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Pepsiamericas Case Study Spring 2021
Pepsiamericas Case Study Spring 2021
Case description:
In 2009, PepsiAmericas (PAS) was the world’s second largest manufacturer and distributor of
Pepsi beverages, operating in the U.S. (69% of sales), central and Eastern Europe (26% of Sales)
and the Caribbean (5% of sales). Net sales in 2008 totaled nearly $5 billion or 20% of PepsiCo’s
total US beverage sales. A recession hit the U.S. economy, but PepsiAmericas was also faced
with two more important long-term challenges: (1) a declining U.S. market for carbonated soft
drinks, and (2) increasingly powerful retailers who were squeezing PAS profit margins. In
addition, PepsiAmericas product line had moved from 35-40 products in the mid-1990s to
nearly 400 products by 2009.
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PepsiAmericas Case Study Spring 2021
knowledge to negotiate better contracts for raw materials, lower supply chain operating costs,
more accurately monitor consumer demand, and ultimately strike more profitable deals with its
large retail customers. In effect PepsiAmericas employed customer data as a competitive asset,
collecting vast amounts of data as part of daily operations (transacting) and then employing
that data for management and control as well as for innovation in product development and
customer service.
This transformation process was dubbed the “Customer Optimization to the 3 rd power –
Planning + Selling + Delivery” program and was intended to reduce inventory management
issues, increase productivity across PepsiAmericas’ production platforms, and improve overall
customer service. For example, national customers, like Wal-Mart, fed point-of sales data
directly into PAS’s SCM system, informing the detailed product mix and quantities going from
PAS to particular sales location. And at the other end of the spectrum, those PAS employees
serving the small local shops had access to detailed historical sales data to forecast the
requirements for local stores and to provide the right mix of products day in and day out. The
ability to consistently adjust prices was also significantly improved. Prior to having integrated
systems and aligned operations, PAS customers within the same ZIP code would have different
prices depending upon who they dealt with in PAS and the pricing data available to that sales
person. In addition, productivity for PAS customer service representatives rose noticeably.
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PepsiAmericas Case Study Spring 2021
Continuous data feeds from PAS SCM and ERP systems to the firm’s decision support systems
provided PepsiAmericas executives with ready access to real-time data to finetune business
processes and to promptly address performance and customer servicing issues. This same
approach drove decisions concerning the acquisition of both additional production capabilities
and new lines of products. It also contributed to the continuous improvement of ongoing firm
business processes and services, and the shift to a more data-driven decision making culture
across the organization. PepsiAmericas leadership employed their data assets to build
competitive knowledge in three areas that were critical to their long-term success, namely:
customer alignment and relationship management, supply-chain process improvement, and
enabling more dynamic pricing across the company. PAS continues to mine data across the
enterprise to measure business results and to inform best practices.
Source:
Beath, Cynthia M. and Jeanne W. Ross, “PepsiAmericas: Building an Information Savvy
Company”, Feb. 2010, MIT Sloan School of Management Journal, accessed online
http://dspace.mit.edu/bitstream/handle/1721.1/68550/Pepsi%20BeathRoss2.pdf
Case Questions:
For the questions below, think first about the appropriate representation for your answer
(bullet list, multi-part bullet list, table) and then the appropriate course framework to ensure
both accuracy and completeness.
1. Describe the IT architecture (both type of IT architecture and its information system
elements) at PepsiAmericas before its Customer Optimization initiative.
Distribution was handled by the local delivery person, who “owned” a particular route
of retail customer stores and would only load the truck according to its region demand
The delivery person had to address customer needs on a day-to-day basis.
Business units, organized into 13 regional divisions, designed, and implemented discrete
information systems to meet regional needs.
Production was based on the predictions of delivery drivers.
Pepsi had limited knowledge about customer wants and needs
Pepsi did not have a centralized ERP and CRM system
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PepsiAmericas Case Study Spring 2021
Info problems
Customer Intimacy The US recession affected customers
A declining US market for soft drinks
Powerful retailers were squeezing
PAS profit margins.
Customers paid different prices for
PAS products (regardless of ZIP code)
because they depended on who in
PAS they were doing business with.
This caused customer confusion and a
bad customer service
3. Describe the investments in information systems that were made to address these
information needs (excluding DSS).
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PepsiAmericas Case Study Spring 2021
4. Explain the role of decision support systems (DSS) in enabling the business success of
PAS in terms of customer intimacy and operational excellence. Your answer should
include treatment of both structured and unstructured decisions. Describe one
additional way that a DSS could potentially enhance information processing within at
PAS.
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PepsiAmericas Case Study Spring 2021
inventory
management issues
and increase
productivity
By having data about
the company, Pepsi
managers can analyze
what areas they need
to improve
5. [Optional – data dictionary practice] PAS collects lots of customer data as part of daily
operations (transacting). Two entities or events on which PAS is likely to collect data
include CUSTOMERS and ORDERS.
For each entity, think of 3 characteristics (fields/ also called data elements) that would be
important details for PAS to track (recognize that there are likely many more than 3). Be sure
to identify at least 1 characteristic (field=primary key) that could be used to uniquely identify
any CUSTOMER or ORDER.
Describe each characteristic (field/ data element) using metadata (e.g. clear description of the
characteristic, format allowed, values allowed, …).
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