PepsiCo – September 2019

WINNING WITH PURPOSE: SUPPLY CHAIN TRANSFORMATION AT PEPSICO LATAM

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PEPSICO LATAM: DRIVING INNOVATIVE SUPPLY CHAIN OPERATIONS IN A HIGH PERFORMANCE MARKET

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PEPSICO

PEPSICO LATAM HAS BEEN UNDERGOING A SIGNIFICANT SUPPLY CHAIN TRANSFORMATION AS THE COMPANY AT LARGE CONTINUES TO STREAMLINE AND OPTIMIZE THE EFFICIENCY OF ITS OPERATIONS

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epsiCo’s portfolio of evocative household names has a foothold in every major market around the world, and delivering

those products to consumers in the most effective manner possible has become a company-wide 04

strategic imperative. For PepsiCo’s operations in Latin America (LATAM), the centralization of procurement has been an ongoing endeavor for the past several years and the transformation is reaping dividends. As a key region for PepsiCo’s wider balance sheet, optimization of procurement and logistics in the region stands to have a significant impact on success at large. The procurement function is, in effect, essential to the company’s wider growth strategy. When new CEO, Ramon Laguarta, came in last year, there was a refinement in the company’s vision focused on how PepsiCo can become the leader in convenience food and beverages by winning with purpose rather than just performing – and this mentality is central to the company’s supply chain transformation.

$64.6bn Approximate revenue

1898

Year founded

250,000+ Number of employees worldwide

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PEPSICO

“ THE FIRM’S STRONG PARTNERSHIP MANAGEMENT IS TIED INTO THE SUCCESS OF ITS NEW FLEET MANAGEMENT CAPABILITIES”

With its LATAM operations accounting for around 11% of PepsiCo’s global revenues, optimizing supply chain and procurement operations in the region is essential for continued growth at both a national and global level.

Leveraging relationships with suppliers worldwide is key, along with the capacity to negotiate on a global scale whilst simultaneously servicing and supporting local markets. In 2012, previous CEO Indra Nooyi set a goal of securing $1.5bn in cost savings

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through streamlining and incrementally

CLICK TO WATCH : ‘PEPSICO SUPPORTS RECYCLING IN LATIN AMERICA WITH INNOVATIVE PROGRAMS’ 07 upgrading the company’s productivity,

region, has been vital to the realization

citing the firm’s positive performance

of this ambitious goal. By combining

in the five volatile preceding years

procurement and operations, both

for world economies. “Our goal is to

delivering more cost-effective ways

continue on that earnings trajectory

of purchasing and enabling the supply

over the next five to 10 years, fully

chain with new technologies – such

recognizing that we need to make

as the new fleet management system

changes to the way we operate to

– quarterly productivity has been

address the challenges identified in the

enhanced significantly both on a local

review process,” said Nooyi in a press

and wider level.

statement at the time. “2012 will be

Partnerships have been particularly

a transition year, in which we will be

crucial to the cost-saving strategy, as

taking the appropriate steps to build

more effective relationships can yield

a stronger, more successful company

higher quality solutions at cheaper

going forward.” Latin America, as a

rates. Not only that, but the complex w w w.pe psico. com

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The opinion and feedback of our customers is very important to us. That is why we always work closely together with them when developing new products. In addition, a huge capital employment enables us to consistently push the transformation towards zero-emission mobility. With the all-electric e-Crafter, ABT e-Caddy and ABT e-Transporter (the last two developed together with our strategic partner ABT), our portfolio contains solutions for urban traffic that are already sustainable now.

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11 nature of Latin America’s established

source locations. The aforementioned

and varied markets necessitates

regional and intra-regional quirks are

a high degree of expertise on the

similarly vital to consider when it

business side to initiate and maintain

comes to both partner selection and

such relationships. Every country

the application of innovative techno-

has its particularities, so having the

logical solutions. Driverless vehicles,

necessary talent and capability

for example, are not currently viable in

to connect with the correct partners,

places like Sao Paolo and Lima due to

provide the right efficiencies and

both infrastructural and technological

scale relative to different countries

limitations. However, these limitations

is essential for PepsiCo’s delivery

have not prevented the company from

of its supply chain objectives.

establishing a new fleet management

PepsiCo proactively and regularly

solution in the region replete with

assesses its partners and ensures it

benefits to productivity, efficiency,

is leveraging the most cost-effective

logistics, sustainability, driver safety w w w.pe psico. com

PEPSICO

and more. Focusing on safety and making sure hard braking, hard cornering, inefficient acceleration and so forth are reduced has reaped myriad benefits, improving the employee experience along with wider ranging results. Beyond safety, the new fleet management system has a much broader reach: the platform pilot is seeing a reduction of 10% in both idling and travel distance, significantly reducing fuel consumption and greenhouse gas emissions. The 12

implications for enhanced sustainability are a particular boon as consumers around the globe become more conscious of the environmental impacts of the products they buy.

The firm’s strong partnership management is tied into the success of its new fleet management capabilities, too. Leveraging key relationships with expert fleet managers to augment its ability to build and deploy customized systems has enabled PepsiCo to boost efficiency, automatic dispatching, roadside assistance, and more. These efforts have resulted in a 90% reduction in

“ IT’S CLEAR THAT THE POTENT INTEGRATION OF TECHNOLOGIES AND BLENDING OF THEIR CAPABILITIES HAS BEEN KEY TO PEPSICO LATAM’S SUCCESS”

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PEPSICO

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associated administrative work, enabling employees to focus on more fulfilling value-added activities.

No single technological solution or platform is responsible for or capable of securing such successes, however, it’s clear that the potent integration of technologies and blending of their capabilities has been key to PepsiCo LATAM’s success. The transport management system is tied into the telematics system, the last mile system, the route planning systems and so on, enabling the best qualities of each solution to be available in the same place.

Taking a broader view of business operations, growth of the company at a global level, and the focus on a clear strategic vision are collectively bringing PepsiCo ever further forward as an example of procurement and supply chain operations done right.

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Purchase, Harrison New York, United States T 1-800-433-2652 www.pepsico.com