Supply Chain Management Strategies

This assignment delves into the multifaceted world of supply chain management. It examines various strategies employed by organizations to optimize their supply chains, including aligning human capital needs with global supply-chain strategies and fostering strategic supplier partnerships. The role of customer relationship management (CRM) in building strong customer relationships is also discussed, along with the impact of organizational structure on a firm's overall performance.

TABLE OF CONTENTS
EXECUTIVE SUMMARY.............................................................................................................1
SUPPLY CHAIN CASE STUDY...................................................................................................2
a) The application of technology and information system in the supply chain to reduce
“Bullwhip-Effect”...................................................................................................................2
b) Use of Customer Relationship Management (CRM) and the benefits to the organization3
c) Choice between centralisation and decentralisation which one is more predominant and
how it impacts supply chain decisions in the organization....................................................5
SUMMARY.....................................................................................................................................7
REFERENCES................................................................................................................................8

EXECUTIVE SUMMARY
In the present study, PepsiCo organization has been selected which is an American
multinational food, snack and Beverage Corporation and its headquarters in New York, US.
Company possess huge interests in its manufacturing, marketing, distribution of grain based
snack foods, beverages and other products (Felea and Albastroiu, 2012). Although company was
formed in 1965 with its merger of Pepsi-Cola Company and Frito-Lay. Also, company focuses
upon expanding its namesake product Pepsi to a wider range of food and beverage brands that
involves an acquisition of Tropicana. However, company's products were distributed across more
than 200 countries which results into annual net revenues of $43.3 billion. Company being the
second largest food and beverage business in the world.
Supply chain management is considered as the network of international businesses which
is involved in the ultimate provision of product and service packages that is required by the end
customers. PepsiCo needs to adopt effective supply chain strategies in order to manage its
movement and storage of raw material, work-in-process inventory and finished goods from the
point of origin to point of consumption. Company is able to undertake push/pull supply chain
process which is initiated in anticipation to the customer order (Ross, 2013). It assists firm to
raise its demand and is applicable in non-seasonal period as well as seasonal period. Also,
PepsiCo undertakes customer and supply chain uncertainty in order to identify customer needs,
demand uncertainty and uncertainty for the capability of the supply chain. With the help of such
process, it assists business to understand the capabilities of supply chain in order to achieve the
strategic fit. It also involves different issues faced by the supply chain network of PepsiCo and
thus it faces serious issues such as it understands the supply chain process of PepsiCo. Also, it is
essential for firm to identify its innovative distribution strategy i.e. direct to store delivery model.
Another crucial challenge faced by firm is in regard to examine the benefits of the direct to store
delivery model. Later, firm examines the company's collaborative supplier relationship (Qrunfleh
and Tarafdar, 2013).
The key challenges faced by the supply chain management is globalization of
manufacturing operation, safety and quality of products, shorter lead time, less inventory and
better throughout, access to the latest technology etc. Thus, all these issues need to be considered
by the firm and thus it is essential for business to overcome such challenges and thus attain
desired targets (Tayur, Ganeshan and Magazine, 2012).
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SUPPLY CHAIN CASE STUDY
a) The application of technology and information system in the supply chain to reduce
“Bullwhip-Effect”
Supply chain is considered as the autonomous enterprises that are collectively responsible
for satisfying the customer by creating an extended enterprise in order to conduct design,
procurement and distribution of products. It also involves creating an extended business that
conducts all the phases of design, procurement and manufacturing and distribution of end
products (Fawcett, Ellram and Ogden, 2014). Main aim of PepsiCo is to undertake effective
supply chain management through adopting innovative and latest technology and information
system so that customer requirements can be attained. However, prime responsibility of supply
chain is to move the raw material from the point of procurement to the point of consumption
with minimum lead time. In the present era of globalization, companies are operating as
individual firms and thus they are becoming a part of supply chain. Hence, it assists in reducing
the effectiveness of supply chain in terms of poor service, high operating cost and increased non-
value adding activities. However, the entire supply chain can be viewed as a single unit and thus
it helps in extending the business (Harvey and et. al., 2013). Furthermore, such introducing of the
latest technology and information system helps in reducing the Bullwhip Effect. PepsiCo
introduces effective introduction of innovative technology and information system so that they
can carry out the production and delivery of goods to end users on time and thus it minimizes the
Bullwhip effect.
Following are the main inefficiencies that are occurred by businesses which results from
the Bullwhip Effect such as excessive inventory investment, poor customer service, lost
revenues, wrong capacity plans, ineffective transportation and missed products schedules.
Company is required to undertake effective Electronic data interchange, Point of sale and Vendor
managed inventories etc. so that it assists in reducing the Bullwhip Effect. Furthermore, it also
involves different issues that lead to Bullwhip effect and thus such issues needs to be managed so
that delays can be overcome (Wisner, Tan and Leong, 2015). It involves transmitting
information, lack of coordination which causes Bullwhip effect. It is as follows-
 Delivery delays- PepsiCo delay is considered as the lead time delay which is considered
between an order being placed and its delivery. However, the longer the delay, the more
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likely the Bullwhip effect will occur. Moreover, as firm will increase its order throughout
the supply chain it helps everyone to avail the delivery (Gattorna, 2015).
 Order batching- It is another issues which is faced by organization i.e. order batching
that occurs when an organization accumulates larger orders before processing them in an
effort in order to reduce costs and create transportation economics. Company also waits
for placing larger orders in order to benefit them from lower prices which are offered
during the promotion. However, its inconsistent demand is another major cause of the
Bullwhip effect (Fawcett and et. al., 2015).
 Sales and price discounts- It also causes Bullwhip effect because it creates a boom or
bust cycle. Thus, it is essential for PepsiCo to undertake high sales during the discount
period and drop it afterwards. However, when the stock runs low during the sales, it
means that customers can leave empty handed and disappointed in the business.
Moreover, customers can come in order to expect the sales and thus buy the goods (Xing,
Liu and Wang, 2014).
 Shortage gaming- It occurs when consumers purchase more than they need during
periods of short supply and thus it causes Bullwhip effect. It also assists consumers to
bring about the effect by taking advantage of liberal return policies and thus increase the
demand of PepsiCo products (Hollensen, 2015).
It can be recommended that PepsiCo is required to implement the latest technology and
information system so that it assists business to reduce the Bullwhip effect. Hence, it assists firm
to participate in effective supply chain management system and provides the goods effectively to
the end consumers. Different advanced technology is used by businesses so that they can deliver
the products effectively to consumers and enhances the sales and profitability of firm (Siu and et.
al., 2013). Through implementing innovative and updated technology such as recording, the
number of vendors electronically helps in reducing the Bullwhip effect.
b) Use of Customer Relationship Management (CRM) and the benefits to the organization
It can be assessed that customer relationship management (CRM) plays a crucial part
within modern business management and thus it assists in helping the business in order to
develop excellence in CRM and thus contribute effectively to manage better relationship with
consumers. However, PepsiCo is required to maintain effective relationship with their consumers
through providing them effective products or services so that desired output can be attained.
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PepsiCo uses effective CRM in order to determine the mutually satisfying the goals. Also, it
helps in providing benefits to individual as well as business in order to maintains customer
support (Nguyen and Mutum, 2012).
Furthermore, CRM is required to be adopt effective system and thus develop energy and
resources in order to raise awareness among consumers. Main purpose of CRM helps in
developing initiative in order to enhance the profit and thus attain desired goals. CRM not only
enhances the service to customer and thus attain good image in the minds of consumers.
Effective CRM helps in reducing the staff stress, decreases employee attrition rate and increases
the relationship among consumers and management (Payne and Frow, 2013). CRM also helps
firm to grow their business and attains long term growth. Following are the main benefits of
good CRM which are as follows-
 It helps in reducing costs because the right things are being done i.e. effective and
efficient operation.
 PepsiCo focuses upon enhancing customer satisfaction because they are getting exactly
what they want and thus fulfilling the expectations of customers in order to raise the sales
of firm (Kumar and Reinartz, 2012).
 It also assists in ensuring that the focus of firm is external and thus it leads to customer
satisfaction.
 It also assists firm to enhance its customer base and attain desired targets.
 Firm raises maximisation of opportunities and thus provides diverse services to
customers in order to enhance consumer base (Supply Chain Management, 2014).
 However, it also increases the access to source of market and competitor information.
 It highlights poor operational processes.
 Helps in providing long term profitability and sustainability so that success can be
attained for long term (Felea and Albastroiu, 2012).
Following are the elements of CRM which are as follows-
 Customer service- Customer service function within PepsiCo helps in representing the
front office functions and thus develops interaction with the clients. It involves the main
business process that allows the firm to develop interaction with the customers so that
success can be attained. It also helps firm to enhance the sales of products or services so
that desired targets can be attained (Ross, 2013). Moreover, firm is required to adopt
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effective communication with the clients in order to deal with them properly so that
requirements of customers can be fulfilled.
 Sales force automation- PepsiCo also helps in enhancing the sales department
constantly so that opportunities within firm is increasing and thus attracting new
customers effectively. However, the sales force automation functionally carries out the
CRM software which allows sales team to record the actual figures of number of sales as
well as made contact with customers (Tayur, Ganeshan and Magazine, 2012).
 Campaign- Furthermore, company is required to develop effective advertising and
campaigning in order to influence consumers to purchase the products and services and
thus enhances the sales of firm. It also assists firm to reach the targeted customers on
timely and thus enhances the sales and profitability of firm (Fawcett and et. al., 2015).
CRM software is used in order to record the details of the campaign, customer responses
and analysis performed as part of the campaign so that success can be attained in an
effective manner.
Furthermore, there are several more benefits of CRM to the firm that needs to be adopted
by business so that success and growth can be attained. These are as follows-
 CRM assists PepsiCo to provide effective customer service.
 It also assists in improving customer revenues and attains desired targets.
 CRM helps firm to identify new potential customers so that they can be attracted towards
firm in order to enhance satisfaction (Gattorna, 2015).
 It also assists sales staff to close their deals effectively.
 It is the best method through which firm can carry out effective marketing and sales
processes so that targets can be attained.
c) Choice between centralisation and decentralisation which one is more predominant and how it
impacts supply chain decisions in the organization
In the present era of globalization, it involves two different types of organizational
structures such as centralisation and decentralisation. Centralisation means that the authority of
making decisions and planning lies in the hands of exclusively in the top management. On the
other hand, decentralisation means that the powers for the same in regard to take decisions and
planning is disseminated by the top management to middle or lower level management (Tran,
2013). Hence, it is essential for PepsiCo to adopt effective decentralisation organisational
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structure so that company provides power to be lied in the hands of top management to middle or
lower level management within different countries where they are operating. Thus, it is crucial
for firm to adopt decentralisation structure, as it is the process which assists in transferring and
assigning decision making authority to the lower level of firm. However, in a decentralized
business, the decision making has been effectively moved to a lower level so that every level of
employees gets a chance to take decisions or involve in decision making to attain desired targets.
Here, the span of control of top management is relatively small as it helps in disseminating the
knowledge and information to other levels in order to achieve desired targets (Xing, Liu and
Wang, 2014).
PepsiCo undertakes three forms of decentralisation methods such as-
 Deconcentration- It is the weakest form of decentralisation which assists in decision
making authority as it is redistributed to lower or regional levels so that decision can be
taken effectively (Hollensen, 2015).
 Delegation- It is more extensive form of decentralisation as it helps in delegating the
responsibility for decision making so that success can be attained. It is transferred or
controlled by the central organization but ultimately it is accountable to it (Nguyen and
Mutum, 2012).
 Devolution- Here, the authority for decision making is completely transferred to the
autonomous business units so that they can take crucial decision and thus best results can
be attained in an effective manner (Kumar and Reinartz, 2012).
It can be assessed that decentralisation is the effective organisational structure that lays
positive impact upon the supply chain decision of firm. However, it is essential for PepsiCo to
adopt effective decentralisation technique so that effective supply chain decisions could be taken
in order to attain desired goals and thus it helps firm to achieve desired objectives. Moreover, it
also does not affect the business and thus supplies the product or services effectively to
consumers (Payne and Frow, 2013). Hence, it is essential for business to adopt effective policies
and practices so that best decisions could be made in order to attain desired targets. Thus, it is
essential for business to adopt effective decentralization technique so that desired objectives can
be attained. Therefore, it helps firm to carry out effective supply chain management process in
order to obtain desired success.
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SUMMARY
From the above report it can be articulated that supply chain management is the best
method through which company can create contact with the customers and supplies in an
effective way so that products could be supplied efficiently. Moreover, PepsiCo aims to maintain
and develop effective Customer Relationship Management system within firm so that desired
sales and profitability can be attained. It also helps in identifying the needs of consumers and
thus provides them desired results. Furthermore, PepsiCo assists in updating its technology and
information system as it reduces the Bullwhip effect and thus increases the sales of firm. At the
end, it is assessed that it is essential for company to adopt effective decentralisation structure so
that each and every country where firm is operating will possess their own decisions to run the
business and thus it will not impact the supply chain decisions of firm.
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REFERENCES
Books and Journals
Fawcett, S.E. and et. al., (2015). Why supply chain collaboration fails: the socio-structural view
of resistance to relational strategies. Supply Chain Management: An International Journal.
20(6), 648-663.
Fawcett, S.E., Ellram, L.M. and Ogden, J.A., (2014).Supply chain management: from vision to
implementation. London: Pearson.
Felea, M. and Albastroiu, I., (2012). Supply Chain Strategies. Valahian Journal of Economic
Studies, 3(3), 45.
Gattorna, J., (2015). Dynamic supply chains. Pearson Education Limited.
Harvey, M. and et. al., (2013). Aligning global organizations' human capital needs and global
supply‐chain strategies. Asia Pacific Journal of Human Resources, 51(1), 4-21.
Hollensen, S., (2015). Marketing management: A relationship approach. Pearson Education.
Kumar, V. and Reinartz, W., (2012). Customer relationship management: Concept, strategy, and
tools. Springer Science & Business Media.
Nguyen, B. and Mutum, D.S., (2012)A review of customer relationship management: successes,
advances, pitfalls and futures. Business Process Management Journal, 18(3), 400-419.
Payne, A. and Frow, P., (2013). Strategic customer management. Cambridge University Press
Textbooks.
Qrunfleh, S. and Tarafdar, M., (2013). Lean and agile supply chain strategies and supply chain
responsiveness: the role of strategic supplier partnership and postponement. Supply Chain
Management: An International Journal.18(6),571-582.
Ross, D.F., (2013). Competing through supply chain management: creating market-winning
strategies through supply chain partnerships. Springer Science & Business Media.
Siu, N.Y.M. and et. al., (2013). New service bonds and customer value in customer relationship
management: The case of museum visitors. Tourism Management, 36, 293-303.
Tayur, S., Ganeshan, R. and Magazine, M. eds., (2012. Quantitative models for supply chain
management (Vol. 17). Springer Science & Business Media.
Wisner, J., Tan, K.C. and Leong, G., (2015). Principles of supply chain management: a balanced
approach. Cengage Learning.
Xing, W., Liu, L. and Wang, S., (2014). More than a second channel? Supply chain strategies in
B2B spot markets. European Journal of Operational Research, 239(3), 699-710.
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Online
Supply Chain Management, (2014). [Online]. Available through:
<http://cmuscm.blogspot.in/2014/11/pepsico-what-supply-chain-model-made-it.html>.
[Accessed on 16th June 2016].
Tran, Q., (2013). Organizational Structure: Influencing Factors and Impact on a Firm. [PDF].
Available through: < http://file.scirp.org/pdf/AJIBM_2013042513413585.pdf >.
[ Accessed on16th June 2016].
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