Supply Chain Mgt of Pepsi

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Supply Chain Management of PepsiCo

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Case Details:|
Case Code| :| OPER102|
Case Length| :| 14 pages|
Period| :| 2005-2011|
Organization| :| PepsiCo.|
Pub Date| :| 2012|
Teaching Note| :| Not Available|
Countries| :| US; Global|
Industry| :| Food and Beverages|
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Abstract:
In 2010, PepsiCo Beverage Company (PBC), an operating unit of PepsiCo Inc. (PepsiCo), the second largest food and beverage company in the world, received the supply chain innovation award from the Council of Supply Chain Management Professionals (CSCMP). PepsiCo was given this award for its innovative distribution strategy, the “Direct to Store Delivery model”, that reduced system-wide inventory, eliminated warehouse space constraints, enhanced the potential for unlimited SKU growth, and delivered warehouse cost savings. After showing spectacular growth in the 1990s and early2000s, PBC found it difficult to manage its distribution centers and warehouses.| | The case looks at how the company tried to optimize cramped warehouses and how it revived its distribution strategy using automation technology. The case also highlights the benefits of total supply chain transformation for PepsiCo. This case can be used by MBA / MS students studying Operations Management as part their curriculum. -------------------------------------------------

Issues:
» To understand the supply chain process of PepsiCo.
» To understand and discuss PepsiCo’s innovative distribution strategy, the “Direct to Store Delivery model”. » To examine the benefits of the “Direct to Store Delivery model";.  » To discuss PepsiCo’s collaborative supplier relationship.  -------------------------------------------------

Contents:
 | Page No.|
Introduction| 1|
About Pepsico| 2|
Supply Chain Management at Pepsico| 4|
Procurement of Raw Materials| 4|
Manufacturing Operations| 5|
Distribution Network And Logistic Management| 6|
Pepsico's Relationship with Retailers| 8|
Road Ahead| 9|
Exhibit| 10|
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Keywords:
Operations Management, Supply Chain Management, Supplier Network, Operational Strategies, Distribution Model, Direct to Store Delivery model, Automation Technology, Inventory Management, Collaborative Supplier Relationship, Continuous Improvement, Supply Chain, Low Cost manufacturing, PepsiCo, Quality. “Winning Council of Supply Chain Management Professionals 2010 Supply Chain Innovation Award is tangible recognition for years of hard work by Paul Hamilton, Tim Thornton, and the entire PBC supply chain team. This group of supply chain veterans has successfully positioned PBC (Pepsi Beverage Company) for continued growth by deploying an automated solution that is both innovative and integrated into our business processes" – Victor Crawford, Executive Vice President of supply chain and system transformation for PepsiCo Beverage Company, October 7, 2010. “In this environment, where consumer demand is weak, competition is fierce, and profit margins are under pressure, you have to scrutinize every area of the business — everyone and everything has to stand up to disciplined evaluation in the interest of efficiency.” – Mike White, Vice Chairman of PepsiCo and CEO of PepsiCo International, July 14, 2009. In 2010, PepsiCo Beverage Company (PBC), an operating unit of PepsiCo Inc. (PepsiCo), the second largest food and beverage company in the world , received the supply chain innovation award from the Council of Supply Chain Management Professionals (CSCMP)1 . PBC was formed on February 26, 2010, when PepsiCo acquired two large bottlers, PepsiCo bottling Group2 (PBG) and PepsiCo America Inc.3 (PAS), for US$7.7 billion and named the combine PepsiCo Beverage Company. Experts opined that the formation of PBC reflected an effort on PepsiCo’s part to streamline its...
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