involved over 30 manufacturing and distribution facilities and the
seasonal demand of over 20 product types.
3. Tropicana used i2 Supply Chain Strategist to execute hundreds of scenarios and
sensitivities, producing data that provided insights into areas where the company
could rationalize system capacity at manufacturing facilities and increase
efficiencies within existing distribution and logistics systems.
Reference:

1)http://www.academia.edu/16591062/Assignment_on_Coca-Cola_Company

2)http://www.lawyersnjurists.com/article/pepsico-fundamentals-of-marketing/
Limitations of Pepsi Supply Chain over Coke

PepsiCo has duplicate distribution systems for its beverages. Coca-Cola has for the
most part-maintained distribution of its entire beverage line-up through its bottlers.
Pepsi bottling system is more fragmented than Coca-Cola's
In a consolidated system negotiations involve fewer players and therefore take less
time to gain agreement, which may be why the Pepsi system has lagged in system
efficiency efforts. PepsiCo and its bottlers have established a purchasing
cooperative to gain purchasing power in buying raw materials.
While PepsiCo has been pursuing international beverage acquisitions, those
investments will take time to produce significant operating income.
PepsiCo consolidation puts pressure on the independent system bottlers to more
readily consider agreements for warehouse distribution.