PEPSI

REVERSE LOGISTICS
SUBMITTED BY: SAMEER NARANG
SIDDHARTHA GUPTA SHELZA GUPTA SONIA WALIA SURBHI SHARMA VIKAS HOODA

INTRODUCTION
Pepsi cola has begun in 1898 by CALAB BRADHAM. It became known as PepsiCo when it merged with FRITO LAY in 1965.

The PepsiCo headquarters are located in Purchase, Harrison, New York. It is the 2nd largest manufacturer of soft drinks in the world.

It is manufacturing and marketing wide variety of carbonated and non carbonated drinks, snacks. Indra Krishnamurthy Nooyi is present CEO.

Tropicana Products,Inc. joined the Pepsi portfolio in 1998 and gives PepsiCo the strongest brand name in Juice.

PEPSICO PRODUCTS
PepsiCo has a lot of diversification while the company has core product (Pepsi). The diversification products of PepsiCo are:
1. Fruit juices (Tropicana and Dole)

2. Sport Drinks (Gatorade) 3. Snack Foods (Frito, Lay s, Ruffles, Doritos, Chee-tos, and Sun Chips) 4. Cereals, rice, and breakfast products (Quaker oatmeal, Cap n Crunch, Life, Quaker rice cakes, and Quaker grits)

PEPSICO IN INDIA
PepsiCo established its business operations in India in the year 1989. PepsiCo has invested more than USD 1 billion in India since its establishment. PepsiCo has a diverse range of products from Tasty Treats to Healthy Eats. It has more than 36 bottling plants including 13 Company & 23 Franchise owned ones. It has 3 state-of-the-art food plants in Punjab, Maharashtra and West Bengal. PepsiCo India provides direct and indirect employment to 150,000 people including suppliers and distributors.

CHALLENGES IN SOFT DRINK INDUSTRY

Flat demand during 1998 2004. Contaminations scare at India. Obesity issues. Challenges of internationalization.

INDUSTRY LIFE CYCLE

Introductory Stage Growth Stage Maturity Stage Decline Stage

Total Market Sales

Time

STRATEGIES OF PEPSI
PepsiCo has gone for product diversification. Many consumers are becoming increasingly aware of the dangers of obesity and the health problems with consuming large amounts of sugary carbonates drinks.
This health awareness has caused drift noncarbonated beverages and other healthier foods that Pepsi Co. Produced.

RAW MATERIALS
Raw material used for Pepsi

Carbonated Water

Sugar

Emulsions

Citric Acid

Additives

Flavorings

Raw Material Used For Bottles

Glass

Silica

Aluminium

MANUFACTURING PROCESS
The water is taken from different sources and is purified to meet the international standards. For water purification-RO ,Ion Exchange, Coagulation(chemical treatment) Co2 is used in manufacture of CSD (Carbonated Soft Drinks) Purity is maintained at Microbiological level There are 41 plants of PEPSI Co across India. Plant Capacity:-1 Lot or 1 Batch is prepared bottled in 2 days.1 Lot =24000 crates,1 crate=24 bottles.

BOTTLING OPERATIONS
FOBO Franchise owned bottling plant Bottling Operations are of 2 types COBO Company owned bottling plant

STORAGE
Temporary Quickly transported by large trucks. Stores across the country receives deliveries several times a week.

DYNAMICS OF MATERIAL FLOW

Supplier

Plant

Distributor

Logistics

Retailer

REVERSE LOGISTICS
Process of planning, implementing, and controlling the efficient, cost effective flow of raw materials, in-process inventory, finished goods and related information from the point of consumption to the point of origin for the purpose of recapturing value or proper disposal.

DIFFERENCE
FORWARD LOGISTICS
       

REVERSE LOGISTICS
Forecasting more difficult Many to one distribution point Product quality not uniform (ie. BOTTLE) Product packaging often damaged Pricing dependent on many factors Reverse cost less directly visible Inventory management of bottles is not consistent Visibility of process less visible.

Forecasting is relatively Forward. One to many Distribution points. Product Quality uniform(ie. BOTTLE) Product Packaging uniform Pricing relatively uniform Forward distribution cost easily visible Inventory Management of bottles is consistent Visibility of process more transparent

IMPORTANCE OF REVERSE LOGISTICS

Assets utilization (rather we can say re-utilization) . Assets recovery (to capture the value, which otherwise will be lost) . Profit maximization: Cost reduction through recycling . To fulfill the Environmental obligations, e.g., Waste recycling, Hazardous waste management, e.g., Car batteries disposal . Customer Relations Management, e.g., after sales service, buy back guarantee .

APPLICATION AREAS
Publication houses (40-50% by volume): To take back the unsold volumes for reuse Beverage industries: To collect reuse the empty bottles, e.g., Coca cola & Pepsi Heavy industries: To collect and reuse the waste Pharmaceutical industries: To collect the expired formulations and drugs for environment friendly disposal Automobile industries: To fulfill the commitments of after sale service and buy back guarantee

ACTIVITIES IN REVERSE LOGISTICS

Collection

Combined inspection/ selection/sorti ng

Reprocessing or Direct recovery

Redistribution

REVERSE SUPPLY CHAIN NETWORK(COLLECTION)

CONSUMERS RETAILERS DISTRIBUTORS

BOTTLING PLANT

 INSPECTION AND SORTING

products are sorted according to their quality state and recovery route.

GRADING OPERATION- Expensive test

equipment and the need for skilled labour to check QUALITY of GLASS

RECYCLING- glass is processed in order to get the

desired quality after which they are being reused.

REDISTRIBUTION- bringing the FILLED BOTTLES

in the market.

DESIGN OF REVERSE SUPPLY CHAIN NETWORK

The location of production facilities, storage concepts, and transportation strategies are major determinants of supply chain performance. Reverse logistics should also be taken into account during the design of the support network such as location and capacity of warehouses, plants, choice of outsourcing vendors, distribution channel and supporting technology. MAIN STRATEGY:- Returns information captured should be integrated with forward supply chain information to achieve optimum planning and reduction of costs.

Information flow

Money flow

Supplier

Plant

Distributor

Logistics

Retailer

NETWORK STRUCTURE
The Convergent Network
o Accumulates used products from individual sources and conveys them to some recovery facility. o Companies can set up dedicated returned products collection centers at specific locations or collect the products through retailers and distributors.

CUSTOMER RETURNS BOTTLE

REVERSE TRANSPORT

NO BOTTLE CANNOT BE REPAIRED OR REFURBISH ED

SORTATION AND TESTING

CAN THE BOTTLE BE REUSED? YES BASIC PROCESSING

RECYCLE

FORWARD LOGISTICS TAKES PLACE

FACTS OF PEPSI
Each crate consist of 24 bottles Crate weighs 14.4 kg in case on 200ml full bottle Crate weighs 18 kg in case of 300 ml full bottle Height of 300 ml bottle -22cm Weight of 300 ml bottle-700 gms when full Weight of 300 ml bottle -400 gms when empty For each day one truck consumes 6-7 litre of diesel One truck carries 3 Tonnes which includes 144 crates(primary truck)

REVERSE LOGISTICS FACTS OF PEPSICO

AVERAGE ORDER SIZE a) Distributor to Company b) Retailer to Distributor How orders are Placed a) Distributor to Company b) Retailer to Distributor TRANSIT TIME FREQUENCY OF ORDER INVENTORY MAINTAINED Telephone , direct ordering through distributor representative 3 Days Twice or Thrice in a week 3 Days stock is maintained Stock Keeping IT USED Account Keeping Problem Handling Depend on Demand, season Depend on demand, season

MODES OF TRANSPORTATION EXPENSES OF TRANSPORTATION a) From distributor to company b) From retailer to distributor WAREHOUSE a) storage capacity b) self owned/rent LEAD TIME

TATA ACE, Auto, TATA 407

By Company By distributor

Minimum 250 sq m Self owned/rental 4 DAYS

DISTIBUTOR COLLECTS BOTTLES FROM

4000- 4500 Outlets

DISTRIBUTOR S BACK UP

3 Days stock

REVERSE FLOW
The empty bottles are picked by the secondary trucks from the retailers and brought back to the distributors. The primary trucks carry the empty bottles further to the bottling plant where the bottles are cleaned and reused.

STANDARDS FOLLOWED BY PEPSI

Pepsi Co also made its product Micro sensitive by reducing some key preservatives. All the GMP and GHP practices were followed. Especially for REVERSE LOGISTICS, All the protocols followed are Internationally recognized and strictly followed. The PEPSICO Plants are not only ISO :2k certified but also AIB(American Institute of Bakery) and FSC certified. At Each Plant, Plant Manager and Quality Manager are responsible for product quality.

EVALUATION PARAMETERS USED BY PEPSI IN REVERSE LOGISTICS

Time taken by driver to reach the distributorship Time taken by driver to reach at plant Damage/loss to the product while delivering Damage/loss to EMPTY BOTTLE during return to plant Delay due to malfunctioning of truck Adherence to safety check list Misbehaviour by truck driver Display of PEPSI LOGO on trucks

Physical condition of truck

INDEXES USED BY PEPSI IN EVALUATION

Damage Index (DI) Misconduct Index (MI) Vehicle Performance Index (VPI) Performance Index of Drivers (DPI) Transporter Performance Index (TPI) TPI = 0.5*DPI + 0.4* VPI + 0.1*Previous TPI ALL THESE INDEXES HELPS IN REDUCTION OF BULLWHIP EFFECT

EXPENSES INCURRED BY DISTRIBUTORS

PROBLEMS FACED BY PEPSI IN REVERSE LOGISTICS

LACK of good information systems. IS should also include information programs about reverse logistics measurements, such as return rates, recovery rates, and returns inventory turnover etc. Current information systems do not allow them to monitor the status of their returns

SUGGESTIONS
The outsourcing of reverse logistics to a third party logistics provider may be the wisest choice. The way toward success in the reverse logistics process is through higher visibility of selective information and as close to "real-time" process knowledge as possible. Technologies like bar-coding and RFID helps in making reverse logistics operations more effective and responsive. It provides REAL TIME process knowledge.

THANK YOU