ASSIGNMENT ON

PepsiCos Distribution
&
Logistics Operations

SUBMITTED BY:-

PARAMITA GHOSH

14202153

ANKIT AGRAWAL

14202151

RAHUL KUMAR

14202148

PRIYANKA KALWAR

14202145

Question 1
Analysts felt that one of the key reasons for PepsiCos dominance in the
beverages and snack foods markets was its efficient distribution system.
Describe Pepsicos distribution system and the channels used in detail.
Discuss the strength and weakness of the companys distribution
operations. Give suggestions to overcome the weakness you have discussed.
Answer:- PepsiCos distribution system was aimed at making available all or
most of the products in its portfolio within a distance easily reachable by
consumers.
The pepsicos distribution system and the channels used are:1.
2.
3.

Direct Store Delivery (DSD)

Broker Warehouse Distribution (BWD)
Vending & Food Service (V&FS) system
The DSD system was the oldest method of distribution used by
PepsiCo .Under this system, PepsiCos employees were required to take
orders from the grocery and convenience stores and deliver the previous
orders to the stores. They were even responsible for putting the product
on store shelves .Each day, the employees had to meet a particular
number of customers.
The BWD system was used for the product which were less delicate and
perishable. IMPULSE BUYING products were not included. Under this
system PepsiCo. Employed third party distributors to distribute products
to the stores from PepsiCos warehouses to the retailers warehouses and
outlets.
V&FS system, through this, the products were made available in
schools, colleges, stadiums,office premise,restaurants etc. Recognising
the huge potential of this distribution channel,it developed one of the
largest vending and food service salesforces in the U.S,comprising 600
people; it generated revenues of over $1billion every year through this.
Pepsico distributed its beverages in the U.S through five retail channels1.
2.
3.
4.
5.

Supermarkets/retail stores
Fountain/restaurant
Convenience stores
Vending
Others

Strength and weakness of the companys distribution operations are:

STRENGTH ARE:1. Store door delivery system granted the freshness of its products, reduce
retailer inventory and minimise wholesaling expenses,
2. They concentrated on DTS accounts (down the street), which resulted in
65% sales of salted snacks versus 45% in supermarkets.
3. Frito lays served more than 400000 retail customers each week through
more than 10000 truck routes and 1600 distribution centres.
4. No additional employee:-It benefited the retailer, the retailers did not
have to incur labour costs required for unloading the trucks and placing
the product on shelves.
5. It ensures maximum visibility and accessibility.
WEAKNESS ARE:1. No EPR system, so separate distribution systems of each brand, this
increases cost.
2. Pepsi Co group companies and its bottlers operates independently instead
of joined approach.
3. Distribution channel concentrated more on super markets and restaurant
4. Frito lays and beverages are delivered separately, which increases cost.
SUGGESTIONS TO OVERCOME THE WEAKNESS ARE: Integrate the distribution channel of products with same destination
Frito lays and beverages should be delivered together as it will reduce
time and cost.
PepsiCo should widen its distribution channel to rural as well as urban
areas
Instead of such a distribution system PepsiCo is lacking behind with
Coca-Cola, so it should improve its distribution channels more.

Question -2
Prior to the implementation of the wireless mobile solutions, PAS faced
several problems in its logistics operations. Describe how the

implementation of wireless solutions helped in solving the problems of PAS.

What measures must PAS take to further improve its logistical efficiency?
Answer: Prior to the implementation of wireless mobile solutions, PAS in
order to achieve its ultimate objective of ensuring that the store were stocked
with required quantities of product at right time and to increase the sales and
productivity levels. It had to check on timely dispatch of goods as well as full
utilization of resources and to check how the sales could be increased.
Before the implementation of wireless mobile solution or ERPs the
Delivery agents DOS based computers which were not wireless compatible.
PAS replaced the DOS computers with PDT 8000computers which were
integrated with barcode scanners and numeric keyboard. Now using the wireless
network the account sales managers fed the customer orders into the sales
system at distribution centres. This helped the delivery agents to deliver the
order at the respective retail outlets. The new handheld computers weighted less
and the data processing was way faster and was done on real time basis. This
reduced the waiting time at the distribution centres as the data simply gets
transmitted instantly. Another advantage was maintenance of the new PDTs we
less. This system simplified the sales and distribution for the PAS. The other
issues which were sorted were earlier bottlers faced problem in inventory as
they could not gauge customer demand accurately which resulted in
unnecessary increased cost of fuel (transport trucks), labour cost ( for loading
unloading) and risk of goods getting damaged due to frequent loading and
unloading. The new PDTs helped to make daily routes and take products to
appropriate stores. The Accounts sales managers use the data to study the
market trends, to identifying consumer buying habits and comparisons of ales of
various areas and give them advice in other to increase sales.
The measures which could be further taken for improvement for market
penetration and sales increment PAS launched 2 new distribution methods like
the chilled DSD system and the hybrid system.

Question -3
Analysis felt that PepsiCo could reap significant cost benefits by integrating
and streamlining the operations of its group companies (beverages, snack

foods & bottling). Prepare an operational plan for PepsiCo to achieve this
task. Make suitable assumptions to answer the question.
Answer:
COMPANY NAME PEPSICO
MISSON STATEMENT To have largest distribution & Logistics system.
GOAL To reap cost benefit by integrating & streamlining the group
companies (Pepsi, Frito lay, Tropicana)
PRESENT STATUS Direct store delivery (DSD), Broker warehouse
distribution, Vending & Foot services.
They actually want to show the POWER OF ONE by integrating the
operations & systems of group companies. They want to have the largest
distribution & logistics network system in the world. According to the analyst it
would affect the PepsiCos profitability & it was an area which required
maximum attention to enable the company to compete effectively with its
competitors.
PLAN To improve the market penetration PepsiCo launched two distribution
system, Chilled DSD system & Hybrid system.
Chilled DSD - It is a small distribution method created for items which requires
continuous refrigeration. Example fruit, juices
Hybrid System - was formed by pooling the various distribution system of
PepsiCo. It help PepsiCo in serving large numbers of retailers.
Employing advanced idea application all five major unit invested in own
wireless technology. They improved the ERP system previously they were
having separate distribution system for same retail outlet.
Integration of all the units through wireless network so that each & every
member of the company would know what is going on operation & logistics.
The new system helped in sorting out many issues like delivery, quantities, roots
& schedules.
It helped PepsiCo to achieve significant improvements in the way it handled its
logistics operations resulting in enhanced efficiency procedures. There were
significant gain in productivity which helped the company to its customer better.
The sales personnel were able to make more customer calls rather than wasting
the time at retail outlet.