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Virginie Perret ISQA 458 Tour Reaction Paper #2 Portland Pepsi Bottling Co pan!

! April 2"# 2$$5 This second tour was very rich in learning points. The tour was well prepared by our hosts so it turned out to be easier to get a whole picture of the way the plant is operated and to understand the issues and challenges faced by the Pepsi Bottling Company in managing the business and their supply chain. During the tour, I was very impressed by the efficiency of our tour leader, the plant manager. She was in perfect command of the business she is in, controlled almost every topic and was able to provide pertinent answers to all our uestions. I reali!ed how important it is to have at least one person mastering the duties and challenges faced by each department, i.e. production, production planning and distribution. By mastering the big picture, it seems that the activities can be more easily and efficiently managed and coordinated. The second learning point deals with the storage issues. "s we saw, the Pepsi plant has no available space for further e#pansion, meaning that they have develop their business and carry more and more stoc$ $eeping unit everyday with no new e#tra storage spot in their warehouse. The situation that Pepsi is currently e#periencing is valid for many manufacturers and distribution centers. Indeed their warehouses are getting old and in many cases the surroundings do not allow to e#pand the facilities% distribution must conse uently store more S&'s with the same storage capacities. (fficiency problems also arise from bad location, i.e. far from the freeway. )educed storage capacities implies coming up with creative ideas in order to optimi!e the available space. Indeed when carrying an increasing number of S&'s, somebody needs to assume the difficult *ob of space allocation in order to maintain efficient operations and provide on+time deliveries. ,ne of the issues created by the increasing variety of products is the difficulty to maintain a product at the same location all the time in order to facilitate the *ob of the pic$ers. The third learning point relates to the distribution process of the Pepsi Bottling Company done at -../ through Direct Store Distribution 0DSD1. This concept was almost new to me and this tour helps reali!ing the challenges of this type of distribution process, two of them being the ability to provide on time delivery to each customer as well as a great fle#ibility toward retailers

re uests and conditions. The DSD system allows for very few mista$es indeed each big or small retailer needs to receive on time its product order to meet customers2 demand. The fourth learning point, perhaps more an observation, relates to inventory management. Inventory is done manually daily for the consumer ready products and once a wee$ for the raw materials. The current inventory management is based on a very simple process, the difference between the beginning inventory and what is sold, shipped and received during a day. I found this point very interesting especially since she mentioned that they e#perience very little shrin$age. (ven if they truly need to upgrade their current inventory management system to a barcode system, it showed us that a perpetual and manual inventory, if well run, can also wor$. The fifth learning point deals with the status of Pepsi as a ma*or supplier of the biggest retailers. "s a conse uence, Pepsi is obliged to adapt uic$ly to their re uirements. 3or instance 4al+5art was re uiring all its suppliers to be )3ID compliant by the beginning of 6..7. Since Pepsi was not able to achieve this, they had to negotiate and guarantee that their delivery would be 88/ accurate in order to remain in good term with the retailer. This $ind of compliance creates in turn for the manufacturers some obligations to moderni!e their production and delivery process. 9ew technologies are being implemented by manufacturers under the pressure of outside constraints, not because of an internal drive. 5y last observation relates to the wor$ environment. The Pepsi bottling plant re uires highly physical labor, where employees have to be productive and at the same time be fast at locating products and pay e#treme attention for safety since they move very heavy items very fast. I reali!ed that despite all the current technologies available, distribution remains a labor+ intensive sector. "s a conse uence, providing a safe and comfortable wor$ing environment is one the $ey points to be successful and profitable. "s a conclusion, I would say that this tour was very interesting and allowed us to see how the direct store distribution system is wor$ing. I was impressed by the simplicity of the way an internationally recogni!ed brand can conduct its business. The production planning is bro$en in five main items, which gives the available inventory and then allows establishing the production. They have developed an efficient distribution system by $eeping control on their operations from the production to the distribution. Pepsi is a highly vertically integrated company, which gives

them greater fle#ibility and allow them to $eep total control over their business. "fter the tour I started to be a bit s$eptic about the need for always implementing more and more technology in the supply chain, but I reali!ed that conducting manual inventories can only be viable for a small business and that on the long run the company would not be competitive anymore.