VISION & MISSION “To be the world's premier consumer products company, focused on convenient foods and beverages. We seek to produce healthy financial rewards to investors as we provide opportunities for growth and enrichment to our employees, our business partners and the communities in which we operate. And in everything we do, we strive for honesty, fairness and integrity”
HISTORY & PROFILE PepsiCo was founded in 1965 through the merger of Pepsi-Cola and Frito-Lay. They are headquartered in Purchase, New York. Pepsi has many products such as Frito-Lay, Quaker Oats , Pepsi Bottling Group, and has continued to gain acquisitions in recent years such as Gatorade, Tropicana, Starbucks bottled Frappucino drinks, SoBe health juices, and Aquafina bottled waters.
“PepsiCo owns some of the worlds most popular brands including Pepsi-Cola, Mountain Dew, Diet Pepsi, Lay's, Doritos .”
To support its operations, PepsiCo has 36 bottling plants in India, of which 13 are company owned and 23 are franchisee owned. In addition to this, PepsiCo’s Frito Lay foods division has 3 state-of-the-art plants. PepsiCo’s business is based on its sustainability vision of making tomorrow better than today. PepsiCo’s commitment to living by this vision every day is visible in its contribution to the country, consumers and farmers.
FINANCIAL PERFORMANCE Pepsi Co brands are available in nearly 200 countries and territories. It generates revenues of over $43 billion and has over 168,000 employees.
ROLE OF INFORMATION SYSTEMS IN BUSINESS FIRMS INVEST IN INFORMATION SYSTEMS IN ORDER TO: ACHIEVE OPERATIONAL EXCELLENCE. DEVELOP NEW PRODUCTS & SERVICES. ATTAIN CUSTOMER INTIMACY & SERVICE. IMPROVE DECISION MAKING. PROMOTE COMPETITIVE ADVANTAGE. ENSURE SURVIVAL.
TPS in PEPSICO It serves operational managers in the sense that it updates them with the required activities on floor. Its principal purpose is to answer routine questions & to track the flow of transactions through the organization. Monitors status of internal operations & firm’s relationships with suppliers. It is the main source of information for other systems.
MIS & DSS in PEPSICO It provide middle level managers with report on factory’s performance & monitoring activities & helps in predicting future performance. Summarizes & gives reports on basic operations using data from TPS. It enables drill down facility to check the performance level. It is typically not very flexible system. The system uses various modules to gain information from data.
EXECUTIVE INFORMATION SYSTEMS (EIS) in PEPSICO This type of information is primarily used by senior managers. It addresses strategic issues & helps in formulating long term plans. Helps in identifying what the consumer’s taste will be in coming years? It uses web portal interface to present the content
ERP systems integrate business processes & information from entire enterprise . The system helps in coordinating the operation of business functions. ERP systems are software packages that can be used for the core systems necessary to support enterprise systems.
VALUE OF SYSTEM INTEGRATION ONE OF THE VALUES PROVIDED BY AN ERP SYSTEM IS THE COORDINATION OF VALUE ACTIVITIES IN THE VALUE CHAIN. THE SYSTEM PERFORMS THIS COORDINATION BY SHARING DATA ACROSS BUSINESS PROCESSES.
Inefficient Customer Service Do you think that one can keep the customer on the phone throughout this process? Would you consider this to be good customer service?
Solution to Inefficient Customer Service Enterprise system establishes available to promise (ATP) by checking warehouses and scheduled manufacturing Price and creditworthiness automatically determined from database
PepsiCo Inc. has selected SAP’s full MySAP Business Suite to streamline its distribution & delivery processes, improve planning & forecasting & give better visibility to its global supply chain. PepsiCo, which manufactures, distributes & markets Frito-Lays snacks, Pepsi-Cola beverages, Gatorade sports drinks, Tropicana juices & Quaker foods, is aiming to better link its supply chain & inventory data with its customer data.
SUPPLY CHAIN MANAGEMENT (SCM) SYSTEM The system manages relationships with suppliers, purchasing firms, distributors & logistic’s firms. It manages shared information about orders, production, inventory level etc. The goal is to move correct amount of product from the company to point of consumption as quickly as possible & at the lowest cost.
PEPSICO MAKES SURE THAT ALL OF ITS SUPPLIERS (WATER, CORN SYRUP, FOOD COLORINGS, CARBONATION, PLASTICS etc.) Come into an appropriate plant so as to keep customers satisfied with no shortages. Too much of additional inventory is avoided which hangs up resources & cash flows. Pepsico uses mysap business suite applications which helps in communicating with its suppliers & generate forecast of demand.
GENERALLY A STOCK OF UPTO 12 DAYS IS MAINTAINED IN THE INVENTORY.
Sap helps in fine-tuning their supply chains from a sequential supply chains into adaptive supply chain networks. “Adaptive” refers to the ability to rapidly sense & respond to changing internal & external conditions. “Network” refers to the ability to have real-time collaboration & coordination across all partners in th supply chain. It is a community of customer-focused companies that share knowledge & resources to intelligently adjust to changing market conditions.
CUSTOMER RELATIONSHIP MANAGEMENT (CRM) SYSTEM The system helps in managing relationship with customers. Deals with customers effectively & efficiently to optimize their revenue & increase customer satisfaction. The system captures & integrates customer data from all over the organization, analyze the data & distribute results to various systems & customer touch points across the enterprise.
Pepsico’s CRM application has allowed for conversion of former dissimilar sales systems into an integrated application solution, which gives a complete view of their entire consumer base. CRM applications are used in pepsico to determine profitable customers, discover potential sales opportunities, improve customer interaction & relations.
MIS AT PEPSICO THE STATION COMPUTERS ARE LINKED TO PEPSICO’S CENTRAL COMPUTER SYSTEM DAILY TO UPDATE INVENTORY, SALES & PRODUCTION INFORMATION SYSTEM. THE MANAGEMENT BELIEVES THAT THEY SAVE ANNUALLY OVER Rs. 12,50,000 PER YEAR JUST BECAUSE OF THIS SYSTEM.
Mis helps PepsiCo's managers to recognize market trends, in respect of price, differentiation of products & timely information of market trend. Effective marketing planning is assisted in terms of product planning, pricing, promotion & distribution. It helps in taking quick decisions & also validating manager’s decisions. It provides reliable & relevant information so that managers can take effective decisions at right time.
CBIS ELECTRONIC DATA INTERCHANGE (EDI): Information exchange between the companies, its suppliers & its subsidiaries. DIRECT EXCHANGE (DEX): Information exchange between hand-held computers & store’s delivery system.
THE DECISION MAKER’S DILEMMA The administration of pepsico was in dilemma: Integrate the new stand alone applications. Wait for their existing application upgradation according to their requirements. The management at pepsico chose to go with the first alternative.
The management was dwindling between strategic & tactical decisions. Strategic In this the entire system have to undergo bpr (business re-process engineering) which poses a tremendous challenge for the company & the results can’t be predicted. Tactical It is more controllable. It is perceived to increase short term benefits, decrease risk, fast roi. The tactical strategy is what the company adopted for.
FISCAL CONCERS REGARDING IMPLEMENTING APPLICATIONS Huge cost involved in product purchase & implementation. Integration of application with one or more other applications across the enterpirise. It is most time consuming. Data keeps changing with time & it is difficult to update the system then. Timing of the implementation must be sorted out carefully. Cost ofuser training & re-training on addition of modules.
COST COMPARISON OF IMPLEMENTING INTEGRATED BUSINESS SUITE SOLUTION vs. POINT SOLUTION.
INTEGRATION TO THE SYSTEM – point solutions vs. suite models over time
Flexibility to incrementally add the right mix of CRM, SCM & PLM (product life-cycle management) as business needs evolve. If offers a comprehensive business scope & can be the basis for all industry solutions.
MYSAP ERP MySAP ERP is a software package which combines world’s best & most complete ERP software functionality & addresses the core business software requirements of medium & large organizations. SAP NetWeaver is a full suite of enabling software technologies including functionality for portal infrastructure, business data warehousing, exchange integration, web application server, mobile technologies etc. From a modern ERP environment, it is highly recommended the customers convert the existing license to MySAP ERP to benefit from additional capabilities. MySAP ERP is designed to offer real-time integration with other SAP products. Third party applications can be integrated with MySAP ERP through SAP NetWeaver.
PROPOSED ENTERPRISE APPLICATIONS Proposed ERP system Outsourcing peripheral activities to external providers which can be a cost effective alternative. Outsourcing non-core business processes, Such as human resource & procurement, companies can focus on core competencies & free up valuable resources for further innovation & growth SAP supports BPO services in setting up services that reduces costs & improving process qualities.
Proposed SCM system It is proposed to do things as they are doing it right now. Company needs to keep an information system that will integrate all their suppliers to the main needs. They need to make sure that whatever information they use in future can accurately predict changing consumer demands.
Proposed CRM system The company’s CRM have greatly improved after trying new variety of software systems. The integration of the CRM application across all subsidiaries under PEPSICO has helped improve the system a lot which was not there when they were using Oracle PeopleSoft. CRM applications can be used to develop future marketing campaigns to meet the needs & desires of customers in specific areas.
Electronic business applications in PepsiCo PepsiCo & Pepsi Bottling Group (PBG) select MEDSTAT Advantage suite to manage employee benefits. This is a multi year licensed software provides PepsiCo & PBG with a DSS & reporting applications for proactively managing individual & organizational health in order to improve productivity & profitability. The MEDSTAT DSS integrate all of their information into a single, central source
The MEDSTAT system is used to identify the drivers of rising healthcare expenditures & ensure all employees are receiving the quality care available. MEDSTAT advantage suite integrates data warehousing capabilities, advanced healthcare analytic methodologies & business intelligence applications to provide a powerful decision support system.
The strategic fit Making one stage more responsive allows the other stages to focus on being more efficient. While discussing Pepsi’s supply chain capability, it was told that Pepsi tends to be more responsive in cities & a bit less in towns. Multiple beverages type contributes to a broader product portfolio causing the unit to adjust its strategies accordingly, thus fine tuning the supply chain for each type of beverage.
Technological factors for PepsiCo The competitive advantage will go the company that can apply technology to areas such as logistics, getting costs out of the distribution pipeline & getting products into the stores less expensively while increasing the availability of sales information.
Strategic alternatives Continue to diversify their beverage selection. The company needs to ensure that they can properly manage all of acquired companies & should divest that shows that show limited potential. Increase the use of exclusivity agreements to boost their sales in key markets. Tie up with restaurants, food chains, sporting events etc.
Improvements due to IT Executive support system (ESS): ability to closely monitor sales or market share. Decision support system (DSS): reduces cost of raw materials & supplies. Packaging Application Expert (PAX): automates production & logistical processes. Transaction processing system (TPS): saves 30-50 thousand man hours weekly. Management reporting system (MRS): improved product quality, less waste & gives profit-vision.
PepsiCo software's cost Software costs includes : Direct cost of materials & services utilized in developing or obtaining computer software. Compensation & related benefits for employees who are directly associated with the software project. Interest costs incurred while developing internal-use computer software.
Software costs are included in property, plant & equipment on the balance sheets & amortized on a straight-line basis when placed into service over the estimated useful lives of the software, which approximates 5-10 years. Net software & development costs were $1.1 billion as of December 26, 2009 & $940 million as of December 27, 2008.
Why SAP? PepsiCo Inc. selected SAP's full MySAP Business Suite to streamline its distribution and delivery processes, improve planning and forecasting, and give better visibility to its global supply chain. PepsiCo, which manufactures, distributes and markets Frito-Lay snacks, Pepsi-Cola beverages, Gatorade sports drinks, Tropicana juices and Quaker foods, is aiming to better link its supply chain and inventory data with its customer data. PepsiCo was a great competitive win for SAP because some of PepsiCo's subsidiaries were already running Oracle for enterprise resource planning (ERP) systems, as well as PeopleSoft and Siebel CRM systems.
PepsiCo was probably fed up with Oracle's inability to execute on the integration of Pepsi's dissimilar software applications spread across its subsidiaries. It's one of the better platforms when data, application and process integration with other non-SAP applications and databases is an issue. Companies are looking to SAP to displace dissimilar systems, give geographic locations real-time process visibility and remove process redundancies.