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PepsiCos Distribution & Logistics Operations

CONTENTS
Introduction Background Product Line Raw Material of Pepsi Distribution Models PepsiCos Logistics Operations Problems Alternate Solutions

INTODUCTION
PepsiCo is the US based worlds leading beverage and snacks food companies. Headquartered in New York, in its 2002 annual report company claimed to have the largest share in US beverage markets. PepsiCo served diverse market with its six group companies such as: Frito-Lay North America Frito-Lay International Pepsi-Cola North America Pepsi Beverage International Gatorade/Tropicana North America Quaker Foods North America

CONTINUED.
PepsiCo choose various efficient distribution methods. PepsiCos bottlers employed wireless technologies to strengthen their distribution system and effectively serve the customers in the market.

BACKGROUND
In 1898, Caleb Bradham invented Pepsi-Cola in his pharmacy in North Carolina, U.S. Bradham started bottling his drink in 1904 By 1909, Bradham had established a network of 250 bottlers for Pepsi-Cola with operations in 24 states in the US. By 1910, the network had increased to about 300 Pepsi-Cola Bottlers. In 1963, Donald Kendall become President of Pepsi Two Years later, in 1965 Pepsi-Cola was merged with Frito-Lay International (FLI) with its operations in 42 countries.

PRODUCT LINE
Pepsi Diet Pepsi Miranda Mug Root Beer Mountain Dew Aquafina(Bottled water) Lipton Ice Teas Frito-Lay Quacker Tropicana

RAW MATERIALS OF PEPSI


WATER

SPARKLING SODA

PEPSI

SUGAR

FLAVORING

DISTRIBUTION MODELS
DSD (Direct Store Delivery) Oldest method used by Pepsi Pepsi employees take orders directly from grocery and convenience stores Arrange the products on store shelves and ensure on time delivery ADVANTAGES of DSD Direct link between company and retailer Maximum visibility of products Launch of new products in quick time No intermediary cost

LIMITATIONS of DSD Higher transportation costs Orders are small but credit period is longer BWD (Broker Warehouse Distribution) This method is used for less delicate and perishable goods Effective and economical than DSD Third party distributors act as intermediary Store employees handles the products and place them on the shelves ADVANTAGES of BWD Lower cost of transportation Intermediary take the product in bulk Higher profit margin

LIMITATIONS of BWD Less visibility of products Delay in delivery of products No link with the retailer V&FS (Vending and Food Services) Sales personnel distributed its products through third party V&FS and bottling companies. To make goods available in schools, colleges, office, premises, stadiums, restaurants etc. Largest V&FS Salesforce in US and this channel contributes huge revenue.

PEPSICOS LOGISTICS OPERATIONS

Beverage Manufacturing Unit To Bottlers


PepsiCo sold beverage concentrate to bottling companies in US and Canada. Syrup was either sold directly to the fountain accounts or was combined with carbonated water for bottling. Pepsi Cola North America(PCNA) owned 60 plants that produces concentrates ,which are distributed through 450 licensed territories. PCNAs main responsibility was to ensure that the concentrate reaches the bottler in time.

Bottlers To Retail Outlets


PepsiCo's bottlers delivered the companys products to thousands of retail outlets in their region. Pepsi Americans(PAS) was the second largest Pepsi cola bottler. PAS had 100 distribution centers and each center had 50 trucks. PAS produced, distributed and promoted major PepsiCo brands such as Pepsi, Diet Pepsi, Cadbury Schweppes. Lately PAS employed a mobile computing system using Wireless Local Area Network (WLAN) and Wireless Wide Area Network (WWAN).

PROBLEMS
Inventory management Handhelds Computers Taking orders manually Delivering quantity available in the truck neglecting retailers requirement.

SOLUTIONS & ADVANTAGES


Advertising Full capacity utilization Gauge customer demand accurately High labor and fuel cost went down Routes and schedules were clear to delivering agents Helped in identifying consumer behavior and making comparisons

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