Professional Documents
Culture Documents
Mis Pepsico Final
Mis Pepsico Final
on Information
System of
PEPSICO
An insight on strategic
business evolution
TABLE OF CONTENTS
ACKNOWLEDGEMENT........................................... 4
ABOUT PEPSI CO.................................................. 5
EXECUTIVE SUMMARY............................................ 7
Introduction to Information Systems.................................8
Information & Organizations........................................................................................... 9
Functional aspects of MIS............................................................................................... 9
Financial MIS......................................................................................................... 10
Manufacturing MIS.................................................................................................. 10
Marketing MIS....................................................................................................... 11
Human Resource MIS............................................................................................... 11
Business functions.................................................... 12
The order fulfillment process......................................................................................... 13
Role of Information Systems in a business:........................................................................13
ERP SYSTEMS...................................................... 21
Enterprise Resource Planning......................................................................................... 22
ACKNOWLEDGEMENT
ABOUT PEPSI CO
MISSION
To be the world's premier consumer products company, focused on convenient
foods and beverages. We seek to produce healthy financial rewards to investors as
we provide opportunities for growth and enrichment to our employees, our business
partners and the communities in which we operate. And in everything we do, we
strive for honesty, fairness and integrity.
VISION
"To build Indias leading total beverage company, delighting consumers by best meeting their
everyday beverage needs, and stakeholders, by delivering performance with purpose, through our
talented people."
SUSTAINABILITY VISION
"PepsiCos responsibility is to continually improve all aspects of the world in which we operate
environment, social, economic creating a better tomorrow than today"
Tomorrow better than Today
PepsiCos foods company, Frito-Lay, is the leader in the branded salty snack market and all Frito
Lay products are free of trans-fat and MSG. It manufactures Lays Potato Chips, Cheetos
extruded snacks, Uncle Chipps and traditional snacks under the Kurkure and Lehar brands and
the recently launched Aliva savoury crackers. The companys high fibre breakfast cereal,
Quaker Oats, and low fat and roasted snack options enhance the healthful choices available to
consumers. Frito Lays core products, Lays, Kurkure, Uncle Chipps and Cheetos are cooked in
Rice Bran Oil to significantly reduce saturated fats and all of its products contain voluntary
nutritional labeling on their packets.
The group has built an expansive beverage and foods business. To support its operations,
PepsiCo has 36 bottling plants in India, of which 13 are company owned and 23 are franchisee
owned. In addition to this, PepsiCos Frito Lay foods division has 3 state-of-the-art plants.
PepsiCos business is based on its sustainability vision of making tomorrow better than today.
PepsiCos commitment to living by this vision every day is visible in its contribution to the
country, consumers and farmers.
EXECUTIVE SUMMARY
Introduction
PepsiCo is a world leader in convenient snacks, foods & beverages, with revenue of more than
$39 billion & more than 1, 85,000 employees. The company consists of PepsiCo American
Foods (PAF), PepsiCo Americas Beverages (PAB) & PepsiCo International (PI). PAF includes
Frito-lay North America, Quaker foods North America & all Latin America food & snack
businesses. PAB includes PepsiCo Beverages North America & all Latin America beverage
businesses. PI includes all PepsiCo businesses in UK, Europe, Asia, Middle East & Africa.
PepsiCo brands are available in nearly 200 countries & generate sales at the retail level of more
than $98 billion. Some of PepsiCos brands names are more than 100 years old, but the
corporation is relatively young. PepsiCo was founded in 1965 through a merger of Pepsi-Cola &
Frito-Lay. Tropicana was acquired in 1998 & PepsiCo merged with Quaker Oats Company,
including Gatorade, in 2001.
PepsiCo offers product choices to meet a broad variety of needs & preferences from fun-foryou items to product choices that contribute to healthier lifestyles. PepsiCos mission is To be
the worlds premiere consumer Products Company focused on convenient foods & beverages.
We seek to produce healthy financial rewards to investors as we provide opportunities for growth
& enrichment to our employees, our business partners & the communities in which we operate.
And in everything we do, we strive for honesty, fairness & integrity.
PepsiCo Headquarters
PepsiCo World Headquarters is located in Purchase, New York. The 7 building headquarters
complex was designed by Edward Durrell Stone, one of Americas foremost architects.
The unit of PepsiCo we visited manages the supply for several wholesalers, retailers, restaurants,
hotels & other such food outlets. In order to achieve the projected sales target effectively, the
organization ensures a comprehensive strategic alignment with the overall PepsiCos business
strategy. The units primary functions are to conduct a systematic manufacturing & supply of the
product without any tactical flaws. Pepsi products are safe, Pepsi analyze water, sugar &
flavorings in accordance with the best international guidelines. Pepsi products comply with most
stringent international regulations, including the new regulations for carbonated soft-drinks.
Financial MIS
This MIS provides financial information to all financial managers within an organization.
Manufacturing MIS
Marketing MIS
This MIS supports managerial activities in product development, distribution, pricing decisions
& promotional effectiveness.
Business functions
There are 4 major business functions:
1.
2.
3.
4.
Every business regardless of its size must perform the above mentioned 4 functions to succeed. It
must produce the product or service; market & sell the product; keep track of accounting &
financial transactions & perform basic human resource tasks such as hiring & retaining
employees.
Fulfilling a customer order involves a complex set of steps that require the close coordination of
the sales, accounting & manufacturing functions.
Senior management: identify manpower requirements (skill, education level, types & number
of positions etc.) for meeting long term business plans.
Middle management: monitor & analyze recruitment, allocation & compensation of employees.
Operational management: track recruitment & placement of employees.
An Employee Record Keeping System
It provide middle level managers with reports on firms performance which helps them
to monitor firms operations & helps in predicting future performance.
It summarizes & gives reports on basic operations using data from TPS.
It provides weekly, monthly, annual results but may enable drilling down into daily &
hourly data.
It is typically not very flexible system with little analytical capability.
In the system illustrated by this diagram, 3 TPS supply summarized transaction data to the MIS
reporting system at the end of the time period. Managers gain access to the organizational data
through the MIS, which provide them with appropriate reports.
It supports non-routine decision making for middle level management. For e.g. what
would impact on production schedules be if the sales doubled in any previous month?
It uses information from TPS, MIS & external sources.
7
ERP SYSTEMS
ERP systems integrate business processes & information from entire enterprise. The system
helps in coordinating the operation of business functions. ERP systems are software packages
that can be used for the core systems necessary to support enterprise systems.
SAP modules:
Enterprise Applications:
Enterprise applications are systems that span functional areas & automate processes for multiple
business functions & organizational areas; they include:
Enterprise systems
Supply Chain Management (SCM) systems.
Customer Relationship Management (CRM) systems.
Knowledge Management systems.
Enterprise Systems:
The system manages relationships with suppliers, purchasing firms, distributors &
logistic companies.
It manages shared information about orders, production, inventory levels etc., the goal is
to move correct amount of product from source to point of consumption as quickly as
possible & at lowest cost.
Customer orders, shipping notifications, optimized shipping plans & other supply chain
information flow among Warehouse Management System (WMS), Transportation Management
System (TMS) & its back-end corporate systems.
The system helps in capturing, storing, distributing & applying knowledge so that it can
be leveraged for strategic benefit.
It includes systems for managing & distributing documents, graphics & other digital
knowledge objects.
It includes systems for creating knowledge directories of employees with specialized
expertise.
Status of MIS
Computer Based Information Systems:
Electronic Data Interchange (EDI)
Information exchange between companies.
Direct Exchange (DEX)
Information exchange between hand-held computer & stores delivery system.
Business Process
There are so many products, operations centers, & offices required for massive co-ordination of
each department, activity, geographic location & employees. PepsiCo uses MySAP Business
Suite applications in the management of their enterprise resource management. The systems help
to standardize the internal software & systems through the elimination of legacy systems, thus
reducing the redundancy & error that are common in nature of legacy systems. The system is
built with the industry best practices that allow Pepsi to be at the forefront of the industry in each
area of the business.
for operations, profit & growth. It allows for the integration of information from, for e.g., both
human resources & operations, in order to budget personnel for a specific production line. The
entire company can be consolidated into representation in single budget. Individual employees at
all levels of the organization are able to access information documenting their own contributions
& the progress made within their department.
Another important part of the ERM at Pepsi is the Enterprise Human Capital Management. This
system has processes that help managers place employees, provide rewards for performance &
promote valuable employees.
simplification of the resolution process, accurate & timely deliveries & reduction of product
inventory close time by 1-2 days. Through the use of real time customer information, the
managers are able to have up-to-date information on any issue of needs of the customer through
their account, allowing a clear picture of their customers & their relationships with the company.
This also allows workers to uncover potential sales opportunities with their customers. The real
time information system is also used to improve customer interaction & satisfaction through the
use of help desks, customer service representatives & allowing customers themselves to access
the real time information system. Pepsi uses CRM applications to determine profitable
customers, uncover potential sales opportunities, improve customer interaction & relations &
provide the enterprise with up-to-date information.
There is a complicated ROI analysis that evaluates & effectively gauges the level of
benefits & costs for each option & then discount them for time-to-benefit, cost
distribution over time & the risk associated with each option.
Once the enterprise vendor offers the same solution as the point product supplier,
integration of the solution into the production environment is both faster & easier,
delivering a more rapid ROI.
Hidden cost effects of integration on cumulative benefit stream
Comparative cost of implementing integrated business suite solution vs. integrated point
solutions (per $1 of software expenditure
Integrating to the infrastructure effort of point solutions vs. additional suite models over
time
Cost comparisons over time are the telling data points for determining the effects of integrating
multiple third-party applications. Looking at the benefits obtained from implementing
applications in relation to time can provide a view into the costs of both delay and integration.
Above figure shows the payback from a typical project where applications are integrated. At the
beginning of a project, before the application is in use, the organization incurs costs related to the
initial software purchase, and implementation and integration. Once implementation and
integration are complete, the organization begins to accumulate benefits and at some time the
breakeven point is, in theory, reached. The maintenance of the integration points created by
revision by the point solution supplier causes additional costs, reducing the benefit stream
temporarily. In some instances, the time needed for a positive ROI can take many months
typically years.
Adding an ERP module to the existing solution vs. adding a new point solution
Above figure depicts the contrast between the two strategies. It exemplifies the decision to add
new functionality via a third-party point solution as opposed to adding the same functionality
through an integrated module of the existing infrastructure suite. By eliminating the need for
significant integration and by reducing implementation costs, the time to reach breakeven and a
positive benefit stream can be reduced. With functional parity between the point product and the
module, the time to benefit within the organization is reduced. An early implementation of the
integrated module could cause the accumulation of benefits (the slope of the line) to be steeper.
Not only is the time to breakeven reduced, but the organization also accumulates more benefits.
The area between the solid line and the dashed line in the figure denotes that additional benefit
achieved by avoiding integration time and costs. For example, with all things being equal in
product functionality between a suite providers integrated solution and a third-party providers
point solution, the benefit return on the integrated application is both greater and more rapidly
achieved.
Integration delays initial arrival at breakeven; it also has an iteratively negative effect with
repeated re-integration over time. The effect on time to net benefit can be significant.
MySAP ERP
SAP R/3
SAP R/2
REAL TIME
STANDARD
BUSINESS
PROCESS
CLIENT
SERVER
BASED
DISTRIBUTED
ARCHITECTUR
E.
EXTENSIBILIT
Y via SAP
NETWEAVER.
TRANSPAREN
CY &
CORPORATE
GOVERNANC
E.
CUSTOMER &
HUMAN
BASED
Flexibility & scalability to incrementally add the right mix of Customer Relationship
Management (CRM), Supply Chain Management (SCM) & product life-cycle
management functionality as business needs evolve.
It offers a comprehensive business scope & can be the basis for all industry solutions.
7
What is the difference between MySAP ERP & SAP R/3 Enterprise?
MySAP ERP includes function available in SAP R/3 Enterprise and additional functionalities
entire functional areas: Analytics, Strategic Enterprise Management (SEM), Financial Supply
Chain Management, Manager Self Services (MSS), SAP Learning Solution, SAP E-Recruiting,
Employee Self Services (ESS), Self-Service Procurement and Internet Sales R/3 Edition.
MySAP ERP also contains the complete SAP NetWeaver platform; SAP R/3 Enterprise includes
a subset of SAP NetWeaver, the SAP Web Application Server.
What is the difference between MySAP ERP, MySAP All-In-One & SAP Business
One?
MySAP ERP is an enterprise resource planning solution for medium to large companies; MySAP
ERP focuses on the optimization of internal business processes.
MySAP All-In-One is targeted at small companies. It is a preconfigured MySAP Business suite
that runs on one database & makes a pre-configured system with various scenarios. All-In-One
incorporates, for example, additional functionality in the areas of SCM & CRM.
SAP Business One is a PC project for very small subsidiaries or companies needing rudimentary
finance & logistic functions.
How does MySAP ERP integrate with other SAP products & potential third-party
applications?
MySAP ERP is designed to offer real-time integration with other SAP products. Third-party
applications can be integrated with MySAP ERP through SAP NetWeaver.
marketing campaigns to meet the needs & desires of customers in specific areas. Other than these
minor changes, we feel that the present CRM application is very promising for PepsiCo.
Predictable
supply &
demand
Predictable
supply &
uncertain
demand or
uncertain in
supply &
Highly
uncertain
supply &
demand
PEPSICO
PepsiCo provides health benefits for more than 1,16,000 employees & the retirees while PBG
covers some 83,000 employees & retirees.
MEDSTAT advantage suite seamlessly integrates data warehousing capabilities, advanced
healthcare analytic methodologies & business intelligence applications to provide a powerful
decision support solution.
FRM
Finance
Resource
Manageme
nt
SCM
MRP
Manufacturin
Manufacturin
g
g Resource
Resource
Planning
Planning
CRM
Customer
Customer
Relationshi
Relationshi
p
Manageme
Manageme
nt
nt
ERP
syst
em
Supply
Supply
Chain
Manageme
Manageme
nt
nt
HRM
Human
Human
Resource
Resource
Manageme
Manageme
nt
nt
Material planning & sourcing is carried out as well. Sources of supply of raw material both local
& foreign are identified & terms & conditions are negotiated. Capacity planning is also done at
this stage. Sales forecasting & production planning depends upon the capacity of the
organization with respect to:
1. Production.
2. Storage: raw & packing.
3. Storage: finished goods.
The unit has a procurement budget of approximately Rs. 3 billion. Approved suppliers cant go
beyond this budget the supplier is audited by the most efficient quality control department.
Distributors are also decided by the company, keeping in mind past performances.
Supply chain planning
As the above configurations have been set, planning must be done within the above stated
constraints. Planning establishes parameters within which a supply chain will function over a
period of time. Companies start the planning phase with a forecast for the coming year of
demand. Pepsi carries out sales forecasting for local demand as well as for export purposes to
countries such as Nepal, Bhutan & Bangladesh. The annual sales target is conveyed to the supply
chain department of the unit. Planning is carried out on a monthly, weekly & daily basis.
Supply chain operation
Company makes decision regarding individual customer orders. The goal of supply chain
operations is to handle incoming customer orders in the best possible manner. During this phase,
firms allocate inventory or production to individual orders, set a date that an order is to be filled,
generate pick lists at a warehouse, allocate to shipping, set delivery & so on. There is less
uncertainty about demand. At this unit, sales & supply chain departments get together to decide
the inventory usually on a weekly basis.
Achieving the strategic fit
Making one stage more responsive allows the other stage to focus on being more efficient. The
Pepsi supply chain assign different roles to its different stages, the company has to decide either
to transfer the responsiveness to manufacturing stage or the retailer stage. While discussing
Pepsis supply capability it is seen that Pepsi tends to be more responsive in cities & a bit less in
towns. Therefore, transferring the responsiveness to the retailer & distributor, allowing them to
face the higher implied demand uncertainty. This in returns allows the manufacturer & supplier
to be more effective. At the same time, multiple beverages type contributes to a broader product
portfolio causing the unit to adjust its strategies accordingly; tailoring the supply chain to best
meet the needs of each beverage demand.
challenges with technology. Sales data also helps Pepsis managers make decisions about
products before they reach the freshness date & must be pulled from the shelf & discarded.
Strategic alternatives
Out of the many strategic alternatives that PepsiCo could choose to follow, we have chosen to
endorse one that fosters continued growth & diversification. Although their over-satisfied
portfolio has hindered their international growth, these strategies strengthen their overall
corporate worth & make presence domestically.
Pepsi should focus on increasing sales globally to compete effectively with Coke. They have
been beaten badly in some markets & need to focus more on un-tapped areas.
They should:
Continue to diversify their beverage selection through acquisitions. This will enable
PepsiCo to combat the decreased interest in Cola. Going along with this, PepsiCo needs
to ensure that they can properly manage all of these acquired companies & should divest
that show limited potential.
Increase the use of exclusivity agreements to boost their sales in key markets. This may
make it harder to keep costs low but will ensure added revenues. Another reason why
Coke has continued to beat Pepsi is through its exclusivity agreements with restaurant
chains, sports & entertainment complexes & college campuses. More attention in this
area will help to battle Cokes dominance.
Capitalize on their aggressive corporate culture in overseas dealing. This can help to
combat the weakness of their current international strategies.
Logistics
In order to manage its distribution systems effectively, PepsiCo had put in place advanced
logistics systems. PepsiCo sold beverage concentrate to bottlers, who added carbon dioxide,
sweetener & water to make beverages & beverage syrup. Syrup was sold either directly to the
fountain accounts or was combined with carbonated water for bottling. Bottling companies were
owned & operated by local companies in the countries where PepsiCo operates.
The transportation network has been designed with a view to ensure responsiveness & boost the
availability of the product. For the unit we visited, using fast mode of transport increases
responsiveness as well as the transportation cost but lowers the inventory holding cost. The unit
decides different mode of transportations having different characteristics with respect to speed &
size of shipment.
Electronic commerce in PepsiCo
Pepsi takes the plunge with an online campaign
PepsiCos recent announcement that it would conduct a joint promotion of its products with
Yahoo, one of the most popular sites on the internet, is promising news for website operators that
have struggled to persuade the richest advertisers to spend their money online.
Even as the internet achieved mass market audience levels, consumer goods advertisers like
Coca-cola, Nabisco & until now Pepsi, have kept their wallets shut, spending mere pocket
change on the web. They have argued that the medium may be great for direct marketing, but it
does little to advance their primary advertising goal: increasing brand awareness.
SAP announced global brand leader PepsiCo has selected MySAP Business Suite
SAP has announced that global brand leader PepsiCo has selected MySAP Business Suite as the
primary business platform for unifying its operations, standardizing business processes &
increasing efficiency across its divisions. The USD 27 billion convenience food & beverage
company produces Frito-Lays snacks, Pepsi-cola beverages, Gatorade sports drinks, Tropicana
juices & Quaker foods.
SAP spokespeople declined to comment the value of the deal in monetary terms. John Grozier,
SAPs Vice-President of CRM product marketing, told CRM buyer in an interview that PepsiCo
selected MySAP to kick off a major business transformation for the company.
Information Technology improvements
RECOMMENDATIONS
Meanwhile, software analyst Trotta believes that, over the course of the PepsiCo deployment,
SAP's MySAP Business Suite will eventually replace the majority of systems that are currently
running within PepsiCo and its subsidiaries.
"This is certainly a testament to SAP's ability to execute and demonstrate the value that
NetWeaver brings to the table," said Trotta.