PepsiCo’s Supply Chain Management Strategies

PepsiCo’s overall philosophy of cooperation, integration, and innovation helps ensure its
varied and complex supply chain remains stable, resilient, and flexible.

As a vast, multinational company, Pepsi must input, analyze, and act on an enormous
amount of data to properly manage the flow of its food and beverage products – each
with its own specific needs. For instance, some products require cold chain logistics,
while others require ingredients sourced from multiple regions around the world.

In addition to coordinating numerous suppliers, manufacturers, shippers, warehousing

managers, and retailers, PepsiCo must also plan for potential disruptions due to
seasonal sourcing requirements, weather and climate change, and shifts in demand.

To help ensure agility and adaptability, the company has focused on a couple of
different areas in recent years.

Human Rights

PepsiCo has numerous policies and standards in place to ensure the safety, health,
and well-being of every supplier.

The Global Code of Conduct, for example, lays out clear guidelines for all of PepsiCo’s
suppliers. Touching upon labor practices, environmental management, and anti-
corruption practices, among others, the code of conduct is adjusted yearly as
appropriate. A 24/7 anonymous hotline is available for every partner worldwide.

Pepsi also has a standalone human rights policy, guided by the United Nation’s
Universal Declaration of Human Rights. The company is a signatory to the UN Global
Compact, demonstrating its commitment to universally accepted standards of fair labor
practices and worker rights.

Digitization and Technology

PepsiCo has been increasingly focused on investing in digital tools and advanced

technologies to create a more efficient, streamlined supply chain.

Specifically, the company is zeroing in on data integration to create a clearer picture of

the individuals and households buying PepsiCo products. Not only could this help the
business meet consumer demand in the short term, but it could also allow for better
long-term strategizing and forecasting.

More sophisticated data analytics also help PepsiCo’s distributors and retailers track

inventory. By improving ordering algorithms, stores can put in much more accurate
orders, accounting for sales histories and purchasing trends. This aids in creating a
streamlined, cost-efficient chain.
Environment and Sustainability

PepsiCo has implemented several policies over the years to create a more sustainable,
environmentally friendly supply chain.

In 2017, for example, the company began its Sustainable Farming Program in India.
This ambitious initiative is focused on promoting responsible agricultural practices that
will lead to better crop yields and improve farmers’ livelihoods—all while protecting the
environment and natural resources.

By demonstrating next-generation farming practices and technologies, for example, the

PepsiCo team in India helps farmers develop the knowledge and skills they need to
succeed in an increasingly tech-driven world.

Lessons to Learn from the PepsiCo Supply Chain

For companies looking to strengthen and fortify their supply chains, PepsiCo can offer
many useful examples. Its focus on new technologies, in particular, has enabled the
company to stay ahead of the trends.

Along with the aforementioned digital tools and tech, Pepsi has been experimenting
with 3D printing – even creating several ridged potato-chip prototypes to test
preferences among consumers. While this kind of experimentation with production may
not be within reach for smaller businesses, paying attention to emerging tech is key for
businesses looking to stay ahead of the crowd.

Harnessing the power of data, however, is something every company should already be

tapping into. Today’s sophisticated data collection and analysis tools make it easier than
ever for businesses to create highly accurate forecasts, prepare for dips and spikes in
demand, and pinpoint areas for improvement in the supply chain.

Finally, the company’s commitment to social and environmental responsibility is

indicative of a shifting tide, as today’s consumers increasingly look to support
businesses whose values align with their own.

How COVID-19 Is Affecting the PepsiCo Supply Chain

PepsiCo is used to dealing with supply chain disruptions; as a major international
corporation, natural disasters are par for the course. But the COVID-19 crisis is
something else entirely. For global actors such as PepsiCo, the crisis has
presented unique challenges and opportunities to identify areas for improvement.

To ensure a streamlined, efficient supply chain, PepsiCo taps into lean methodologies –

but now every link in its supply chain is being tested. Going forward, PepsiCo may
choose to keep more inventory on hand, allowing for quicker responses in the event of
future disruptions.

In an April interview, PepsiCo CFO Hugh Johnston said that the pandemic may spur
manufacturing changes, saying, “many of us have run supply chains and inventory
levels more leanly than 5 to 10 years ago.” The surge in demand, he said, resulted in a
“scramble to react.”

To aid in relief efforts, the snack and soda giant has launched a $7 million effort to help
communities hit hardest by the global pandemic. This will provide support in a range of
different areas, including testing, health care services, and family and senior housing. 

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