PEPSI REVERSE LOGISTICS

SUBMITTED BY:SAMEER NARANG

SIDDHARTHA GUPTASHELZA GUPTA

SONIA WALIASURBHI SHARMA

VIKAS HOODA

INTRODUCTION• Pepsi cola has begun in 1898 by CALAB

BRADHAM.• It became known as PepsiCo when it merged

with FRITO LAY in 1965.

The PepsiCo headquarters are located in Purchase, Harrison,New York.It is the 2nd largest manufacturer of soft drinks in the world.

• It is manufacturing and marketing wide variety of carbonated and non carbonated drinks, snacks.

• Indra Krishnamurthy Nooyi is present CEO.

Tropicana Products,Inc. joined the Pepsi portfolio in 1998 and gives PepsiCo the strongest brand name in Juice.

PEPSICO PRODUCTS• PepsiCo has a lot of diversification while the company

has core product (Pepsi). The diversification products of PepsiCo are: 1. Fruit juices (Tropicana and Dole) 2. Sport Drinks (Gatorade) 3. Snack Foods (Frito, Lay’s, Ruffles, Doritos, Chee-tos, and

Sun Chips) 4. Cereals, rice, and breakfast products (Quaker oatmeal,

Cap’ n Crunch, Life, Quaker rice cakes, and Quaker grits)

PEPSICO IN INDIA• PepsiCo established its business operations in India in the year 1989.• PepsiCo has invested more than USD 1 billion in India since its

establishment.• PepsiCo has a diverse range of products from Tasty Treats to

Healthy Eats.• It has more than 36 bottling plants including 13 Company & 23

Franchise owned ones.• It has 3 state-of-the-art food plants in Punjab, Maharashtra and

West Bengal.• PepsiCo India provides direct and indirect employment to 150,000

people including suppliers and distributors.

CHALLENGES IN SOFT DRINK INDUSTRY

• Flat demand during 1998 – 2004.• Contaminations scare at India.• Obesity issues.• Challenges of internationalization.

INDUSTRY LIFE CYCLE

Introductory Stage

Growth Stage Maturity Stage Decline Stage

Time

Total Market Sales

STRATEGIES OF PEPSI

• PepsiCo has gone for product diversification.• Many consumers are becoming increasingly aware of the dangers of obesity and the health

problems with consuminglarge amounts of sugary carbonates drinks.– This health awareness has caused drift noncarbonated beverages and other healthier foods that Pepsi

Co. Produced.

RAW MATERIALS

MANUFACTURING PROCESS

• The water is taken from different sources and is purified to meet the international standards.

• For water purification-RO ,Ion Exchange, Coagulation(chemical treatment)

• Co2 is used in manufacture of CSD (Carbonated Soft Drinks) • Purity is maintained at Microbiological level• There are 41 plants of PEPSI Co across India.• Plant Capacity:-1 Lot or 1 Batch is prepared bottled in 2 days.1

Lot =24000 crates,1 crate=24 bottles. •  

BOTTLING OPERATIONS

STORAGE

• Temporary• Quickly transported by large trucks.• Stores across the country receives deliveries several

times a week.

DYNAMICS OF MATERIAL FLOW

Supplier Plant Distributor Logistics Retailer

REVERSE LOGISTICS• Process of planning,

implementing, and controlling the efficient, cost effective flow of raw materials, in-process inventory, finished goods and related information from the point of consumption to the point of origin for the purpose of recapturing value or proper disposal.

DIFFERENCE

FORWARD LOGISTICS REVERSE LOGISTICS

IMPORTANCE OF REVERSE LOGISTICS

• Assets utilization (rather we can say re-utilization) .• Assets recovery (to capture the value, which otherwise will be

lost) .• Profit maximization: Cost reduction through recycling .• To fulfill the Environmental obligations, e.g., Waste recycling,

Hazardous waste management, e.g., Car batteries disposal .• Customer Relations Management, e.g., after sales service, buy

back guarantee .

APPLICATION AREAS

• Publication houses (40-50% by volume): To take back the unsold volumes for reuse

• Beverage industries: To collect reuse the empty bottles, e.g., Coca cola & Pepsi

• Heavy industries: To collect and reuse the waste • Pharmaceutical industries: To collect the expired formulations

and drugs for environment friendly disposal • Automobile industries: To fulfill the commitments of after

sale service and buy back guarantee

ACTIVITIES IN REVERSE LOGISTICS

REVERSE SUPPLY CHAIN NETWORK(COLLECTION)

CONSUMERS

RETAILERS

DISTRIBUTORS

BOTTLING PLANT

• INSPECTION AND SORTING— products are sorted according to their quality state and

recovery route.

• GRADING OPERATION- Expensive test equipment and the need for skilled labour to check QUALITY of GLASS

• RECYCLING- glass is processed in order to get the desired quality after which they are being reused.

• REDISTRIBUTION- bringing the FILLED BOTTLES in the market.

DESIGN OF REVERSE SUPPLY CHAIN NETWORK

• The location of production facilities, storage concepts, and transportation strategies are major determinants of supply chain performance.

• Reverse logistics should also be taken into account during the design of the support network such as location and capacity of warehouses, plants, choice of outsourcing vendors, distribution channel and supporting technology.

• MAIN STRATEGY:- Returns information captured should be integrated with forward supply chain information to achieve optimum planning and reduction of costs.

Information flow Money flow

Supplier Plant Distributor Logistics Retailer

NETWORK STRUCTURE

• The Convergent Networko Accumulates used products from individual sources and

conveys them to some recovery facility. o Companies can set up dedicated returned products

collection centers at specific locations or collect the products through retailers and distributors.

CUSTOMER RETURNS BOTTLE

REVERSE TRANSPORT

CAN THE BOTTLE BE REUSED?

SORTATION AND TESTING

BASIC PROCESSING

FORWARD LOGISTICS

TAKES PLACE

BOTTLE CANNOT BE REPAIRED

OR REFURBISH

ED

RECYCLE

NO

YES

FACTS OF PEPSI

• Each crate consist of 24 bottles• Crate weighs 14.4 kg in case on 200ml full bottle• Crate weighs 18 kg in case of 300 ml full bottle• Height of 300 ml bottle -22cm• Weight of 300 ml bottle-700 gms when full• Weight of 300 ml bottle -400 gms when empty• For each day one truck consumes 6-7 litre of diesel• One truck carries 3 Tonnes which includes 144

crates(primary truck)

REVERSE LOGISTICS FACTS OF PEPSICO

AVERAGE ORDER SIZE

a) Distributor to Companyb) Retailer to Distributor

Depend on Demand, seasonDepend on demand, season

How orders are Placed

a) Distributor to Companyb) Retailer to Distributor

Telephone , direct ordering through distributor representative

TRANSIT TIME 3 Days

FREQUENCY OF ORDER Twice or Thrice in a week

INVENTORY MAINTAINED 3 Days stock is maintained

IT USED

Stock Keeping Account Keeping Problem Handling

MODES OF TRANSPORTATION TATA ACE, Auto, TATA 407

EXPENSES OF TRANSPORTATION

a) From distributor to company

b) From retailer to distributor

By CompanyBy distributor

WAREHOUSEa) storage capacity

b) self owned/rent

Minimum 250 sq mSelf owned/rental

LEAD TIME 4 DAYS

DISTIBUTOR COLLECTS BOTTLES FROM 4000- 4500 Outlets

DISTRIBUTOR’S BACK UP 3 Days stock

REVERSE FLOW

• The empty bottles are picked by the secondary trucks from the retailers and brought back to the distributors.

• The primary trucks carry the empty bottles further to the bottling plant where the bottles are cleaned and reused.

STANDARDS FOLLOWED BY PEPSI

• Pepsi Co also made its product Micro sensitive by reducing some key preservatives. All the GMP and GHP practices were followed.

• Especially for REVERSE LOGISTICS, All the protocols followed are Internationally recognized and strictly followed. The PEPSICO Plants are not only ISO :2k certified but also AIB(American Institute of Bakery) and FSC certified.

• At Each Plant, Plant Manager and Quality Manager are responsible for product quality.

EVALUATION PARAMETERS USED BY PEPSI IN REVERSE LOGISTICS

• Time taken by driver to reach the distributorship• Time taken by driver to reach at plant• Damage/loss to the product while delivering• Damage/loss to EMPTY BOTTLE during return to plant• Delay due to malfunctioning of truck• Adherence to safety check list• Misbehaviour by truck driver• Display of PEPSI LOGO on trucks • Physical condition of truck

INDEXES USED BY PEPSI IN EVALUATION

• Damage Index (DI)• Misconduct Index (MI)• Vehicle Performance Index (VPI)• Performance Index of Drivers (DPI)• Transporter Performance Index (TPI) TPI = 0.5*DPI + 0.4* VPI + 0.1*Previous TPIALL THESE INDEXES HELPS IN REDUCTION OF BULLWHIP EFFECT

EXPENSES INCURRED BY DISTRIBUTORS

PROBLEMS FACED BY PEPSI IN REVERSE

LOGISTICS• LACK of good information systems.• IS should also include information programs about

reverse logistics measurements, such as return rates, recovery rates, and returns inventory turnover etc.

• Current information systems do not allow them to monitor the status of their returns

SUGGESTIONS• The outsourcing of reverse logistics to a third party

logistics provider may be the wisest choice.• The way toward success in the reverse logistics process is

through higher visibility of selective information and as close to "real-time" process knowledge as possible.

• Technologies like bar-coding and RFID helps in making reverse logistics operations more effective and responsive. It provides REAL TIME process knowledge.