SUPPLY CHAIN MANAGEMENTSUPPLY CHAIN MANAGEMENT

Trina Bhagat(05), Meghrag Gawande(09), Rohini Mukhopadhyay(19), Trina Bhagat(05), Meghrag Gawande(09), Rohini Mukhopadhyay(19), Rishika Mittal(30), Susrita Sen(36), Swati Randhawa(42)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 (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.

Supply Chain Management

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

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.

1. The Customer and Supply Chain Uncertainty1. 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 StrategySupply Chain Strategy

Supply Chain Flow- Pepsi

OUR PRODUCT IS PEPSI COLA 300ml GLASS BOTTLE

ChemburChembur

Manufacturing plants in Maharashtra

Manufacturing plants in Maharashtra

PaithanPaithanRohaRoha

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

LOCATIONS OF PEPSI COBO & FOBO IN INDIA

COBOCOBO

FOBOFOBO

FOBO- Franchise owned bottling operations

FOBO- Franchise owned bottling operations

COBO-Company owned bottling operations

COBO-Company owned bottling operations

Bottling Operations are of 2 types

Bottling Operations are of 2 types

In India , out of 43 bottling operations 17 are COBO and the rest are FOBO.

Supply Chain Flow- Pepsi

Raw Materials Used for Pepsi

Raw Materials Used for Pepsi

Carbonated water

Carbonated water SugarSugar Citric acidCitric acid AdditivesAdditives FlavoringsFlavoringsEmulsionsEmulsions

Raw Materials Used for Bottles

Raw Materials Used for Bottles

SugarSugar

GlassGlass SilicaSilica AluminiumAluminium

Dynamics of Material Flow

Supplier Plant CnF/Distributor

Logistics Retailer

FLOW OF MATERIAL

Reverse Flow

Reverse Flow

Forward Flow

Forward Flow

Organized Sales

Organized Sales

Direct Sales

Direct 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.

Supplier Plant CnF/Distributor

Logistics Retailer

Information FlowInformation Flow Money FlowMoney Flow

FLOW OF MONEY

Organized SalesOrganized Sales Direct SalesDirect Sales

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

The money is paid by the retailer to the

Driver at the time of delivery.

The payment is made in cash.

•All expenses are borne by distributor but are 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

•TheThe retailer gets a margin of Re 1 retailer gets a margin of Re 1

FLOW OF INFORMATION

Sales ManagerSales Manager

Territory Development Manager

Territory Development Manager

Customer ExecutiveCustomer Executive

Direct Sales Representative

Direct Sales Representative

Pre Sales Representative

Pre Sales Representative

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

• 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.

FLOW OF INFORMATION contd

• 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…