Pepsico's Distribution &LogisticsPepsico's Distribution &Logistics
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
• 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% .
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
• Success mainly due to logistics and distribution
• Technical Capabilities to support logistics.
• Power of one program by Roger Enrico.
• Integrating and streamlining operations of various
• 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.
• Diversification into restaurant business.
• 1980s Pepsi Co acquired its franchisees to build its bottling
• 1990s Overseas expansion of bottling operations.
• 1998 Formation of Pepsi Bottling Company (PBG).
SYSTEMS (V& FS)
Direct StoreDelivery (DSD)Direct StoreDelivery (DSD)
• DSD was the oldest method employed by the PepsiCo
• Employees take Direct orders and delivers the
• Orders are taken manually .
• Timely delivery and shelf arrangement
• Ensured maximum visibility for passers by.
• 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.
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
perishable.eg cold drinks and juice.
• No additional employees
Vending & Food serviceVending & Food service
• 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,
• Huge potential of distribution channel developed the
largest vending and food service sales forces in the
US, comprising 600 people
• Revenues of over $1 billion /year
• Five retail channels –supermarkets/retail stores,
fountain/restaurant, convenience stores, vending and
• There were other distribution channels for beverages
including institutional buyers such as airlines.
• 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.
• 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
• Timely delivery
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
• PCNA -3rd
party logistics company “Penske
• Penske offered transport solution and warehouse
• Used- i2 transportation optimization system (TOS)
• Monitor movement of products and makes
necessary changes in routes and schedule to tackle
• Thus PCNA achieves more than 99.1% accuracy
• PCNA has centralized transportation to single
• It also employs Six sigma quality process.
• TOS –
o Order optimization,
o Load configuration,
o Lowest shipping cost,
o Quick routes
BottlersTo Retail OutletsBottlersTo Retail Outlets
• Pepsi Americas (PAS) was one of the largest bottlers
• PAS had 100 distribution centres and each centre
had 50 trucks
• PAS objectives
o Timely dispatch
o Full capacity utilization
o Quicker inventory replenishment.
• 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
• 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.
• Chilled DSD system for products that require
continuous refrigeration and Hybrid System should
• 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.