BỘ GIÁO DỤC VÀ ĐÀO TẠO

ĐẠI HỌC KINH TẾ QUỐC DÂN

GROUP WORK REPORT

TOPIC: INTRODUCTION TO
LOGISTICS AND SUPPLY CHAIN
MANAGEMENT

Group 6:

Name MSV
Nguyễn Diệu Linh (Leader) 11234907
Bùi Thị Khánh Huyền 11236825
Lê Thị Huyền Trang 11232828
Nguyễn Lê Mai Linh 11236921
Nguyễn Khánh Linh 11233874
PART A. CONTENT
I. Choose and describe briefly ONE multinational company and ONE
product/ service that company is providing to its customers
WE CHOOSE PRODUCT PEPSI OF PEPSICO
1. PepsiCo Overview:
- PepsiCo, Inc., established in 1965, is one of the world’s largest food and
beverage corporations, with a market presence in over 200 countries.
- In 2023, the company generated a net revenue of more than $91 billion, driven
by popular brands such as Lay's, Doritos, Gatorade, Mountain Dew, Quaker,
and Pepsi
- The company’s vision focuses on being a global leader in beverages and
convenient foods, supported by a commitment to sustainability under its
“PepsiCo Positive (pep+)” initiative.
2. Pepsi Product:
- Founding and Early Years:
+ Pepsi was created in 1898 by pharmacist Caleb Bradham, originally named
"Brad's Drink."
+ It was marketed as a beverage to aid digestion and boost energy
- Evolution and Expansion:
+ During the Great Depression, Pepsi gained popularity by selling 12-ounce
bottles for five cents, offering more value than Coca-Cola’s 6.5-ounce bottles at
the same price.
+ Over the years, Pepsi has introduced several variations like Diet Pepsi, Pepsi
Zero Sugar, and seasonal flavors such as Cherry, Vanilla, and Lime
- Supply Chain and Sustainability:
+ PepsiCo’s supply chain spans global sourcing, manufacturing, and
distribution. It has made significant strides in sustainable agriculture, sourcing
ingredients responsibly and managing water use.
+ For example, PepsiCo improved its operational water-use efficiency by 25%
in high-risk areas by 2023, surpassing its 2025 target.
+ The company has also implemented regenerative farming practices, now
 covering 1.8 million acres globally, supporting PepsiCo’s long-term goal of
promoting sustainable agricultural practices across its value chain.

II. Draw supply chain of product you chose

At least in upstream and/ or downstream has 2 tiers/ layers

Pepsi’ Supply Chain

1. Raw Materials (Stage 1)

- PepsiCo’s supply chain begins with essential raw materials for carbonated
beverages, particularly Pepsi.
- Key ingredients include: carbonated water, high fructose corn syrup, natural
flavors, caffeine,phosphoric acid
- These raw materials are sourced from various farms and suppliers:
 Corn for high fructose corn syrup is primarily sourced from the
United States.
 Natural flavors may come from suppliers in Europe and Asia.
2. Suppliers of Processed Raw Materials and Components (Stage 2)
- These suppliers process the raw materials into usable components such as:
sweeteners, carbonation. flavorings
- These components are then sent to PepsiCo’s manufacturing plants.
 - PepsiCo processes approximately 5 million tons of corn annually to produce
sweeteners and syrups for their beverages.
3. PepsiCo Company-owned Plants (Stage 3a)
- PepsiCo owns 291 manufacturing plants, located in places like:Mexico, the
United States, Canada
- Each plant is equipped for large-scale production, ensuring a consistent
supply.
- In 2023, PepsiCo produced around 1.5 billion liters of Pepsi from these
facilities.
4. Third-party Owned Manufacturers (Stage 3b)
- PepsiCo collaborates with approximately 700 third-party manufacturers,
including companies like:Coca-Cola Enterprises for production in specific
regions.
- These third-party manufacturers contribute to nearly 30% of PepsiCo's total
beverage production.
5. Distribution via Company-owned Fleet (Stage 4a)
- PepsiCo utilizes its own distribution fleet to transport products from its
manufacturing plants to retailers and wholesalers.
- Fleet Size: PepsiCo operates over 10,000 delivery vehicles, ensuring timely
and efficient distribution.
6. Distribution via Third-party Fleet (Stage 4b)
- In addition to its own fleet, PepsiCo partners with logistics companies like
Schneider and XPO Logistics, managing a significant portion of product
distribution.
- Numbers: PepsiCo collaborates with hundreds of logistics providers,
supporting the distribution of over 1 billion liters of Pepsi annually.
7. Wholesalers (Stage 5)
- PepsiCo distributes its beverages to wholesalers supplying mid-sized and
small grocery stores and other retail outlets.
- PepsiCo reaches over 1 million small and medium-sized retail locations,
ensuring that Pepsi is widely available.
8. Retailers (Stage 6)
- Large retail chains such as Walmart, Target, and Costco, as well as smaller
grocery stores, sell Pepsi directly to consumers.
- PepsiCo products are available in over 200 markets, with partnerships
involving hundreds of thousands of retailers.
9. End Consumers (Stage 7)
- The final stage involves Pepsi reaching end consumers, who purchase it
from various retailers.
- Customer Base: PepsiCo serves over 1 billion consumers daily, providing a
wide range of products, including its flagship carbonated beverage, Pepsi,
along with other snacks and packaged foods.

10. Product Flow: The primary product flow moves from raw materials through
the stages of processing, manufacturing, distribution, and retail to reach the end
consumers.
11. Cash Flow: The primary cash flow moves in the opposite direction, with
consumers paying retailers, who in turn pay wholesalers and manufacturers,
ultimately benefiting PepsiCo and their raw material suppliers.

III. Competitive and supply chain strategies of Pepsico:

1. Competitive strategies:
PepsiCo applies different generic competitive strategies, considering the
company’s wide array of products and target markets. These generic strategies
maintain competitive advantages in the global consumer goods market:
- Product Diversification and Mergers and Acquisitions:
 Strategy: To expand its product portfolio and reduce reliance on the
beverage industry alone, PepsiCo has developed products in the food sector
(such as Frito-Lay and Quaker Oats) in addition to beverages. This approach
helps the company reach a broader customer base and mitigates risks
associated with dependence on a single product category. Moreover,
PepsiCo acquires other companies to expand its global scale and market
 share, particularly focusing on companies providing healthy food and
beverage options.
 Execution: PepsiCo continually innovates existing products and develops
new ones (such as soft drinks, snacks, cereals, yogurt, etc.) to align with
market demands and consumer trends. The company has acquired Tropicana,
Quaker Oats, SodaStream, and several others to diversify its product
portfolio and grow in the healthy food and beverage market.
 Example:
 PepsiCo began strategic acquisitions beyond the beverage market in 1965
when it purchased Frito-Lay.
 In 2001, PepsiCo acquired Quaker Oats for $13.8 billion.
 PepsiCo sold Tropicana, Naked, and other juice brands to PAI Partners in
2022 but retains a 39% non-controlling interest.
 PepsiCo Beverages North America (PBNA):
This division of PepsiCo includes world-famous brands like Pepsi, Gatorade,
Mountain Dew, and Aquafina. PBNA creates and distributes licensed products
from Keurig Dr. Pepper, including Dr. Pepper, Crush, and Schweppes, as well as
juices from Dole Food Company, Inc. and Ocean Spray Cranberries, Inc. It also
markets partnership brands including tea variants from Lipton and coffee with
Starbucks. PBNA accounted for 30% of net revenue for PepsiCo in 2023. In 2022,
PepsiCo sold Tropicana, Naked, and other select juice brands to PAI Partners while
retaining a 39% non-controlling interest in a newly formed joint venture, Tropicana
Brands Group (TBG), operating across North America and Europe.
 Frito-Lay North America (FLNA):
Frito-Lay resulted from the 1961 merger between the manufacturer of Fritos
corn chips and the snack-food delivery company started by Herman W. Lay. Four
years later, the company merged with Pepsi-Cola to form PepsiCo. The acquisition
of Frito-Lay marked Pepsi's first venture beyond the beverage market. Frito-Lay
has grown dramatically in size to become Pepsi's biggest profit producer. In fiscal
year (FY) 2023, Frito-Lay North America accounted for 47% of operating profit,
more than double any other division. Frito-Lay generates its profit stream from
more than 29 snack brands, including Lay's, Doritos, Cheetos, Fritos, Sun Chips,
Tostitos, Cracker Jack, Miss Vickie's, Rold Gold, Ruffles, and Smartfood.
  Targeting the competitor's credibility:
In business, major competitors often have a network of partners, such as
suppliers, distributors, and manufacturers of complementary products. These
partnerships are a key source of their strength. By creating conflicts between the
competitor and their partners, Pepsi has leveraged these opportunities to develop
and enhance its brand reputation.
A classic example is Pepsi-Cola's success against Coca-Cola in the market
during the 1980s. At that time, Coca-Cola was very powerful and had numerous
bottling partners. Pepsi introduced a larger bottle size compared to Coca-Cola’s
products, quickly increasing its market share. However, Coca-Cola couldn’t follow
suit because its bottling partners had heavily invested in equipment for smaller
bottle sizes. Switching to new bottlers would have alienated its existing partners.
The most dramatic battle occurred in 1985. At the time, to celebrate its 100th
anniversary, Coca-Cola suddenly announced it was changing its formula, which
had been used for over 90 years, to a newly developed recipe. This new formula
had cost tens of millions of dollars in research and testing. However, when the
product hit the market, it triggered a massive backlash, with consumers protesting
the change, leading to a significant decline in Coca-Cola’s brand image.
Seizing this rare opportunity, Pepsi spent a large amount of money on a
television advertising campaign that aired continuously for a month. The ad had a
unique storyline: a girl with a pleading look stared directly into the camera, saying,
"Can anyone tell me why such a big soda company would do this? Why did they
change the formula?" Then, the camera suddenly cut to the same girl saying,
"Because they changed it, I started drinking Pepsi." She then takes a big sip of
Pepsi and exclaims, "Oh, now I understand." With this advertisement, Pepsi
gradually overtook Coca-Cola and solidified its brand identity.

2. Supply chain strategies:

Pepsico - a global beverage industry leader, has built its success upon a
robust and efficient supply chain strategy. By leveraging the pillars of its supply
chain strategy, Pepsi ensures the availability of its products on store shelves,
enhances operational efficiency, minimizes costs, and ultimately creates a
competitive advantage in a rapidly evolving market. This introduction sets the
stage for a closer exploration of the fundamental elements that power Pepsi’s
supply chain strategy and contribute to its enduring success.
- The Pillars of Pepsi’s Supply Chain Strategy:
Pepsi’s supply chain strategy operates on multiple fronts: sourcing and
procurement, production and manufacturing, distribution and logistics, inventory
management, and collaboration and partnerships. Each pillar is crucial in ensuring
the smooth flow of products from raw materials to store shelves.
 Sourcing and Procurement: At the core of Pepsi’s supply chain strategy is
sourcing and procurement. With a commitment to quality, the company
carefully selects ingredients and establishes strong relationships with
suppliers. This focus enables Pepsi to maintain consistency in taste and meet
stringent quality standards.
 Production and Manufacturing: Production and manufacturing are other
key aspect of Pepsi’s supply chain prowess. The company operates global
bottling plants and assembly lines, employing efficient processes and
cutting-edge technology to optimize production and maximize output. By
streamlining operations, Pepsi can respond to market demands swiftly while
maintaining high levels of quality and efficiency.
 Distribution and Logistics: The distribution and logistics segment of
Pepsi’s supply chain strategy ensures that products reach their destinations in
a timely and cost-effectively. Leveraging advanced routing and
transportation systems, the company optimizes delivery routes, reducing
lead times and minimizing costs. This enables Pepsi to stay competitive and
meet customer expectations.
 Inventory Management: Effective inventory management is critical to
Pepsi’s success. By employing sophisticated forecasting techniques and
demand planning, the company ensures the availability of its products while
minimizing excess inventory. This approach helps Pepsi maintain freshness
and minimize waste, thereby reducing costs and improving profitability.
 Collaboration and Partnerships: Pepsi’s supply chain strategy extends
beyond its operations through collaboration and partnerships. The company
strengthens its supply network and fosters mutual growth by forging strong
relationships with suppliers, distributors, and retailers. This collaborative
approach allows Pepsi to adapt to changing market dynamics, optimize
resources, and drive innovation.
- Pepsi’s Use of Technology to Improve Supply Chain Efficiency: Pepsi
leverages technology to enhance supply chain efficiency and drive operational
excellence. Pepsi optimizes various aspects of its supply chain operations by
embracing automation and data analytics. Automated systems help streamline
production processes, reducing manual errors and increasing productivity.
Advanced data analytics enable real-time monitoring and decision-making,
allowing Pepsi to respond swiftly to changing market dynamics. Additionally,
technology integration improves inventory management by enabling accurate
demand forecasting and inventory tracking, minimizing stockouts, and reducing
excess inventory. Overall, Pepsi’s use of technology empowers the company to
optimize efficiency, enhance customer satisfaction, and stay at the forefront of the
ever-evolving beverage industry.
- Benefits of Pepsi’s Supply Chain Strategy:
 Pepsi’s supply chain strategy offers several key benefits that contribute to
the company’s success in the beverage industry.
 First and foremost, it ensures product quality and consistency by carefully
sourcing and procuring high-quality ingredients. This commitment to quality
allows Pepsi to deliver refreshing and consistent beverages to consumers
worldwide.
 Additionally, the strategy enables efficient production and manufacturing
processes, optimizing output while maintaining high levels of quality and
efficiency. By streamlining distribution and logistics, Pepsi can deliver
products in a timely and cost-effective manner, meeting customer
expectations and gaining a competitive edge.
 Finally, effective inventory management techniques minimize waste and
ensure product availability, resulting in improved profitability and reduced
costs. Overall, Pepsi’s supply chain strategy enhances operational efficiency,
supports customer satisfaction, and drives the company’s growth and
success.
- Challenges Faced By Pepsi’s Supply Chain Strategy: Despite its impressive
supply chain strategy, Pepsi faces challenges in its pursuit of excellence. Rising
raw material costs, geopolitical uncertainties, and changing consumer preferences
require the company to remain agile and adaptable. By proactively addressing
these challenges, Pepsi continues to enhance its supply chain operations and
maintain its competitive edge.
(Source: [Link]
 [Link]
nang/quan-tri-mua-sam/122141473-pepsi-co-supply-chain/77239384 )

3. Actions to achieve:
a. To achieve its competitive strategies:

 To achieve product diversification, PepsiCo can:

 Invest in market research and R&D to align products with health trends.
 Develop products with low sugar, natural ingredients, and unique flavors.
 Partner with health experts to create nutritious offerings.
 Use agile product testing and focus on online sales channels.

 For mergers and acquisitions, PepsiCo should:

 Acquire brands in health, sustainability, and emerging markets.

 Smoothly integrate new brands while preserving their unique identities.
 Leverage PepsiCo’s marketing to promote acquired brands.
 Establish innovation hubs with new brands to drive joint development.
 Prioritize acquisitions that support sustainability and environmental goals.

b. To achieve its supply chain strategy:

PepsiCo employs several specific actions to achieve its robust supply chain
strategy, focusing on efficiency, innovation, and sustainability. Here are key
actions they have taken:

1. Advanced Data Analytics and Technology Integration: PepsiCo uses data

analytics to improve decision-making across its supply chain. This includes
real-time monitoring of inventory, predicting consumer demand more
accurately, and optimizing delivery routes to reduce lead times and costs.
Automation is heavily used to streamline production, reduce errors, and
boost productivity. This technology allows for better tracking of inventory
and minimizes waste, ultimately enhancing customer satisfaction

2. Sustainable Practices: Sustainability is a core focus of PepsiCo's supply

chain efforts. They have implemented eco-friendly packaging and optimized
their transportation systems to reduce carbon emissions. Additionally, they
promote responsible sourcing practices, ensuring that they work with
suppliers who meet environmental and labor standards
 3. Collaboration and Partnerships: PepsiCo works closely with suppliers,
distributors, and retailers to enhance operational efficiency. These
partnerships allow for more seamless integration, better resource allocation,
and the ability to innovate across the supply chain. For example, by
strengthening supplier relationships, PepsiCo ensures consistent product
quality while also fostering long-term growth

4. Flexible Logistics Network: PepsiCo has created a logistics system that can
quickly adapt to disruptions, such as geopolitical tensions or supply
shortages. This flexibility helps the company maintain a resilient supply
chain and ensures timely product delivery, even in the face of external
challenges

These actions help PepsiCo maintain its competitive edge in the global market,
ensuring product availability and operational efficiency while adapting to changing
market conditions and customer demands.

IV. Calculate and analyze supply chain performance via at least 4 indicators,
must have C2C cycle.
1. Selected Financial Data for Pepsico InC Table
Fiscal year is January-December. All values USD
Millions. 2023 2022

Sales/Revenue 91,468 86,403

Sales Growth 5.86% 8.73%

Cost of Goods Sold (COGS) 41,64 40,281

COGS Growth 3.37% 9.07%

Gross Income 49,828 46,122

Gross Income Growth 8.04% 8.43%

Gross Profit Margin 54.48% -

Unusual Expense 1,846 3,577

Non Operating Income/Expense 26 3,196

Non-Operating Interest Income - -

Interest Expense 850 780

Interest Expense Growth 8.97% -55.25%

Gross Interest Expense 850 780

Income Tax 2,262 1,727

Consolidated Net Income 9,155 8,978

Minority Interest Expense 81 68

Net Income 9,074 8,91

Net Income Growth 1.84% 16.96%

Cash & Short Term Investments 10,003 5,348

Cash Only 9,711 4,954

Cash & Short Term Investments Growth 87.04% -10.69%

Total Accounts Receivable 10,815 10,163

Accounts Receivables, Net 8,5 8,042

Accounts Receivables, Gross 8,675 8,192

Bad Debt/Doubtful Accounts -175 -150

Other Receivables 2,315 2,121

Accounts Receivable Growth 6.42% 17.09%

Accounts Receivable Turnover 8.46 8.5

Inventories 5,334 5,222

Finished Goods 2,842 2,742

Work in Progress 104 114

Raw Materials 2,388 2,366

Other Current Assets 731 766

Miscellaneous Current Assets 731 766

Total Current Assets 26,883 21,499

Net Property, Plant & Equipment 29,944 26,664

Property, Plant & Equipment - Gross 57,344 52,157

Buildings 11,579 10,816

Land & Improvements 1,159 1,142

Machinery & Equipment 36,006 33,335

Total Investments and Advances 4,33 3,886

Intangible Assets 32,657 33,788

Net Goodwill 17,728 18,202

Net Other Intangibles 14,929 15,586

Other Assets 2,007 1,944

Deferred Charges 1,227 1,111

Tangible Other Assets 780 833

Total Assets 100,495 92,187

Liabilities & Shareholders' Equity

ST Debt & Current Portion LT Debt 7,066 3,897

Short Term Debt 3,142 801

Current Portion of Long Term Debt 3,924 3,096

 Accounts Payable 11,635 10,732

Accounts Payable Growth 8.41% 9.13%

Other Current Liabilities 12,946 12,156

Total Current Liabilities 31,647 26,785

Long-Term Debt 39,995 37,59

Non-Convertible Debt 37,595 35,657

Provision for Risks & Charges 3,448 3,037

Other Liabilities 2,873 3,369

Total Liabilities 81,858 74,914

Total Shareholders' Equity 18,503 17,149

Total Equity 18,637 17,273

Liabilities & Shareholders' Equity 100,495 92,187

Source: [Link]
statement
[Link]
2. Calculate

Indicator
Formulas 2022 2023
s
Net Income
ROA Total Assets
9.03 9.67

Net Income
ROE Total Shareholder Equity
0.49 0.52

Sale Revenue
ART Account Receivable
8.46 8.50
 Cost of goods sold
APT Account Payable
3.58 3.75

Cost of goods sold

INVT Inventories
7.81 7.71

52 52 52
C2C + − -1.72 (weeks) -1.00 (weeks)
INVT ART APT

3. Analyze supply chain performance of Pepsico

a. Return on Assets (ROA)
 2023: 9.03%
 2022: 9.67%
 Analysis: The decrease in ROA from 9.67% to 9.03% indicates that
PepsiCo's efficiency in using its assets to generate profit has declined. This
could suggest increased operational costs or a less efficient asset
management in 2023 compared to 2022.
b. Return on Equity (ROE)
 2023: 0.49
 2022: 0.52
 Analysis: A slight decrease in ROE from 0.52 to 0.49 implies that the
company generated slightly less profit per dollar of equity in 2023. This
decline reflects reduced financial efficiency, potentially indicating issues in
profitability or increased liabilities.
c. Accounts Receivable Turnover (ART)
 2023: 8.46
 2022: 8.50
 Analysis: ART measures how effectively a company collects revenue from
its credit sales. A minor decline from 8.50 to 8.46 suggests slightly slower
 collection of receivables in 2023, indicating a marginally less efficient credit
and collection policy.
d. Accounts Payable Turnover (APT)
 2023: 3.58
 2022: 3.75
 Analysis: The reduction in APT from 3.75 to 3.58 indicates that PepsiCo is
taking longer to pay its suppliers in 2023. While this could free up cash in
the short term, it may strain relationships with suppliers or imply weaker
liquidity.
e. Inventory Turnover (INVT)
 2023: 7.81
 2022: 7.71
 Analysis: The increase in INVT from 7.71 to 7.81 shows an improvement in
inventory management, with PepsiCo selling and replenishing its inventory
more quickly in 2023. This suggests better efficiency in handling stock and
less capital tied up in inventory.
f. Cash-to-Cash (C2C) Cycle
 2023: 1.72 week
 2022: 1 week
 Analysis: The increase in the C2C cycle from 1 week to 1.72 week indicates
that PepsiCo took longer to convert its investments in inventory and other
resources into cash in 2023. This extension in the cash cycle suggests a
potential inefficiency in the overall supply chain performance.
Overall Comparison and Conclusion
 Asset and Equity Efficiency: The decline in both ROA and ROE suggests
that PepsiCo was less effective in using its resources to generate profit in
2023.
  Receivables and Payables Management: The slight decrease in ART and
APT indicates minor inefficiencies in managing accounts receivable and
payable.
 Inventory Management: PepsiCo improved inventory turnover, showing
more effective stock management.
 Cash Conversion Cycle: The longer C2C cycle highlights a potential
concern, as it took more time to convert investments into cash, which could
affect liquidity.

V. Define KPIs for at least 2 drivers of supply chain performance for your
chosen company
To measure and improve the performance of PepsiCo’s supply chain, we can focus
on two main drivers: Demand Forecasting Accuracy and Inventory Turnover. Let’s
break these down with clear KPIs that help us assess and optimize these areas.
1. Demand Forecasting Accuracy
This is all about predicting customer demand as accurately as possible. If PepsiCo
can forecast demand well, it avoids both overproduction (which can lead to wasted
products and storage costs) and underproduction (which leads to missed sales).
Here are some key KPIs to monitor:
- Forecast Accuracy (%):
This KPI compares PepsiCo’s forecasted demand to actual customer
demand. A higher percentage means that our forecast is closer to reality,
helping us maintain the right amount of stock without overloading
warehouses. For example, if the forecast accuracy is 90%, it shows we’re
closely aligned with actual demand, reducing the risk of stockouts or
overstock.
- Mean Absolute Percentage Error (MAPE):
MAPE is a more precise way to measure forecast accuracy. It looks at the
average percentage error across all forecasts and compares it to actual
demand, helping us identify and correct any consistent forecasting errors. A
lower MAPE percentage indicates a more reliable forecast.
- Demand Planning Cycle Time (Days)
 This measures the time it takes to adjust our forecast in response to new data
or market changes. For PepsiCo, a shorter cycle time is essential. For
example, if there’s a sudden increase in demand for a product, PepsiCo can
quickly adjust production plans to avoid stockouts, keeping shelves stocked
and customers happy.
By focusing on these KPIs, PepsiCo can optimize its production schedules, reduce
waste, and better serve customer needs.
2. Inventory Turnover
Inventory turnover tells us how efficiently PepsiCo is managing its stock. Since
many PepsiCo products are perishable, this is especially important. High inventory
turnover means products are moving quickly, reducing holding costs and ensuring
freshness for customers. Key KPIs include:
- Inventory Turnover Ratio:
This KPI shows how many times PepsiCo’s inventory is sold and replaced
over a period, like a month or a quarter. A higher ratio suggests efficient
inventory management, as products are being sold and replenished quickly.
For instance, if we have a turnover ratio of 10, that means our inventory is
sold and replaced 10 times over the period, indicating strong demand and
efficient stock management.
- Days of Inventory Outstanding (DIO):
DIO tracks the average number of days products remain in inventory before
being sold. Lower DIO means products move faster through the supply
chain, which is particularly important for fresh products. A DIO of 20 days,
for example, means PepsiCo holds inventory for only 20 days on average
before selling, keeping products fresh and minimizing storage costs.
- Stockout Rate (%):
This KPI measures how often PepsiCo experiences product shortages. A low
stockout rate is essential to ensure that customers can always find PepsiCo
products when they need them. By keeping the stockout rate low, PepsiCo
can maintain a consistent supply and build trust with customers.

By focusing on these KPIs, PepsiCo can ensure a smooth, efficient supply chain
that delivers fresh products to customers while minimizing costs and waste. These
KPIs give PepsiCo actionable insights to make better decisions, streamline
operations, and ultimately strengthen its supply chain performance.
VI. Collect information and analyse logistics and supply chain management
activities of your chosen company. You can find some news about
investment/strategies/ ... then analyze advantages and disadvantages.
6.1. Warehouse and Inventory
6.1.1. Overview:
PepsiCo manages an extensive supply chain that incorporates sophisticated
warehouse and inventory practices to meet global demand for its products.
6.1.2. Warehouse Activities:
- Storage Solutions: PepsiCo uses a mix of automated systems and manual
processes, including pallet racking and high-density storage, to maximize space
efficiency.
- Cross-Docking: This strategy allows products to be transferred directly from
incoming shipments to outgoing transport, reducing storage time.
- Order Fulfillment: Various picking methods, such as wave picking and batch
picking, are implemented to enhance accuracy and speed in fulfilling customer
orders.
6.1.3. Inventory Management:
- Just-in-Time (JIT): Aiming to minimize excess inventory, PepsiCo aligns
production with demand forecasts to reduce holding costs.
- Demand Forecasting: Advanced analytics are utilized to predict customer
demand accurately, ensuring that inventory levels are sufficient without being
excessive.
- Inventory Tracking: Technologies like RFID and barcode systems are
employed for real-time tracking, improving visibility and accuracy of inventory
data.
6.1.4. Advantages of Warehouse and Inventory Management
- Operational Efficiency:
 Streamlined processes reduce lead times, enhancing service levels and
productivity.
 Automation minimizes labor costs and decreases the likelihood of errors.
- Cost Management:
 Effective inventory strategies help minimize holding costs, particularly with
perishable items.
 JIT practices reduce excess inventory and associated costs.
- Enhanced Customer Satisfaction:
 Maintaining accurate inventory levels ensures product availability, fostering
customer loyalty.
 Quick and accurate order fulfillment improves overall customer experience.
- Flexibility and Responsiveness:
 Real-time analytics allow rapid adjustments to inventory levels based on
market trends.
 The ability to quickly adapt to changes provides a competitive edge.
6.1.5. Disadvantages of Warehouse and Inventory Management
- High Initial Investment:
 Implementing advanced automation and technology can be costly.
 Ongoing maintenance and operational costs may be significant.
- Complexity:
 Managing a large network of warehouses requires skilled personnel and
sophisticated systems.
 Increased complexity can lead to inefficiencies if not managed properly.
- Risk of Stockouts or Overstocking:
 Poor demand forecasting can result in stockouts, leading to lost sales, or
overstocking, increasing holding costs.
 Seasonal fluctuations can complicate inventory management.
- Supply Chain Disruptions:
 External events, such as natural disasters or geopolitical issues, can disrupt
supply chains.
 Dependency on suppliers for timely deliveries adds another layer of risk.
=> Conclusion: PepsiCo's warehouse and inventory management practices are
integral to its operational success, allowing for efficient product flow and high
customer satisfaction. While there are notable advantages, such as cost
management and operational efficiency, challenges like high investment costs and
complexity must be effectively managed to ensure continued success.
6.2. Transportation management activities
6.2.1. Transportation network
Pepsi supply chain strategy is closely linked to the appropriate use of
transportation. In a typical market, quick response enables supply chains to meet
the customer demands for ever-shorter lead times, and to synchronize the supply to
meet the peaks and troughs of demand. The major focus is to determine the
processes that are to be integrated in the supply chain network with their
corresponding suppliers, distribution centers and the associated transport links
between them.
6.2.2. Modes of transportation
- Land: Truck offers advantage of door to door shipment, a shorter delivery time
and no transfer between pick up and delivery. Pepsi uses the TL (truck load)
approach. This approach provides paves the way for economies of scale and is
able to meet service requirements while minimizing both trucks idle and empty
travel time. Truck loads are more suited Pepsi because of the use of warehouses
and larger shipments therefore making it cheap. Raw materials from the
suppliers are brought using trucks; finished products are transported to
distributors and then retailers using trucks as well. Pepsi have its own fleet of
small and large trucks and vehicles for carrying goods and raw material, while
the distributors also use their own vehicles.
- Water: This mode forms only a very small part of the total transport network. It
is used for shipping of empty cans .
- Air: It is again a very small part of the entire transport network.
6.2.3. Strategies and initiatives
- Route optimization: Using advanced software to plan the most efficient routes
for delivering products, reducing transportation distances and fuel consumption.
- Carrier selection and management: Partnering with reliable and efficient
carriers, and managing their performance to ensure timely and cost-effective
transportation.
- Inventory management: Coordinating transportation with inventory levels to
minimize stockouts and excess inventory, reducing transportation costs.
- Technology adoption: Utilizing transportation management systems (TMS) to
track shipments, manage carrier relationships, and optimize routes.
- Sustainability initiatives: Implementing measures to reduce fuel consumption,
emissions, and packaging waste, such as using more fuel-efficient vehicles and
exploring alternative transportation modes.
6.3. Risk management activities and/or other initiatives/ plan in digitalization
and green transition.
6.3.1. Digitisation Initiatives:
PepsiCo has begun using artificial intelligence (AI)-driven tools to get a
grasp of people’s food and beverages preferences and understand the reasons
behind their preferences. The tools analyze large quantities of data related to food
and beverages online such as menu items, social posts, recipe interactions, social
conversations on food & beverages etc. and provide insights that allow PepsiCo to
understand the latest trends in the F&B space. PepsiCo has been drawing on these
insights to develop innovative food and beverage products that resonate well with
consumers.
a, Internet of Things (IoT):
By connecting devices and systems, PepsiCo is gaining real-time insights
into its operations, enabling predictive maintenance and efficient resource
allocation.
At the heart of this transformation is the acknowledgment of an
unconventional yet critical factor: noise. Contrary to the common perception that
the clamor of the manufacturing machinery is just background noise, PepsiCo and
Augury have turned it into a diagnostic tool.
The deployment of these sensors at PepsiCo marks a significant step towards
the digitalization of the manufacturing sector. By leveraging real-time data and
analytics, the company is not only able to maintain continuous production but also
improve the quality of its products. The successful pilot in the U.S. has paved the
way for a global rollout, indicating the potential for this technology to transform
manufacturing practices worldwide.

Augury’s vibration analysis software (Source: Augury)

b, Data-Driven Decision Making
PepsiCo leverages big data analytics to make informed decisions, from
product development to marketing strategies, resulting in precise insights and
increased agility in a dynamic market landscape.
c, E-Commerce and Direct-to-Consumer Initiatives
PepsiCo embraced e-commerce platforms and established direct-to-
consumer channels, enabling customers to purchase products online, fostering
convenience and expanding their market reach.
d, Mobile App Innovation: PepsiCo on the Go
The “PepsiCo on the Go” app revolutionized customer engagement, offering
rewards, promotions, and seamless purchasing options, ensuring PepsiCo remains
a constant presence in consumers’ lives.
e, Influencer Marketing and Social Media Engagement
PepsiCo harnesses the power of influencer collaborations and social media
engagement to amplify brand awareness and connect with diverse audiences on
platforms like Instagram, TikTok, and Twitter.
f, Sustainability and Ethical Practices in the Digital Age
PepsiCo’s commitment to sustainability is amplified through digital
channels, allowing the company to transparently communicate its eco-friendly
initiatives and ethical practices, resonating with environmentally conscious
consumers.
6.3.2. Green Transition Initiatives:
a, Sustainable Packaging:
PepsiCo aims to achieve our sustainable packaging goals by fostering cross-
industry and public-private partnerships, advocating for improved recycling,
composting, broader waste management infrastructure and regulatory reform,
supporting the advancement of new materials and enhanced recycling
technologies, collaborating with suppliers and partners, and helping to increase
consumer education and acceptance, all of which are necessary to meet our overall
goals. In formulating our new virgin plastic reduction goal, we will reduce use of
virgin plastic through use of: recycled content plastic feedstock; packaging
redesign to eliminate plastic; reusable and/or refillable models; new innovative
technologies; and alternative packaging materials.
b, Eliminating problematic or unnecessary plastic packaging
Over the course of 2020, PepsiCo has been testing and validating
alternatives for materials that are not recycle compatible to gain insights for future
innovation.
- Launched a market test of molded pulp fiber and paperboard replacements for our
plastic 6-pack carriers in the U.S.
- Transitioned some beverage SKUs to recycle compliant labels and ran validation
trials for other relevant SKUs.
- Transitioned certain markets from neon green beverage bottles to transparent
light green.
c, Water Conservation: The company is implementing water conservation
measures across its operations, including efficient irrigation systems and water
recycling technologies.
d, Membrane bioreactors: We’ve Implemented technology at 21 manufacturing
sites globally, including 14 in high water-risk areas, to treat, purify and recycle
water to drinking-level standards for reuse in operations. This alone can help a site
to reduce its freshwater demand by an average of 70%.
e, Renewable Energy: PepsiCo is transitioning to renewable energy sources, such
as solar and wind power, to reduce its carbon footprint. In 2021, PepsiCo reduced
Scope 1 and 2 emissions by 25% from a 2015 baseline. It continues to make good
progress with more than 70% of global electricity needs in its own direct
operations now met by renewable sources and a plan to transition to 100%
renewable electricity across all company-owned operations globally by 2030.

PART B: REFERENCES
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