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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"“Winning Council of Supply Chain Management Professionals 2010 Supply Chain Innovation Award is tangible recognition for years of hard work by Paul Hamilton, Tim Thornton, and the entire PBC supply chain team. This group of supply chain veterans has successfully positioned PBC (Pepsi Beverage Company) for continued growth by deploying an automated solution that is both innovative and integrated into our business processes"

– Victor Crawford, Executive Vice President of supply chain and system transformation for PepsiCo Beverage Company, October 7, 2010.

“In this environment, where consumer demand is weak, competition is fierce, and profit margins are under pressure, you have to scrutinize every area of the business — everyone and everything has to stand up to disciplined evaluation in the interest of efficiency.”

– Mike White, Vice Chairman of PepsiCo and CEO of PepsiCo International, July 14, 2009.

In 2010, PepsiCo Beverage Company (PBC), an operating unit of PepsiCo Inc. (PepsiCo), the second largest food and beverage company in the world , received the supply chain innovation award from the Council of Supply Chain Management Professionals (CSCMP)1 . PBC was formed on February 26, 2010, when PepsiCo acquired two large bottlers, PepsiCo bottling Group2 (PBG) and PepsiCo America Inc.3 (PAS), for US$7.7 billion and named the combine PepsiCo Beverage Company. Experts opined that the formation of PBC reflected an effort on PepsiCo’s part to streamline its operations and facilitate faster and more integrated product delivery to create a more integrated supply chain, strengthen its distribution channel, and enhance revenue growth.

Operations Management Case Studies | Case Study in Management, Operations, Strategies, Marketing Management, Case Studies

PepsiCo was given the award for its innovative distribution strategy, the “Direct to Store Delivery model”, that reduced system-wide inventory, eliminated warehouse space constraints, enhanced the potential for unlimited SKU4 growth, and delivered warehouse cost savings. Timothy Thornton (Timothy), vice president, supply chain logistics, PBC, said PBC had to move an increasing number of products every day and company executives had realized that its distribution centers and warehouses were finding this difficult to manage...

About Pepsico - Next Page>>

1] Supply Chain Brain launched this award in 2005 to highlight and recognize the top players in the industry when it comes to innovative programs, projects, and collaboration.
2] PepsiCo Bottling Group, Inc. was the largest bottler of PepsiCo beverage. It accounted for more than one half of the PepsiCo beverage sold in the US and Canada and about 40% worldwide.
3] PepsiCo Americas, Inc. was the second largest bottler of PepsiCo products. It had 19 bottling plants in the US and had a presence in 11 countries in Central/Eastern Europe and 55 countries in Caribbean. It held 41.1% stake in the PepsiCo Inc.
4] SKU is the acronym for stock keeping unit. Here, SKUs represent larger collations of Pepsi’s individual packets, cartons, or other servings — for example a pallet containing a number of multipacks.

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