Group Assignment 3 Supply

Chain

Amna Mohamed Hassan

Ibrahim Mohamed El Hassan
AbdulKarimu Issaka
20 Dec 2021
Abdelrahman Siddig
List of Contents

1.0 Executive summary………………………………………………………………………………………………..3

2.0 Introduction…………………………………………………………………………………………………………..4
3.0 Scope…………………………………………………………………………………………………………..………..4
4.0 Reason for selecting the company………………………………………………………………….………4
5.0 Current situation: SWOT ………………………………………………………………………………………..5
6.0 Supply Chain Strategies…………………………………………………………………………………………..6
6.1 Coordinated Forecasting and Distribution…………………………………………………………..6
6.2 Purchasing………………………………………………………………………………………………..………..6
6.3 Supplier relationships…………………………………………………………………….…………………..6
6.4 Supply Chain Visibility …………………………………………………………………..…………………..6
7.0 Supply chain policy……………………………………………………………………………………….………..7
8.0 Management Method……………………………………………………………………………..……………..7
9.0 Issues identified……………………………………………………………………………………………………..7
10.0 Using Information System (IS) ……………………………………………………………………………..8
10.1 Current Enterprise Resource Planning Systems (ERP)……………………………………………8
11.0 Recommendation for supply chain improvement…………………………………………………8
12.0 Conclusion …………………………………………………………………………………………..……………..9
13.0 References…………………………………………………………………………………………..……………..10

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1.0 Executive Summary
Pepsi is a carbonated soft drink produced by PepsiCo. Originally produced in 1893 by Caleb
Bradham and introduced as Brad's Drink, it was renamed as Pepsi-Cola in 1898, and then in 1961
shortened to Pepsi. PepsiCo’s product portfolio has foods including 23 brands each of which rakes
in an estimated $1 billion in sales.
PepsiCo has earned itself a high reputation of leading green and sustainable production and
marketing. It inspires its consumers through its iconic brands to ensure a sustainable
environment whilst supporting communities and improving livelihoods throughout its supply
chain.
PepsiCo’s sustained efforts at Green and sustainable production, marketing and environment has
earned it the Prestigious Terra Carta Award by His Royal Highness, The Prince of Wales for
Sustainable Markets Initiative (SMI) at Davos in January 2020.
Generally, Factors that make PepsiCo stand out and, in a way, becomes the benchmark for its
competitors are: The application RFID and AI among other technological applications, its Supply
chain management strategies, and Superior Inventory Management Plans and proper application
of lean concept. Inventory policies are so crucial to manufacturers that they spend heavy amount
to ensure the policy is working.
Despite all these successes that PepsiCo has achieved, it still has to face some risk elements and
challenges. The assessment of risk provides indispensable part in decision making. There shall
therefore be swot and Pestel analysis in the subsequent pages to explain further.

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2.0 Introduction
PepsiCo’s products are household names in over 200 countries, and over a thousand (1,000)
control employees. More of the products of PepsiCo namely Frito-Lay, Gatorade, Quaker,
Tropicana, and Soda-Stream are consumed worldwide. It has many outsourced business partners
for bottling, other production processes and distributions.
PepsiCo’s products are enjoyed more than one billion times a day in more than 200 countries in
the world. Its net revenue for 2020 Financial year was over $70 billion because of the supportive
performance of its other products portfolio aside Pepsi, its commercial Beverages in Europe and
sales and supply chain management strategies, even during covid 19 pandemic.
Even though the main ingredients constituting naked juices are sugars and sodium, PepsiCo has
moderated the percentages of these additives in addition to an easy-to-understand nutritional
labelling.
PepsiCo has developed a well-structured consumer complaint system which enables it to take
appropriate corrective measures timely.
It has an entrenched policy not to source raw materials from environmentally unsustainable
sources. Materials from sources of proven child and forced labour and excessive human right
abuse are not patronized either.
3.0 Scope
The Inventory management and supply chain in the beverage industry plays a crucial role in the
success of the companies. The supply chain management is the management of transformation
of goods and services into final products. The supply chain helps in improving the customer value
and gain a competitive advantage in the industry. This report is aimed at analyzing the various
parts in the supply chain and inventory management of PepsiCo visa vis the current challenges
and opportunities to enhance its performance.
4.0 Reasons for selecting PepsiCo
Pepsi company was chosen because it has an ideal demand-driven supply chain strategy that fits
the current market, which is highly competitive with companies such as Coca-Cola. also, After the
company realized that it needed to use superior strategies for its supply chain to ensure that
products are delivered to retailers in an efficient manner to avoid cases of stock outs in stores. It
is also responsible for obtaining the appropriate raw materials for its beverage products, and
transporting them to the manufacturing plants, and these materials are tested to ensure their
quality before they are used in the manufacture of different products. This paper will focus on
PepsiCo's supply chain strategies in the beverage sector. (Biswas, 2007)

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 5.0 Current situation: SWOT
In this part, the current state of the company will be mentioned by analysing the SWOT analysis
as in the below chart:
Strong Leadership: Pepsi
Co. managed to remain in
the second place in the
food and beverage sector
after Nestlé.
Customer Loyalty: Has a
wide base of loyal
customers, because of the
great taste of drinks.
Strong distribution: The
global presence of Pepsi-
Cola in over 200 countries
provides it with a perfect
distribution network.
Supply Chain: It has one of
the best supply networks in
the world also has a very
effective reverse logistics
associated with it.
Tie-Ups: links with
sporting events and
concerts, sponsorships for
major sports teams
(Bhasin, 2019).
SWOT
Competition: Intense
competition with Coca-
Cola.
Products perceived as Competitors: PepsiCo's
unhealthy: Many views main competitors are
soft drinks as unhealthy. Coca-Cola, Kraft food,
Product Dependence: Nestle, Dr Pepper Snapple
Their products are limited Group and Mondelez.
to foods and drinks. Health Factor: The health
Failed Products: The worker may affect the
production of many failed presence of many clients
Healthy Options: need to and may lose them.
products such as "Crystal
work on improving the Economic Slowdown: The
Pepsi", which negatively
negative effects of its existence of any economic
affect the image of the
products. The Pepsi Diet is reforms and factors of
brand, giving room for
one of the positive steps stagnation and inflation
competitors to grow.
towards that. may affect the company's
Value addition: it does not
Diversification: Pay sales.
address the positive values
attention to the Government Norms:
of life as Coca-Cola
diversification of There may be difficulty in
frequently does in its
businesses in different dealing with and
advertisements (Bhasin,
sectors. complying with the
2019).
CSR: Considering social different standards of
responsibility activities different countries.
that benefit the local (Bhasin, 2019)
population and addressing
negative comments.
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6.0 Supply chain strategies
Companies today have concluded that offering only high-quality products is not enough to
remain competitive in the current market. Companies must develop good supply chain strategies
to ensure that customers reach products when they need them and to maintain efficiency and
reliability. So, PepsiCo has reworked supply chain management strategies to a more customer
centric ones. Here are some of the strategies positions the company has relied on over years
(Shah, 2009):
6.1 Coordinated Forecasting and Distribution
Coordinated forecasting is one of the most important supply chain strategies for Pepsi-Cola.
PepsiCo takes market information to predict the total quantity of product required across all
channels and markets in which it is sold. Forecasts are made monthly and are based on current
stock levels, current demand, and projected changes in each channel. After communicating with
the soft drink bottling plant, their requirements for raw materials are determined. The raw
materials include many ingredients such as corn syrup, sugar, and bananas. The results of this
process are shared outside PepsiCo for the possibility of planning their production needs.
After the forecasting process is completed the distribution phase of the supply chain begins,
products are delivered from 20 distribution centres to retailers and wholesalers around the
world. Each distribution centre is responsible for a specific region within America or Europe.
There are joint distribution programs through which the delivery of products from different
suppliers is coordinated to meet the needs of customers (ibottling, 2021).
6.2 Purchasing
Availability of a team of suppliers who can deliver the required raw materials in a timely manner
is an important factor for the success of the manufacturing process. So, PepsiCo adopted a
decentralized purchasing strategy to improve its efficiency. It operates different production
plants in different locations. The regional head is given the power to make a purchase decision
based on the local environmental forces in that area. Decentralization of raw material
procurement is a workable way to empower branches in different locations. (Jespersen, 2005)
6.3 Supplier relationships
There is a strategy adopted by PepsiCo in maintaining a close relationship with its suppliers to
the extent that most of them feel that they are partners, by extending its various benefits to
these suppliers, including loans, and it is also based on organizing sporting events and end-of-
year parties for all its permanent suppliers. Such strategies would contribute to achieving success
in this competitive industry. (Ehrhardt, 2014)
6.4 Supply Chain Visibility
The role of PepsiCo Supply Chain Management is not limited to material delivery and distribution,
but once the products reach the stores, it always monitors and sees the location and condition

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of the items. And this is through sales techniques that tell sellers which products have been sold
and how quickly they are sold out. The store uses a POS system when it sells products to
electronically send information to PepsiCo. This data includes the amount sold, the location of
the item in the store, and the price at which the item was sold. This data then travels through the
supply chain management process until they have a picture of how quickly the products are
selling and what the customer is really asking for. This process helps to better manage inventory
and product life cycle and to know when to update its elements by adding new designs or flavours
(ibottling, 11 Key Points in Pepsi-Cola Supply Chain Management, 2021).

7.0 Supply Chain Policy

PepsiCo aims to implement key roles in supply chain policies resulting in a global sustainability
plan. These below are from the main points which will be focused on:

• Continuing improvement and enhancement of distribution processes and manufacturing

equally. This comes as part of the environmental awareness across its value chain globally.
• In its clear essence, sustainability will be effectively used in sourcing the raw materials by
2025. (Based on this goal; sugar cane and palm oil are already hundred percent sustained
in purchase).
• Supplier Code of Conduct (SCC) principles will be broadened to govern all franchises and
sub-partners (since it was implemented already on direct suppliers) (Dixon, 2020).

8.0 Management Method

Current businesses are mainly run by advanced technologies and modern management modules.
One of which is a concept called Big Data Analysis. Big data aims to help businesses benefit from
the common-used algorithms, best-practices, advanced methodologies, and mathematical
applications -in some cases- to be performed on a great scale of data fed by manufacture plants,
supply chain, distribution centers and consumer end points ” (AHMED, KUMAR, & NALLUSAMY,
2018). Big data could be vital in Supply Chain Management (SCM) in terms of allocating the
needed raw materials, being supporting in determining how the dispersal goes and ending with
the final product presented into the customer hands.

9.0 Issues Identified

PepsiCo has a big reputation and big strategic partners in both logistics and retail business as
well. This potential of relations has made the company focus more on the corporates and diverge
a little from the satisfactory of customer. This issue could be clearly noticed when compared to
the most competitive company which is Coca-Cola. Although that it is wide in spread when
compared to Coca-Cola, still the latter is more diverse in options and tastes which gives the
customer a sense of majority and availability more than PepsiCo (Crawford).

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Additionally, there is one major supply methodology which should be overcome which following
the trend of partner-based expansion. PepsiCo contract with potential entities to act as their
presence, which -with the common digital marketing era- could be damaging for the company
image consistency. No doubt that legalities are sorted out through exclusivity for a particular
partner in a certain region or country. There is a concern however that there will be a time when
one cannot differentiate between the authorized dealer and the sub-authorized one. Possible
intersection of the fields of work, such as promoting distribution versus delivery could represent
a conflict of interest between partners internally. Also, shortage of supply could happen every
now and then which could be evaded if took over by the main product producer who will have
better improvements through continuous, advanced, and more strict monitoring technologies.

10.0 Using Information System (IS)

PEPSICO used IS to address and achieve all processes, tasks and transactions related to their
business. There are many software systems used by PEPSICO for different type of purpose, like
Sales system, transaction system and management information system.

management Information system is implemented to have a centralize system that can be used
to store, process, and deliver all relevant data to the concern department in requested time
(PepsiCo information systems - [PPTX PowerPoint], 2021). The main purpose of Information
Systems used on PEPSICO is to help the company facilitating marking planning and control. This
includes gathering information from all stakeholders, different departments, and customers, and
use these information and data on improving quality decision making to stay on top market.

10.1 Current Enterprise Resource Planning Systems (ERP)

ERP system is the current system used by PepsiCo. to achieve the day-to-day operation task and
accomplish all other process related to the company’s departments such as finance, accounts,
etc. ERP is the centralized software system, it allows PEPSICO to better manage, improve and
sustain their business. This system will eliminate legacy systems which, thus reduce the common
errors that usually occurs through them ("Management information system in Pepsico, 2021).

11.0 Recommendation for supply chain improvement

To maintain the performance and improve the supply chain management in PepsiCo. the below
recommendation can be taken into consideration:

1- Innovation and Technology: PEPSICO has to focus and innovate on Research and Development
to create new products and reduce the costs of service delivery.

2- Forecasting: Developing an intelligent system to forecast the number of product demand need
it in each location and on daily or weekly basis instead of monthly basis.

3- Information transparency: Since all Information are taken from the system and data is entered

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by the employees. All the employees should have access to the relevant Information systems and
make sure they are getting accurate products information details pricing and availability. The
system used by PEPSICO for products information called Enterprise Information Portfolio.

4- Real Time Supply chain visibility: product availability should be monitored once it arrives the
specific location. The more real time information about the product availability, the more
accurate product delivery will be in terms of time and quantity (https://ibottling.com/11-key-
points-in-pepsi-cola-supply-chain-management/).

12.0 Conclusion
PEPSICO always aims to provide high quality product. They are keen to use high quality raw
material, convert it to product and deliver it to the customer in efficient time. This requires
quality check on each stage of product life cycle to make sure the final product is as per the set
standards. Although PEPSICO has a very clear vision and supply chain management system,
production process, and operation management, there is always a room for a more sustainable
supply chain management, especially to overcome challenging periods such COVID-19 pandemic.

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13.0 References
2021. Pepsico information systems - [PPTX Powerpoint]. [online] Available at:
<https://cupdf.com/document/pepsico-information-systems.html> [Accessed 19 December
2021].

Bhasin, H. (2019). SWOT Analysis of Pepsi. Marketind 91.

Biswas, A. a. (2007). Coke vs Pepsi: Local and Global Strategies. Economic and Political Weekly.

Dixon, L. (2020, May 17). PepsiCo's sustainable supply chain goals. Retrieved from Supply Chain Digital:
https://supplychaindigital.com/supply-chain-2/pepsicos-sustainable-supply-chain-goals

Ehrhardt, M. a. (2014). Corporate Finance: A Focused Approached. New York: Cengage

Publishing.

ibottling. (2021). 11 Key Points in Pepsi-Cola Supply Chain Management.

https://ibottling.com/11-key-points-in-pepsi-cola-supply-chain-management/.

ibottling. (2021). 11 Key Points in Pepsi-Cola Supply Chain Management. ibottling.com.

Jespersen, B. a. (2005). Supply Chain Management: In Theory and Practice. Cengage.

Management information system in Pepsico - Management information system in Pepsico The

microcomputers are linked up to Pepsicos central computer system | Course Hero.
Coursehero.com. (2021). Retrieved 19 December 2021, from
https://www.coursehero.com/file/15272541/Management-information-system-in-Pepsico/.

Shah, J. (2009). Supply Chain Management: Text and Cases. Pearson Education.

Beheshti. (2012). ABC Inventory management. Journal of Promotion Management, 18(4), 414.

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NASDAQOMXs News. (2021, Feb 25). Global carbonates soft drink markets. NASDAQ OMXs.

NEWSwire, P. (2013, March 18). Journal LIVE 2015 to feature RFID. PR Newswire.

Newswire, P. (2019, July 24). 2019 sustanable procurement Barometer. PR Newswire.

Rees. (2015). Business risk and simulation modeling in practice. New York.

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