Once the raw materials are inspected to be of the right quality, they are always stored under the right conditions and with proper supervision to avoid any possibility of contamination. Before being used to make the products, the raw materials are once again inspected to ensure that they are of the right value. Once the products have been manufactured, they are always packed in bottles and cans to enhance their safety. This strategy has enabled this firm to operate in the global market without facing any major complaints from the customers about their products being contaminated.
Inventory management in the beverage industry comes with numerous challenges, top of which is the fear of possible poisoning or contamination. PepsiCo has installed superior infrastructures at its production plants to deal with this issue. It has some of the modern storage facilities for its raw materials to help in expanding their lifespan. The new systems also help in detecting any contamination and presence of wrong ingredients in the raw materials. This automated system has eliminated some of the mistakes experienced in the past such as failure to detect contamination at the right time. When contamination is detected in the final product, the loss to the company will be huge. It explains why it is important to use these automated systems that stops the entire operation system once an irregularity is detected.
Process management approach
Process management is another aspect of operation that specifically deals with the activities of transforming the raw materials into the finished products needed by the consumers in the market. Shah (67) defines process management as “The ensemble of activities of planning and monitoring the performance of a process.”8 As mentioned in the section above, production of beverages is a very sensitive process because the products will be consumed. Pepsi drinks are always consumed directly without being taken through any further processing by the customer. This means if any products have any defect; the customer will ultimately be affected. This has forced the management to install the sophisticated automatic machines such as the one shown in the diagram below.

This machine is instrumental not only in improving the quality and safety of the products, but also in reducing the cost of labor. What this machine can handle within a day may require several employees whose cost may be very high for the company. The machine does the processing and bottling of the products at a very high speed, and produces standardized products. Using tools such as the total quality management enhances the quality of the supply chain.
Logistics and Distribution
When the company has successfully completed the production process, the next important stage is the logistics and distribution of the products. Any food product has a short lifespan despite some of the preservatives that may be used. Once the PepsiCo’s products are ready, this firm must use the shortest time possible to ensure that they are delivered to the market. The global logistics and distribution strategies used by this firm are unique. PepsiCo has the responsibility of ensuring that its beverage products are delivered to the retailers in the regions where it operates.
This may seem to be an expensive process, but is one of the reasons why this firm has been very successful in the world market. Most retailers do not have problems of stocking their products because they are assured that the products will be delivered to them other than having to incur the transportation cost. The following are some of the areas of logistics and distribution strategies used by this firm that has enhanced its superiority.
Domestic and international logistics
Managing domestic and international logistics may be a challenge, especially for a firm with wide a market coverage such as PepsiCo. However, this firm has been able to manage its local and international logistics very effectively. The United States remains the major market for PepsiCo’s products. It has special tracks that it uses to deliver its products to its domestic customers. The track below shows a typical truck used to distribute the products of this firm.

In the international market, this firm uses various types of trucks to ensure that their products reach the retailers within the right time. The chart below shows the growth of income of PepsiCo from the international market, which shows that the logistical demand, is on the rise.

According to Bachmeier 78), PepsiCo has an elaborate transport and logistics unit that has won several awards in the United States for its effeciency. In the United States and Europe, this firm has enough trucks that it uses to transport its products. It also has warehouses that are strategically located along the highways to help in the storage of its perishable products before they are delivered to the market. The same trend is now being used in the developing economies.
Customer relationship management
Managing customer relationship is one of the most important activities for the marketing unit. PepsiCo has a heavy market presence through regular advertisements in the global market. The following is the brand logo that this firm has been using to identify itself to the customers.

The firm has managed its brand in the domestic market, and has rolled out ambitious programs to penetrate the global market. Its interactive social networking strategy is specifically meant to enhance its relationship with the international market.
Global location management
As stated before, PepsiCo operates in the global market, and this means that it requires effective global location management strategies. Unlike its archrival Coca Cola Company that outsources most of the activities in the production and distribution processes, PepsiCo has established its own plants in the global market. The production process takes place at these plants, which in most of the cases also house the administrative offices. This gives the firm the total control of its production process. The firm is also directly responsible for the distribution of the products to the market. This eliminates the intermediaries whose actions may increase the prices of the products. Although this location management strategy is expensive, it gives the firm the full control of its own market operations.
Service response logistics
The consumers have become very demanding, and firms are forced to deliver products that meet their demands. Service response logistics is a relatively new concept that seeks to ensure that a firm delivers the products needed by the customers at the time of need. It involves basing the logistic strategies on the responses received from the customers. Erickson (19) says that PepsiCo has embraced this new strategy of using the social media platform that enables it to capture the response of its customers about its products and the delivery approach.9
Sustainability
Sustainability is an issue that many business entities have been struggling to achieve. According to Leeman (49), sustainability has three pillars, which include the environment, society, and customers.10 PepsiCo has shown its commitment to the environment through various programs that are meant to conserve forests and reduce green gas emissions. Its annual reports also indicate that it has been working closely with the members of the society to enhance the living standards of people by sponsoring sports and education of children from poor families. The firm has been keen on maintaining the quality of services to its customer, which has earned it a pool of loyal customers.
According to Bachmeier (39)11, PepsiCo is currently running an initiative in Belgium, France, Iberia, Germany, and Holland to support sustainable agriculture among the fruit famers. The initiative, which is part of PepsiCo’s sustainable programs, is meant to support these farmers to ensure that the raw materials used in producing the beverages are protected. In order to support the farmers, PepsiCo, in collaboration with Cambridge University, has been creating awareness among its farmers to help them understand the benefits of renewable energy in their farming practices (to Bachmeier 56).
This program aims at lowering the cost of production for the farmers. This will help them sell their produce to PepsiCo at fair prices but still make good profits. Water is the most important raw material that Pepsi uses to produce beverages. In some countries, this firm has experienced shortage of clean water that it can use in its production process. In India, this firm has been facing the problem of clean water shortage (Bachmeier 41). In 2009, PepsiCo introduce Positive Water Balance Initiative in India to help it address the issue of clean water scarcity in this country.
This sustainability program helped PepsiCo replenish more water than the amount it used in its production process. This was done through water conservation programs and protection of water catchment forests in India (Kanani 1)12. In 2010, the company introduced water-recycling policies at all its plants, including those in India. This helped in reducing water consumption by over 30%. Currently, the firm is closely working with farmers to embrace drip irrigation system because of the minimal amount of water that is used (Kanani 1).
Strengths and Weaknesses of the Firm
The main strength of this firm lies in its financial capacity and many years of experience in this industry. It understands the market dynamics, which gives it an edge over other market competitors. However, the slow pace in implementing the emerging technologies, especially in marketing, is one of its main weaknesses (Erickson 19).
Conclusion
The management of PepsiCo has made an effort to ensure that its supply chain management for its beverages is very effective in order to maintain high quality products in the market. This management has been keen on acquiring quality raw materials, transports them to the firm, transforms the materials to final products, and delivering the products to the clients in the market. In its supply chain, the firm has always emphasized on maintaining quality at all the stages using various quality management tools such as Total Quality Management. It is clear that PepsiCo is one of the best examples of firms that have used the modern methods of supply chain management to enhance their operations in the market. Although the market is very competitive, this firm has been able to remain very competitive because of its ability to access quality raw materials, use efficient production processes, and deliver quality products to the customers in time.
Works Cited
Bachmeier, Kristina. Analysis of Marketing Strategies Used by Pepsico Based on Ansoff’s Theory. München: GRIN Verlag GmbH, 2009. Internet resource.
Biswas, Arijit, and Anindya Sen. Coke vs Pepsi: Local and Global Strategies. Economic and Political Weekly 34.26 (2007): 1701-1708. Print.
Ehrhardt, Moses and Brigham Edmond. Corporate Finance: A Focused Approached. New York: Cengage Publishing, 2014. Print.
Erickson, Gary. Advertising Competition in a Dynamic Oligopoly with Multiple Brands. Operations Research, 57.5 (2009): 1106-1113. Print.
Gattorna, John. Gower Handbook of Supply Chain Management. Aldershot: Gower, 2008. Print.
Jespersen, Birgit, and Tage Larsen. Supply Chain Management: In Theory and Practice. New York: Cengage, 2005. Print.
Kanani, Rahim 2013. Why PepsiCo is a Global Leader in Water Stewardship and Sustainable Agriculture.Web.
Leeman, Joris. Supply Chain Management: Fast, Flexible Supply Chains in Manufacturing and Retailing. London: McMillan, 2010. Print.
PepsiCo: Production Budgets 2014. Web. Shah, Janat. Supply Chain Management: Text and Cases. Upper Saddle River: Pearson Education, 2009. Print.
Smith, Andrew. Drinking History: Fifteen Turning Points in the Making of American Beverages. New York: Columbia University Press, 2013. Print.
Yahoo Finance: Historical Prices 2014. Web.
Footnotes
- Biswas, Arijit, and Anindya Sen. Coke vs Pepsi: Local and Global Strategies. Economic and Political Weekly 34.26 (2007): 1701-1708. Print.
- Jespersen, Birgit, and Tage Larsen. Supply Chain Management: In Theory and Practice. New York: Cengage, 2005. Print.
- Ehrhardt, Moses, and Brigham Edmond. Corporate Finance: A Focused Approached. New York: Cengage Publishing, 2014. Print.
- Erickson, Gary. Advertising Competition in a Dynamic Oligopoly with Multiple Brands. Operations Research 57.5 (2009): 1106-1113. Print.
- Gattorna, John. Gower Handbook of Supply Chain Management. Aldershot: Gower, 2008. Print.
- Leeman, Joris. Supply Chain Management: Fast, Flexible Supply Chains in Manufacturing and Retailing. London: McMillan, 2010. Print.
- Erickson, Gary. Advertising Competition in a Dynamic Oligopoly with Multiple Brands. Operations Research 57.5 (2009): 1106-1113. Print.
- Shah, Janat. Supply Chain Management: Text and Cases. Upper Saddle River, N.J: Pearson Education, 2009. Print.
- Erickson, Gary. Advertising Competition in a Dynamic Oligopoly with Multiple Brands. Operations Research 57.5 (2009): 1106-1113. Print.
- Leeman, Joris. Supply Chain Management: Fast, Flexible Supply Chains in Manufacturing and Retailing. London: McMillan, 2010. Print.
- Bachmeier, Kristina. Analysis of Marketing Strategies Used by Pepsico Based on Ansoff’s Theory. München: GRIN Verlag GmbH, 2009. Internet resource.
- Kanani, Rahim 2013. Why PepsiCo is a Global Leader in Water Stewardship and Sustainable Agriculture. Web.