SCM OF PEPSI PAKISTANSubmitted By: Muhammad Umar Registration No: 0958107

Haidri Beverages Private Limited, Pakistan

INTRODUCTIONf A Franchise of PepsiCo Inc f The largest beverage company in Pakistan with a successful business

history of more than 25 yearsf The Haidri Beverages Group was set up in 1979 and is Pepsi's sole

selling agent for District Rawalpindi and Islamabadf It is based in the CDA Industrial Triangle, Kahuta Road, Islamabad

CONTINUEDf It manages the supply for several wholesalers, retailers, restaurants,

hotels and other such food outletsf Haidri Beverages primary functions are to conduct a systematic

manufacturing and supply of the product without any tactical flawsf It has set up a sophisticated manufacturing and storage plant in

Rawalpindi with multiple production units and huge production capacity

Understanding the Supply Chain of Haidri Beverages

1. SUPPLY CHAIN STRATEGY

f During this phase a company decides how to structure the supply chain f

f f f f f

over the next several years The company makes long term decisions in regards to location and capacities of production and warehousing facilities, the modes of transportation to be made, information systems etc The supply chain design is very expensive to alter on short notice and supports the companys strategic objectives In order to ensure a good supply chain strategy, Haidri Beverages plans two years in advance It has several contracts with manufacturers, and receives raw material on a convenient basis The company also decides where production plants are to be placed Haidri has production plants at Peshawar and Islamabad

f Material planning and sourcing is carried out as well f Sales forecasting and production planning depends upon the capacity of

the organization with respect to: Production (180,000 converted 250 ML crates per day). Storage: Raw and packing (80,000 Sq Ft) Storage: Finished goods (120,000 Sq Ft)

f Haidri has a procurement budget of Rs 2.9 billion f Approved suppliers cannot go beyond this budget f The supplier is audited by the most cost efficient quality control

department f Distributors are also decided by the company, keeping in mind past performances f The company has increased its distribution capacity from one to six filling lines during the last few years

2. SUPPLY CHAIN OPERATION

f Company makes decision regarding individual customer orders f During this phase; f Firm allocate inventory or production to individual orders, f Set a date that an order is to be filled, f Generate pick lists at warehouses f Allocate to shipping f Set delivery and so on f At Haidri, the production, sales and supply chain departments get

together to decide the inventory usually on a weekly basis

PUSH-PULL VIEW OF SUPPLY CHAINf Pepsi has a seasonal demand f Just in time concept is applicable in non-seasonal period and not applicable

in seasonal periodf All processes that are part of the procurement cycle, manufacturing cycle,

replenishment cycle, and customer order cycle are push processesf The Shipping Manager receives sales order from Sales Team, distributors

through telephone, fax & email one day before dispatch.f The sales are made to base distributors on advance payment against orders. f then shipping manager plans according to the demand of distributors on

daily basis

3. EFFICIENCY AND RESPONSIVENESS

f The efficiency and responsiveness varies according to the consumer

needs, implied demand uncertainty, product type and market segmentsf In remote areas the company focuses on being somewhat efficient as

other modes of transportation could turn the product to be highly expensivef According to the company it does not deal with distributors who do

not have 20 to 25 vehicles, therefore as the company has focus on cost reduction, uses slow and inexpensive modes of transportation, the demand is certain, and uses economies of scale in productionf In cities, the company focuses its attention on being highly responsive as

Pepsi has to meet short lead time, meet a high service level, handle a large variety of products and respond to wide ranges of quantity demanded

4. DRIVERS OF SUPPLY CHAIN PERFORMANCE

FRAMEWORK FOR STRUCTURING DRIVERS

Inventory

f Haidri has established a comprehensive plan to ensure the sufficient f f f f

f

inventory levels to keep up with the market demand effectively For this purpose the main inventory storage has been established within the main plant area Kahuta road, Rawalpindi It has the storage capacity of 120,000 Sq Ft and the area is being utilized both horizontally and vertically The shipping department is in charge for storage and subsequent displacement of the product orders The inventory capacity is being utilized and maintained in coordination with the production department and is based on the term production estimates Apart from the main storage house, Haidri has established more than 10 storage facilities nearer to the market in Rawalpindi and Islamabad

Transportation

f Haidris transportation network is the collection of routes, modes and

locations along which the product can be shippedf With the help of several distributors the product is being supplied to

the marketf Haidri decides and selects different modes of transportation having

different characteristics with respect to the speed and size of shipmentf The transportation network has been designed with a view to ensure

responsiveness and boost the availability of the product

Information

f The information driver connects all the supply chain stages effectively

allowing them to coordinate and maximize total supply chain profitabilityf The unit manager utilizes the production scheduling system that is

based on information on demand to create a schedule that allows Haidri Beverages to produce the right amount of productf The warehouse in charge uses this information to create visibility of the

warehouses inventory itemsf Timely and accurate information enables the distribution managers to

fix potential stock out or oversupply problems

Facility

f In order to ensure the responsive strategy implementation, the role of

facilities is of prime importance in the supply chain of Haidri Beveragesf Pepsi has established a flexible and a product-focused production facility

in order to respond effectively to the variability in demandf The storage facilities are designed in order to provide maximum

possible capacity for the inventoryf The large amount of excess capacity allows the facility to be very

flexible and to respond to wide surges in demands placed on itf In alignment with the responsive supply chain strategy the facilities have

been geographically located close to the market

4. DISTRIBUTION CHANNELS

f Direct Distribution Delivery of post mix cylinders & handling of key accounts: The key accounts are different wholesalers, restaurants and hotels

like Pizza Hut, KFC, Metro which serve as a place for key sale These are known as national key accounts and are very important in

terms of competitionf Indirect Distribution Through Base market distributors Through Outstation distributors

f Before delivering the product some certain guiding principles are

f f f

f

followed for the assessment of distributors capability by Haidri Applicant must have 20 to 25 vehicles (depending on the area). Applicant must have 20,000 cases of empty bottles. Applicant must deposit Rs.1, 000,000 as a security. Haidri uses light and heavy vehicles for safe delivery of goods to the distributors for timely delivery Haidri receives orders from all distribution centers and the shipment department delivers the orders. At the distribution center, products from the manufacturer are delivered into different trucks and each truck makes deliveries to multiple retail stores The system works on trust and does not require the delivery person to be present when store personnel scan the delivery

f Haidri have nine distributors in Islamabad and Rawalpindi, mainly: Shan

distributors, Awan distributors and Arbab Distributorsf To support this distribution network they have a transport department

which consists of more than 30 ten wheeler trucks in Islamabad alonef Each truck has a capacity of 1572 Pepsi crates f Rawalpindi distribution is made possible through Shehzore and Suzuki

because of the narrow and congested roadsf The distribution department is in direct contact with the manufacturers and

keeps updating inventory levelsf The distribution department is responsible for all the variety of the products

in their portfoliof PepsiCos overall distribution network spreads throughout Pakistan

connecting the remotest of places and providing great customer service

4. FACTORS AFFECTING DISTRIBUTION NETWORK DESIGN

Response Time with over 30 delivery trucks

in Islamabad, Pepsi is readily available to every retailer within 30 minutes Rawalpindi has 6 warehouses

from where the supply to the market is done through Shehzore or small cars

Product Varietythe product variety includes beverages ranging from the water Aquafina to Mountain Dew, Pepsi, Pepsi Max, 7 Up, Mirinda, Mirinda Apple & Fountain Fresh

Customers DesirePepsi and Mountain Dew the most; Mountain Dew has the highest consumption in Gujranwala.

Availability Availability of Pepsi is very

high and the product is always available in stock whenever an order arrives The Distributors have 3 days

stock as back up with them in order of any malfunctioning of the plant or other such external factors.

Customer Experience Customer Experience for

Pepsi has always been positive as they receive the product with ease and on time There has never been a

shortage or a delay for Pepsi in Metro, Pizza Hut, KFC or McDonald which are the key accounts for the company

THANK YOU