I.

Overview of PepsiCo Corporation and PEPSI products

1.Intro
● In the current era of economic integration, the birth of multinational companies has
created many opportunities for developing countries, including Pepsi. Pepsi has long
gradually asserted its position and become a familiar drink to everyone. However, no
company has problems in purchasing management, and Pepsi is no exception.
● We had time to research the media to synthesize and plan the company's solutions for
future development.
● The layout of the article includes 3 parts:
+Part I: Overview of PepsiCo Corporation and PEPSI products.
+Part II: PepsiCo's purchasing management process.
+Part III: Conclusion.

2. Operating System
PepsiCo Ltd Joint Stock Company. is a beverage company with a great reputation
worldwide in the FMCG market. PepsiCo ranks 6th in the FMCG business. PepsiCo
is a multinational company in 190 countries with over 400 brands. Possessing 185,000
employees worldwide, the Company has an annual revenue of $39 billion, and this
number is proliferating. Pepsico provides various products to meet consumers' diverse
needs, including Frito-lay snacks, Pepsi-Cola drinks, Gatorade sports drinks, and
Tropicana juice. In addition, PepsiCo also Invests in 17 brands with $1 billion more
planned for retail business activities every year. In particular, in India, there are 37
bottling plants. The history is as follows:
● Founder: Mr. Caleb Bradham
● Year of foundation: 1890
● Name formation: Founded to relieve indigestion, it was later named Pepsi
beverage.
● The first factory was established in 1905, in America
● By 1936, the company earned a profit of 2 billion USD
● To date, PepsiCo's business activities have spread to more than 190 countries and
more than 500 companies.
● In Gujarat, Pepsi has 1 plant, a Jhagadia
mega G.I.D.C Bharuch, built in 1997 with
GRB (glass refilling bottle).
● In India, the first PepsiCo company was
established in Jaipur.
● In 2001 PET (polyethylene tetracycline)
was started.
● In 2003 AQUAFINA plant was started in
Jhagadia
● In 2010 SLICE plant was started in Jhagadia
 Although Pepsi products were born nearly 13 years after Coca-Cola, they still have a
great advantage and become the main product line bringing huge profits to the
company of about 20 USD annually (accounting for about 1/5 of the total revenue of
the parent company). To meet the needs of consumers PepsiCo has diversified its
packaging and ingredients to suit customers such as cans, plastic bottles, glass
bottles of different volumes, and zero-calorie, low-calorie varieties. sugar, or
original flavor..

II. PepsiCo's purchasing management

process.

1.Analyze the current practices of the company’s purchasing management which might
include:

1.1 Supplier selection

+ Sourcing Decisions in Supply Chain
For Pepsi, outsourcing results in the supply chain function being performed by a
third party. It is one of the most important factors facing the firm. Raw material for
production and packaging is being outsourced through contracts. Inbound and
outbound transportation of products from the manufacturing place to the distribution
center and then to the final customer is also being outsourced to a third party. The
basic considerations are:
● Pointing out sources of supply and negotiating with suppliers
● Sourcing of raw materials from local and foreign suppliers
● Deciding terms and conditions with the supplier
● Coordinating activities and documentation with suppliers
● Cost comparisons and quality assurance.
Pepsi decides where to outsource by inviting bids for tenders in the local
newspapers. The tender works as a general offer to all the interested parties whether
they are related to the provision of raw material or distribution vehicles. The
sourcing process of the company includes the selection of suppliers, design of
supplier contracts, product design collaboration, procurement of materials and
services, and evaluation of supplier performance in case of raw material
procurement.

1.2 Supplier Scoring and Assessment

 When comparing suppliers, Pepsi does not only focus on the quoted price but also
on other dimensions that may affect the total cost of the supplier. The following
factors other than the quoted price are being considered: replenishment lead time,
supply flexibility, supply quality, pricing terms, exchange rates, duties, and supplier
viability. For Pepsi, the supplier scoring and assessment is based on the feature that
the supplier performance, in terms of replenishment lead time and on-time
performance, distinguishes them from their
competitors. Soon after the tender notice for the procurement of raw materials is
advertised, the suppliers are asked to send samples of the products. For example, for
the manufacture of Pepsi, concentrate and sugar are demanded of high quality which
is the forte of the company. These samples are tested in total-quality laboratories. If
the samples match with the standard set then the sales department selects that
particular supplier. Pepsi is an ISO-9001-certified company and cannot sell low-
quality products, therefore it has strict standards set for the purchase of raw materials
from suppliers

1.3 Supplier management

The sourcing company needs to manage its suppliers ensuring their performance is
up to standard and sustained. Pepsi will employ various techniques to achieve
supplier management which will include increasing the quality of communication
using high technology infrastructure like ether-nets and multimedia technology
including Skype and video conferencing. Notably, improved communication will
ensure that information is continuously shared and updated on various issues and
that the decision-making process is optimal. Pepsi can also assign its employees to
be based on the supplier plant or company for coordination and fast-tracking
processes.
How do pepsico manage supplier

PepsiCo, as a global beverage and snack food company, employs several strategies to
effectively manage its suppliers and maintain a robust supply chain. Here are some key
aspects of how PepsiCo manages its supplier relationships:

1. Cooperation, Integration, and Innovation:

○ PepsiCo’s overall philosophy revolves around cooperation, integration, and
innovation. These principles help ensure that its complex supply chain remains
stable, resilient, and flexible.
○ As a multinational company, PepsiCo deals with a diverse range of products,
each with specific requirements. Some products need cold chain logistics,
while others rely on ingredients sourced from various regions worldwide.
○ The company coordinates numerous suppliers, manufacturers, shippers,
warehousing managers, and retailers. It also accounts for potential disruptions,
such as seasonal sourcing requirements, weather changes, and shifts in
demand1.
2. Data-Driven Approach:
○ PepsiCo invests in digital tools and advanced technologies to create a more
efficient supply chain.
○ The company focuses on data integration to gain insights into consumer
behavior and purchasing patterns. By understanding the individuals and
households buying PepsiCo products, they can optimize their supply chain1.
3. Sourcing and Procurement:
○ At the core of PepsiCo’s supply chain strategy is sourcing and procurement.
○ The company carefully selects ingredients and establishes strong relationships
with suppliers. This commitment to quality ensures consistency in taste and
adherence to stringent quality standards2.
4. Supplier Diversity:
○ PepsiCo actively promotes supplier diversity.
○ They plan to double their spending efforts with Black-owned suppliers by
2025, focusing on growth across services, agriculture, sustainable packaging,
and operations3.
In summary, PepsiCo’s supply chain management combines collaboration, technology, and a
commitment to quality to maintain its competitive edge in the global market.

How to develop the supplier management of pepsico ?

PepsiCo employs several strategies to develop and enhance supplier management. Let’s
explore some key aspects of their approach:

1. Supplier Diversity:
○ PepsiCo recognizes that supplier diversity is a critical business advantage.
○ They actively seek out nimble, innovative suppliers who challenge their
thinking.
○ Supplier diversity ensures that their supplier base mirrors the diversity of
employees, customers, consumers, and communities where they operate.
○ By developing relationships with diverse suppliers, PepsiCo aims to create
mutually beneficial partnerships that expand their sphere of activity.
2. Sustainable Sourcing:
 ○PepsiCo is committed to respecting human rights and supporting the safety,
wellness, and equality of the workforce across its value chain.
○ They expect suppliers to adhere to the same standards of integrity that PepsiCo
holds itself to.
○ Their sustainable sourcing program includes formal risk assessments, third-
party audits, corrective actions, and capability building.
3. Technology and Innovation:
○ PepsiCo collaborates with emerging technology start-ups through programs
like PepsiCo Labs.
○ They scout for breakthrough tech solutions related to procurement needs, such
as spend analytics, market intelligence, supplier relationship management, and
more.
4. Regenerative Farming:
○ PepsiCo aims to spread regenerative practices across 7 million acres by 2030.
○ They sustainably source crops and work closely with farmers to embed
integrity, fairness, and stewardship throughout their agricultural supply chain.
In summary, PepsiCo combines supplier diversity, sustainable sourcing, technological
advancements, and a commitment to positive impact to enhance their supplier management.

1.4. Receiver process.

The process of receiving raw materials at a Pepsi factory involves several key steps:
1. Ordering: In accordance with production schedules and inventory levels, the plant sets
orders with suppliers for the necessary raw materials.
2. Delivery scheduling: To guarantee that the supplies arrive when needed, the manufacturer
works with the suppliers to arrange the delivery dates and times.
3.Receiving: The factory's receiving department receives the raw materials and verifies that
the right goods and quantities have been delivered by comparing them to the purchase order.

4. Sampling: To make sure there is consistency and adherence to standards, raw material
samples may be obtained for additional quality testing and analysis.
5. Identification and Labeling: For traceability purposes, each batch of raw materials is
tagged and identified with pertinent information including batch numbers, expiration dates,
and supplier data.
6.Quarantine and Approval: Before being permitted for use in manufacturing, raw materials
may be put in a specified quarantine area for additional examination or testing. Using only
high-quality materials during the production process is ensured by this stage.
7.Storage: Following inspection, the raw materials are kept in specially designated sections of
the factory, including storage silos or warehouses.
8.Inventory management: Raw materials received are documented in the inventory
management system to ensure accurate inventory levels for production planning and
scheduling.
9. Quality control: To make sure the raw materials fulfill the necessary requirements,
continuous quality control procedures are put in place.
10. Documentation: For the sake of traceability and record-keeping, all pertinent
documentation is kept, including delivery receipts, inspection reports, and inventory records.

1.6 Analysis of the EOQ inventory model of Pepsico

Applying the EOQ model to calculate the optimal order quantity of Pepsico Company:

For the management of raw materials inventory. Currently, the company applies the EOQ
ordering model. However, because the characteristics of each material are different as well as
the packaging method of the manufacturer, supplier, order cycle, waiting time from ordering
to delivery, etc., the quantity This optimal ordering cannot be fully compliant with the EOQ
model but also from the experience of the staff in the production planning department. In
some cases, the order volume is also dependent on the requirements of the export manager
when there are situations where the shortage of raw materials occurs during the production
process as well as on the programs of company promotions. For many years, the demand for
Pepsico’s raw has been rapidly growing. To meet this demand, the company has actively
invested in partnerships with raw material suppliers, sustainable agricultural production and
effective supply chain management. In addition, research and development of more efficient
production methods is also an important solution to meet the increasing demand for raw
materials.

on the one hand and has steadily grown its purchase and development of soft drinks from
manufacturing on the other. As a result, the team decided to investigate the inventory of soft
drinks.

EOQ formula:

We call:

D = Annual demand it units of a product

S = Ordering cost per order

H = Holding cost per unit of the product

 ● The assumptions of the EOQ model are as follows:
● Demand for inventory is stable (no change).
● The waiting time for goods from placing an order to receiving the goods is determined
and does not change.
● The company receives all orders from suppliers at the same time. There are only 2
types of costs: ordering costs and storage costs.
● No shortage occurs if the order is fulfilled on time, i.e. if the order is placed after the
optimal inventory is determined and the order is fulfilled on time, there will be no
status at all. Inventory shortages lead to production and consumption disruptions.
Assume that Pepsi's annual demand for products is 300,000 units. The holding cost
is $80 per year involves keeping a product in stock and the ordering cost per order is
$50,000.
So we have: D = 300,000 units; S = $50,000; H = $80
Thus, EOQ = 19,365 units
This depicts that at the order quantity of 19,365 units per order, the company would
have minimum costs while keeping the required stock in hand.

1.7. E-Procurement
E-Procurement Procedure for Pepsi Soft Drink Items
1. Demand projections and requirements analysis:
-Forecast demand for Pepsi Soft drink products using market trends, consumer insights, and
historical sales data.
-Perform routine reviews to find out about impending promotions, depletion rates, and
inventory levels.
2. Find and pre-qualify vendors:
- Use supplier databases, industry recommendations, and market research to find possible
suppliers for Pepsi Soft drink items.
-Pre-qualification of suppliers is done on the basis of factors like competitive pricing,
delivery capabilities, sustainable practices, and adherence to legal requirements.
3. Negotiation and involvement of suppliers:
-Start negotiating advantageous conditions, such as price, terms of payment, delivery
schedules, and service level agreements (SLAs), with eligible suppliers.
-Insist on the significance of product quality, uniformity, and adherence to PepsiCo
guidelines and specifications.
4. Establish an electronic bidding system: -Update or implement the e-procurement system to
make the Pepsi soft drink products purchase process easier.
-Set up the system to handle vendor management, orders, approvals, reporting, and
purchasing requirements.
5. Submit buy request: - Using the electronic procurement system, the authorized person
sends a purchase request including the amount, packing, delivery address, and any specific
needs for Pepsi soft drink items.
6. Oversee the procedure of approval:
-In the e-procurement system, create a hierarchy for the approval process to assign purchase
requisitions to review and approval.
-Assign approvers in accordance with procurement policy, financial authority, and
organizational responsibility.
7. Create and submit purchase orders: -In the e-tendering system, approved purchase
requisitions are automatically converted into purchase orders.
-Orders, along with pertinent information including product specifications, quantities, prices,
delivery instructions, and contract terms, are sent electronically to a list of approved
suppliers. select.
8. Order fulfillment and delivery:
- After confirming receipt of the order, the supplier begins supplying raw materials for Pepsi
production.
-Monitor order fulfillment status using e-procurement system and liaise with suppliers to
ensure that delivery dates and quality requirements are met.
Inspect incoming shipments of Pepsi production materials to ensure compliance with quality,
quantity and specifications.
9. Processing bills and payments: -Check supplier invoices against matching purchase orders
after receiving Pepsi soft drink items, and obtain reports via the e-procurement system.
-Approve payment invoices in accordance with financial regulations and agreed terms of
payment.
In order to preserve supplier relationships, process payments using the business's accounts
payable system, making sure they are accurate and made on time.
10. Performance evaluations and vendor input: -Keep an eye on supplier performance
indicators like SLA compliance, responsiveness, quality of product, and on-time delivery.
-Give suppliers constructive criticism based on performance reports, emphasizing areas for
development or incentives.
-Collaborate with suppliers to promptly and proactively address any problems or challenges.
 11. Continuous improvement and optimization:
-Continually assess the e-procurement procedure to identify areas for improvement in terms
of cost, efficiency, and streamlining.
-Ask end users, suppliers, and internal stakeholders for their opinions in order to pinpoint
issues and possible fixes.
- Optimize the procurement of raw materials for the manufacturing of Pepsi by putting
precision measures into place, streamlining procedures, or updating technology as needed.

1.8. Value added when keeping goods in the warehouse.

1. Analysis and Forecasting of the Market

+ Examine past sales data to project demand for the upcoming year:
● For the quarter ended December 31, 2023, PepsiCo's revenue was $27.850
billion, a 0.52% decrease from the previous year.
● PepsiCo's revenue increased by 5.88% year over year to $91.471 billion for
the 12 months that ended on December 31, 2023.
● PepsiCo's 2023 yearly revenue increased 5.88% from 2022 to $91.471 billion.
● PepsiCo's 2022 yearly revenue increased 8.7% from 2021 to $86.392 billion.
● In 2021, PepsiCo generated $79.474 billion in revenue, a 12.93% increase
over 2020.
+Take into account variables like promos, client preferences, and seasonal variations.
● Variations in Season and Marketing Initiatives for Pepsi Soft Drinks
1.Creative Thinking and Limited Editions: PepsiCo consistently allocates resources
towards product innovation, launching novel tastes, exclusive editions, and inventive
packaging to sustain consumer engagement. To meet changing consumer tastes, this
includes introducing goods like Pepsi Zero Sugar.

2.Variations by Region: PepsiCo adjusts its product lineup to suit local preferences
and tastes. This entails creating products, tastes, and formulas especially for regional
markets.
3.Point of Purchase (POP) Displays: Pepsi uses visually striking POP displays in
retail establishments to draw customers in and encourage impulsive sales. To get
people to purchase Pepsi products, these displays may include new products, limited-
edition packaging, or exclusive deals.
4.Promotional Pricing: To increase sales and entice consumers to buy its products,
Pepsi regularly offers promotional pricing in the form of discounts, packaged offers,
 and exclusive deals. These promos are frequently connected to occasions, special
occasions, or the introduction of new products.
5. Pricing Discrimination: To appeal to various client categories and reach a wider
market, Pepsi uses pricing discrimination based on variables like geography,
distribution channel, and packaging size.
6. Pepsi employs psychological pricing, setting prices just below whole numbers to
entice customers to think they're getting a better deal and change their purchasing
habits.

● Customer Preferences
+Pepsi's marketing strategy involves leveraging celebrity endorsements, creative campaigns,
potent advertising, and a strong brand logo to connect with consumers and maintain a
competitive edge.
+To ensure its longevity and relevance in the market, Pepsi focuses on leveraging its brand
power, investing in continuous innovation, and staying attuned to consumer needs
+From teenagers to adults, the company's target market is diversified. To effectively target
this population through a variety of marketing channels, including digital campaigns, TV ads,
and content marketing, the company has identified important regions, demographics, and
preferences.
2. Planning Inventory
● Based on the anticipated demand, calculate the amount of Pepsi carbonated
soft drinks that are required.
● Determine the necessary quantity of each Pepsi product variation, including
special seasonal editions like Pepsi Salted Caramel, to have on hand.
3. Coordination of Suppliers
● Build ties with regional distributors or PepsiCo to guarantee a steady supply
chain.
● Reach a deal on bulk purchases to get goods at a discount.
4. Purchasing Raw Materials
● Obtain raw materials according to the needs of the production, such as sugar,
citric acid, essence, activated carbon, and others.
● To avoid shortages, keep a buffer reserve of necessary raw materials.
5. Scheduling of Production
● To achieve the desired inventory levels for every Pepsi product variation, set
up a production schedule.
● In order to reach production targets, make sure that the machinery is
maintained and run efficiently.
6. Inspection of Quality
● Put quality control procedures in place to keep Pepsi goods tasting and looking
consistent.
● Verify that completed goods and raw materials adhere to requirements on a regular
basis.
7. Holding and Organizing
● Make sure the inventory of Pepsi carbonated soft drinks has enough room to be
stored.
● Make sure the product is stored properly to avoid harm and maintain quality.
8. Marketing Techniques
● Create marketing efforts to highlight Pepsi goods with Christmas themes.
● To increase consumer attention and sales, make use of social media, in-store displays,
and promotions.
9. Distribution and Logistics
● Streamline distribution processes to guarantee prompt Pepsi product delivery to retail
locations.
● Work together with distributors to control inventory levels at various sites.
10. Customer Input and Modifications
● Ask customers about their preferences and the availability of the products.
● Adapt assortment and stock levels to consumer feedback and sales figures.

2.Assessment of the company’s

2.1 Achievements:

- Products: PepsiCo has successfully positioned itself in the hearts of customers over
the past 100 years. Building a prestigious and highly famous brand comes with good
quality, beautiful packaging, and product diversity consistent with the goals the
company is aiming for.
- Price: Price is stable and receives loyalty and support from customers. Aim for the
low price segment and discount regime to limit competition between companies and
decline in output for new products.
- Distribution: Always pay attention to intermediary distributors who cooperate with
fast-food restaurant chains so that products can reach customers quickly. In Vietnam,
Pepsi's branch cooperated with the Kinh Do Joint Stock Company to expand its sales
network to boost revenue.
- Marketing: The marketing department contributes greatly to successfully attracting
people to identify the product. At the same time, Pepsi spent a large amount of money
to invite famous representatives to promote and increase brand recognition.

2.2 Limitations

- Products: Although Pepsi has products designed with diverse designs and materials,
they are still less attractive than the current market - a market that is easily attracted
to eye-catching things.
- Price: Currently, the market is quite competitive because there are beverage products
that still have price differences at a certain level, causing difficulty in pricing. If
PepsiCo prices its products against competitors, it will miss out on paying attention
 to costs and market needs. Therefore, pricing needs to be timely and consistent with
market needs.
- Distribution: The direct distribution function to customers is still not working well,
investment in distribution still has many shortcomings and limitations.
- Marketing: Spend quite a lot of money on marketing. Choosing a product
spokesperson will bring many disadvantages if not carefully considered. Targeting
product promotion to young people but not keeping up with trends.

III Conclusion

3.1 Prospects of product/service development of the company’s purchasing management:

3.1.1 Opportunities:
+ Pepsico has certain and large suppliers. Easily access information about new suppliers
that may be more suitable for certain regions or products thus ensuring overall
satisfaction among the customer's end products.
+ Thanks to comprehensive and proactive management of suppliers, bringing positive
results in the company's global operations.
+ Pepsico’s Supply Chain Management has taken a proactive stance on Quality
Management to ensure the highest quality of their product offerings.

3.1.2 Challenges:
+ The market has many competitors, so it will require stronger supplier capabilities.
+ Ineffective data management.
+ A company that decentralizes its purchasing activities down to the regional level
creates problems with inventory standardization, which affects the quality of the
company's products.
+ Outsourcing ICT services to a third-party provider also risks leaking important and
confidential company information because it can be a source of a company's
competitive advantage.

3.2 Propose solutions to improve the company’s purchasing management based on the above
analysis.
+ Find many different suppliers to avoid risks when the supplier does not provide timely
or unqualified quality raw materials for the production process.
+ Suppliers link together in a mutually beneficial direction, strengthening relationships
with suppliers will maintain and create favorable conditions in the process of
operation and development.
+ Maintain high standards when improving supplier relationships by placing great
importance on improving supplier relations they can secure better prices but also take
steps to ensure the Company's compliance in emerging markets.
IV.References
Purchasing by ABC or EOQ or buying multiple products

https://www.scribd.com/doc/108855416/Inventory-Management-Pepsico

https://www.studocu.com/vn/document/truong-dai-hoc-ngan-hang-thanh-pho-ho-chi-minh/
marketing-management/bai-tieu-luan-nlm-lam-ve-tap-doan-pepsico-va-gioi-thiep-chien-luoc-
4ps-san-pham-pesi/22091293?origin=organic-success-document-viewer-cta

Value added when

https://www.macrotrends.net/stocks/charts/PEP/pepsico/revenue
https://thestrategystory.com/blog/pepsi-marketing-mix-4ps/
https://www.linkedin.com/pulse/pepsi-challenge-marketing-campaign-started-1975-simply-
baek--0lr1c

Receiver process
https://dfreight.org/blog/the-power-of-pepsis-supply-chain-strategy/
https://www.supplychaintoday.com/pepsi-supply-chain-case-study-with-solution/
https://pepsisupplychain.weebly.com/supply-chain.html

Value added keeping warehouse

https://www.linkedin.com/pulse/11-key-points-pepsi-cola-supply-chain-management-john-l--
rdhjc
https://www.dematic.com/en-us/insights/case-studies/pepsico-thailand/
https://www.pepsico.com/who-we-are/about-pepsico
https://accgroup.vn/quan-ly-chuoi-cung-ung-cua-pepsico