Supply Chain Management - Essay Example

PepsiCo: Supply Chain Management PepsiCo is an American multinational corporation headquartered at New York. Even though the company is a world’s leading distributor in snacks, foods and beverages, it mainly focuses on the manufacture and distribution of a wide range of carbonated and non-carbonated beverages. The company functions with more than 1, 85,000 employees and has an average revenue of USD 43.25 billion. This paper will critically evaluate PepsiCo’s supply chain management in Indian market.

Now in India, PepsiCo has 36 bottling plants among which 13 are company owned and 23 are owned by franchisees (‘Our corporate profile’, n. d). Pepsi, the drinkable liquid is generally contained in a bottle and it has only two components. The main ingredients of Pepsi are carbonated water, sugar, emulsions, citric acid, additives, and flavourings; and glass, silica, and aluminium are the major raw materials used for bottles (Bhagat et al, n.d.). In the supply chain of Pepsi, the product passes through five different phases before reaching it in the hands of ultimate consumers.

Firstly, the required raw materials are collected from the supplier and it is transferred to the plant. In the plant, the processing of raw materials takes place and the finished products are sent to wholesale distributors’ warehouses. The wholesaler distributes Pepsi to retailers on order placements; distribution vehicles play an important role in this phase. Ultimately, the product reaches the hands of original consumers and the whole process is regarded as the supply chain operations. Since this product largely employs water resources for the production, it adversely affects the environment.

This negative feature in turn notably impinges on Pepsi’s supply chain management as it is a major societal issue. Similarly, large number of links in supply chain makes the product expensive to customers. For instance, Pepsi Max is the newly introduced PepsiCo’s product in India which would be available at 15 and25 INR. It is essential to note that India has abundant water resources and the company employs it largely for the production of Pepsi drinks. As discussed above, the Pepsi does not contain much expensive ingredients but the increased number of intermediaries in supply chain makes the product costly.

This situation negatively contributes to the effective supply chain activities and thereby the economic growth of Pepsi. According to the concepts of Downward, it is advisable for the PepsiCo to initiate direct sales method since it would assist the company to reduce huge costs associated with intermediary operations. Under this system, trained sales executives will get the products directly from the warehouse and they can market the products using distribution vehicles. If the selected executives do not possess adequate marketing and communication skills, it would badly affect the system.

Likewise, when a new sales person is appointed he has to be provided with basic training. It will certainly enlarge the expense column of the company. However, a well organised selection and training system may minimise these costs to a large extent in the long run. Since India is a democratic country, there may political and social oppositions towards the water exploitation and non-scientific waste disposal. Therefore, it is essential for the firm to reduce water consumption and use modern technologies to overcome waste processing barriers.

References Bhagat, T, Gawande, M, Mukhopadhyay, R, Mittal, R, Sen, S & Randhawa, S n.d, ‘Supply chain management’, Scribd, viewed 14 March 2011 ‘Our corporate profile’, n. d, PepsiCo, viewed 14 March 2011