Product Variety The product variety is huge and unique. It ranges from water, to chips.

Hence, they have easily managed to secure their place in the market. The diverse range includes products like: mineralized water like Aquafina, beverages like Mountain Dew, Pepsi, Pepsi Diet, 7Up, Mirinda; etc. Availability All the products are always available and in stock, as the distributors have a constant back up. The chance of malfunctioning of the plant or any other sort of external factor is compensated through a back of at least three days. Customer Experience Pepsi, has always kept the retailers satisfied as they receive the product with ease and punctually. As for the retailers, they are the direct customers as they place an order to the distributors themselves. Return ability Unsatisfactory products can be changed on the spot by both the customers and/or retailers alike. This is made possible by a systematic management by Pepsi to fulfill this requirement. Pepsi has always been firm in its policies like these. Distributor Storage with Carrier Delivery The Pepsi manufacturing factories do not hold inventories. They are rather held by the distributors or retailers at intermediate warehouses. Package carriers are used as means of transport to deliver the product from the intermediate warehouses to the final customer. This demands the distributor to have a highly maintained inventory, as the distributor or retailer aggregate a demand uncertainty if the inventory is low maintenance than the manufacturer. The transport costs are quite low as Pepsi utilizes economical options like truckloads. These can be employed if the shipment to be made is close to the customer. On the other hand, facility costs are high as loss of aggregation leads to higher processing costs. The information structure is quite simple-the distribution warehouse is a mediator between the manufacturer and the customer. A real-time visibility between the customers and the warehouse is necessary, however; it is not required between customer and manufacturer. This leads to a reduced response time. Due to this, customer conveniences increases; and order visibility with manufacturer storage becomes easier. Storage at distributor level complies well with medium to fast moving goods and can also handle higher levels of variety than retail stores. Value of Distribution System There are two components of distribution: 1. Storage

The storage facilities are designed to correspond to the availability of the product on time. Also, they can store a maximum number of products at any time. Distributors, hence, are fully capable and ensure a fluid supply of the product. 2. Distribution The distribution network is an integration amongst all supply chain components, rather than working between only certain components. Like Pepsi, FMCG too does not compromise with the systematic distribution process. The Pepsi distribution system has linked all of the supply chains, for all product categories. Accordingly, the distribution centers and the information network play a key role. The main motive is to track item sales and to offer short replenishment cycles. Upon the placing of an order, it is rapidly transmitted to the supplier through the distribution manager. Transportation Network In respect to the Pepsi supply chain strategy, it makes use of the proper use of transportation. The typical requirement in an average market is the spontaneous response that enables supply chains to meet the customer prerequisites in a short time. It is also to synchronize the supply with the highest and lowest points of demand. Here, the chief focus is to recognize the processes that are to be merged in the supply chain network with their respective suppliers, as well as distribution centers and the related transport that links them. Modes of Transportation Truck In order to meet the economies of scale, Pepsi utilizes the TL (Truckload) approach. This enables them to easily meet the service requirements, while decreasing the trucks idle and empty travel time, simultaneously. Truckloads are a well suited option for Pepsi, as the shipments are large and the travelling to warehouses becomes convenient, making the cost cheaper. Both the raw materials and the finished products are transported through trucks, to and from the retailers and the distributors, respectively. Pepsi owns it personal range of trucks and various vehicles for the purpose of transportation, whereas, the distributors have their own vehicles. Water Water as medium of transport is only used for the shipment of empty cans, therefore; only makes a small part of the whole transportation network. Design Options for a Transportation Network Shipment via central DC with inventory storage using milk-runs: This is the ideal transportation mode for long distance transportation. At first, the products are stored at the distribution centers in a particular region. Then smaller trucks carry these products

using milk runs to the local retailers according to the demand. This makes the transportation both cost effective and avoids higher transport costs rising from the transportation of products from the supplier directly to the retailer. It also prevents stock outs as the inventory is situated closer to the retailed outlets. Direct Shipping: This method is used for transporting products to key account holders such as KFC and Pizza Hut. Sourcing Decisions in Supply Chain If outsourcing is practiced, the supply chain function is performed by another team rather than Pepsi. This in fact forms one of the major problems being faced by the firm. Contracts are made to outsource raw material for production and packaging. Outsourcing to a third party is also practiced for inbound and outbound transportation of products from the manufacturing factories to the distribution centers, and finally to the end customer. The decisions of outsourcing are made via bids for tenders in the local newspapers. These tenders serve as a general offer to all the interested parties, whether they be related to the provision of raw material, or distribution vehicles. Outsourcing process of Pepsi Company includes: selection of supplier, design of supplier contracts, product design collaboration, procurement of material and services and evaluation of supplier performance in case of raw material procurement.

Supplier Scoring and Assessment Pepsi takes into account the quoted price as the most important factor, while comparing suppliers. There are various other dimensions that may vary the total cost of the supplier too. These are: replenishment lead time, supply flexibility, supply quality, pricing terms, exchange rates, duties and supplier viability.

When Pepsi considers supplier scoring and assessment, it is based on the fact that the supplier performance is superior amongst all competitors, in regard to the replenishment time and

performance time. The suppliers are to send sample products, as soon as the tender notice for the procurement of raw materials is advertised. For the manufacture of Pepsi for example, a high quality of sugar and concentrate are required-this being the forte of the company. These samples are then tested in the companys laboratories. If any of the samples manage to comply with the standards set by Pepsi, the sales department picks the product and the particular supplier for further processes. As Pepsi is an ISO-9001 certified company, it needs to sell high quality products. Therefore, its set standards cannot be budged in the purchase process of raw materials from the respective suppliers. Selection of suppliers Selection of suppliers is done by negotiating with the suppliers and by contracting with the suppliers in which sealed bids contaracts is used. In contarcts all the Suppliers bid the price and the supplier with the lowest price is bidder is selected . Moreover there is a win win situation because if the supplier doesnt negotiate on a particular price then he has to give more better quality and less lead time to cover-up the price it charged.

Raw material Procurement The raw materials need to produce pepsi are procured fom local as well as from foreign suppliers. The raw materials that are needed for the manufacturing of Pepsi are ( bottles , cans sugar ,CO2 and syrup ). These are bought from the suppliers who have already been selected by PepsiCo international. They are procured from different suppliers from different parts of the country. The concentrate is obtained directly from PepsiCo International. The management uses newspaper to give advertisement that they need vendors and then they select suppliers. Selection Criteria of Distributors Distribution is very important for the PepsiCo because all the supply is within the distributors and they are responsible that the supply should be constant and it should reach the retailers in time and consumers do not have to wait for the product. This is the main competitive edge the Pepsi have over coke and it is the main target of the company. Product Categorization by Value and Criticality The drink formula is very important for PepsiCo and it is the base of the companys business all over the world. The drink formula is the strategic item for Pepsi .CO2 is the critical item and the companys should make sure that it is available all the time so that its production is not affected at all. The general items are cans and the bottles and also the packaging items . whereas the sugar comes into the category of bulk items because it is used in huge amounts and its quality should not vary to maintain a particular standard of the product hence it is bought in bulk.

High

Criticality

Critical Item s Ensure availability Gas CO2 General Item s Ensure low cost Cans and bottles Low

Strategic Item s Ensure long term relationship Drink Formula Bulk Purchase Item s Ensure low cost Sugar High

Low

Value/Cost
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Revenue Management In summers the demand of Pepsi increases and in winters its demand decreases so to balance of the demand PepsiCo reduces the prices in off peak periods to attract consumers whereas when the demand increases they shift back to the original prices of the product. They give promotional and reduces prices in off peak periods and shift back to the prices when the demand increases.

Pricing and Revenue Management for Multiple Customer Segments

Pepsi has targeted many target markets , there are multiple customers children ,adults and teenagers they provide their product range in different types cans, bottles , plastic bottles 500ml,1liter.2.25liters and also in glass bottles of 250ml. Pepsi also keeps records of the customers who buy the product in the peak seasons and who will buy the product in the off peak seasons. They target those particular areas where the customer buying power is more and the customer buying power remains the same. This is how can company make predictions about the revenue in the future . hence revenue management has made company to make huge profits . Customer relationship management system CRM plays an important role in retaining the customers. Pepsi is also taking help of CRM systems to make good relations with is customers and retain them .oracle is helping Pepsi to give its customers superior customer experience .Pepsi is using CRM to simplify the timely delivery process , reduce inventory costs and to get customer information. PepsiCo doesnt want to lose its potential customers . this systems captures data from all over the organization to improves sales by improving its marketing and not losing its most important asset that is the customer. Moreover PepsiCo has also made CRM desks where customers can report nay problem and any query regarding the product this might help in improving the product or it can help the customer as well. The overall focus of CRM system is to find attract and attract new potential customer and retain the old customers. Supply-chain management system: One of the main responsibilities for PepsiCo is to manage its supplies across the world that also consist of the smaller areas. Its bottle plants are constructed all around the world that is why they have to make sure that a right number of bottles come into their plant so that their customer is content and also so they do not get shortages. One of their main task is to make sure there is a balance between stock and inventory that is that they neither have too much or too less that can use some extra resources or cash. For all their business solutions they use the application Oracle E- business suite application which help them to connect to their suppliers so that they could forecast demand and avoiding more or less inventory. The forecast consist of the information from the past and current sales, the economic conditions that are being faced in the country, changing trends in the society etc. the main job of the system is to keep track of the demand that is changing and the preferences so that it could join in all the suppliers to create a stronger base. The Oracle Advanced Supply Chain Planning makes it quicker to do activates as they are being done simultaneously like the material and capacity planning in multiple branches while doing the accounting for the latest consensus forecast. Inventory management:

What PepsiCo has managed to do is to start with more complex constrained and enhanced planning constructs, bringing the out-of-the-box enhancements, or they decided to get to the point with a free hand planning. With the usage of Oracle Inventory Management, PepsiCo has increased their inventory visibility, reduce their inventory and control their inventory operations. Everything in their line of business and the stage that the product is in is outlined in a single system. The increase in transparency reduces the requirement for the local buffer stock, allowing the inventory to be located. The Oracle Inventory Management System helps to determine whether if the inventory is needed or not. The Inventory information is managed whether it is in travel, in storage or it is given to the customers. The information on inventory can be managed for a wide range of materials that includes Ingredients, Finished goods, returns and fragments. It makes different serials that are used as a badge or a serial operated from the receipt of the supplier to the production and customer shipment. By recognizing the location of all the end products. It gives a variety of tools to reduce their inventory levels as the more accurate. The more the precise the inventory level and effective replacement the less the safety stock are needed to be hold. Bringing resources from dealers allows dropping the amount of inventory needed to down. All of these helps PepsiCo to reduce inventory carrying cost .

Information technology in the supply chain of PepsiCo Software and hardware used by PepsiCo

The E-business software used by Pepsi-Co is Oracle E, the application is a competitive improvement as they have the maximum controls that work with the Oracle E network. Even IMF has made it a requirement for companies to have Oracle network, failure to do so would result in not getting the funds. Oracle uses a software that maximizes the consistency of soft drinks manufacturing gear and thus avoiding a disaster in the development process as it gives all the possible options through which failure could come. To know when the failure will come, it uses the FTA methodology which tells about the reliability of the manufacturing gear. This allows the company to make a more solid decision when the failure is seen. Another important task is that it tells the areas where the breakdown may occur and gives warning which leads to the beginning of the order process for replacement gear. HP Hardware PepsiCo is systematically controlled by central data department by HP globally where hp is responsible for Pepsis hardware/software management. Protection of software application To protect their softwares and other important applications PepsiCo uses Norton Antivirus, as it is the most trusted antivirus software that is available to protect its systems and data. The best

thing about Norton antivirus is that it protects the equipment in a similar fashion except that new features and improvements are added every few days. Norton antivirus removes viruses and security threats automatically; heuristically detecting spywares, malwares, worms, trojans and also helps protect mail., as a result Pepsi Co have ranked IT security as one of their priorities as things like Financial fraud, data violation, which could damage their firm. Oracle is the known front-runner in data security; identity management; and governance, risk, and compliance solutions that provides combined business software and hardware systems to protect information and databases. The firewall is the first line of defense against the viruses as it records the activity in the network and stop unknown access and other attacks. Coordination in the supply chain of the company: the performance and the obstacles involved If we look at the supply chain network of PepsiCo, it has enabled itself to gain a market leader status in Pakistan with and approximate 65% of the market share with them. One of the main reasons for this is the widespread supply of Pepsi in the rural areas of Pakistan and by catering the masses that are living in the cities. These factors have it far ahead of its competitors.

Some of the obstacles when coordinating in the entire supply chain include,

In time flexibility plants do not operate continually and are left idle during portions of the day or week. The demand fluctuates by day of the week or week of the month. territory in the remote areas of the country where access is not that easy. Outsourcing the production to third parties like shamim bottlers in Multan may hamper the communication process and requires a lot of coordination for everything to run smoothly.

Recommendations PepsiCo should shadow design partnership while making tracking decisions. The design of product, transportation and logistics should be given to the concerned departments for more efficiency. In order to coordinate the activities. If any alteration happens in the design of transportation route during disturbances, then the new network design should be synchronized to manufacturing and delivery departments.

Riaz bottlers is the firm that manages the supply and manufacturing for PepsiCo, so there is a need for them to adopt the proper technology so it could get a better performance of supply chain. The working act can be achieved by make efficient manufacturing, production and circulation backed by technology which is backed by EDI, ERP and RFID