PepsiCo operation Management

Group Members
 Ali Raza
 Aasim Mustafa
 Suheer Patras
 Zeeshan Gu
 Zohaib Akbar
EXECUTIVE SUMMARY:

 PepsiCo is an American multinational corporation dealing with snack and

beverages
 In terms of revenues for the company’s revenue hit a high of $66.4 billion.
 The company has a wide range of subsidiaries in its portfolio.
 PepsiCo’s business lineup was 22 $1billion in the financial year 2018.
 PepsiCo offers product choices to meet a broad variety of needs and preference
from fun for you items to product choices that contribute to healthier lifestyle.
Company Profile
 PepsiCo is a leading food and beverage company that manufactures
and distributes its products in more than 200 countries.

 The company’s beverage product portfolio includes carbonated soft

drinks, juices, tea and coffee, sports drinks, and water bottle.
Headquartered in New York, the company employs around 263,000
people worldwide.

 PepsiCo owns nine of the 40 largest packaged goods trademarks in

the United States. The company owns several brands, and 22 of
them, including Pepsi, Lays, and Gatorade, generate more than $1
billion each in revenues.
Market and Product Profile
 The market of PepsiCo is huge because the company have the good

image in the market and they are currently the market leader in the world

in term of providing good snacks and Soft drinks etc.

 PepsiCo market share and their customers are increasing day by day

because they have a strong distribution network in the world it means that

Pepsi and other products of PepsiCo are available easily worldwide.

 TARGET MARKET:
Pepsi beverages have different products in the form of carbonated
drinks, and each product has different target market. According to
Pepsi beverages, they hit different market groups by different product
such as Pepsi and 7up is for families, Miranda is for teenagers,
Mountain dew is for aggressive people on the other hand Pepsi max &
7up free are for diet alert and health conscious people. They promote
their products according to the target market through different types of
advertising campaigns and have special marketing strategies for each
product.
 MARKET SHARE:

Pepsi 72%

Coca cola 23%

Other 5%
Sales revenue

 PepsiCo revenue for the quarter ending September 30, 2019 was
$17.188B, a 4.26% increase year-over-year. PepsiCo revenue for the
twelve months ending September 30, 2019 was $66.045B, a 2.14%
increase year-over-year.
 PepsiCo annual revenue for 2018 was $64.661B, a 1.79% increase from
2017.
 PepsiCo annual revenue for 2017 was $63.525B, a 1.16% increase from
2016.
 PepsiCo annual revenue for 2016 was $62.799B, a 0.41% decline from
2015.
COMPETITIVE STRATEGY OF PEPSICO

 Differentiation:
 Sometime Pepsi have to work on differentiation as they have launch the
product as a different taste with its competitor like coke (which is strong in
taste) so the Pepsi work as a slightly sweetener taste which is more likely to
be used by the all age groups.
 Cost Leadership:
 As the company earns more and more profit from different territories same
as it is company some time has to bear the losses for some times in order to
be the part of Market, and to maintain the goodwill in the eyes of its
customers. Company is bound to the agreement with government, it’s
keeping the price of Pepsi (250ml) at PRs 12, while according to the high
cost of production, and price should be 16 PRs.
LAYOUT STRUCTURES:

 FACILITY LAYOUT:
 Facility layout is an arrangement of different aspects of manufacturing in an appropriate
manner as to achieve desired production results. Facility layout considers available space,
final product, safety of users and facility and convenience of operations.
 LAYOUT STRATEGY:
 PepsiCo is the second biggest player in the global food and beverage industry. To maintain
this position, PepsiCo’s operations management (OM) practices must effectively address
business needs in the strategic decision areas. Efficient movement of people, materials and
information is the operations management concern in this strategic decision area. In
PepsiCo’s case, spaces are designed with efficiency and productivity in mind. For example,
layout design in PepsiCo production facilities is centered on the principles of assembly line
production and total quality management (TQM).
Supply Chain Structure of PepsiCo
 The company makes long term decisions in regards to location and

capacities of production and warehousing facilities, the products to be

manufactured or stored at various locations, the modes of transportation to

be made, and information systems .

 The supply chain design is very expensive to alter on short notice and

supports the company’s strategic objectives

QUALITY AND INVENTORY MANAGEMENT TOOLS:
Quality Management of PepsiCo

 This strategic decision area has the objective of optimizing quality based on
business and consumer expectations. PepsiCo’s operations management
aims to provide the highest quality products under the company’s “Human
Sustainability” goals. For example, new PepsiCo products are usually
improved variants, such as low-calorie Pepsi products and less-salt Frito-Lay
products.
 Inventory Management.
 PepsiCo’s inventory management emphasizes automation. Adequacy,
scheduling, and cost minimization are the key objectives in this strategic
area of operations management. PepsiCo does so through computerized
monitoring of inventory. Inventory managers can access real-time data to
help them make decisions.
 Sourcing:
 VENDOR SELECTION CRITERIA
 PepsiCo expect their suppliers and business partners to uphold these principles as well.
PepsiCo Supplier Code of Conduct, Sustainable Sourcing Program and Sustainable
Farming Initiative are tools we use to communicate our expectations and to minimize
the risk of human rights abuses throughout our supply chain. Always check your actions
to ensure that they do not violate or contradict any of the basic human rights principles
noted above. If you suspect a human rights abuse within our operations or supply chain,
speak up and report it.
 SOURCING STRATEGIES FOR LOCAL / IMPORTED ITEM
 The PepsiCo coconut water supply chain starts with growers in Indonesia and the
Philippines, uses co-packers in Asia and in the U.S., imports goods through ports in
California and New York, provides first line storage in warehouses near the ports, and
then redistributes the goods to other distribution centres across North America based on
demand. Packaging material is sourced from Europe, Asia, and the Middle East.
 CENTRALIZED/DECENTRALIZED PURCHASING
 Pepsi had taken a decentralized approach to procurement with each
markets and business units independent to make decisions but they must
uphold the organization’s policy and goals. Some 300,000 suppliers, most
selected by location managers, were inundating the company with 1.5
million invoices a year. In turn, those invoices were handled by more than
200 full-time-equivalent employees, who managed purchases, matched
invoices to point of sale (POs), and issued checks on 26 different systems
around the country. The labour-intensive process left little room for
gathering, let alone analysing, national purchasing data.
 ROLE OF E-PROCUREMENT
 E-Procurement is advancing to develop and drive strategies on a global
scale to maximize value and efficiencies in day to day purchasing
activities at PepsiCo. As a result, this role will be responsible for the
management of Procurement projects, compilation of Procurement
compliance data reports, leading global best practices for Procurement
to ensure full compliance to PepsiCo and PGCS Purchasing Procedures.
The role will require execution on a quarterly basis of Procurement
controls, supporting wider team and initiatives.
 LEAN MANUFACTURING
 PEPSI INSTALLS NEW WAREHOUSE AUTOMATION EQUIPMENT TO REDUCE COSTS:
 In a move to reduce waste and warehousing costs under its Six Sigma plan, Pepsi
Beverages Co. has installed an automated storage and retrieval system (AS/RS) and
warehouse control system at its plant in Tampa, Fla., USA. According to Pepsi, the
new equipment includes two AS/RS storage and retrieval machines, a pallet
conveyor system, five robotic vehicles, a pallet-squaring station, and packaging
machines to apply shrink wrap and labeling. The new equipment uses a 30 percent
smaller footprint than a conventional beverage processing facility, the company
said.
 PEPSICO- PLACE AND DISTRIBUTION STRATEGY:
 PepsiCo Inc. (PEP) is a leading food and beverage company with an impressive
global presence. The company’s products reach the market through the following
three channels: direct store delivery (or DSD), customer warehouse, and third-party
distributor networks. PepsiCo chooses the relevant distribution channel based on
customer needs, product characteristics, and local trade practices.
 Three Distribution Channels of PepsiCo:
 Direct store delivery:
 Under the DSD framework, PepsiCo conveys items straightforwardly to retail
locations. Of the three channels, DSD empowers PepsiCo to stock with greatest
serviceability. It’s more reasonable for items that are restocked regularly and are
touchy to advancements and showcasing.
 Customer Warehouse:
 The client stockroom framework is a less costly distribution channel. It’s optimal for
items that are less delicate and perishable, have lower turnover, and are not
acquired imprudently.
 Third-party distributor systems:
 PepsiCo appropriates nourishment and drink items to eateries, organizations,
schools, and stadiums through outsider sustenance administration and distributing
merchants and administrators.