Supply Chain Management of PepsiCo

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Case Details:

Case Code : OPER102
Case Length : 14 Pages
Period : 2005-2011
Organization : PepsiCo.
Pub Date : 2012
Teaching Note :Not Available
Countries : US; Global
Industry : Food and Beverages

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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Excerpts

Supply Chain Management at Pepsico

PepsiCo's supply chain management had been based on the idea of collaboration and integration. The company took several initiatives to have a more collaborated and integrated supply chain, which would become a source of competitive advantage...

Procurement of Raw Materials

The raw materials used in manufacturing PepsiCo's beverage and food products were: apple, pineapple juice and other fruit juice concentrates, corn, aspartame, corn sweeteners, flour, flavoring, grapefruits, oats, oranges, rice potatoes, sucralose, sugar, vegetable and other oils, and wheat.

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Raw materials also included packaging material — plastic resins such as polyethylene terephthalate and polypropylene resin used for plastic beverage bottles, film packaging for snack foods, aluminum for cans, and also fuels and natural gases.

Manufacturing Operations

PepsiCo employed many technologies at its production facility when it realized that production flow was not smooth due to the frequent breakdown of machine and mismanaged inventory. Production at PepsiCo plants began with the unloading of empty bottles from the trucks via the conveyor and their being moved to the depalletizer....

Distribution Network And Logistic Management

PepsiCo used different distribution strategies to bring its products to market depending upon product characteristics, local trade practices, and customers’ needs. It delivered fragile and perishable products which were less likely to be impulse purchases, from its manufacturing plant and warehouses to customer warehouses and retail stores. PepsiCo used third party foodservices and vending distributors to distribute its snacks, foods, and beverage to restaurants, schools, stadiums, businesses, and other locations.

Pepsico's Relationship with Retailers

PepsiCo also made its supply chain better by establishing a collaborative relationship with its retailers. One such example was its relationship with Wegman’s retail . PepsiCo approached Wegman’s with a proposal for the Frito-Lay line which controlled two fifth of the world market for salty snacks and PepsiCo products...

Road Ahead

As of 2011, PepsiCo was continuing with its efforts in the direction of having a well managed supply chain and of strengthening its relationship with all its supply chain partners. In January 2011, PepsiCo changed the distribution system of its Gatorade products from warehouse delivery to “Direct to store” at convenience stores through both company-owned independent bottlers in the US and Canada.

Exhibits

Exhibit I: PepsiCo Inc.’s Business Units
Exhibit II: Consolidated Income Statement of PepsiCo from 2006-2010 (In US$ Millions)
Exhibit III: Different Brands of PepsiCo Inc.
Exhibit IV: PepsiCo’s Supplier Code of Conduct

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