SUPPLY CHAIN MANAGEMENT

PROJECT

SUBMITTED TO: SUBMITTED BY:

Prof. M. S. Kumar Eshita Singh
PGDM(M)
Pgmf1616

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 A.

DISTRIBUTION CHANNEL OF PEPSICO INDIA

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 ABOUT PEPSICO INDIA

PepsiCo entered India in 1989 and, in a short period of time, has grown into one of the largest
MNCs. Company earned a revenue of $62,799 in the year 2016, driven by Food and Beverage
portfolio. PepsiCo's product portfolio includes a wide range of enjoyable foods and beverages,
including 22 brands that generate more than US $1 billion dollars each in estimated annual
retail sales.

PepsiCo has been consistently investing in India, in the areas of product innovation, increasing
manufacturing capacity, ramping up market infrastructure, strengthening supply chain and
expanding company’s agriculture programme. The company has built an expansive beverage
and snack food business supported by 62 plants across the country. In two decades, the
company has been able to organically grow eight brands each of which generate Rs. 1000
Crores or more in estimated annual retail sales and are household names, trusted across the
country.

PepsiCo India’s diverse portfolio reflects its commitment to nourish consumers with a diverse
range of fun and healthier products and includes iconic brands like Pepsi, Lay’s, Kurkure,
Tropicana, Gatorade and Quaker. In addition to the recently launched Lay’s Maxx, 7UP
Revive and Tropicana Slice Alphonso, the portfolio includes several healthier treats like
Quaker Oats, Tropicana juices, rehydrator Gatorade, Tata Water Plus and Quaker flavoured
oats.

PepsiCo India is focused on reducing its carbon footprint. In 2015, PepsiCo’s India’s Food and
Beverage plants had a 78% and 41% share from renewable energy sources, respectively such
as bio mass and rice husk boilers and wind turbines. Initiatives such as reduction in use of
chemicals, eco-friendly packaging initiatives and efficient waste management help reduce load
on the environment. PepsiCo in partnership with the NGO Exnora and local municipalities has
also been working on a unique waste collection and treatment model programme called

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‘Waste-to-Wealth’. The award winning programme has positively impacted more than
5,00,000 people.

DISTRIBUTION NETWORK OF PEPSICO INDIA

PepsiCo
Concentrate

Bottling and Bottling and

Distribution Plants Distribution Plants

(Company owned) (Franchise)

Retail Stores

Food Service Vending Machine Retail Stores Food Service Vending Machine

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DISTRIBUTION CHANNELS
The company’s products reach the market through the following three channels:

Distribution
Channel

Direct Store Customer Distributor

Delivery Warehouse Networks

1) Direct Store Delivery (DSD)

It was the oldest method employed by PepsiCo India. In this method, employees used to
take orders and deliver the required products. Orders were taken manually in this method.
Timely delivery and shelf arrangement was the responsibilities of the employees. Under this
method, market response could be determined quite quickly. This method was much more
responsive as it quickly met the demand of consumers.

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2) Customer Warehouse (CW)
This method adopted by PepsiCo India was less expensive as compared to Direct Store
Delivery method. This channel was used for less delicate and perishable products like cold
drinks and juices, which had lower turnover and were not purchased impulsively. PepsiCo
India employed third party distributors for Customer Warehouse method. Employees at the
stores handled the products delivered to stores and also placed them on shelves.

3) Vending and Food Services (V & F)

PepsiCo distributes food and beverage products to restaurants, businesses, schools and
stadiums through third party food service and vending distributors and operators. PepsiCo’s
sales personnel distributes products through third party Vending and Food Services and
Bottling companies. Huge potential of distribution channel developed the largest food and
vending service sales force. There are five retail channels of PepsiCo India –
Supermarkets/Retail Stores, restaurants, Convenience stores, vending, etc.

Because of this distribution system, Frito Lay served more than 400000 retail customers
each week through more than 10000 trucks routed and 1600 distribution centres.

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LOGISTICS OPERATIONS

 PepsiCo’s logistics two main phases were:

 Giving syrups to the bottlers
 Distributions of bottles /cans to retail outlets

 Product quality and uniformity standards are maintained by the company

 Timely delivery is the criteria of the company

MANUFACTURING UNIT TO BOTTLERS

PepsiCo India
manufacturing
unit

Other Bottler
RJ Corporation
Companies

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 PepsiCo India manufactured and sold beverages and concentrate to bottling units in
India. Company sold either syrup directly to the bottlers or was combined with
carbonated water for bottling. Logistics department monitors movement of products and
makes necessary changes in routes and schedule to tackle unexpected situations.
Logistics company of PepsiCo has centralized transportation to single location. It also
employs six sigma quality process.

BOTTLERS TO RETAIL OUTLETS

Bottling Units

Direct Store Consumer Vending and

Delivery Warehouse Food Services

RJ Corporation is one of the biggest Bottler company of PepsiCo India. RJ Corporation has
300 distribution centres and each ahs 100 trucks. PepsiCo India has more than 50 bottling
companies which also transport products to retail outlets. Distribution is done through
Direct Store Delivery, Consumer Warehouse and Vending and Food Services. Distribution
is done to restaurants, businesses, schools and stadiums, etc.

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 B.
PROBLEMS IN SUPPLY CHAIN OF

PEPSICO INDIA

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ARES OF IMPROVEMENTS IN PEPSICO INDIA

 Frito lays and beverages are delivered separately which increases cost of labour, fuel
and time

 Distribution channel of PepsiCo India concentrates more on supermarkets and

restaurants. Vending machines are not so popular in India. It is opportunity which can
be exploited by PepsiCo India

 PepsiCo group of companies and its bottler operators work independently rather than an
integrated approach

 There is no EPR system, hence, there are separate distribution systems of each brand,
which increases cost to the company

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 C.

PROJECT SHAKTI – BY HINDUSTAN

UNILEVER LIMITED

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‘Shakti’ is HUL’s rural initiative, which targets small villages with population of 2000 or less.
It seeks to empower underprivileged rural women by providing income generating
opportunities, health and hygiene education through Shakti Vani programme, and creating
access to relevant information through the ishakti community portal.

Shakti is a pioneering effort in creating livelihoods for rural women, organized in Self Help
Groups (SHGs), and improving living standards in rural India. Shakti provides critically
needed additional income to these women and their families, by equipping and training them
to become an extended arm of the company’s operation.

Shakti entrepreneurs directly sold to retailers as well as consumers.

Project ‘Shakti’ had sustainable competitive advantage, as:

 Low pricing
 Brand Recognition
 Distribution and Information systems
 Community development – SHGs, NGOs, ishakti
 Women empowerment – Shakti entrepreneur
 Customer service
 Consumer for life

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Rural distribution under Project Shakti:

Manufacturers

Depot

Rural
Distributors

Shakti
Entrepreneurs

Rural
outlets/Consumers

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 D.
RURAL SUPPLY CHAIN IN DREAM
COMPANY

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My dream company is HDFC Bank. Though it is not a FMCG Company and does
not need any typical supply chain, being in a service industry, but HDFC Bank
can employ rural women at its branches in rural India, which would provide
income to rural women and will make them independent. HDFC Bank could
provide training to these women in order to enhance their skills continuously.
Rural women can be allotted duties like security guards in bank branches, ATMS,
etc. This step would enhance their skills, boost up their confidence and also
inculcate a feeling of independence in them.

HDFC Bank has several branches in rural India, they just need to employ women
at those branches, which would help them penetrate in rural market as well.

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