UNIVERSITY OF TRANSPORT AND

COMMUNICATIONS
Table of Contents
Introduction ....................................
.........................................................
...................................... 3
Pepsi Co History
.........................................................
.........................................................
............. 4
PepsiCo’s Mission
.........................................................
.........................................................
...... 4
Competitive and Supply Chain
Strategies ........................................
............................................ 5
PepsiCo’s Supply Chain
Management ...................................
..................................................... 6
Difficulties without Just-in-Time
.........................................................
......................................... 6
Improvement with using Just-In-
Time (JIT)
.........................................................
........................ 6
I2 Transportation
.........................................................
.........................................................
....... 6
Implementation ..............................
.........................................................
.................................... 7
I2 Supply Chain Visibility
.........................................................
..................................................... 7
E-solution by Hewlett Packard
(HP) ................................................
................................................. 9
Pepsi Bottling
.........................................................
.........................................................
.............. 9
The challenge
.........................................................
.........................................................
........... 10
The solution
.........................................................
.........................................................
............. 10
The results
.........................................................
.........................................................
............... 11
Packaging as a tool for Supply
chain management
.........................................................
.............. 11
Palletization Roadmap
.........................................................
.................................................... 12
PepsiCo’s Frito Lay Supply chain
.........................................................
........................................... 13
Strength ..........................................
.........................................................
.................................. 13
From supplier to retailer
.........................................................
................................................... 13
Retailers .........................................
.........................................................
................................... 13
Competitive advantages
.........................................................
................................................... 14
Pepsi Tropicana Supply Chain
.........................................................
......................................... 15
Background ....................................
.........................................................
................................... 15
Problems ........................................
.........................................................
................................... 15
Solution ..........................................
.........................................................
................................... 16
Limitations of Pepsi Supply Chain
over Coke
.........................................................
........................ 17

Table of Contents
Introduction ....................................
.........................................................
...................................... 3
Pepsi Co History
.........................................................
.........................................................
............. 4
PepsiCo’s Mission
.........................................................
.........................................................
...... 4
Competitive and Supply Chain
Strategies ........................................
............................................ 5
PepsiCo’s Supply Chain
Management ...................................
..................................................... 6
Difficulties without Just-in-Time
.........................................................
......................................... 6
Improvement with using Just-In-
Time (JIT)
.........................................................
........................ 6
I2 Transportation
.........................................................
.........................................................
....... 6
Implementation ..............................
.........................................................
.................................... 7
I2 Supply Chain Visibility
.........................................................
..................................................... 7
E-solution by Hewlett Packard
(HP) ................................................
................................................. 9
Pepsi Bottling
.........................................................
.........................................................
.............. 9
The challenge
.........................................................
.........................................................
........... 10
The solution
.........................................................
.........................................................
............. 10
The results
.........................................................
.........................................................
............... 11
Packaging as a tool for Supply
chain management
.........................................................
.............. 11
Palletization Roadmap
.........................................................
.................................................... 12
PepsiCo’s Frito Lay Supply chain
.........................................................
........................................... 13
Strength ..........................................
.........................................................
.................................. 13
From supplier to retailer
.........................................................
................................................... 13
Retailers .........................................
.........................................................
................................... 13
Competitive advantages
.........................................................
................................................... 14
Pepsi Tropicana Supply Chain
.........................................................
......................................... 15
Background ....................................
.........................................................
................................... 15
Problems ........................................
.........................................................
................................... 15
Solution ..........................................
.........................................................
................................... 16
Limitations of Pepsi Supply Chain
over Coke
.........................................................
........................ 17

Table of Contents
Introduction ....................................
.........................................................
...................................... 3
Pepsi Co History
.........................................................
.........................................................
............. 4
PepsiCo’s Mission
.........................................................
.........................................................
...... 4
Competitive and Supply Chain
Strategies ........................................
............................................ 5
PepsiCo’s Supply Chain
Management ...................................
..................................................... 6
Difficulties without Just-in-Time
.........................................................
......................................... 6
Improvement with using Just-In-
Time (JIT)
.........................................................
........................ 6
I2 Transportation
.........................................................
.........................................................
....... 6
Implementation ..............................
.........................................................
.................................... 7
I2 Supply Chain Visibility
.........................................................
..................................................... 7
E-solution by Hewlett Packard
(HP) ................................................
................................................. 9
Pepsi Bottling
.........................................................
.........................................................
.............. 9
The challenge
.........................................................
.........................................................
........... 10
The solution
.........................................................
.........................................................
............. 10
The results
.........................................................
.........................................................
............... 11
Packaging as a tool for Supply
chain management
.........................................................
.............. 11
Palletization Roadmap
.........................................................
.................................................... 12
PepsiCo’s Frito Lay Supply chain
.........................................................
........................................... 13
Strength ..........................................
.........................................................
.................................. 13
From supplier to retailer
.........................................................
................................................... 13
Retailers .........................................
.........................................................
................................... 13
Competitive advantages
.........................................................
................................................... 14
Pepsi Tropicana Supply Chain
.........................................................
......................................... 15
Background ....................................
.........................................................
................................... 15
Problems ........................................
.........................................................
................................... 15
Solution ..........................................
.........................................................
................................... 16
Limitations of Pepsi Supply Chain
over Coke
.........................................................
........................ 17

Table of Contents
Introduction ....................................
.........................................................
...................................... 3
Pepsi Co History
.........................................................
.........................................................
............. 4
PepsiCo’s Mission
.........................................................
.........................................................
...... 4
Competitive and Supply Chain
Strategies ........................................
............................................ 5
PepsiCo’s Supply Chain
Management ...................................
..................................................... 6
Difficulties without Just-in-Time
.........................................................
......................................... 6
Improvement with using Just-In-
Time (JIT)
.........................................................
........................ 6
I2 Transportation
.........................................................
.........................................................
....... 6
Implementation ..............................
.........................................................
.................................... 7
I2 Supply Chain Visibility
.........................................................
..................................................... 7
E-solution by Hewlett Packard
(HP) ................................................
................................................. 9
Pepsi Bottling
.........................................................
.........................................................
.............. 9
The challenge
.........................................................
.........................................................
........... 10
The solution
.........................................................
.........................................................
............. 10
The results
.........................................................
.........................................................
............... 11
Packaging as a tool for Supply
chain management
.........................................................
.............. 11
Palletization Roadmap
.........................................................
.................................................... 12
PepsiCo’s Frito Lay Supply chain
.........................................................
........................................... 13
Strength ..........................................
.........................................................
.................................. 13
From supplier to retailer
.........................................................
................................................... 13
Retailers .........................................
.........................................................
................................... 13
Competitive advantages
.........................................................
................................................... 14
Pepsi Tropicana Supply Chain
.........................................................
......................................... 15
Background ....................................
.........................................................
................................... 15
Problems ........................................
.........................................................
................................... 15
Solution ..........................................
.........................................................
................................... 16
Limitations of Pepsi Supply Chain
over Coke
.........................................................
........................ 17

Introduction
Supply Chain Management is the
process of planning, implementing,
and controlling the operations of
supply chain with the purpose to
satisfy customer requirements as
efficiently as possible. Supply
chain
management spans all movement
and storage of raw materials,
work-in-process inventory, and
finished
goods from point-of-origin to
point-of-consumption. It is a cross
functional approach to managing
the
movement of raw materials into
an organization and the
movement of finished goods out
of the
organization toward the end
consumer.
Supply Chain management is also
the combination of art and science
of improving the way company
finds the raw components it needs
to make a product or service and
deliver it to customers. It seeks to
enhance competitive performance
by closely integrating the internal
functions within a company and
effectively linking them with
external operations of suppliers
and channel members. Moreover,
this has
been a prominent concern for
both large and small companies
as they strive for better quality
and
higher customer satisfaction.
In a supply chain, a company links
to its supplier upstream and to its
distributors downstream in order
to serve its customer. The goal of
supply chain management is to
provide maximum customer
service at
the lowest possible costs.
Companies now are competing
supply chain-to-supply chain
rather than enterprise-to-
enterprise
requiring for more intimately
connected relationships.
Customer markets and supply
chains are no
longer limited by physical
proximity, and businesses are
sourcing from and managing a
greater number
of far-flung partners and channels.
Success of a company now
depends on effective global supply
chain management, its ability to
deliver
the right product to the right
market at the right time. The
complexity involved in managing
supply
chains that span continents and
dominate markets demands
strategies and systems that are
adaptable.
Managing Supply Chain for
Global Competitiveness takes a
strategic look at all of the core
functions of
global supply chain management
which includes product design,
planning and forecasting,
sourcing,
outsourcing, manufacturing,
logistics, distribution, and
fulfilment. An example to
illustrate this
theory on the supply chain
management is the PepsiCo, I
Introduction
Supply Chain Management is the
process of planning, implementing,
and controlling the operations of
supply chain with the purpose to
satisfy customer requirements as
efficiently as possible. Supply
chain
management spans all movement
and storage of raw materials,
work-in-process inventory, and
finished
goods from point-of-origin to
point-of-consumption. It is a cross
functional approach to managing
the
movement of raw materials into
an organization and the
movement of finished goods out
of the
organization toward the end
consumer.
Supply Chain management is also
the combination of art and science
of improving the way company
finds the raw components it needs
to make a product or service and
deliver it to customers. It seeks to
enhance competitive performance
by closely integrating the internal
functions within a company and
effectively linking them with
external operations of suppliers
and channel members. Moreover,
this has
been a prominent concern for
both large and small companies
as they strive for better quality
and
higher customer satisfaction.
In a supply chain, a company links
to its supplier upstream and to its
distributors downstream in order
to serve its customer. The goal of
supply chain management is to
provide maximum customer
service at
the lowest possible costs.
Companies now are competing
supply chain-to-supply chain
rather than enterprise-to-
enterprise
requiring for more intimately
connected relationships.
Customer markets and supply
chains are no
longer limited by physical
proximity, and businesses are
sourcing from and managing a
greater number
of far-flung partners and channels.
Success of a company now
depends on effective global supply
chain management, its ability to
deliver
the right product to the right
market at the right time. The
complexity involved in managing
supply
chains that span continents and
dominate markets demands
strategies and systems that are
adaptable.
 Managing Supply Chain for
Global Competitiveness takes a
strategic look at all of the core
functions of
global supply chain management
which includes product design,
planning and forecasting,
sourcing,
outsourcing, manufacturing,
logistics, distribution, and
fulfilment. An example to
illustrate this
theory on the supply chain
management is the PepsiCo, I

3
Introduction
Supply Chain Management is the
process of planning, implementing,
and controlling the operations of
supply chain with the purpose to
satisfy customer requirements as
efficiently as possible. Supply
chain
management spans all movement
and storage of raw materials,
work-in-process inventory, and
finished
goods from point-of-origin to
point-of-consumption. It is a cross
functional approach to managing
the
movement of raw materials into
an organization and the
movement of finished goods out
of the
organization toward the end
consumer.
Supply Chain management is also
the combination of art and science
of improving the way company
finds the raw components it needs
to make a product or service and
deliver it to customers. It seeks to
enhance competitive performance
by closely integrating the internal
functions within a company and
effectively linking them with
external operations of suppliers
and channel members. Moreover,
this has
been a prominent concern for
both large and small companies
as they strive for better quality
and
higher customer satisfaction.
In a supply chain, a company links
to its supplier upstream and to its
distributors downstream in order
to serve its customer. The goal of
supply chain management is to
provide maximum customer
service at
the lowest possible costs.
Companies now are competing
supply chain-to-supply chain
rather than enterprise-to-
enterprise
requiring for more intimately
connected relationships.
Customer markets and supply
chains are no
longer limited by physical
proximity, and businesses are
sourcing from and managing a
greater number
of far-flung partners and channels.
Success of a company now
depends on effective global supply
chain management, its ability to
deliver
the right product to the right
market at the right time. The
complexity involved in managing
supply
chains that span continents and
dominate markets demands
strategies and systems that are
adaptable.
Managing Supply Chain for
Global Competitiveness takes a
strategic look at all of the core
functions of
global supply chain management
which includes product design,
planning and forecasting,
sourcing,
outsourcing, manufacturing,
logistics, distribution, and
fulfilment. An example to
illustrate this
theory on the supply chain
management is the PepsiCo, Inc.
Introduction
Supply Chain Management is the process of planning, implementing, and controlling
the operations of the supply chain with the purpose to satisfy customer requirements
as efficiently as possible. Supply chain management spans all movement and storage
of raw materials, work-in-process inventory, and finished goods from point of origin
to point of consumption. It is a cross-functional approach to managing the movement
of raw materials into an organization and the movement of finished goods out of the
organization toward the end consumer.

Supply Chain management is also the combination of the art and science of improving
the way a company finds the raw components it needs to make a product or service
and deliver it to customers. It seeks to enhance competitive performance by closely
integrating the internal functions within a company and effectively linking them with
the external operations of suppliers and channel members. Moreover, this has been a
prominent concern for large and small companies as they strive for better quality and
higher customer satisfaction.

In a supply chain, a company links to its suppliers upstream and its distributors
downstream to serve its customers. Supply chain management aims to provide
maximum customer service at the lowest possible costs.

Companies now are competing supply chain-to-supply chain rather than enterprise-to-
enterprise requiring more intimately connected relationships. Customer markets and
supply chains are no longer limited by physical proximity, and businesses are sourcing
from and managing a greater number of far-flung partners and channels.

The success of a company now depends on effective global supply chain management,
and its ability to deliver the right product to the right market at the right time. The
complexity involved in managing supply chains that span continents and dominate
markets demands strategies and systems that are adaptable.

Managing Supply Chain for Global Competitiveness takes a strategic look at all of the
core functions of global supply chain management which includes product design,
planning and forecasting, sourcing, outsourcing, manufacturing, logistics,
distribution, and fulfillment. An example to illustrate this theory on supply chain
management is PepsiCo, Inc.

Pepsi Co History
PepsiCo, a Fortune 500, American Multinational Corporation is in the food
consumer product industry and is the world leader in convenient foods and beverages.
The Pepsi brand and other Pepsi-Cola products account for nearly one-third of the
total soft drink sales in the United States. For the company to make sure that its
products reach the customers, the company needs efficient supply chain solutions.

It was founded in 1965 through the merger of Pepsi-Cola and Frito-Lay. Tropicana
was acquired in 1998 and PepsiCo merged with The Quaker Oats Company, including
the Gatorade in 2001. PepsiCo offers product choices to meet a broad variety of
needs and preferences - from fun-for-you items to product choices that contribute to
healthier lifestyles. PepsiCo owns some of the world's most popular brands, including
Pepsi-Cola, Mountain Dew, Diet Pepsi, Lay's, Doritos, Tropicana, Gatorade, and
Quaker. Coca-Cola Company in market value for the first time in 112 years since both
companies began to compete. Other brands include Caffeine-Free Pepsi, Diet
Pepsi/Pepsi Light, Caffeine-Free Diet Pepsi, Caffeine-Free Pepsi Light, Wild Cherry
Pepsi, Pepsi Lime, Pepsi Max, Pepsi Twist and Pepsi ONE,7 Up, Aquafina (Flavour
Splash, Alive, and Twist/Burst), Propel Fitness Water, SoBe, Quaker Milk Chillers.

The Frito-Lay brands are: Cheetos, Fritos, Go Snacks, James' Grandma's Cookies,
Hamka's, Lay's, Miss Vickie's, Munchies, Sandora, Santitas, The Smith's Snackfood
Company, Sun Chips, Kurkure, Tostitos and some of the Quaker Oats brands
include Aunt Jemima, Capone Crunch, Chewy Granola bars, Coqueiro,
Crisp'ums, Cruesli, FrescAvena, King Vitaman, Life, Oatso Simple, Quake,
Quisp, Rice-A-Roni, and Spudz

PepsiCo’s Mission
 PepsiCo's overall mission is to increase the value of shareholder's investment. They
do this through sales growth, cost controls, and wise investment of resources.
 They believe their commercial success depends upon offering quality and value to
their consumers and customers; providing products that are safe, wholesome,
economically efficient, and environmentally sound; and providing a fair return to their
investors while adhering to the highest standards of integrity.
 A customer while purchasing a bottle of Pepsi will consider product quality, price,
and availability of the product. Thus, Pepsi focuses its competitive strategy on
producing sufficient variety, reasonable prices, and the availability of the product.

Pepsi Ceo

Indra Krishnamurthy Nooyi has been the chief executive of PepsiCo since 2006.
During her time, healthier snacks have been marketed and the company is striving for
a net-zero impact on the environment. This focus on healthier foods and lifestyles is
part of Nooyi's "Performance with Purpose" philosophy. In 2007, Nooyi spent $1.3
billion on healthier alternative brands like Naked Juice, a California maker of soy
drinks and organic juice.

Today, beverage distribution and bottling are undertaken primarily by associated

companies such as The Pepsi Bottling Group and Pepsi Americas. PepsiCo is a SIC
2080 (beverage) company.

PepsiCo has also recently acquired a 50% stake in U.S.-based Sabra Dipping
Company.

Competitive and Supply Chain Strategies

 In its business, diversity and inclusion provide a competitive advantage that drives
business results.
 Its brands appeal to an extraordinarily diverse array of customers and they are sold
by an equally diverse group of retailers.
 It understands the needs of our consumers and customers
 Uses diversity in our supplier base and in everything we do.
 Commitment to purchase from a supplier base representative of our employees,
consumers, retail customers, and communities.
 Developing partnerships with minority-owned and women-owned suppliers helps us
build the world-class supplier base we need.
Creates mutually beneficial relationships that expand PepsiCo's sphere of activity. It
helps build community infrastructure by providing employment, training, role
models, buying from other minority and women-owned businesses and supporting
community organizations

Figure 1

the major sustainable advantages

that give PepsiCo a competitive
edge as they operate in the
global marketplace:
1.Big, muscular brands,
2.Proven ability to innovate and
create differentiated products and
3.Powerful go-to-market systems.
The major sustainable advantages that give PepsiCo a competitive edge as they
operate in the global marketplace:
1. Big, muscular brands
2. Proven ability to innovate and create differentiated products
3. Powerful go-to-market systems.

PepsiCo’s Supply Chain Management

Difficulties without Just-in-Time

 When an operation of the company was not just-in-time based, the demand or
production planner strived to optimize production-oriented goals and objectives such
as equipment utilization, labor efficiency, throughput, and uptime.
 Optimizing these goals often leads to running large batch sizes that are dependent on
the availability of raw materials. This optimizes the equipment and labor utilization
but the production planners and managers had not been looking at the expense of the
bigger picture.
 The sourcing or purchasing managers strived to reduce the company’s spending
overall. This manager consolidated suppliers offering products or materials at the
lowest per unit costs through buying in volume.
 They even got the shipping and freight costs included in the purchase price, which
led to an increase in the price of the commodity.
 Purchasing managers focused on getting the best price, not taking into consideration
the supplier performance and reliability.
 The logistics transportation manager was tasked with getting raw materials in and
the finished goods out of the production process and seeking to optimize the
transportation and distributing network. This manager focused on the lowest cost and
reliability of the logistics or transportation solutions. However, the lowest cost could
only be attained if the purchasing team negotiates a delivered cost package deal with
the supplier and the supplier is responsible for the reliability and performance of the
carriers or transporters.

Improvement with using Just-In-Time (JIT)

 When it comes to delivering high-cost and perishable products to manufacturing

sites, just-in-time (JIT) remains one of the most cost-effective supply chain solutions.
In JIT process, on-time delivery is an absolute necessity.
 Just-in-Time (JIT) is a philosophy that defines how a manufacturing system should
be managed. It enhances customer satisfaction in terms of availability of options,
assurance of quality, prompt delivery times, and value of money.
 The Pepsi brand and other Pepsi-Cola products accounted for nearly one-third of the
total soft drink sales in the United States. To ensure that PepsiCo’s concentrates reach
bottlers as needed during production had to reach them JIT, they partnered with 3PL
provider Penske Logistics to manage its transportation. Penske also provides
warehouse management for two Pepsi distribution centers in North America.

I2 Transportation
 I2 Transportation is part of an end-to-end solution for planning, execution, and
management of the entire transportation cycle.
 It is designed to enable an organization to utilize and manage an entire
transportation network, as well as reduce cost while improving transport performance.
 I2 transportation is designed to employ sophisticated optimization and data
techniques to define and evaluate alternative transportation strategies. It is also
designed to provide comprehensive data management, analytics, and reporting of key
transportation costs and service trade-offs.

Implementation

PepsiCo set two objectives for transportation management. One was to achieve an on-
time delivery rate of 99.1% and another was to reduce transportation costs. It is
empowered with optimized processes and technology that enable the team to perform
at the highest possible level. With the application of new technology that provides
greater supply chain visibility, better-organized data, and access to higher levels of
real-time or near real-time information, even the best team can improve their
performance.

In 2000, Penske converted Pepsi’s transportation management technology from

propriety software to an I2 transportation optimization solution. i2 transportation
platform was enhanced with the addition of an interface between the two companies.

In addition, Penske’s partnership with Business Objects provided comprehensive

supply chain data from its data warehouse, analysis, and management applications.
Penske’s with the use of I2 transportation could track performance at every stage in
the process which increased flexibility and provided greater control over the
transportation operation. This increase in visibility made it easier to keep track of
shipments, revise routes and schedules to accommodate unforeseen changes, and
implement alternative plans to counter delays. By Penske’s putting a solution in
place to track and measure every shipment, Pepsi has been able to provide an on-
time delivery performance of well over 99 percent.

Pepsi’s transportation is consolidated to a central location to reduce costs. Penske also

provided a nationwide carrier rate re-negotiation and service assessment which
improved cost structure and achieved on-time delivery goals. This centralization,
allows negotiation on a large scale to secure the best rates and services.

Furthermore, Pepsi’s orders are received electronically and optimized to ensure the
lowest transportation cost. Advanced technology is deployed to select the lowest-cost
carrier, find the best routes, and consolidate shipments. Optimal load configuration
ensures maximization of each truckload (2003).

In summary, PepsiCo used the JIT process in its supply chain management. To make
this possible, Pepsi partners with Penske which has provided them with I2
transportation optimization solutions that have satisfied their consumers with on-time
delivery and with the benefit to the company for it has also reduced transportation
costs. I2 Supply Chain Visibility With shorter lifecycles and lead times customers
demand faster results and more responsive service. Globalization and outsourcing
have added to the complexity, resulting in more diversified supply chains. The number
of supply chain partners, as well as the amount of geographic dispersion, has
increased dramatically as a result.

as well as reduce cost while

improving transport performanc