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Pepsico Case Study File

870 words - 4 pages

The Business Case:

PepsiAmericas (PAS) is the world’s second largest manufacturer and distributor of Pepsi beverages, operating in nineteen mostly Midwestern states in the U.S. (69% of sales), central and Eastern Europe (26% of Sales) and the Caribbean (5% of sales). Net sales in 2008 totaled nearly $5 billion or 20% of PepsiCo’s total US beverage sales. In 2009 a recession hit the U.S. economy, but PepsiAmericas was also faced with two more important long-term challenges: (1) a declining U.S. market for carbonated soft drinks, and (2) increasingly powerful retailers who were squeezing PAS profit margins. In addition, PepsiAmericas product line had moved from 35-40 products in the ...view middle of the document...

In response to these pressures and challenges, PepsiAmericas invested heavily in supply-chain management (SCM) and manufacturing enterprise resource planning (ERP) systems to better enable the management of bottling and distribution, as well as a customer relationship management system to facilitate the capture and retrieval of qualitative information concerning individual customer relationships within the new three-tier customer serving structure. With these systems the firm integrated its core business processes (i.e. procurement, manufacturing, selling, and warehousing and distribution) and automated data capture at every key step along its value chain. To PepsiAmericas, one of the biggest benefits of its ERPs was the collection and measurement of business process outcomes for better management, control and planning of large and complex business processes. The company used these rich data resources and related process knowledge to negotiate better contracts for raw materials, lower supply chain operating costs, more accurately monitor consumer demand, and ultimately strike more profitable deals with its large retail customers. In effect PepsiAmericas employed customer data as a competitive asset, collecting vast amounts of data as part of daily operations (transacting) and then employing that data for management and control as well as for innovation in product development and customer service.

This transformation process was dubbed the “Customer Optimization to the 3rd power – Planning + Selling + Delivery” program and was intended to reduce inventory management issues, increase productivity across PepsiAmericas’ production platforms, and improve overall customer service. For example, national customers, like Wal-Mart, fed point-of sales data directly into PAS’s distribution system, informing the detailed product mix and quantities...

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