SUPPLY CHAIN MANAGEMENT

Trina Bhagat(05), Meghrag Gawande(09), Rohini Mukhopadhyay(19),

Rishika Mittal(30), Susrita Sen(36), Swati Randhawa(42)
About Pepsi

• PepsiCo, Incorporated (NYSE: PEP) is a Fortune 500,

American multinational corporation

• Headquartered in Purchase, NY with interests in

manufacturing and marketing a wide variety of carbonated
and non-carbonated beverages, as well as salty, sweet
and grain-based snacks, and other foods.

• PepsiCo founded in 1965 through the merger of Pepsi-

Cola and Frito- Lay.

• Revenue: USD 43.25 Billion.

• More than 1,85,000 employees.

About Pepsi-India

• Chairwoman, President & CEO: Indra Krishnamurthy Nooyi

• Available in nearly 200 countries and territories.

• It entered India in 1989

• Owns 43 bottling plants in India, 17 are company owned and 26

are franchisee owned.

• Generates direct employment for more than 4000 people in India

and indirect employment for 60,000 people

• Set up 8 Greenfield sites in backward regions of different states.

PepsiCo intends to expand its operations and is planning an
investment of approximately USD 150 million in the next two-
three years.

• Annual exports from India are worth over USD 60 million

Supply Chain Management

• Supply chain management (SCM) is the management of a

network of interconnected businesses involved in the ultimate
provision of product and service packages required by end
customers.

• 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.

• Definition an American professional association put forward:

“Supply Chain Management encompasses the planning and
management of all activities involved in sourcing, procurement,
conversion, and logistics management activities.”

• It also includes coordination and collaboration with channel

partners, which can be suppliers, intermediaries, third-party
service providers, and customers.

• In essence, Supply Chain Management integrates supply and

demand management within and across companies.
A Supply Chain Flow
A Supply Chain Flow

• Cycle View of Supply Chain: There are five stages in a

supply chain (Supplier Manufacturer Distributor Retailer
Customer) and four supply chain process cycles (customer
order, replenishment, manufacturing, procurement cycle).
A Supply Chain Flow
• Push/Pull View of Supply Chain:
– With push process execution is initiated in anticipation to a
customer order. Pepsi has a seasonal demand. Just in time
concept is applicable in non-seasonal period and not
applicable in seasonal period. All processes that are part of
the procurement cycle, manufacturing cycle, replenishment
cycle, and customer order cycle are push processes.

– Pepsi Sales order and processing: The Shipping Manager

receives sales order from Sales Team, distributors through
telephone, fax & email one day before dispatch. The sales
are made to base distributors on advance payment against
orders then shipping manager plans according to the
demand of distributors on daily basis.
 Supply Chain Strategy

1. The Customer and Supply Chain Uncertainty

1. Identifying customer needs
2. Demand uncertainty and implied demand
uncertainty
3. Uncertainty for the capability of the supply chain

• Understanding the Supply Chain Capabilities

• Achieving the Strategic Fit

Supply Chain Flow- Pepsi

OUR PRODUCT IS PEPSI COLA 300ml GLASS BOTTLE

Manufacturing
Manufacturing
plants
plants in
in Maharashtra
Maharashtra

Chembur
Chembur Roha
Roha Paithan
Paithan

One truck carries 9 tonnes which includes 550-700 crates (Primary

truck)
LOCATIONS OF PEPSI COBO & FOBO IN INDIA

COBO

FOBO
 FOBO-
FOBO- Franchise
Franchise
Bottling
Bottling Operations
Operations
are
owned
owned bottling
bottling
are of
of 22 types
types
operations
operations

COBO-Company
COBO-Company
owned
owned bottling
bottling
operations
operations

In India , out of 43 bottling operations 17 are COBO and the rest are FOBO.
 Supply Chain Flow- Pepsi

Raw
Raw Materials
Materials
Used
Used for
for Pepsi
Pepsi

Carbonated
Carbonated Sugar
Sugar Emulsions
Emulsions Citric
Citric acid
acid Additives
Additives Flavorings
Flavorings
water
water

Raw
Raw Materials
Materials
Used
Used for
for
Bottles
Bottles

Glass
Glass Silica
Silica Aluminium
Aluminium
Dynamics of Material Flow

Supplier Plant CnF/ Logistics Retailer

Distributor
FLOW OF MATERIAL

Forward
Forward Reverse
Reverse
Flow
Flow Flow
Flow

Organized
Organized Direct
Direct
Sales
Sales Sales
Sales
 Organized Sales

• CnF (group of workers namely loaders, de-loaders, salesmen

work per CnF) There are 13 CnFs in Pune

• Distributor
– 70 manpower with distributor
– Distributor supplies to 4000-4500 outlets
• He supplies in 11 routes with the help of 11 vehicles
• 10 vehicles for organized sale
• 1 for direct sale
• Secondary trucks under the supervision of the driver deliver the material to
the retailer
• Distributors have 3 days stock as back up with them in order of any
malfunctioning of the plant or other such external factors.

• Retailers
 Direct Sales
From CnF the secondary trucks leave for the semi urban and rural areas for
the direct sales of the materials . For each day truck consumes 6-7 L of diesel
per day. This kind of selling is not used for demand forecasting but still
generates huge amount of revenue that is why this practice is being followed
despite having various loopholes.
• One truck carries 3 tonnes which includes 144 crates
• Each crate consists of 24 bottles
• Crate weighs 14.4 kg in case on 200ml full bottle
• Crate weighs 18 kg in case on 300ml full bottle
• Height of 300ml bottle -22cm
• Weight of 300ml bottle-700gms when full
• Weight of 300ml bottle-400gms when empty
Reverse Flow

The empty bottles are picked by the secondary trucks

from the retailers and brought back to the CnF.

The primary trucks carry the empty bottles further to

the bottling plant where the bottles are cleaned and
reused.
 Information Flow Money Flow

Supplier Plant CnF/ Logistics Retailer

Distributor
 FLOW OF MONEY

Organized
Organized Sales
Sales Direct
Direct Sales
Sales

A Pre Sales Representative (PSR) takes The money is paid by the retailer to the
the order from the retailer thrice a week. Driver at the time of delivery.
Direct sales representative (DSR) delivers the
The payment is made in cash.
order the very next day.
The money is paid by
the retailer to the DSR at the time of delivery.

•All expenses are borne by distributor but are •The retailer gets a margin of Re 1
later reimbursed by company
•Rs 170 for each crate of 200 ml bottles
•Rs 218 for each crate of 300ml
•Empty bottle costs Rs.3-6 each
FLOW OF INFORMATION

Pre
Pre Sales
Sales
Representative
Representative
Direct
Direct Sales
Sales
Representative
Representative

Customer
Customer Executive
Executive

Territory
Territory Development
Development
Manager
Manager

Sales
Sales Manager
Manager
FLOW OF INFORMATION contd

• The customers of the Company are divided into different

categories and different routes, and every salesman is
assigned to one particular route which is to be followed by
him on a daily basis.
• 11 PSR- 2-3 extra- they reach out to 30-32 outlets a day
• 11 DSR- 2-3 extra
• Monthly target for PSR is 2500-3500(in season), 1500-
1800(off season)
– Incentives are based n these targets
– They should achieve an annual growth of minimum 20%
– For every 20% growth, an increase of Rs.3000 in salary
FLOW OF INFORMATION contd

• Key Accounts: The customers in this category collectively contribute a

large chunk of the total sales of the Company. It basically consists of
organizations that buy large quantities of a product in one single
transaction. The Company provides goods to these customers on credit,
payments being made by them after a certain period of time i.e. either a
month of half a month.
• Examples: Clubs, fine dine restaurants, hotels, Corporate houses

• Future Consumption: This route consists of outlets of Pepsi products,

wherein a considerable amount of stock is kept in order to use for future
consumption. The stock does not exhaust within a day or two, instead as
and when required stocks are stacked up by them so as to avoid shortage or
non-availability of the product.
• Examples: Departmental stores, Super markets etc.
• Immediate Consumption: The outlets in this route are those which
require stocks on a daily basis. The stocks of products in these outlets
are not stored for future use instead, are exhausted on the same day
and might run a little into the next day i.e. the products are consumed
at a fast pace.
• Examples: Small sized bars and restaurants, educational institutions
etc.

• General: Under this route, all the outlets that come in a particular area
or an area along with its neighboring areas are catered to. The
consumption period is not taken into consideration in this particular
route.
Source of Information- Pashankar Beverages

• Harish Chandra, CE(Customer Executive)

• Viran Talwar, DSR
• Nilesh Katarnavre, DSR
Thank You…