Pepsico distribution


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Pepsico distribution

  1. 1. Pepsico's Distribution &LogisticsPepsico's Distribution &Logistics OperationsOperations By (Group - 8) Sec C Arun K.P- 12129 Gaurav Jhunjhunwala- 12138 Md.Shahbaaz Roomy Akhtar- 12149 Roshan v shetty- 12158 Vinay Prakash- 12178 Sarthak Rohatgi- 12182
  2. 2. Introduction • PepsiCo is the US based world’s leading beverage and snacks food companies. • Headquartered in New York. • Largest share in US beverage markets with 28% with revenue of $25.11bn and growth of 6.8% . `
  3. 3. Contd… PepsiCo served diverse market with its six group companies such as 1) Frito-lay North America 2) Frito-lay International 3) Pepsi-Cola North America 4) Pepsi Beverage International 5) Gatorade/ Tropicana North America 6) Quaker Foods North America
  4. 4. Contd…Contd… • Success mainly due to logistics and distribution management operations. • Technical Capabilities to support logistics. • Power of one program by Roger Enrico. • Integrating and streamlining operations of various companies.
  5. 5. Background • In 1898, Caleb Bradham invented Pepsi-Cola. • Started marketing in 1903 and developed system of bottling franchise for the drinks. • Went bankrupt in 1923. • Charles, head of Loft candy company bought in 1931 and merged it with Loft candy to create Pepsi- Cola bottling company in 1941. • Merged with Frito lays international in 1965 to create PepsiCo Inc.
  6. 6. Contd…Contd… • Diversification into restaurant business. • 1980s Pepsi Co acquired its franchisees to build its bottling business. • 1990s Overseas expansion of bottling operations. • 1998 Formation of Pepsi Bottling Company (PBG).
  8. 8. Direct StoreDelivery (DSD)Direct StoreDelivery (DSD) • DSD was the oldest method employed by the PepsiCo • Employees take Direct orders and delivers the previous orders • Orders are taken manually . • Timely delivery and shelf arrangement • Ensured maximum visibility for passers by.
  9. 9. Contd…Contd… • To launch new products in pretty quick time • Market response can be determined more easily • No labour costs -unloading the trucks , placing the products on shelves.
  10. 10. Broker WarehouseDistribution(BWD)Broker WarehouseDistribution(BWD) • Less delicate & perishable products • “IMPULSIVE BUYING” products were not included • Employed third party distributors • Employees at the stores handled the products and placed them on the selves. • For the products which are less delicate and cold drinks and juice. ADVANTAGES:- • No additional employees • Economical
  11. 11. Vending & Food serviceVending & Food service System(V&FS)System(V&FS) • PepsiCo’s sales personnel distributes products through third party V&FS and bottling companies • Through this system, products were made available in school, colleges, canteen, stadiums, offices, restaurants etc • Huge potential of distribution channel developed the largest vending and food service sales forces in the US, comprising 600 people
  12. 12. Contd…Contd… • Revenues of over $1 billion /year • Five retail channels –supermarkets/retail stores, fountain/restaurant, convenience stores, vending and others • There were other distribution channels for beverages including institutional buyers such as airlines.
  13. 13. BenefitsBenefits • By 1990s Frito-Lay served more than 400000 retail customers each week through more than 10000 truck routed and 1600 distribution centers. • Store door delivery system granted the freshness of its product ,reduced retailer inventory and minimized whole sale expense. • During this period they concentrated on DTS(Down the street), which resulted in 65% sales of salted snacks versus 45% in supermarket.
  14. 14. LogisticsOperationsLogisticsOperations • PepsiCo’s logistics two main phases were: 1.Giving syrup to the bottlers 2.Distribution of bottles/cans to retail outlets • Product quality and uniformity standards should be maintained. • Timely delivery
  15. 15. BeverageManufacturing Unit to BottlersBeverageManufacturing Unit to Bottlers • Pepsi-Cola North America (PCNA) produced and sold beverages& concentrate to bottling units in the US and Canada. • Syrup was either sold directly to the bottlers or was combined with carbonated water for bottling • PCNA’S objective 1.Timely delivery(99.1% accuracy). 2.Reduce transportation cost
  16. 16. Contd…Contd… • PCNA -3rd party logistics company “Penske logistics” • Penske offered transport solution and warehouse management services • Used- i2 transportation optimization system (TOS) software • Monitor movement of products and makes necessary changes in routes and schedule to tackle unexpected situations. • Thus PCNA achieves more than 99.1% accuracy
  17. 17. Contd…Contd… • PCNA has centralized transportation to single location • It also employs Six sigma quality process. • TOS – o Order optimization, o Load configuration, o Lowest shipping cost, o Quick routes
  18. 18. BottlersTo Retail OutletsBottlersTo Retail Outlets • Pepsi Americas (PAS) was one of the largest bottlers of PepsiCo. • PAS had 100 distribution centres and each centre had 50 trucks • PAS objectives o Timely dispatch o Full capacity utilization o Quicker inventory replenishment.
  19. 19. PDTPDT • Delivered according to the stocks in truck • Labor and fuel cost • Old system- SKU 55’s(1990) to 300(2002) • Replaced handheld computers with PDT8000 • PDT 8000- according to customer requirement • Connected via WLAN or Modem
  20. 20. ProblemsProblems • Frito lays and beverages are delivered separately. • Cost of Labor, Fuel and Time incurred. • Distribution channels concentrated more on super markets and restaurant. • Pepsi Co group companies and its bottlers operates independently instead of an integrated approach. • No ERP system, so separate distribution systems of each brand , this increase cost.
  21. 21. RecommendationsRecommendations • Chilled DSD system for products that require continuous refrigeration and Hybrid System should be extended. • Combination of Pepsi Cos selling operations with its distributions and logistics function. • Streamline operations and integrate systems • Integrate the distribution channel of products with same destination . • Allocation of resources in the emerging markets like India and China.