SIP Project Report_Snigdho Sundar Kundu

General Supply Chain and Sub Distributor
Management
Summer
Internship Report
AUTHORED BY:
Snigdho Sundar Kundu
Post Graduate Diploma in Management (PGDM)
batch of 2014-2016
International Management Institute Kolkata
Tenure: April - June

1 | S t u d y o n S u b D i s t r i b u t i o n a n d S u p p l y C h a i n o f P e p s i C o I n d i a
INTERNSHIP CERTIFICATE

EXECUTIVE SUMMARY
This project deals with a study on the general supply chain and thereby a focussed study on sub
distributors of PepsiCo India in the region on North Kolkata City (NKC).
The study span is a period of eight weeks. The first two weeks were spent on understanding the modus
operandi of PepsiCo’s distribution system, and the next six on studying sub distributors and their
operations.
For the first two weeks, Prerna Udyog’s Tangra Distribution Centre was the hub from where markets
such as Rajabazar and Salt Lake was studied. Also, key performance indicators (KPIs) and Focus
Month Objective (FMO) was understood, Distribution Metrics were acquainted with.
Sub Distributor is channel partner that operates in areas where direct distribution is difficult. Such
difficulty may occur due to lack control on the area or otherwise. Sub distributors are generally sole
proprietor entities that operate somewhat independently. In general they engage in distribution of not
only one product but other products too.
The project has attempted to understand the vitality of the sub distributors and their integral part in the
supply chain. It focusses on their behavioural aspect and motivation and the impact of such factors on
the way they operated as a channel partner. Thereby it tries to suggest ideas that can improve the
efficiency of the supply chain and the sub distributor.
The Managerial importance of this project is that it will give unique insights from the field which will
be a repository of ground knowledge. It can be used for future strategic decision making. Suggestions
for the same have been included in this report. The problems that have been addressed are quite
common. They may be applied to similar contexts.

ACKNOWLEDGEMENT
I am deeply indebted to Mr Dev Narayan Sarkar, Associate Director, PepsiCo India Holdings Ltd. for
selecting me as an eligible candidate for a summer internship project with PepsiCo India Holdings Ltd.
I am grateful to Mr Subeg Singh, GMHR, Varun Beverages for giving me the opportunity to
understand PepsiCo’s supply chain mechanism and thereby assigning me a project on ‘sub distribution’
of PepsiCo in North Kolkata City.
I must admit the guidance of Dr. Nandita Mishra, Placement Chair, IMI Kolkata who supported my
decision to join PepsiCo.
My heartfelt gratitude goes towards Dr. Himadri Roy Chowdhury, my faculty guide for his constant
support and helping me to discover pathways to improve my project and make it a success.
My deep respect towards Mr. Pranab Chatterjee, TDM, Varun Beverages for welcoming me as a
summer intern in his team and allowing me to work with him.
My gratitude towards the CEs Ravi Katial, Abhishek and Rakesh Goswami, and all the PSRs who
explained me the nuances of the supply chain and subtle aspects of the beverage supply chain.
Lastly, I am also grateful to my fellow summer intern Piyush Pagaria with whom I could discuss my
ideas on improving efficiency in the supply chain processes of PepsiCo.
SNIGDHO SUNDAR KUNDU
PGDM 2014-16, IMI Kolkata

PAGE OF CONTENTS
SL. No. CHAPTER NAME MODULES PAGE NO.
Module 1: Industry Analysis
Module 2: Competition Analysis
Module 3: Bottling Franchises
Module 1: Products
Module 2: Channel Partners
Module 1: Eight Step Call Process
Module 2: Beat Planning
Module 3: Delivery Planning
Module 4: Focus Month Objectives
Module 5: Traditional Trade Performance Metrics
Module 6: Inventory Management
Module 7: Minimum Base Quantity (MBQ)
Module 1: VISI Coolers
Module 2: Planogram
Module 3: Below the Line Marketing (BTL)
Module 1: General Charecteristics of Sub Distributors
Module 2: Sub Distributor Details
Module 3: Identifying Long Term Sustainability
Module 4: Actions Suggested
6 CONCLUSION 42-44
7 LIMITATIONS 45
8 REFERENCES 46
30-33SERVICE AND MERCHANDISING4
SUB DISTRIBUTION5 34-41
OVERVIEW OF THE SUPPLY CHAIN2
INTRODUCTION1 5-13
14-16
3 OPERATIONS 17-29

ABSTRACT
Distribution is one of the major targets of any business. Distribution ensures steady growth and
maintaining existing market share. An efficient supply chain is the facilitator of effective distribution.
PepsiCo India’s supply chain typically consists of four entities, the bottler, the Carrying and
Forwarding Agent (CNF), the distributor and the retailer. However in order to penetrate in suburban
markets, where distribution through the above mechanism is difficult due to various reasons, a fourth
entity called “Sub Distributors” come into play. The ‘sub distributor’ is an intermediary in between
the distributor and the retailer in selected geographies. This project deals with understanding the
behavioural aspects of sub distributors and its effect on the modus operandi of sub distributors. Based
on the study the project suggests ideas that can lead to stronger channel relationships and an efficient
supply chain. The project borrows ideas from the general distribution system of PepsiCo as well as its
competitors. The project appreciates the existing mechanism and suggest ideas that can make the
supply chain more efficient. To accomplish this various existing literature on Supply Chain
Management was referred to and supply chain of other FMCG companies were also studied. It
recommends that visibility is the key to efficiency of supply chains for products such as soft drinks
that involve reverse logistics.

INTRODUCTION
Soft Drinks is one of the popular FMCG products and also one of the most complex ones to distribute.
Soft drinks is manufactured in various ways. Bottling plants import concentrates which are introduced
into plants where bottling take place. Bottled soft drinks are then transported to distribution centres in
bulk. Distribution Centres are smaller companies that apply for distribution licenses to the soft drink
company. The distribution centres are business partners that work in tandem with bottlers. They
provide the infrastructure, manpower and local knowledge to the mother company. Especially in
countries like India local knowledge is of immense importance because the country is so divergent.
There are territories that are unplanned and only a local person can identify such territories. Also trust
and a good relation is extremely important in the Indian business context. If one can win the trust of a
partner he can do good long term business with him. Beverages are manufactured in a large number of
brands and also a large number of Stock Keeping Units (SKUs). This expedites the complexity of
distribution in the form of tracking demand of each SKU and inventory management of SKUs as well
as the brands. The major market of the beverage sector being unorganized retail makes it all the more
difficult to capture data and facilitate data driven decisions. There is also an existence of ‘bullwhip
effect’ in the supply chain. This is because decisions are mostly heuristics based. Thus orders are
placed according to ballpark estimates. Similar decision making upwards the supply chain results in
‘bullwhip effect’. Visibility is the panacea to reduce the bullwhip effect. However unorganized retail
is still not so advanced to facilitate visibility of the point of sale (POS) data to the channel partners.
Thus it becomes extremely difficult to forecast demand. Soft drinks demand is also affected by a lot
of other factors such as climatic conditions, festivals, offers etc. This again adds to the existing
complexity. Reverse logistics forms an integral part of the beverage supply chain. Keeping track of
reverse logistics also plays a major part of the supply chain. This causes many retailers to not stock
beverages. The proliferation of brands and SKUs under the beverages umbrella makes inventory
management and forecasting very difficult. On top of that there are wholesale schemes that increases
variability of demand. Constant addition and deletion of retailers also adds to the variability. Some
companies such as RC Cola, new to the Indian Market have intelligently avoided the problem of
reverse logistics by removing the presence of returnable glass bottles (RGBs) in their SKUs.

MODULE-1: INDUSTRY ANALYSIS
The Indians are the third largest consumers of beverages in the world, after US and China. However
the per capita consumption of beverages in India has been quite low. This got India into the focus areas
of beverage majors. Since then penetration has increased and competition has become fiercer. The
market is undoubtedly dominated by PepsiCo and the Coca Cola Company. Other major players
include Parle Agro, RC Cola, Campa Cola, Dabur India, Del Monte Foods etc.
Jointly, PepsiCo and the Coca Cola Company hold about 95% of the Indian beverage market1
.
Business today: ‘A rough summer’, July 21, 2013
With gradual change in the lifestyle of Indian households and a fast increase in disposable incomes the
soft drinks market has experienced growth in the Indian market. Rise in rural consumption leading to
intelligent pricing and SKU planning, beverage majors such as Pepsi, Coca Cola and Parle Agro have
started rural penetration. Emergence of the health conscious consumer in the Indian landscape has
created high demand for juice based drinks and bottled water. Bottled water market has grown
tremendously in India with numerous local players fighting for market share and the leaders trying to
register their brands in the Indian consumers’ mind.
The focus of most beverage companies right now is rural penetration and ways to increase per capita
beverage consumption. Beverage marketers are thus doing extensive research on factors that drive
beverage consumption and are trying to come up with product variants that would appeal to the taste
of the modern Indian consumer. India is thus attracting investment from new entrants such as RC Cola.
1
NIIR Project Consultancy Services: Soft Drinks Industry in India, www.niir.org
Pepsi 9.80%
7up 7.50%
Mountain Dew 5.80%
Slice 3.40%
Mirinda 7.60%
Coke 8.30%
Sprite 15.00%
Limca 7.00%
Fanta 8.30%
Thums Up 14.80%
Maaza 3.30%
PEPSI BRANDS
COCA COLA BRANDS

Beverage drinking pattern in India is quite sporadic due to factors such as climate, lack of brand
awareness, prevalence of home-made drinks such as lemon water etc. Many Indians prefer not to
consume soft drinks due to health reasons. This is why soft drinks majors such as Coca Cola Company
and Pepsi have migrated to products like Juices, Bottled Water, Foods, etc.
Some reasons of sporadic beverage consumption in India as opposed to economies such as US or China
can be cited as such2
:
 Indians do not like the taste of packaged beverages, they prefer making their own beverage at
home
 Beverages are not available according to their preferred flavours
 Energy drinks often do not suit the Indian taste and are quite expensive for the average Indian
consumer
Notwithstanding, India is the third largest consumer of beverages in the world. Approximately around
120 billion litres of non-alcoholic beverage is consumed by Indians every year3
. Only 5% of that is
packaged store bought beverage. Major beverage consumption is contributed by tea and coffee. Thus
Soft drink companies fight out only a 6 billion litre of beverage consumption. Projections suggest that
2
Boston Analytics Study on over 7900 Indians published in Asia Food Journal
3
“Soft drink industry in India”, NIIR Project consultancy Services
Excerpt from Boston Analytics’ survey on over 7900 Indians published in Asia Food Journal
It has been observed that
most Indians consume
beverages less than once as
day.
About 75% Indians consume
less than one store bought
beverage a Day.

the soft drink industry will grow at the rate of 19% per annum annually.4
Hence in the recent years
India has experienced fresh investments in the soft drink and beverage business.
The graph shows a steady growth over the years 2000 through 2010. The absolute change in sales of soft drinks
have been captured by the next graph. It shows a mixed trend. It can be understood that the rate of growth of
sales has diminished initially and became constant. It again increased in 2006 and diminished again in 2007 and
remained constant in 2009 and 2010.
These years were marked by good foreign investment, increase in per capita income which might be reasons of
such steady growth. However recession struck India in 2008-09. Overall the market of soft drinks has done quite
well to constantly grow at a Compounded annual growth rate (CAGR) of 5.87%.
4
Drink Technology India report on the Indian Food and Beverage Industry, 2013
243
262
279 291
310
330
359
373
388
403
0
50
100
150
200
250
300
350
400
450
MillionCases
Years
DEMAND OF AERATED SOFT DRINKS
2000-01
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
19 17
12
19 20
29
14 15 15
0
10
20
30
40
MillionCases
Years
GROWTH IN SALES OF SOFT
DRINKS (ABSOLUTE CHANGE)
2001-02
2002-03
2003-04
2004-05
2005-06
2006-07
Mean Sales 323.80
Standard Deviation 55.49
Coefficient of Variation 17.14%
The coefficient of variation is 17.14%.
It may be commented that growth has
been steady and there has not been
any negative growth as shown by the
graph.
Soft Drink Industry in India, NIIR Project Consultancy Services
Soft Drink Industry in India, NIIR Project Consultancy Services
Soft Drinks started their
penetration into rural India in
order to keep their growth
steady.

Soft Drink consumption (in million litres) have been captured by the following chart. The CAGR of
soft drink consumption has been found to be 21.89% from 2008 to 2013. With such high growth rate
the soft drink industry in India seems prosperous. Consumption in 2018 has been projected.
The next chart compares soft drinks consumption pattern with that of bottled water, aerated drinks and
juices.
4369
11755
22937
0
5000
10000
15000
20000
25000
2008 2013 2018 projected
MillionLitres
Years
SOFT DRINKS CONSUMPTION PATTERN
4369
2734
1207 381 47
11755
8197
2351
1132 75
22937
16957
3465 2413
102
0
5000
10000
15000
20000
25000
Soft Drinks Bottled Water Aerated Drinks Juices Others
Millionlitres
CONSUMPTION PATTERN OF NON ALCOHOLIC DRINKS
2008
2013
2018 projected
High growth of soft drink
consumption can be
attributed mostly to the
changing life style of
Indians, exposition to media
and a good distribution.
Euromonitor International 2014, VDMA Report
Euromonitor International 2014, VDMA Report
Soft Drinks 21.89%
Bottled Water 24.56%
Aerated Drinks 14.26%
Juices 24.33%
Others 9.80%
CAGR 2008-2013Juices have been projected to achieve the highest growth rate from
2013 through 2018. Players like ITC have also jumped into the
bandwagon with its own brand of juices B Natural. Followed by
juices bottled water will also grow fast. However growth of
carbonated drinks are expected to decline gradually due to the rise
of health conscious Indians.

MODULE-2: COMPETITION ANALYSIS
The soft drink Industry in India is mostly dominated by two players; the Coca Cola Company and
PepsiCo. Jointly they have captured around 91% of the total soft drinks market in India. Some other
notable competitors are Parle, Dabur India, Del Monte Foods etc.
Coca Cola
Both Coca Cola and PepsiCo operate through franchises in India. Coca Cola operates in India through
its Indian Subsidiary Hindustan Cola Holdings. Coca Cola owns 51% stake in this company making it
a wholly owned subsidiary of Coca Cola. It operates through 16 franchises and 35 plants5
. Coca Cola
has built a strong market by acquiring dominant Indian brands from companies like Parle, Cadbury.
Some of the notable brands that have been acquired by Coca Cola in India are:
 Thums Up (formerly owned by Parle)
 Limca (formerly owned by Parle)
 Citra (formerly owned by Parle)
 Gold Spot (formerly owned by Parle)
 Maaza (formerly owned by Parle)
 Rimjim (formerly owned by Parle)
 Scweppes (formerly owned by Cadbury)
These acquisitions gave Coca Cola a head start and it just acquired the 60% market share that Parle
had been enjoying through its brands. Since then Coca Cola has arguably been leading the soft drinks
market in India. The sales ratio of soft drinks to beverages for Coca Cola is about 95:5. Coca Cola
targets to bring this ratio to 80:20.
5
“Soft drink industry in India”, NIIR Project consultancy Services
5 95
0% 20% 40% 60% 80% 100%
1
2
C O CA C O LA: S O FT DR INKS T O O T HER BEVERAGES
Other Bevarages Soft Drinks

Coca Cola has ventured into products like canned coffee and iced tea through its brand Georgia.
However it has not ventured into food unlike Pepsi. About 30% of the brands owned by Coca Cola
have come through acquisition. Thus mergers and acquisitions have played a critical part in the strategy
of Coca Cola in India.
Coca Cola’s brands in India have been listed below:
 Coca Cola
 Diet Coke
 Coke Zero
 Thums Up
 Sprite
 Fanta
 Limca
 Maaza
 Milky Maaza Delight
 Minute Made: Pulpy Orange
 Minute Made Nimbu Fresh
 Minute Made Guava
 Minute Made Mango
 Minute Made Mixed Fruit
 Burn
 Kinley Water
 Kinley Soda
 Schweppes
 Georgia Gold
Apart from these the Coca Cola Company has many other brands through joint ventures. One such
brand is Nestea, a joint venture between Nestle and the Coca Cola Company. Nestea is a brand that is
available in most countries. In India it is available in four flavours: Lemon, Peach, Apple and
Cardamom.

PepsiCo
Pepsi entered India through a marketing tie up with Hindustan Lever Limited. Thus, it advantaged the
experience of Hindustan Lever Limited’s deep routed network in India. Partnerships has been the key
of Pepsi’s business success in India. It has acquired only two brands in India, one being Uncle Chips.
PepsiCo operates in India through its marketing subsidiary PepsiCo India Holdings Private Limited.
Pepsi has total 36 plants is India. 13 of which are company owned and 23 are owned by franchises6
.
Pepsi has always believed that giving more independence to the franchise partners and allowing them
to expand operations would result in garnering the local knowledge and supply chain economics. Its
largest bottling partner is Varun Beverages, the flagship company of RJ Corp.
Unlike Coca Cola, PepsiCo’s product portfolio is quite balanced through the presence of both
beverages and food items. Some of the Notable Brands that PepsiCo owns are:
 Foods:
 Cheetos
 Kurkure
 Lays
 Lehar namkeen
 Quacker Oats
 Uncle Chips
 Beverages:
 7up
 Aquafina
 Duke’s
 Gatorade
 Mirinda
 Mountain Dew
 Nimbooz
 Pepsi
 Slice
 Tropicana
6
Indian Beverage association website

MODULE-3: BOTTLING FRANCHISES
Franchises play a major role in the India operations of both the companies. Most of the operations from
production to sales is over seen by the bottlers. The mother company oversees mostly the marketing
of its products. There is competition among the franchises too; even franchises of the same company.
85% of soft drinks are still sold in returnable glass bottles (RGB)7
. The floating stock of bottles in the
Indian market have been valued at ₹6 billion. In order to abide by the guidelines and to introduce new
bottles a fresh investment of ₹5 billion is required. However after the government allowed such
investment to be deferred, the soft drink companies used PET bottles extensively.
Franchises are provided with the cola concentrates by the mother brand. They often procure raw
materials such as mango pulp, oranges, bottles, bottle caps and packaging materials from local Medium
and Small Scale Enterprises.
The franchises own trucks and other infrastructure to facilitate sales and distribution. They employ
manpower and invest in the back end infrastructure requirements for beverage distribution.
7
“Soft Drink Industry in India”: NIIR Project Consultancy Services
34.00%
15.00%
9.00%
7.00%
7.00%
6.00%
5.00%
6.00%
11.00%
MARKET SHARE OF FRANCHISES
Aradhana Beverages
Varun Beverages
Devyani Beverages
Kandhari Beverages
Ludhiana Beverages
Sri Sarvarya Beverages
Pearl Drinks
Pearl Beverages
Others
Aradhana Beverages
hold 34% of the market
share at the Number 1
position.
Varun Beverages is at
number 2 with 15%
market share.
NIIR Project Consultancy Services, “Soft Drink Industry in India”

OVERVIEW OF THE SUPPLY CHAIN
MODULE-1: PRODUCTS
The brands that have been majorly covered here include:
 Pepsi
 Mirinda
 7up
 Mountain Dew
 Slice
 Nimbooz
 Acquafina
 Lehar Soda
These products come in various SKUs making the task of inventory management very complex.
Products are classified as under:
LIGHT REFRESHING BEVERAGE
Bottled Soft Drinks (BSD) Aquafina (AF)
Juice Based
Drinks (JBD)
Carbonated Soft
Drinks (CSD)
Returnable
Glass Pallets
(RGP)
Polyethylene
Terephthalate
(PET)

The SKUs and the Brands have been mapped with each other.
SKU
Tetra pack Can 200ml 300ml 350ml 500ml 600ml 1200ml 1250ml 2000ml
BRAND
PEPSI ✓ ✓ ✓ ✓ ✓ ✓
DIET PEPSI ✓ ✓ ✓
PEPSI ATOM ✓ ✓
MIRINDA ✓ ✓ ✓ ✓ ✓ ✓
7UP ✓ ✓ ✓ ✓ ✓ ✓
MOUNTAIN
DEW ✓ ✓ ✓
SLICE ✓ ✓ ✓ ✓ ✓
TROPICANA
SLICE
ALPHONSO
✓
ACQUAFINA ✓ ✓
NIMBOOZ ✓ ✓
NIMBOOZ
MASALA
SODA
✓
LEHAR
SODA ✓
As it can be observed from the above chart, the channel of distribution has to handle a large array
of products and SKUs. Moreover, new products or SKUs are added on as and when required,
depending on seasonality, experimentation or other factors.
Metrics regarding the Product-SKU mix of the distribution channel has be explained in the
forthcoming section.

Considering only the beverages sold through the traditional distribution chain product mix
dimensions have been listed below:
Product Mix Width: 12
Product Mix Length: 37
Average Product Mix Length =
Product Mix Length
Product Mix Width
=
37
12
= 3.083
New entrants to the product family of Pepsi’s beverages are ‘7up Nimbooz Masala Soda’ and
‘Tropicana Slice Alphonso’.
Tropicana Slice Alphonso is a premium brand that Pepsi was previously selling only through the online
channel. Only recently the product was launched into the traditional retail stores through the
distribution chain that carries Pepsi’s classic beverages. This product has fared well in some markets
but not all. The reason being its premium nature and a price point of ₹50 which many consumers are
not ready to pay. Moreover consumers are confused between the normal slice of ₹35 and Tropicana
Slice Alphonso.
7up Nimbooz Masala Soda is another new entrant endorsed by Anushka Sharma. It has done well only
in some pockets. Often consumers confused this product thinking it to be a new sort of Soda8
.
MODULE-2: CHANNEL PARTNERS
Pepsi operates through a 4 tier supply chain involving the following channel partners:
1. Plant
2. Carrying and Forwarding Agent (CNF)
3. Distributor
4. Retailer
However, in order to penetrate into suburban areas Pepsi has partnered with smaller distributors and
termed them “sub-distributors”. Sub distributors are small business entities, generally sole
proprietorships with low capital, small space and low infrastructure. They know their small markets
very well. In these markets business happen only on the basis of good relationship and trust. Thus their
integration into the supply chain is vital in order to capture deeper suburban markets.
8
As per comments received from retailers on store visits

OPERATIONS
In generic terms there is primarily three types of operations that any channel partner takes care of:
1. Primary: Goods Received
2. Secondary: Goods Dispatched
3. Reverse Logistics: cash, returnable glass bottles, damaged stock and application forms
Primary for a distributor is handled by him by monitoring stocks. Secondary is executed through a
process called “Order booking Go to Market”. The first step of order booking is an eight step call.
MODULE-1: EIGHT STEP CALL PROCESS
The 8 step call process is the sales pitch of PSRs at every retail outlet. It include the following steps:
A salesman is the contact point between
the company and the retailer. He ought
to be respected and listened to.
A PSR punching orders in his handheld
device.
1 PREPARATION
2 GREET THE CUSTOMER
3 STORE CHECK
Identify Opportunities
Determine Priorities
Evaluate the best initiative to sell
4 MERCHANDISING
Replenish Coolers, Racks and Displays
Rotate All product and Clean Equipment
Place Point of Purchase displays
Remove non Pepsi products from Equipment
5 DETERMINE THE ORDER
6 PRESENTATION
P Present the opportunities and the situation
E Explain the solution
P Provide the details
S Secure the sale
I Implement Next Steps
7 CURBSIDE DE BRIEF
8 ADMINISTRATION

Apart from the PSRs there is another category of employees who engage in pre-sales. They are called
Route Agents. Route agents are van drivers who carry stock with them and sell it to whichever retailer
demands the stock.
The PSRs engage in pre-sales and enters the order of each retailer into SAMNA in the handheld device.
The handheld device displays the available stock in the distribution centre basis which the PSR either
accepts or does not accept orders. Continuous ordering by the PSRs updates the current stock position
in SAMNA. Thus there is a very strong visibility component existing in the supply chain.
The ready stock guy hands out hand written bills to his customers. Later he puts the order into SAMNA
and takes back the remaining stock which is then taken back in the warehouse and updated.
The order data that is entered into SAMNA by PSRs is used to generate ‘Pick-Lists’. The deliveries
take place the next business day from the date of order booking. Pick Lists are used to load trucks and
goods are thus despatched for deliveries. Each truck is staffed with a driver, two loaders and a delivery
agent (DA).
The delivery agent delivers the order of each retailer, collects cash, previously delivered damaged
goods and the empty bottles and brings them back to the distribution centre. Damaged goods are
collected in between the first and the tenth day of every month.
A sample of the “Work with sheet” mentioning the 8 step call process.

MODULE-2: BEAT PLANNING
The routes of the PSRs are carefully planned. Routes comprise outlets allotted to particular PSRs. The
process of preparing a plan for PSRs to make visits to a given number of outlets efficiently is termed
‘Beat Planning’. This also gives rise to a “permanent journey plan” (PJP) of the PSR.
There are steps that are undertaken for generating a beat plan. The common steps are:
1. Classification of Outlets based on sales volume
2. Estimating sales of each outlet
3. Determining number of visits each week
Outlets are classified into Categories A, B and C.
Category of
Outlet
Yearly Sales (in
cartons)
Number of visits
(weekly)
A ≥600 6
B 300-599 2
C ≤300 1
The volume of yearly sales is determined
through historical data.
Frequency of visits is a standard measure. It
may not be strictly followed. Some outlets
may be visited thrice a week.
One PSR must not visit less than 35-40
outlets each day.
Data from the distribution centre:
Number of Outlets 1800
Number of PSRs 14
A category Outlets 400
B Category outlets 600
C category outlets 800
Calculated from above data:
A category outlets per PSR 29
B Categoty Outlets per PSR 43
C Category Outlets per PSR 57

Now the A, B and C category outlets are labelled as A1, A2, A3…A29; B1, B2, B3… B43 and C1,
C2, C3… C57 respectively. Thus a weekly journey plan is created as such:
Beat planning gives a strict journey plan based on the given facts. However it is not a strict measure
as often some C category outlets need not be visited once every week. PSRs visit them once in two
weeks. Some B category outlets need to be visited thrice a week. Thus based on the specifics of each
route the journey plan may be tweaked by the PSR in consultation with his manager.
Calculated from above data:
29
14
10
52
Category A
Category B
Category C
TOTAL
Number of Outlets to visit per day:
MONDAY TUESDAY WEDNESDAY THURSDAY FRIDAY SATURDAY
A1 A18 B7 A1 A18 B21 A1 A18 B35 A1 A18 B6 A1 A18 B20 A1 A18 B34
A9 A26 C1 A9 A26 C11 A9 A26 C21 A9 A26 C31 A9 A26 C41 A9 A26 B42
A10 A27 C2 A10 A27 C12 A10 A27 C22 A10 A27 C32 A10 A27 C42 A10 A27 B43
A11 A28 C3 A11 A28 C13 A11 A28 C23 A11 A28 C33 A11 A28 C43 A11 A28 C51
A12 A29 C4 A12 A29 C14 A12 A29 C24 A12 A29 C34 A12 A29 C44 A12 A29 C52
A13 B1 C5 A13 B15 C15 A13 B29 C25 A13 B43 C35 A13 B14 C45 A13 B28 C53
B6 C10 B20 C20 B34 C30 B5 C40 B19 C50 B33
TOTAL
VISITS 53
TOTAL
VISITS 53
TOTAL
VISITS 53
TOTAL
VISITS 53
TOTAL
VISITS 53
TOTAL
VISITS 52
Weekly Journey Plan of a PSR

MODULE-3: DELIVERY PLANNING
After the PSRs have booked orders deliveries are scheduled the next day. Thus there is a lead time of
one business day. Deliveries are undertaken through small trucks with a capacity of about 200 cartons
of stock. There is one big truck in the Tangra Distribution Centre which has a capacity of 400 cartons.
The details of the available number of trucks are given below:
It is thus observed that routes of 5 PSRs are facing shortage of vehicles. So some of the 9 trucks are to
carry orders received by multiple PSRs. This problem is solved as such:
The delivery agents loads the trucks referring to the pick list summary. It gives each product’s details
and the number of cartons and number of bottles to be loaded are mentioned against each product item.
The loose column indicates goods distributed as free items with bulk purchases.
8
1
9
14
5
Total number of Small trucks of Capacity 200 cartons
Total number of Large Trucks of Capacity 400 cartons
Total Number of Trucks Available
Total Number of Routes (one route per PSR)
Number of Routes for which vericles are unavailable
PSR Truck
PSR1 Small Truck1
PSR2 Small Truck2
PSR3 Small Truck3
PSR4 Small Truck4
PSR5 Small Truck5
PSR6
PSR7
PSR8
PSR9
PSR10
PSR11
PSR12
PSR13
PSR14
Large Truck 1
Small Truck8
Small Truck7
Small Truck6
Small Trucks 6, 7 and 8 are to carry orders of two PSRs each.
The Large Truck1 is to carry the orders of 3 PSRs.
The choice of which PSRs to club together into one truck
depends on the proximity of their markets.
In case the PSRs have taken orders which outnumber the
capacity of trucks, then more than one trip is undertaken to
deliver orders or delivery is delayed.
This is why local knowledge becomes so important in this case
and as such no standard delivery procedure can be followed.
Specifics of each locality needs to be taken into consideration.

For each and every retailer a summary bill is generated which are handed over to the delivery agent.
The delivery agent unloads stock at every retail outlet referring to the bill. The retailer has to give back
the same number of empty RGPs as the number ordered. The empty pallets are loaded onto the truck
and taken back to the Distribution centre to be sent back to the factory for refilling. At the distribution
centre the empty pallets are sorted properly and are made ready for despatching to the factory. When
the primary order from the factory arrives the empty bottles are loaded onto the primary vehicle after
unloading.
Sl No.
Product
Code
CARTON LOOSE
1 1009 10 12
2 1044 11 11
3 1252 15 5
4 1551 10 0
5 1642 14 14
6 2575 11 11
7 2459 11 0
8 2110 10 10
9 3591 7 7
10 3456 13 13
11 4010 20 1
12 4012 18 5
13 4173 18 0
14 4532 16 60
15 4714 25 0
16 4912 23 23
17 4111 5 15
18 5212 8 0
19 5861 9 1
20 6858 12 12
21 7181 5 0
22 7791 14 4
23 7823 17 7
TOTAL 302 211
7up 2000ml PET 9 Rs. 80
PEPSI COLA 2000ml PET 9 Rs. 80
Quantity
PICK LIST SUMMARY
Nimbooz Masala Soda 600ml PET 24 Rs. 35
Pepsi COLA 1250ml PET 12 Rs. 55
7up 1250ml PET 12 Rs. 55
Slice Mango 1200ml PET 12 Rs. 62
Mirinda Orange 2000ml PET 9 Rs. 80
7up 600ml PET 24 Rs.35
Mirinda Orange 600ml PET 24 Rs. 35
Mountain Dew 600ml PET 24 Rs 30
Everess Soda 600ml PET 24 Rs. 18
Product details
Mountain Dew 200ml RGP 24 Rs. 10
Slice Mango 200ml RGP 24 Rs.12
Mirinda Organge RGP 24 Rs. 12
7up 200ml RGP 24 Rs. 12
Pepsi COLA 200ml RGP 24 Rs.12
7up 300ml RGP 24 Rs. 15
Pepsi COLA 300ml RGP 24 Rs.12
Everess Soda 300ml RGP 24 Rs.15
7up Nimbooz 350ml PET 24 Rs. 20
Pepsi COLA 600ml PET 24 Rs. 35

The following photo shows a loader loading a truck with stocks as per pick list.
The photo is taken at the shipping yard of the Tangra Distribution Centre in North Kolkata City.
Another photo showing the sorting of empty bottles
Secondary Sales being Loaded into trucks
Empty Bottle Sorting Yard

MODULE-4: FOCUS MONTH OBJECTIVES
Each month is allotted a set of objectives that need to be fulfilled. In general a month is broken into 5
phases.
Numeric distribution is put more emphasis on by PepsiCo. Numeric distribution is vital for market
share by volume. However weighted distribution is more important to capture market share by value.
In North Kolkata City Pepsi has a higher numeric distribution than Coke.
The Focus Month Objectives are generally twofold:
1. A specific Brand
2. A specific SKU or Pack
For Example, for the month of April the Focus Month Objectives were:
1. Brand Mountain Dew
2. Pack 600ml
This is formulated in order to provide focussed attention to specific brands and specific SKUs in a
specific timeline so that at the end of the year all brands and SKUs could be successfully distributed.
It is generally done nationally.
In case of the above example for brand Mountain Dew, in the month of April there was a contest among
all the PSRs in Kolkata city in which the PSR who would sell the most number of Mountain Dew
bottles would receive a handsome reward at the end of the month.
In case of SKUs, in order to focus on a specific SKU, for example 600ml in this case, retailers would
be offered attractive schemes. For Example, for the month of April on the 600ml SKU the schemes
offered to the retailer was such:
60% distribution
collect last month's damages
by 15th of Month 85% distribution
Focus on non performing visi outlets
Focus on FMO Brand
Focus on FMO Pack
by 25th of Month Reconcile Targets and Actuals
after 25th of Month
Take necessary action on objectives not
achieved
after 10th of month
by 10th of Month
FMO is a very important technique
in handling Tradtional Trade

However Pepsi’s Brand Aquafina does not receive enough attention. PSRs sales targets do not include
Aquafina. Thus its distribution has been suffering drastically. Its competitors Kinley and Bisleri are
doing very well in spite of being offering lesser margins to retailers.
The market of packaged water is also being raided by many local companies. Their penetration strategy
is to offer margins much higher than the premium brands like Kinley, Bisleri and Aquafina. The local
brands have also penetrated rural markets better than the premium brands.
The FMO technique is a great way to tackle a long range of brands and the SKU proliferation that has
been exhibited by PepsiCo. FMO ensures:
 Focussed attention to each brand and SKU
 Distribution of all brands and SKUs
 Accommodates focus on new launches and older brands simultaneously
 Eases out targets throughout the year
 Effectively manoeuvres the entire portfolio of products
In case of a new product that is launched retailers are given special schemes to display that product in
their stores. Recently Pepsi launched Tropicana Slice Alphonso in their ‘Traditional Trade’ Supply
Chain and retailers were given a spot discount of ₹400 on display of 12 bottles of Tropicana Slice
Alphonso and 12 bottles of 7up Masala Nimbooz Soda. This was not one of the FMOs in the month in
which Tropicana Slice Alphonso was launched however its launch was effectively accommodated by
the Traditional Trade supply chain.
FMO alongside numeric distribution ensures the effective distribution of the entire product portfolio
of Pepsi.
Numer of cartons
purchased
Number of Bonus
bottles per carton
1 carton 1
2 cartons 2
3 or more cartons 3

MODULE-5: TRADITIONAL TRADE PERFORMANCE METRICS
PepsiCo uses intelligent metrics to keep track of its performance in Traditional Trade. Every
distribution centre office has a Territory Scoreboard in which each PSR has to write their daily
performance metrics. The performance metrics are also generated by SAMNA and is also VISIble on
the handheld device of the PSR. These metrics are used to track performance of each PSR and thereby
each territory.
The metrics that are used to track performance are defined as such:
1. Scheduled Calls: Scheduled calls refers to the number of outlets that the PSR is expected to
visit on a particular day
2. Completed Calls: Completed calls refers to the number of outlets that the PSR has actually
visited on that particular day
3. Bill Cut: Bill Cut refers to the number of outlets that have actually placed orders on the given
day
4. Strike Rate: Strike rate refers to the percentage of Outlets in a route that have ordered on a
particular day. It is mathematically expressed as:
𝐵𝑖𝑙𝑙 𝐶𝑢𝑡
𝑆𝑐ℎ𝑒𝑑𝑢𝑙𝑒𝑑 𝐶𝑎𝑙𝑙𝑠
(%)
5. TLSD: TLSD is an acronym for Total Lines Sold per Day. It refers to the sum of the number
of brands ordered by all the outlets on any given day. For example if a route has only two
outlets A and B, outlet A orders two brands and outlet B orders 4 brands then TLSD of the
route is six. It may be noted here that the brands ordered by A and B may be common, hence
there is a double counting.
6. LPSC: LPSC stands for lines per sales call. It is here that the double counting effect of TLSD
is neutralized. It is basically a ratio between TLSD and Bill Cut. It gives an average estimate
of the number of lines sold per outlet. It is mathematically expressed as:
𝑇𝐿𝑆𝐷
𝐵𝑖𝑙𝑙 𝐶𝑢𝑡
7. Route Run: Route Run refers to the number of routes in which activity has taken place on a
given day. Route run is thus basically the number of PSRs who are present on a given day and
have been given attendance.

Given below is a sample of how the above metrics look like:
It can be inferred from the above data that Strike Rate is nothing but a measure of numeric distribution
in a given route. LPSC shows how well the entire product portfolio is getting distributed in the market.
It may be noted that the list of outlets that are there in the handheld device carried by the PSR often
contain errors such as:
 Names Outlets that have closed down
 Repetition of a single outlet multiple number of times
 Names of outlets that used to deal in beverages but have discarded beverages from their
offerings
This often result in metrics that do not reflect the true picture of performance. This is an error of Market
Research for which Pepsi depends on Nielsen. Because the market research is outsourced there is no
scope for Pepsi to rectify these errors. Hence these errors remain in the system and continue to reflect
erroneous metrics. Though it seems a trivial issue but it may lead to wrong decision making if such a
decision is specifically taken by observing this data.
MODULE-6: INVENTORY MANAGEMENT
Inventory Management is a very complex task in case Pepsi’s beverages product line. As exhibited
earlier, there are 37 different Stock Keeping units (SKUs). Tracking the inventory level of each SKU
is a very complex job. Though Pepsi indulges in a considerable amount of automation in their
distribution centres inventory management and reordering is still largely heuristics based. Distribution
centres operate computers where all incoming and outgoing stock is taken and data is updated in real
time. Point of Sales (POS) data is captured through the hand held devices used by the PSRs and thus
the system is always kept updated.
Excerpt from the territory scoreboard
Scheduled Calls 50
Completed Calls 45
Bill cut 40
Strike Rate 80.00%
TLSD 10
LPSC 0.25
Routes Run 12
Metrics are like streetlights on a dark
road. They are always referred to for
continous improvement

Reordering is done after checking the levels of inventory of every SKU in the Distribution Centre.
Reordering of SKUs is a factor of:
1. Production at the Plant, i.e. Availability
2. Schemes that are being run at that point of time
3. Current Inventory Level
4. Backorders
5. Targets
6. Seasonality
Seasonality calculation is based on last 2 years’ monthly average sales. For 2015-2016, the seasonality
that is being followed is shown in the table:
This high degree of fluctuation in demand predominantly because of rainfall and other climatic
conditions makes it very difficult to forecast demand and plan inventory accordingly. It also makes it
difficult for the retailers who are selling the product directly to customers. A heavy rainfall just causes
a massive slump in demand and their inventory piles up too, as a result sales drop and PSRs become
unhappy.
Such a huge fluctuation in demand sometimes causes over capacity sometimes causes under capacity.
On a high temperature day existing trucks become insufficient to deliver goods whereas on a day
marked by heavy rains, demand is so low that the orders are not enough to utilize the trucks fully and
there is spare capacity. Thus sum trucks have to be kept idle.
MONTH
SEASONALITY
PERCENTAGE
January 2%
February 4%
March 10%
April 13%
May 15%
June 11%
July 7%
August 7%
September 10%
October 12%
November 3%
December 6%
Fluctuation in demand is very common in case of soft drinks.
Indian climatic conditions are peculiar. During this project
one day there was a very high demand and there was high
back order due to which the distributor ordered a large lot to
the factory. The day the stock arrived was stuck by heavy
rainfall and demand took a nose dive. Hence inventory
accumulation took place in the distribution centre. And
prolonged rain caused slow inventory turnover.
This phenomenon is quite often found in this industry. Often
the retailers receive stock which are very near to their expiry
dates.

MODULE-7: MINIMUM BASE QUANTITY (MBQ)
There is a Minimum Base Quantity (MBQ) for each SKU that has to be maintained at the Distribution
Centres. Minimum Base Quantity is the minimum level of stock that a distribution facility plans to
carry for a given period of time. MBQ calculation is based on past data. In the case of the distribution
centres in Pepsi, each distribution centre must carry a calculated level of MBQ. MBQ is usually a lot
size of the weekly9
average sale of the last month adjusted to this month’s seasonality. A mathematical
formula has been derived for MBQ and it is represented as such:
𝑀𝐵𝑄 (𝑤𝑒𝑒𝑘𝑙𝑦) = (
𝐿𝑎𝑠𝑡 𝑀𝑜𝑛𝑡ℎ′
𝑠 𝑆𝑎𝑙𝑒𝑠
𝑁𝑢𝑚𝑏𝑒𝑟 𝑜𝑓 𝑤𝑒𝑒𝑘𝑠 𝑖𝑛 𝑡ℎ𝑒 𝑚𝑜𝑛𝑡ℎ
) × (
𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑀𝑜𝑛𝑡ℎ′
𝑠 𝑆𝑒𝑎𝑠𝑜𝑛𝑎𝑙𝑖𝑡𝑦
𝐿𝑎𝑠𝑡 𝑀𝑜𝑛𝑡ℎ′ 𝑠 𝑆𝑒𝑎𝑠𝑜𝑛𝑎𝑙𝑖𝑡𝑦
)
It is obvious that MBQ is different for each SKU and for each distribution centre. The concept has
been made clearer through an example
Let us consider MBQ calculation for 200ml Mountain Dew in the month of July.
Seasonality for July= 7%.
Sales of Mountain dew in June= 63,000 cartons
Seasonality for June= 11%.
Number of Weeks in June= 4
𝑇ℎ𝑢𝑠, 𝑀𝐵𝑄 𝑓𝑜𝑟 𝑎 𝑤𝑒𝑒𝑘 𝑖𝑛 𝐽𝑢𝑙𝑦 = (
63,000
4
) × (
7%
11%
) = 10,022 𝑐𝑎𝑟𝑡𝑜𝑛𝑠
However this is to be done for each SKU and the MBQ for each SKU is to be maintained. This makes
matters complex. It becomes more complex when an item has been out of stock for a long time and
suddenly stock for that item is to be ordered. Point in case is Slice Tetra pack 200ml and Aquafina 2
litres. In such a case last year’s data in the same period comes handy. Last year’s data is termed YAGO,
which stands for year ago.
9
A week may be assumed as 5 days of 6 days.
The distribution centres store the stock by piling up which
often makes the earlier stocks go to the bottom of the pile.
And thus they often cannot follow the FIFO method of
inventory issue. This leads to the problem of retailers
receiving expired stock and thus the company’s brand equity
is hurt.

SERVICE AND MERCHANDISING
The business of soft drinks is highly dependent on the capacity of the retailer to keep the products
chilled. Both Pepsi and Coca Cola provide retailers with VISI Coolers. The coolers come in different
sizes and its availability in the outlet is extremely important to boost sales.
MODULE-1: VISI COOLERS
To extend the support of VISI coolers, outlets are rated on various parameters which are both
quantitative and qualitative in nature. Qualitative parameters especially emphasizes on the locality.
There are some specific localities in which some outlets have political influences or the retailers are
too strong as a lobby. Examples of such kind of areas include Duttabad in Salt Lake, Rajabazar etc.
Some retailers have a tendency to abuse the VISI Coolers. Eateries and Sweet shops especially obtain
a VISI cooler and then use it to stock their own stocks other than products of Pepsi. If they are
politically strong they enter into conflict with the PSRs when the PSR tries to make their VISI Coolers
Pure. It is not always possible for the PSR to engage in a faceoff with the retailer and make his VISI
cooler pure, hence some VISI coolers are always abused by some retailers.
It has also been noted that retailers are not educated on how to use the coolers, both from the technical
point of view or from the merchandising point of view. Due to mishandling of VISI coolers the coolers
often get tampered. Pepsi has a mechanism to address the faltering coolers but retailers are quite
unaware about it. There is a toll free number on which a complaint can be registered. However it is
reported by the retailers that the person responsible for fixing the damaged VISI coolers often do not
turn up on time.
Competitor Coca Cola is quite well placed in this front. Their speed of delivering a VISI,
merchandising it and servicing it is more efficient than that of Pepsi’s. In this project about 160 outlets
have been visited and of them 120 outlets have been documented to have either Pepsi’s VISI or Coca
Cola’s VISI. Comparison has been made on the following parameters:
1. Time that was taken by the companies to get their VISI coolers delivered
2. Purity of the Cooler, purity meaning a Pepsi Cooler should contain nothing but Pepsi’s products
3. Presence of either Coca Cola’s VISI or Pepsi’s VISI
The following charts give us an understanding of how the two competitors Pepsi and Coca Cola
compete on delivering services to the retailers:

1
0.25
0 0.2 0.4 0.6 0.8 1 1.2
Months
AVERAGE TIME TAKEN TO DELIVER VISI
COOLERS
COCA COLA PEPSI
48%
65%
0% 10% 20% 30% 40% 50% 60% 70%
Percentage of Purity
PURITY OF VISI
COCA COLA PEPSI
It has been observed that
Coca Cola takes 1/4th
of
the average time that
Pepsi takes to deliver a
VISI Cooler to a retail
outlet
Coca Cola has been able
to maintain 65% of their
VISI coolers pure as
opposed to 48% for the
same as Pepsi.
61%
82%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90%
Percentage of Outlets
PRESENCE OF VISI COOLERS
COCA COLA PEPSI
Coca Cola’s VISIs are
present in 82% of the
outlets, whereas 61% of
the outlets house Pepsi
VISIs.

MODULE-2: PLANOGRAM
Retailers are provided with a Planogram to merchandise the VISI Coolers. Often it is done by the
PSRs also. A planogram is a merchandising tool. It is a diagram that envisages a specific way to place
retail products in shelves. It is done so that customers have the same experience of purchasing in
different retail stores.
A sample of the Planogram that is used to merchandise VISI Coolers is shown below:
VISIBILITY OF THE RANGE, INCREASES
SALES
Consumer Sees the Entire range and Picks
up the required SKU which increases your
sales
EASE OF ORDER BOOKING
If an SKU is less in stock or Out of Stock, it
is clearly visible through the cooler and
reordering becomes easier
WHATEVER SELLS MORE IS STOCKED
MORE
Space provided to fast moving SKUs is
more resulting in fewer stock out
situations. More sales will translate into
more revenues and profits
SAVES TIME AND ELECTRICITY
Since products are clearly visible to the
retailer in the VISI cooler it takes lesser
time to find and pick up the desired
products for the consumer. It saves
electricity cost as also cooler is not kept
open for a long time
MORE STOCK IN VISI COOLER
Charging cooler according to the
planogram results in more stocks in the
VISI cooler shelves
PLANOGRAM (POG) AND ITS BENEFITS
The Planogram and its benefits have been listed out very well by Pepsi however it remains highly
ineffective. This is because most retailers do not use English as a language very much. On top of
that the benefits of POG often is not communicated to the retailer. The picture given above has
been pasted at the stock point and is visible only to the PSRs. If the same can be communicated to
the retailers effectively, and the benefits of using the POG can be explained, they will embrace it.

MODULE-3: BELOW THE LINE MARKETING
Below the line marketing is practiced heavily in case of Traditional Trade. These majorly constitute
Point of Purchase (POP) Displays. Recently the Indian Premier League was sponsored by Pepsi.
During the IPL season Pepsi introduced a scheme of giving a free ticket for a match in Eden Gardens
to a retailer on ordering a specified lot size. This became a popular scheme and boosted the sales
volume.
POP Displays for Pepsi IPL has been shown as under:
The problems that exists in such kind of marketing drives are:
 Timing
 Effectiveness
The BTL marketing drive for ‘Crash the Pepsi IPL’ was done only before the semi-finals. This could
have been done earlier to ensure its visibility to people for a long period of time.
It is also to be noted that in this case a “gate” (as shown in the picture) was installed in front of the
retail outlet. This was done at a time when monsoons were arriving in West Bengal. The installation
of the gates were so fragile that most of them were damaged the very next day due to heavy rainfall
and storm. Thus the campaign was futile and the goal of the campaign was not achieved.

SUB DISTRIBUTION
Sub Distribution is an additional tier in the existing traditional supply chain of PepsiCo. Sub
distributors are few in number and are present in areas which are difficult to penetrate through
traditional trade. Such difficulties may be due to absence of proper roads, low demand, unprofitable to
deliver at every shop etc.
Sub Distributors are important agents for last mile deliveries of products in suburban pockets within
metro cities which are not profitable enough to be distributed through direct distribution. Sub
Distributors are located to the close vicinity of inaccessible markets and procure stock from the
distribution centres. They are generally sole proprietorship enterprises with fewer resources. Often sub
distribution is not the only activity they indulge in. PepsiCo has a total of 12 sub distributors in North
Kolkata City:
Of these sub distributors only the first six has been included in this study. This study on sub distribution
attempts to identify the behaviour of the sub-distributors as:
1. Opportunistic
2. Entrepreneurial
3. Indifferent
Sl.
No.
SUB Distributor Name Area
1 Tara Maa Enterprises
Salt Lake
Nayapatti
2 Annapurna Agency Sealdah
3 Munna Stores Sealdah
4 Guha and Roy Enterprises Salt Lake Sector 1
5 Saraswati Enterprises
Salt Lake
Kadapara
6 Sunita Enterprises
Salt Lake
Kadapara
7 Abdulla Cold Drinks Rajarhat Lauhati
8 Ashiq Enterprises Technopolis
9 Kakuli Enterprises Rajarhat Lauhati
10 Kailash Chauhan Sonagachi
11 Sanjoy Yadav Sonagachi
12 New Kalika Supplier Belgachia

MODULE-1: GENERAL CHARACHTERISTICS OF SUB DISTRIBUTORS
Some general characteristics that ware found common in all the sub distributors that have been studied
are:
1. Own low resources such as capital, manpower, storage space, vehicles etc.
2. Cater to small markets (30-40 outlets at max)
3. Flexible and can work at any point of time in the day
4. Indulge in more than one activity/businesses for livelihood
5. Have a good rapport with the retailers they deal with
6. Extending credit
7. Generally don’t try to expand their market once a certain level of sales is attained
8. Want independence and prefer not to conform to guidelines unless incentives are extended
9. Often do not maintain proper records
10. Stock product of competitors also
The most important part of operating through sub distributors is the reach that is obtained into the deep
sub urban pockets where direct distribution by super distributors become difficult.
MODULE-2: SUB DISTRIBUTORS’ DETAILS
In this study 6 sub distributors have been considered for analysis. These sub distributors operate in
North Kolkata City. Some of the sub distributors are “Fat Dealers” or Wholesalers. Information
regarding these sub distributors and their operations have been collected by visiting their premises,
travelling with them during their secondary sales and interacting with them. Their details have been
given in the table. The fields that have been looked at for each sub distributor are:
1. Area of Operation
2. Available Warehouse space
3. Warehouse space utilized (for Pepsi)
4. Number of Staff Employed
5. Type and Number of Vehicles Used
6. Vehicle Capacity
7. Number of Outlets Operated
8. Businesses Run
9. Brands Dealt in

Table: Sub Distributor Details
MODULE-3: IDENTIFYING THE LONG TERM SUSTAINABILITY OF THE SUB DISTRIBUTORS
One of the major goals of this project was to identify which sub distributors could be sustainable in
the long term and thus be relied upon for expanding distribution. Once such sub distributors are
identified those sub distributors could be invested on by providing more man power, knowledge etc.
Once the behavioural nature of the sub distributors are identified PepsiCo can plan what actions to take
on which sub distributor. This judgement would incorporate a plethora of both quantitative and
qualitative factors. To enumerate the probable long term sustainability of the sub distributors a two
dimensional graph is constructed with Loyalty on one axis and Efficiency of Operations on the other.
The graph would look as such:
SUB Distributor
Name
Tara Maa
Enterprises
Annapurna
Agency
Munna
Stores
Guha and
Roy
Enterprises
Saraswati
Enterprises
Sunita
Enterprises
Area of Operation
Nayapatti, Salt
Lake
Sealdah Station
Bazar
Bowbazar
Saltlake,
Duttabad
Kadapara,
Hyatt
Kadapara, Hyatt
Warehouse Space
Available (sq. ft.)
300 1200 500 500 350 200
Warehouse Space
Utilized (sq. ft.)
200 200 400 500 200 100
Space Utilization
(%)
66.67% 16.67% 80.00% 100.00% 57.14% 50.00%
Inventory Holding
Capacity (cartons)
500 8000 2000 2000 500 400
No. of Staff 1 + self 5 2 + self 3 self + 2 children self + 2 children
Vehicles Used 3 wheel Van (1)
Cycles (3)
Rikshaw (1)
Cycles (2) Tata Ace Van (1) Cycles (2) Cycles (2)
Vehicle Capacity
(cartons)
100
5 (cycles)
20 (rikshaw)
5 200 5 5
No. of Outlets
Operated
35-40 15-20 20-25 25-30 10-15 10-15
Beverage
Distribution
Beverage
Distribution
Beverage
Distribution
Beverage
Distribution
Fruits
Distribution
Retail Store
Beverage
Distribution
Retail Store
Packaged Milk
Distribution
Retail Store Retail Store
Pepsi Pepsi Pepsi Pepsi Pepsi Pepsi
RC Cola Amrit Fresh Coca Cola Coca Cola Coca Cola
Bisleri RC Cola
Local Packaged
Water
Businesses Run Beverage
Distribution
Brands Dealt in
Wholeseller of
Cigarettes,
Biscuits etc.

METHODOLOGY:
The methodology that has been adopted in order to ascertain the long term sustainability of sub
distributors is similar to the factor rating method. For understanding the long term sustainability of a
sub distributor the two most important parameters that PepsiCo’s sales heads should focus on are:
1. The sub distributor’s efficiency of operations
2. The sub distributor’s loyalty towards the firm
A plethora of variables that could establish these two umbrella parameters of “Efficiency of
Operations” and “Loyalty” have been identified, weighted and quantified.
The variables that constitute each umbrella parameter have been laid down as under:
 Efficiency of Operations (Y Axis):
o Outlets Serviced
o Vehicles Employed
o People Employed
o Space Utilization
o Total Time of Operation per day
o Meeting Payment Deadlines
o Relationship and Rapport with Retailers
o Efforts on Merchandising
o Efforts on Market Growth
EfficiencyofOperations
Loyalty
OPPORTUNIST TRUE ENTREPRENEUR
NEEDS TRAININGINDIFFERENT
LOW HIGH
LOWHIGH

o Experience of Doing Business
 Loyalty (X Axis)
o Proper Record Keeping
o Purity
o Business focus
o Providing accurate Schemes to Retailers
o Efforts to push new products and slow moving items
o Restricting operations to allotted territory
o Suggesting new ideas to the company
DEFINITIONS:
Efficiency of Operations: Efficiency of Operations is construed as whether a sub distributor’s actions
are efficient or not
Loyalty: Loyalty is construed as whether a sub distributors is conforming to the company’s guidelines,
following procedures and looking forward to be with the company in the long term.
The variables have been also been defined as:
a. Outlets Serviced: Ratio of Number of Outlets serviced to Number of Outlets present
b. Vehicles Employed: Ratio of Capacity of the vehicle employed to that of super distributor’s
vehicle capacity
c. People Employed: Ratio of People Employed to what the super distributor would have done
d. Space utilization: Ratio of Utilized space for Pepsi to available space
e. Total Operation Time per day: Ratio of Hours Operated to that of a super distributor’s hours
of operation
f. Meeting Payment Deadlines: Ratio of Deadlines met on Time to Deadlines Due
g. Relationship and rapport with retailers: How much influential he is on his customers
h. Efforts on Merchandising: Time given to merchandising as a percentage of operating time
i. Efforts on market growth: New outlets opened as a percentage of new outlets opened by super
distributor
j. Experience of Doing Business: Years as a percentage of the most experienced sub distributor
k. Proper Record Keeping: How well records have been maintained
l. Purity: PepsiCo’s products in volume as a percentage of total products held
m. Business focus: Ratio of 1 to number of businesses operated
n. Providing Accurate schemes to retailers: Extent to which schemes are not concealed
o. Efforts to push new and slow moving items: Number of times mentioned to customers

p. Restricting operations allotted to territory: Extent of indulgence in channel poaching
q. Suggesting new ideas to the company: coming up with constructive solutions to problems
The basis of quantification of these parameters are any one of the four bases mentioned as under:
i. Comparison with the super distributor’s modus operandi (CSMO)
ii. Comparing with the best performing sub distributor’s metrics (CBPSM)
iii. Simple ratio (RATO)
iv. Qualitative ratings (QUALR)
The aforementioned bases of quantification have been chosen in order to arrive at normalized scores.
Thereafter these generalized scores have been weighted. Weighted has been given to each variable
according to the importance of the actions of the sub distributor.
The following table sums up the methodology of quantifying the variables and thereby making them
applicable to each sub distributor.
As is evident, each variable attracts a maximum score of 100. Thereby the weighted score is arrived at
by multiplying the normalized score obtained with the weight assigned to each variable.
Variables Basis of Rating Weightage
Maximum
Normalized
Score
-Outlet Coverage in the area RATO 5% 100.00
-Van/vehicle capacity CSMO 5% 100.00
-Deployment of People CSMO 5% 100.00
-Space Utilization RATO 7% 100.00
-Total Time of Operation per day CSMO 10% 100.00
-Meeting Payment Deadlines RATO 15% 100.00
-Relationship and Rapport with retailers QUALR 10% 100.00
-Efforts on Merchandising QUALR 20% 100.00
-Efforts on Market growth QUALR 20% 100.00
-Experience of Doing Business CBPSM 3% 100.00
-Proper Record Keeping QUALR 15% 100.00
-Purity RATO 25% 100.00
-Business Focus RATO 25% 100.00
-Providing accurate schemes to retailers QUALR 15% 100.00
-Efforts to push new products and slow moving items QUALR 10% 100.00
-Restricting operations to alloted territory QUALR 7% 100.00
-Suggesting new ideas to the company QUALR 3% 100.00
EFFICIENCY OF OPERATIONS
LOYALTY

After the quantitative analysis each sub-distributor can be classified according to the model that has
been developed above as any of the following four categories:
1. Indifferent
2. Needs Training
3. Opportunist
4. True Entrepreneur
In order to enumerate this a bubble chart has been used. The size of the bubble indicates the maximum
of both good operational efficiency and good loyalty. Thus, the sub distributor who scores the highest
on both the two parameters summed up receives the biggest bubble size.
1
2
3
456
HIGHLOW
LOW HIGH
EfficiencyofOperations
Loyalty
COLOUR CODING:
1 Guha and Roy Enterprises
2 Tara Maa Enterprises
3 Munna Stores
4 Saraswati Enterprises
5 Annapurna Agency
6 Sunita Enterprises
OPPORTUNIST TRUE ENTREPRENEUR
INDIFFERENT NEEDS TRAINING
It is thus evident from the graph that two out of the six sub
distributors are true entrepreneurs and is likely to deliver
sustainable benefits in the long run. Three out of the six are
indifferent to all actions taken by the company, however one of
the six demonstrates opportunistic behaviour.

MODULE-4 ACTIONS SUGGESTED
After the nature and the behaviour of each sub distributor have been identified there has to be actions
to be taken towards each of them and such actions should bring maximum benefits to benefit
PepsiCo.
It is worthwhile to reiterate here that in the deep sub urban pockets sub distributors have been an
effective model to register distribution. Thus it is of importance to treat the sub distributors as important
entities and recognize them as an integral part of the supply chain.
Observed Sub
Distributor
Behaviour
Actions that can be taken
INDIFFERENT
 Do not invest any time or money any further
 Restrict operations to pushing more products only
NEEDS TRAINING
 Educate
 Provide knowhow to improve efficiency
 Provide and explain guidelines to operate
OPPORTUNIST
 Identify Motivating Factors
 See if such motivating factors can fulfil long term goals
 Find out what can ensure loyalty
TRUE ENTREPRENEUR
 Invest time and keep them motivated
 Provide necessary wherewithal in the form of people, credit,
merchandise etc.
 Explain the long term benefits of actions such as merchandising
 Suggest Ideas that will help him grow his market
 Forge a strong partnership that will pay off in the long run

CONCLUSION
The project undertaken on general supply chain and sub distribution has completed an extensive study
of the processes and strategies that are used for ensuring seamless distribution and thereafter it has
studied a focussed part of the supply chain, which is sub distributors and their behavioural aspects of
business.
The project has hereby attempted to comment on the impact of each process on the supply chain
efficiency and motivate on of the retailers and sub distributors. A table has been created in the next
page that demonstrates the impact of any process or observation and it has been mapped with the
efficiency of the competitor’s operations.
Matched upto 25% or less
Matched Upto 50% or less
matched upto 75% or less
Matched Upto 100% or less
Matched by more than 100%
Sustained Positive Impact
Fairly Significant Impact
Negative Impact
Impact
INDEX
Competitor's Satus
The Index on the right hand side shows
how the processes and observations have
been mapped to that of the competitors
and how it is evaluated as providing a
sustained positive impact, Fairly
significant impact or providing a
negative impact.
The table in the next page at a glance can
show where PepsiCo needs to focus on
and where improvements are vital.
This is a product of first-hand experience
and field study and thus can prove to be
extremely important for decision
making.

SL. NO.
PROCESS/
OBSERVATION
DETAILS
COMPETITORS'
STATUS
IMPACT
1 Large Portfolio of Products
PepsiCo has an evenly distributed product portfolio pertaining to Food and
Beverages. Thus a slump in sales of one can be compensated by the other
2 Better Margin To Retailers
PepsiCo's margins have in general been higher than that of its competitors. Thus
many retailers choose to become exclusive dealers of PepsiCo.
3
Order Booking Go To Market
(OBGTM)
Enables maintaining a good relationship with the retailers through regular
personal visits and optimized trucking of Products.
4
Sales Automated Management
for the New Age (ERP)
Enabled capturing the PSR's point of sale (POS) data and thereby effective
demand forecasting.
5 Brand Equity A strong brand of PepsiCo's products helps in opening up new outlets easily.
6
Market Research through
Nielsen
Nielsen provides PepsiCo with Market Intelligence and the service of VISI audit.
This helps in targetting new outlets for expansion and assessing retailers'
performance towards merchandising respectively.
7 Merchandising Support
PepsiCo is lagging behind its competitiors on Merchandising. The Lead time
deliver a VISI to a retailer is four times that of Coca Cola. Also, Coca Cola has
much more POS displays than PepsiCo.
8
Recovery of Damages and
Expiries
Coca Cola and RC Cola are both much more agile than PepsiCo in recovering
damaged and expired stock from the retailers
9 Acquafina
Pepsi's Brand Acquafina is clubbed along with its beverage supply chain
however it does not receive adequete attention from the sales force. PSRs are not
given any targets for Acquafina separately. Acquafina has been constantly losing
market to competitors.
10 Distributor's Operations
Distributors often face capacity constraints. Their resources in the form of
vans, people and cash are limited. Thus often deliveries are delayed to a great
extent which agitates the retailers. In order to mitigate this distributor's often
engage the PSRs to deliver stocks to retailers. This stops the PSR from his
normal operations and thus sales are hampered.
11 Stock Keeping
PepsiCo has to institutionalize guidelines for the Distributors pertaining to
storing stocks. A common problem that was observed was that on stacking of
cartons, cartons carrying a nearer expiry date were, often unconsiously, kept at
the bottom of the pile and in effect they either got expired in the warehouse
itself, or expired stock or stocks with very close expiry dates was delivered to
the retailers wich ignited agitation.
12
Communication of Schemes by
sub distributors
Concealing Schemes offered by the company was observed as a common
practice of the Sub Distributors. In order to mititgate this a database of the
retailers in the sub distributors can be built and daily schemes can be
communicated to them vis SMSs
13 Stock Outs
Stock Outs were observed to be very frequent at the Distribution centres. This
happened because schemes were tweaked without any prior notice to the
Distributors. Therefore, the distributor could not plan his inventories
accordingly. So, most of the stocks of a particular item had to be given as
schemes instead of regular orders. This again agitated the retailers.
14 VISI Purity
Coca Cola has always gone the extra mile to keep their VISIs pure. More often
than not Pepsi's VISIs have been found to be impure, that is, it has contained
products of competing brands or other items such as milk or butter

15 VISI Perormance
It has also been observed that Coca Cola's VISI Coolers have performed much
better than that of Pepsi's in terms of cooling and sturdiness. Pepsi may need to
ensure that their VISIs perform up to the mark.
16 National/ Regional Tie Ups
Coca Cola has put more emphasis on National and Regional Tie Up outlets. In
Kolkata Pepsi has a tie up with Monginis, on the other hand, Coca Cola has a tie
up with Sugar and Spice, Kathleen and Cakes. PepsiCo will have to rethink its tie
up strategies in order to boost sales through these confectionaries and fast food
chains
17 New SKUs
Coca Cola has been early movers in launching new SKUs at attractive price
points. For example, it has a 150 ml Maaza pouch priced at Rs. 5 and a 750ml
coke and Thums Up priced at Rs. 40. PepsiCo will also need to come up with
such innovations to counter competition from the competitor's intelligently
planned SKUs

LIMITATIONS OF THE PROJECT
Though this project was done diligently with a lot of importance to intricate details. Some limitations
persists in this project. Few of the limitations of this project are:
1. Less Time Span: The Project’s time span was just 8 weeks. Given more time, a much more
comprehensive report could be prepared
2. Small Sample Size: In case of Sub distributor profiling, the sample size of sub distributors
taken was only six out of the 12 sub distributors that operate in north Kolkata city. Thus the
evaluations that have been focussed on mostly pertain to these six distributors. Though the idea
may be extrapolated to a lot of other evaluations some distinct features may come up from
some sub distributor which the model might not be able to capture
3. Reluctant Responses: While interviewing sub distributors, retailers and PSRs some of them
have shown reluctance to respond to queries. In such cases the project has resorted to
observations of someone else’s take on the matter
4. Unavailability of Company’s Viewpoints: The project lacks viewpoints of the strategic level
management of the company as not a lot of interaction occurred with the strategic level
managers since the project was based mostly in the field
5. Lack of Geographic Coverage: The project is concentrated only in North Kolkata City that
too in selected areas of B.T. Road, Kadapara, Salt Lake, Tangra, Rajabazar, Esplanade, Sealdah
and Bowbazar. Hence the observations derived are from these selected locations and thus the
project lacks geographical coverage
6. Lack of Data: At many points the lack of availability of data has been felt. For example, sub
distributors often keep no records of their operations, hence, some data were hypothesized

REFERENCES
1. Sales and Distribution Management, Oxford Publications, Panda and Sahadev, Edition II
2. Operations and Supply Chain Management, McGraw Hill Publishers, Chase Shankar and
Jacobs, Edition XIV
3. Marketing Management, Pearson, Kotler Kelly Koshy Jha, Edition XVI
4. “Soft Drink Industry in India”: NIIR Project Consultancy Services
5. Euromonitor International 2014, VDMA Report
6. Boston Analytics Study on over 7900 Indians published in Asia Food Journal
7. Business today: ‘A rough summer’, July 21, 2013

SIP Project Report_Snigdho Sundar Kundu

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