MGT804 Case Study: In-depth Analysis of PepsiCo's Supply Chain

This report provides a comprehensive analysis of PepsiCo's supply chain, focusing on its value chain management. It begins with an executive summary and table of contents, followed by an introduction to value chain management and its benefits. The report delves into PepsiCo's primary and secondary activities, including inbound and outbound logistics, operations, marketing, and service. It identifies key suppliers, target customers, and competitors like Coca-Cola and Red Bull. The analysis evaluates the performance of PepsiCo's supply chain and concludes with recommendations, such as implementing EZOffice Inventory software and sales promotion strategies, to address challenges and enhance efficiency. The report underscores the importance of supply chain management in meeting consumer demands and maintaining a competitive edge in the market. The analysis covers various aspects of the business, from firm infrastructure to human resource management, technology development, and procurement. The report also highlights the role of partners and the dynamic nature of the competitive environment. The report aims to provide insights into how PepsiCo manages its resources and meets consumer expectations.

RUNNING HEAD: SUPPLY CHAIN 0
VALUE CHAIN MANAGEMENT

SUPPLY CHAIN 1
Executive Summary
The aim of the report is to understand the stages performed by PepsiCo and the performance of
the supply chain in the company. The report will also provide information about the competitors,
partners and partners of PepsiCo. The information is received through value chain analysis and
by focusing on the profitability of the company. From the analysis, it is revealed that the
company adopts the stage of performing primary and secondary activities through using other
different activities. There are various competitors of the company such as “Coca-Cola”, “Red
Bull” etc and it target youngsters and various other customers. However still issue arises due to
more competition and different consumers, therefore, to overcome these issues it can adopt
EZOffice Inventory software and can use sale promotion marketing strategy.

SUPPLY CHAIN 2
Table of Contents
Introduction......................................................................................................................................3
Stages in value chain.......................................................................................................................3
Primary Activities............................................................................................................................3
Inbound logistics..........................................................................................................................3
Operations....................................................................................................................................4
Outbound logistics.......................................................................................................................4
Marketing and sales.....................................................................................................................4
Services........................................................................................................................................4
Secondary Activities........................................................................................................................4
Firm Infrastructure.......................................................................................................................5
Human Resource management....................................................................................................5
Technology development.............................................................................................................5
Procurement.................................................................................................................................5
Target customers and Key Suppliers...............................................................................................5
Partners and competitors..................................................................................................................6
Performance of Supply Chain..........................................................................................................6
Conclusion.......................................................................................................................................7
Recommendations............................................................................................................................7
References........................................................................................................................................8
Appendices......................................................................................................................................8

SUPPLY CHAIN 3
Introduction
Value chain management (VCM) is the integration of all resources starting with the
vendor's vendor. It integrates information, materials, labor, facilities, logistics, etc. into a time-
responsive, capacity-managed solution that maximizes financial resources and minimizes waste
(D'heur, 2015). It leads in providing various benefits to the company which includes it support
the organization to gain success in the long run. Further, it also provides other advantages to the
organizations that is it leads in effective flow of goods and services to the target customers
(Christopher, 2016).
The estimation describes that cost of the organizations reduces because of decreasing the
inventory level because of receiving the product from the manufacture at lower cost; it also leads
in reducing wastage of the organization. In this report, PepsiCo Company in United States of
America is selected; further the discussion is made on describing the stages of value chain, target
customers, suppliers and competitors. The report will also provide recommendations to the
company to overcome the challenges and issues in supply chain.
Stages in value chain
PepsiCo is an American multinational food, beverages as well as snacks, it is the well
known company which increases the revenue of the organization that is in the year 2018 it was
$64.44 billion. The company adopts various stages of value chain which includes:-
Primary Activities
The primary activities and approaches of PepsiCo involve in performing all the activities
which focuses on manufacturing the product by selling and offering it to the target customers. It
is estimated that company adopt various strategies to work in efficient manner.

SUPPLY CHAIN 4
Inbound logistics
The portfolio of PepsiCo contains 22 brands, the company also adopts the strategy of
practicing every brand so that it reflect and shows all the raw material as well as other activities
used in producing the product (Kerber & Dreckshage, 2016). Further, the estimation revealed
that in the current year company also use innovation of “3D Printing” that is it use “3D printing
technology” for creating optimal “potato chip prototypes”.
Operations
The operations of PepsiCo are segmented into various areas which include “Frito-lay
North America” it is for distributing the snacks to the customers. The other operations include
“Quaker Foods North America”, in this operations rice, cereals and pasta to the consumers. In
some of the operations PepsiCo sell snack food in different market of Latin America such as
“Tostios”, “Marias”. “North America Beverages” also provide beverages such as mountain due,
pepsi according to the expectations of the consumers (Wood & Lincoln, 2018).
Outbound logistics
PepsiCo adopt various different forms and areas for distributing the product to the final
consumers which includes “Direct-store-delivery”, it is because this leads in increasing visibility
as well as take appeal in the stores. The other forms contain ‘Offering to the warehouses of
customers”, all the perishable products are offered to the consumers and this is considered cost-
effective approach. “The distributor network” in this third party include in distributing the
product which are far from the locations.
Marketing and sales
The estimation revealed that in the current year PepsiCo invest 2.4 billion USD on
advertising the product for increasing awareness among the consumers. The company makes use
of “celebrity endorsement”, “social media”, “placement of product” and PepsiCo also use “print
media” strategy. The company develop marketing message such as “spending quality time
together”, “stay active” etc (Myerson, 2015).

SUPPLY CHAIN 5
Services
PepsiCo offer products through supermarkets, restaurants and shops, the company also
provide various services to the customers that are solving the problems, inquires via “phone no
of customer service”, “online contract forms”.
Secondary Activities
The secondary activities play important role in coordinating with the activities and
approaches of primary activities. Therefore, PepsiCo use different strategies so that efficient
management of activities takes place.
Firm Infrastructure
PepsiCo develop by the strategy according to the level of competition and for addressing
the issue which come from the market rivals. Therefore, company adopts different strategies for
succeeding in long run by adopting “cost-leadership” and “brand differentiation” strategy.
Human Resource management
The employees of PepsiCo is manage in effective manner that is company provide
leadership guidance to the employees and maintain overall data of the employees through
Human resource information system. Therefore, it is also estimated that PepsiCo usually adopt
job posting strategy (Reese, Gerwin, Koch, & Waage, 2016).
Technology development
PepsiCo adopt quality equipments and machinery to produce product according to the
needs of the consumers, it also use advanced technologies for packaging and labeling. The
estimation revealed that company use eco-friendly bottles.
Procurement
PepsiCo ranges from different and various suppliers, machinery and technologies for
effective management of the resources, the company achieve cost efficiency strategy so that
procedure and activities will be performed adopt at optimum level.

SUPPLY CHAIN 6
Target customers and Key Suppliers
The estimation revealed that the primary target audience of PepsiCo is mainly for all the
products which are in the “Pepsi line of products”. For this the people between the age of “13-
34”, therefore, the company has targeted various cultural groups of different regions in United
States of America (Kerber & Dreckshage, 2016). The primary customers of company also
include “grocery stores”, “wholesaler”, “foodservice customers” and “convenience stores”. In
the current year it is investigated that PepsiCo focuses on the youngsters, the company focuses
on this group by concentrating on behavior, attitudes and their lifestyle.
The suppliers play an important role in satisfying the needs as well as requirements of the
consumers. The key suppliers of the company are “Anheuser-busch Inbev Sa”, “Archer daniels
midland Co”, “Ball Corp”. It supports the company in satisfying the needs and requirements of
the target consumers which helps in increasing their profits and revenue (Wasusri &
Theerawongsathon, 2016).
Partners and competitors
The business partners of PepsiCo are “Danone”, “São Miguel”, “Haier” this results in
increasing the operation of the company in US. Further, there are various business partners of the
organization because of investing more on understanding consumes demands and meeting them
by providing different varieties of products.
PepsiCo conduct their operations in highly competitive environment in USA because
competitors adopt different strategy to attract large number of customers towards the products
and services. Therefore, the various competitors of PepsiCo include “Coca-Cola”, “Kraft Heinz”,
“Red Bull”, “Campbell” (PepsiCo, 2020). This leads in increasing the challenges for the
company to use innovative and creative strategies for sustaining in the competitive environment.
The estimation revealed that competitors also provide various discounts to provide more quality
products at lower prices.

SUPPLY CHAIN 7
Performance of Supply Chain
The supply chain increases the ability of PepsiCo to adopt high quality technology and
increase the collaboration of the employees with the partners of supply chain. The supply chain
activities which include distribution of the supplier, manufacturer, distributors and customers
results in meeting the satisfaction level of the consumers, the estimation revealed that in the
2018, it results in increasing the number of consumers of PepsiCo (Raj, Biswas, & Srivastava,
2018). The company also does better management of the resource that is effective inventory
management, storage and using advanced software in tracking the materials so that supply will
meet the demands of the consumers.
The supply chain strategy also support the company to develop strategy, planning the
required task to be performed in the different and implementing it to get efficient results. The
supply chain leads in regular flow of products to the company which can support in gaining
competitive advantage and also leads in increasing productivity of organization (Zhao, Zuo, &
Blackhurst, 2019). Further, it is demonstrate that PepsiCo conduct their operations in highly
competitive environment through which it become difficult for the company to manage overall
work. The other issue is changes in the behavior and attitudes of the consumers that is
conducting operations in dynamic environment.
Conclusion
From the above it is concluded that value chain activities revealed that company use
different types of strategies and for marketing, human resource management so that primary
activities will be performed in efficient manner. There are various customers and key suppliers
which support the company to regular supply of products and services. The company also has
various operations which offer different products according to the needs and requirements of the
company. Therefore, it is also revealed that the supply chain leads in effective management of
the resources and inventory through which the company meet the expectations of the consumers
in timely manner; it also leads in increasing suppliers and consumers of the company in present
year.

SUPPLY CHAIN 8
Recommendations
The company conducts their operations in highly competitive market, therefore to
overcome the challenges company can adopt sales promotion strategy through which it can sell
products and services at 50% discounts and also provide free services to the consumers. This
leads in meeting expectations of the consumers about the quality and price of the product
(Defraeye, et al., 2015). The company can also make use of the EZOffice Inventory software to
manage the inventory which can reduce the cost of the company. The inventory management is
done through tracking the inventory so that safety will be managed and support in the delivery of
the product in timely manner without wastage (Ujam & Godwin, 2018).

SUPPLY CHAIN 9
References
Christopher, M. (2016). Logistics & Supply Chain Management. london: Pearson UK.
Defraeye, T., Cronjé, P., Berry, T., Opara, U. L., East, A., Hertog, M., et al. (2015). Towards
integrated performance evaluation of future packaging for fresh produce in the cold
chain. Trends in Food Science & Technology , 44 (2), 201-225.
D'heur, M. (2015). Sustainable Value Chain Management:Delivering Sustainability Through the
Core Business. Berlin: Springer.
Erkan, B. (2014). The importance and determinants of logistics performance of selected
countries. Journal of Emerging Issues in Economics, Finance and Banking , 3 (6), 1237-
1254.
Garcia, F. A., Marchetta, M. G., Camargo, M., Morel, L., & Forradellas, R. Q. (2015). A
framework for measuring logistics performance in the wine industry. International
Journal of Production Economics , 135 (1), 284-298.
Kerber, B., & Dreckshage, B. J. (2016). Lean Supply Chain Management Essentials:A
Framework for Materials Managers. Boca Raton: CRC Press.
Myerson, P. A. (2015). Supply Chain and logistics management made Easy:Methods and
Applications for Planning, Operations, Integration, Control and Improvement, and
Network Design. Upper Saddle River: FT Press.
PepsiCo. (2020). Latest stories. Retrieved 2020, from https://www.pepsico.com/
Raj, A., Biswas, I., & Srivastava, S. K. (2018). Designing supply contracts for the sustainable
supply chain. Journal of cleaner production , 185, 275-284.

SUPPLY CHAIN 10
Reese, J., Gerwin, K., Koch, S., & Waage, M. (2016). Value Chain Analysis:Conceptual
Framework and Simulation Experiments. Germany: Nomos.
Ujam, C. J., & Godwin, H. C. (2018). Optimization of Packaging Line Performance: A Case
Study of AB Breweries in Nigeria. Journal of Engineering Research and Reports , 1 (1),
1-22.
Wasusri, T., & Theerawongsathon, P. (2016). An Application Of Discrete Event Simulation On
Order Picking Strategies: A Case Study Of Footwear Warehouses. In ECMS , 121-127.
Wood, & Lincoln, C. (2018). Contemporary Approaches and strategies for Applied logistics.
Hershey: IGI Global.
Zhao, K., Zuo, Z., & Blackhurst, J. V. (2019). Modelling supply chain adaptation for disruptions:
An empirically grounded complex adaptive systems approach. Journal of Operations
Management , 65 (2), 190-212.

SUPPLY CHAIN 11
Appendices
Value Chain
SOURCE: (Erkan, 2014)

SUPPLY CHAIN 12
Supply Chain
SOURCE: (Garcia, Marchetta, Camargo, Morel, & Forradellas, 2015)