SUPPLY CHAIN MANAGEMENT

Supply Chain Management



Supply Chain Management of PepsiCo

1. Critically evaluate PepsiCo's overall distribution strategy. Discuss in particular the “Direct to Store” delivery model

PepsiCo is one of the oldest and largest brands of the world which has operation in more than 140 countries with revenues of $ 40 Billion in excess. The reason for PepsiCo success is due to their Distribution Strategies. Distribution strategies have an importance role when positioning the product due to the fact that with the help of this channel product can research to the final consumer.

Pepsi has used different distribution strategies in order to market it product with respect to characteristics i.e. local trade practices and needs of the customers. There are three strategies that have been adopted by PepsiCo, these are Direct-Store-Delivery, Customer Warehouse and Foodservice and Vending (Deloitte, 2011, p. 3).

The overall strategies that has been adopted by PepsiCo is Third party food services and vendor distributors in order to distribute their snacks, foods and beverages to places such as schools, restaurants, stadiums, business and other locations. In order words, Pepsi distribution strategies refer to Third party Logistics - intensive distribution. In this strategy, the product is available to the customers at every possible location so that customers can purchase PepsiCo products with less minimum efforts. The other reason for this strategy is to increase the sales of the product.

PepsiCo product are available in different countries' region, their product presence is always there due to which customers are forced to purchase. Beside this, the reason why PepsiCo has intensive distribution strategy is due the fact that when the manufacturer interested in the maximum number of possible intermediaries in the sale of their products in a competitive market, third party does not impose any special requirements in this regard. In general, this strategy is applied to the goods of daily demand.  Distribution strategy is PepsiCo third strength. PepsiCo sells their products directly from manufacturers and warehouses to consumer warehouses and retail stores. In addition to this the PepsiCo distribution system worth noting if it does not include the use of third-party distribution services and direct delivery to the point of direct sales (Accenture, 2012, pp. 7).

Within the industry, PepsiCo has been famous for its innovative distribution strategies known as “Direct to Store Delivery”. This strategy is related to distribute their snacks and beverages products directly to the retail stores. Here, the part of warehouses step has removed from the supply chain management. Direct to Store Delivery was implemented when PepsiCo made a decision to expand their manufacturing capabilities for their growth. The following are the benefits due to which this strategy was implemented.

Direct to Store Delivery has given PepsiCo more than they expected. This strategy has reduced warehouse cost for PepsiCo whereas also excess of inventory in the warehouses has also reduced along with the warehouse space constraints elimination and offers areas for unlimited SKU growth. Beside this, PepsiCo this strategies leverage new case picking order fulfillment automation technology with the combination ...