SUPPLY CHAIN MANAGEMENT

Trina Bhagat(05), Meghrag Gawande(09), Rohini Mukhopadhyay(19),

Rishika Mittal(30), Susrita Sen(36), Swati Randhawa(42)
Randhawa(42)
About Pepsi

 PepsiCo, Incorporated (NYSE: PEP) is a Fortune 500,

 American multinational corporation

 Headquartered in Purchase, NY with interests in

manufacturing and marketing a wide variety of carbonated
and non-carbonated beverages, as well as salty,
salty, sweet
and grain-based snacks, and other foods.

 PepsiCo founded in 1965 through the merger

m erger of Pepsi-
Cola and Frito-
Frito- Lay.
Lay.

 Revenue: USD 43.25 Billion.

 More than 1,85,000 employees.

About Pepsi-India

 Chairwoman, President & CEO: Indra Krishnamurthy Nooyi

  Available in nearly 200 countries and territories.

 It entered India in 1989

 Owns 43 bottling plants in India, 17 are company owned and 26

are franchisee owned.

 Generates direct employment for more than 4000 people in India

and indirect employment for 60,000 people

 Set up 8 Greenfield sites in

i n backward regions of different states.
PepsiCo intends to expand its operations and is planning an
investment of approximately USD 150 million in the next two-
three years.

  Annual exports from India are worth over USD 60 million

Supply Chain Management

 Supply chain management (SCM) is the management of a

network of interconnected businesses involved in the ultimate
provision of product and service packages required by end
customers.

 Supply Chain Management spans all movement and storage of 

raw materials, work-in-process inventory,
inventory, and finished
f inished goods
from point of origin to point of consumption.

 Definition an American professional association put forward:

³Supply Chain Management encompasses the planning and
management of all activities involved in sourcing,
sourcin g, procurement,
conversion, and logistics management activities.´

 It also includes coordination and collaboration with channel

partners, which can be suppliers, intermediaries, third-party
service providers, and customers.

 In essence, Supply Chain Management integrates supply and

demand management within and across companies.
A Supply Chain Flow
A Supply Chain Flow

 Cycle View of Supply Chain: There are five stages in a

supply chain (Supplier Manufacturer Distributor Retailer 
Customer) and four supply chain process cycles (customer 
order, replenishment, manufacturing, procurement cycle).
A Supply Chain Flow
 Push/Pull View
View of Supply Chain:
 ± With push process execution is
initiated in anticipation to a customer 
custo mer 
order.
order. Pepsi has a seasonal demand.
Just in time concept is applicable
app licable in
non-seasonal period and not applicable
in seasonal period. All processes that
are part of the
th e procurement cycle,
manufacturing cycle,
cycle, replenishment
cycle, and customer order cycle are
 push processes.

 ±  Pepsi Sales order and processing:

p rocessing: The
Shipping Manager receives sales order 
from Sales Team,
Team, distributors
d istributors through
telephone, fax & email one day before
dispatch. The sales are made to base
distributors on advance payment
against orders then shipping manager 
 plans according to the demand of 
distributors on daily basis.
 Supply Chain Strategy

1. The Customer and Supply Chain Uncertainty

1. Identifying customer needs
2. Demand uncerta
uncertainty
inty and
and implied
implied demand
demand
uncertainty
3. Uncertainty for the capability of the supply chain

 Understanding the
the Supply Chain Capabilities

 Achieving the Strategic Fit

Suppl
Supply
y Chain
Chain Flow-
Flow- Pepsi
Pepsi

OUR PRODUCT IS PEPSI COLA 300ml GLASS BOTTLE

Manufacturing
plants in Maharashtra

Chembur  Roha Paithan

One truck carries 9 tonnes which includes 550-700 crates (Primary truck)
LOCATIONS
LOCATIONS OF PEPSI COBO & FOBO IN INDIA
I NDIA

COBO

FOBO
 FOBO
FOBO-- Fran
Franch
chis
ise
e
Bottling Operations
are of 2 types
owned bottling
operations

COBO-Company
owned bottling
operations

In India , out of 43 bottling operations 17 are COBO and the rest are FOBO.
 Suppl
Supply
y Chain
Chain Flow-
Flow- Pepsi
Pepsi

Raw Materials
Used for Pepsi

Carbonated
Sugar  Emulsions Citric acid Additives Flavorings
water 

Raw Materials
Used for 
Bottles

Glass Silica Aluminium

Dynamics of Material Flow

Supplier  Plant CnF/ Logistics Retailer  

Distributor 
FLOW OF MATERIAL

Forward Reverse
Flow Flow

Organized Direct
Sales Sales
 Organized Sales

 CnF (group
(group of
of worker
workerss namel
namely
y loader
loaders,
s, de-load
de-loaders
ers,, sale
salesm
smen
en
work per CnF) There are 13 CnFs in Pune

 Distributor 
 ±  70 manpower with distributor 
 ±  Distributor supplies to 4000-4500 outlets
 He suppli
supplies
es in
in 11 routes
routes with
with the
the help of
of 11 vehic
vehicles
les
 10 veh
vehic
icle
less for org
organi
anize
zed
d sale
sale
 1 for
for dir
direct
ect sal
salee
 Secondary
Secondary trucks under the
the supervision
supervision of the driver
driver deliver
deliver the material
material to
the retailer 
 Distributors
Distributors have 3 days
days stock as
as back up with them inin order
order of any
malfunctioning of the plant or other such external factors.

 Retailers
 Direct Sales

From CnF the secondary trucks leave for the semi urban and rural areas for 
the direct sales of the materials . For each day truck consumes 6-7 L of diesel
 per day. This kind of selling is not used for demand forecasting but still
generates huge amount of revenue that is why this practice is being followed
despite having various loopholes.
 One truck carries 3 tonnes
tonn es which includes 144 crates
 Each
ach cr
crate
ate con
consi
sist
stss of
of 24
24 bot
bottl
tles
es
 Crat
Cratee wei
weigh
ghss 14.4
14.4 kg in case
case on 200m
200mll ful
fulll bott
bottle
le
 Crat
Cratee wei
weigh
ghss 18
18 kg
kg in
in cas
casee on
on 300m
300mll full
full bottl
bottlee
 Heigh
eightt of 300m
300mll bott
bottle
le -22cm
22cm
 Weight of 300ml bottle-700gms when full
 Weight of 300ml bottle-400gms when empty
empty
Reverse Flow

The empty bottles are picked by the secondary

secon dary trucks
from the retailers and brought back to the CnF.
CnF.

The primary trucks carry the empty bottles further to

the bottling plant where the bottles
b ottles are cleaned and
reused.
 Information Flow Money Flow

Supplier  Plant CnF/ Logistics Retailer  

Distributor 
 FLOW OF MONEY

Organized Sales Direct Sales

 A Pre
Pre Sales Representative
Represen tative (PSR) takes The money is paid by the retailer to the
the order from the retailer thrice a week. Driver at the time of delivery.
delivery.
Direct sales representative (DSR) delivers the
The payment is made in cash.
order the very next day.
The money is paid by
the retailer to the DSR at the time of delivery.
delivery.

 All
expenses are borne by distributor but are The retailer gets a margin of Re 1
later reimbursed by company
Rs 170 for each crate of 200 ml
m l bottles
Rs 218 for each crate of 300ml
Empty bottle costs Rs.3-6 each
FLOW OF INFORMATION

Pre Sales
Representative

Direct Sales
Representative

Customer Executive

Territory Development
Manager 

Sales Manager 
FLOW OF INFORMATION contd

 The custome
customersrs of the
the Comp
Company
any are divided
divided into
into diffe
different
rent
categories and different routes, and every salesman is
assigned to one particular route which is to be followed by
him on a daily basis.
 11 PSR-
PSR- 2-3
2-3 extr
extra-
a- they
they reac
reach
h out
out to
to 30-3
30-322 outl
outlet
etss a day
 11 DSR- 2-3 extra
 Monthl
Monthlyy target
target for PSR
PSR is 2500-350
2500-3500(i
0(in
n season)
season),, 1500-
1500-
1800(off season)
 ± Incentives are based n these targets
 ±  They should achieve an annual growth of minimum 20%
 ±  For every 20% growth, an increase of Rs.3000 in salary
FLOW OF INFORMATION contd

 K ey
ey Accounts: The customers in this category collectively contribute a
large chunk of the total sales of the Company. It basically consists of 
organizations
organizations that buy large quantities of a product in one single
transaction. The Company provides goods to these customers on credit,
 payments being made by them after a certain period of time i.e. either a
month of half a month.
 Examples: Clubs, fine dine restaurants,
restaurants, hotels, Corporate houses

 Future Consumption: This route consists of outlets of Pepsi

P epsi products,
wherein a considerable
considerable amount of stock is kept in order to use for future
consumption.
consumption. The stock does not exhaust within a day or two, instead as
and when required stocks are stacked up by them so as to avoid shortage or 
non-availability of the product.
 Examples: Departmental stores, Super markets etc.
 Immediate Consumption: The outlets in this route are those which
require stocks on a daily basis. The stocks of products in these outlets
are not stored for future use instead, are exhausted on the same day and
might run a little into the next day i.e. the products are consumed at a
fast pace.
 Examples: Small sized bars and restaurants, educational institutions
etc.

 General: Under this route, all the outlets that come in a particular area
or an area along with its neighboring areas are catered to. The
consumption period is not taken into consideration in this particular 
route.
Source of Information- Pashankar Beverages
Beverages

 Haris
Harish
h Chand
Chandra
ra,, CE(
CE(Cus
Custo
tome
merr Exec
Execut
utiv
ive)
e)
 Viran
iran Talwa
alwarr, DS
DSR 
 Nile
Nilesh
sh Kat
Katarna
arnavr
vre,
e, DSR 
DSR 
Thank You«