220059865-pepsi

1 Managing Operations in Pepsi-Cola

INTRODUCTION OF PEPSI COLA: ...................................................................................... 3

VISION / MISSION STATEMENT: ....................................................................................... 4

ABOUT SHAMIM & CO. PEPSI COLA MULTAN: ............................................................. 4

OBJECTIVES: ............................................................................................................................ 5

HISTORY OF PEPSI-COLA: ................................................................................................... 5

SETUP OF PEPSI-COLA: ........................................................................................................... 6

CURRENTLY OFFERING PRODUCTS: .................................................................................. 6

PRODUCTS MANUFACTURING IN MULTAN: ............................................................................. 7

PEST ANALYSIS ...................................................................................................................... 7

POLITICAL ANALYSIS OF PEPSICO. ........................................................................................... 7

ECONOMIC ANALYSIS OF PEPSICO. ......................................................................................... 8

SOCIAL ANALYSIS OF PEPSICO. ............................................................................................... 9

TECHNOLOGICAL ANALYSIS OF PEPSICO. ............................................................................... 10

PEST ANALYSIS OF MULTAN BRANCH .................................................................................. 10

SWOT ANALYSIS OF PEPSICO. ......................................................................................... 10

STRENGTHS: ...................................................................................................................... 11

WEAKNESSES: ................................................................................................................... 11

OPPORTUNITIES: .............................................................................................................. 12

THREATS: ........................................................................................................................... 12

SWOT ANALYSIS OF PEPSICO. MULTAN .............................................................................. 13

CONCEPT APPLICATION .................................................................................................... 13

SYSTEMS OF OPERATION PREVAILING IN PEPSICO: ................................................................ 13

SUPPLIER QUALIFICATION SYSTEM: ....................................................................................... 14


FOOD SAFETY SYSTEM: ......................................................................................................... 15

TRAINING SYSTEM: ............................................................................................................... 15

STANDARD AND SPECIFICATION SYSTEM: .............................................................................. 16

QUALITY MANAGEMENT SYSTEM: ......................................................................................... 17

VALIDATION SYSTEM: ............................................................................................................ 17

SCADA SYSTEM: .................................................................................................................. 18

FEEDBACK SYSTEM: ............................................................................................................... 19

PROCESSES INVOLVED IN MAKING A COMPLETE PRODUCT ..................................................... 19

FILLING PROCESS .................................................................................................................. 20

EXTERNAL AND INTERNAL SUPPLIERS .................................................................................... 21

CAPACITY .............................................................................................................................. 21

DEMAND FORECASTING ........................................................................................................ 22

COMPETITIVE PRIORITIES AND CAPABILITIES .......................................................................... 23

IN-HOUSE CORE PROCESSES ................................................................................................. 23

OUT-SOURCE CORE PROCESSES ............................................................................................ 24

ORDER WINNERS AND ORDER QUALIFIERS OF PEPSICO. ....................................................... 24

PROCESSING CYCLE OF PEPSI: ............................................................................................... 25

CORE COMPETENCIES: ........................................................................................................... 28

EFFECTIVE SUPPLIER RELATIONSHIP: ...................................................................................... 29

BOTTLENECK: ........................................................................................................................ 29

GLOBAL STRATEGIES: ............................................................................................................ 30

CONCLUSION: ...................................................................................................................... 31

QUESTIONS: .......................................................................................................................... 34

REFERENCES AND BIBLIOGRAPHY: ................................................................................. 35


INTRODUCTION OF PEPSI COLA:

Pepsi-Cola is a carbonated beverage that is produced and manufactured by PepsiCo.

The drink was first made in the 1980s by pharmacist Caleb Bradham in New Bern,

North Carolina. The brand was trademarked on June 16, 1903. There have been

many Pepsi variants produced over the years since 1903, including Diet Pepsi, Crystal

Pepsi, Pepsi Twist, Pepsi Max, Pepsi Samba, Pepsi Blue, Pepsi Gold, Pepsi Holiday


Spice, Pepsi Jazz, Pepsi X (available in Finland and Brazil, Pepsi Next (available in

Japan and South Korea), Pepsi Raw, Pepsi Retro in Mexico, Pepsi One, and Pepsi Ice

Cucumber in Japan.

The company is registered in New York stock exchange U.S.A. to make a better

control over the business the company has given the manufacturing rights to

different companies. Now, these companies are producing the products on the

behalf of the company by using their trademark. To maintain their goodwill in the

market the company has a strict policy while granting the manufacturing rights

Pepsi-Cola have standardized products all over the world (e.g., same in size, shape

and quality). The franchises have to follow all the standards as given by the

company. Even they have the mobile team, which check the company after 2 or 3

months. Either company is producing products according to the standards given by

the Pepsi Cola international.

VISION / MISSION STATEMENT:

“We aspire to make Pepsi Company the world‟s premier consumer Products

Company, focused on convenient beverages. We seek to produce healthy financial

rewards for investors as we provide opportunities for the growth and enrichment to

our employees, our business partners and the communities in which we operate.

And in everything we do, we strive to act with honesty, openness, fairness and

integrity.”

ABOUT SHAMIM & CO. PEPSI COLA MULTAN:

Pepsi Multan was incorporated in 1963 but it started its production in 1967.Allah

Nawaz Khan Tareen(Ret.DIG) got license of 7-Up. But in 1973, it became Pepsi Cola

franchise. Now a day MD of Pepsi Cola Multan is Alamgeer Khan Tareen son of Allah


Nawaz Khan Tareen. At start Pepsi Multan was having only one production plant

made by Netherlands, and was only producing 7-Up because it was the only brand

produced by Parent Company. In 1973, PEPSI acquired 7-Up in Canada so the

Multan franchise started producing PEPSI and Mirinda along with 7-Up & became

PEPSI franchise.

In Pakistan, Shamim & Company is among top of three out of eleven companies.

When franchise cross a certain volume, plant is classified as, „mega plant status‟

Pepsi Cola has achieved in 2000. Coke was already operating in the market at the

time when Pepsi Multan established. At that time Coke was market leader but with

the passage of time, Pepsi Multan kept focusing on gaining the market share. Then,

Pepsi has launched a new brand with the name of mountain Dew. Now Pepsi Multan

is working with five production plants capable of producing 100,000 cases per day.

Installation arrangements for two new plants are in process. The plant which was

installed at the time of establishment has now been grounded. Pepsi Multan's

currently market leader with more than 80% of market share. The company is

properly serving all these areas with quality products. Pepsi Multan is not an ISO

certified company because it is an international drink having their own standards

and there's no export.

Objectives:

Objective of Pepsi is to maintain market leadership and increase market sales. Pepsi

Cola is in Pakistan as compared to its

competitors according to Shamim & Company we have to place our position on top.

Whenever we make policies, leaders kept in mind that we are number one in current

market position.

HISTORY OF PEPSI-COLA:


In 1893, Caleb Bradham, a young pharmacist from New Bern, North Karolina,

begins experimenting with many different soft drinks.

In 1898, one of Caleb's formulation, known as “Brad's Drink” a combination of

carbonated water, sugar, vanilla, rare oils and coca nuts, is renamed “Pepsi-

Cola”.

On August 28, 1898, Pepsi-Cola received its first logo.

In 1902, he applied for a trademark with the U. S. Patent office, Washington

D.C., and formed the first Pepsi-Cola company.

In 1905, Pepsi-Cola's first bottling franchises were established in Charlotte and

Durham, North Karolina. In 1906, Pepsi gets another logo change, the third in

eight years. The modified script logo is created with the slogan, “The original

pure food drink.”

In 1920, Pepsi theme line speaks to the consumer with “Drink Pepsi-Cola, it

will satisfy you.”

In 1923, Pepsi-Cola was declared bankrupt and its assets were sold to a North

Karolina concern, Carven Holding Corporation, for $30,000.

Setup of Pepsi-Cola:

The head office is situated in New York (USA) with units operating in different

regions of the world. These are called business units and Pakistan is in MENAP

(Middle East, North, America and Pakistan). The head office of MENAP is situated in

Dubai (UAE). The local head offices for each country are situated in the respective

capitals.

CURRENTLY OFFERING PRODUCTS:

The first product of Shamim & Company was 7-up. But the Company is producing

following products.

Pepsi Cola


Diet Pepsi

Mirinda

7-up

7-up Free

Mountain Dew

Sting Gold Rush

Sting Berry Blast

Products Manufacturing in Multan:

1. Pepsi

2. Diet Pepsi

3. 7-up

4. Diet 7-up

5. Mountain Dew

6. Mirinda

PEST ANALYSIS

Pest analysis study the changes caused by political, economical, social and

technological factors.

Political Analysis of PepsiCo.

In the FDA (United State food and drug), non alcoholic beverages fell in the food

group. In terms of regulation, the government shows responsibility in the process of

manufacturing all these products. For example, if they do meet a standard law, there

are possible fines lay down by government on companies.

Following are the factors that could make PepsiCo. actual result to be changed from

the expected result discussed in their original company‟s forward report.

Changes in regulations and laws: This comprise changes in accounting

standards, taxation requests which are (new tax laws, tax rate changes and


revised tax law interpretations) in addition to ecological laws in foreign and

domestic jurisdictions. This is going to affect our product selling price.

Political Conditions: This is mainly in our international markets, which include

civil unrest, change in government and restriction on the possession to transfer

capital across borders. For example the civil unrest in Gaza is going to affect our

market in the Middle East.

Ability to enter developing markets: This mainly depends on both political and

economic situation and how fine they are capable of forming strategic business

alliances and make essential infrastructure enhancements. This might be difficult

in some countries because of some strict laws set by their government e.g.

existence of monopolies, employing 95% of the citizen and so on. This is going

to affect our international market penetrating to developing countries.

Changes in the non-alcoholic industry environment: These consist of

competitive product, without limitation and pricing pressures and their capacity

to achieve or keep share of sales in the global market because of other

competitors. The government affect all these changes by setting rules like

barriers to entry i.e. making it difficult for new company to come up, price fixing,

this is going to affect our share value in the global market because our product

are not sold at our desirable price.

Economic Analysis of PepsiCo.

Global Recession: Few years ago, the united state economy was very good and

almost every part of it was rising and was going fine. Though, lot things have

change. Economists often describe recession as a negative GDP growth or two

consecutive quarters of contraction. Recently, the government officially confirmed

that united state has been experiencing recession for the past few months.

However, the forceful action by Federal Reserve and congress has helped the

economy in going back to sustained positive growth in the next few months. The

Federal Reserve is trying their best to help the economy recover.

Interest Rate: Interest rate has been cut down ten times recently. The rate has

now fall between 40 years low of 3%. Reducing the interest rates will definitely


stimulate customer demand in the economy. Companies will have the

opportunity to enlarge and increase by collecting loans as an outcome of low

interest rates on borrowings. PepsiCo can easily loan money to invest in new

products because the interest rates are now reduced. The loan collected can also

be used on research of new products. As researching for new product would cost

less, PepsiCo will sell its product at a cheaper price and people will spend

because they will get Pepsi product at a cheap rate.

Fear for inflation: The United States is on the course to achieve its economic

levels back. Recently, consumers are now continuing their normal way of life i.e.

going shopping, eating out at eatery and so on. Thou many are still careful with

their money because they still have the believed that lower inflation is still

coming. Consumer will recover their full confidence shortly and will have impact

in our sales figures.

According to the “Standard and Poor`s Industry surveys”, non-alcoholic beverage

industry has high sales in most countries outside the united state. For major soft

drink companies, there has really been improvement in the economic in major

international markets. Such as Brazil, Japan etc. These markets will keep on playing a

major role in the steady and success growth for most non-alcoholic beverage

industry.

Social Analysis of PepsiCo.

A lot of United States citizens are now practicing healthier way of life. The impact of

this on the non alcoholic beverage industry is that many people are now changing

to pure water and diet cola with zero sugar compare to coke, beer and other

alcoholic beverages. The necessity for pure water and products that are healthier are

now very important in the standard day to day life. Most consumers between the

ages of 40-55 are gradually more worried with nourishment. As many are growing

older, they are more worried in increasing their prolonged existence. This will keep

having impact on the non alcoholic beverage industry by rise in demand for

healthier beverages.


Technological Analysis of PepsiCo.

The following are some of the factors that affect the company‟s actual result to

differ from the result expected.

The usefulness of company marketing, advertising and promotional programs.

The recent development in technology of TV and internet e.g. the latest use of

HD graphics. They make product look more attractive especially if the HD is used

on the television. This help in convincing the customers and selling the products.

The introduction of vending machines, plastic bottles and cans have helped to

increase sales for PepsiCo. This is mainly because they can easily be carried and

disposed after use. The introduction of vending machine has also helped to

increase sales because it will save labor cost.

As technology is growing everyday and getting more advance, there has been

overture of new machineries which will enable PepsiCo product to increase

tremendously than it was years before.

PepsiCo has over 10 factories in the United States which use most state of the

art of drink technology to make sure top product quality and very fast delivery.

The biggest factory is in New York opened in 1990. This factory has a machine

with the latest technology which can manufacture cans of PepsiCo drinks faster

than bullets from a machine gun.

PEST Analysis of Multan Branch

Political: No Issues

Economical: Power outages cause great impact on operational cost.

Social: Being present in city center we face difficulties in transportation of material.

Technological: Away from tech-centers like Karachi & Lahore we sometimes have to

get expensive support from these cities. 100% solutions are available.

SWOT ANALYSIS OF PEPSICO.


STRENGTHS:

1. Company Image:

It is a reputable organization and is well known all over the world with the image

of producing a high quality product.

2. Quality Conscious:

They maintain a high quality as Pepsi Cola International collect sample from its

different production facilities and send them for lab test in Tokyo.

3. Good Relation with Franchise:

Throughout its history it has a good relation with franchisers working in different

areas of the world where they have the production facilities.

4. Production Capacity:

It has the highest production capacity i.e. 60,000 cases per day is not only in

Pakistan but also in all over the world this trend is observed.

WEAKNESSES:

1. Short Term Approach:

They have a lack of emphasis on this in their advertising such as currently when

they lost the bid for official drink in the 96 cricket world cup. They started a

campaign in which they highlight the factor such as “nothing official about it”.

2. Weak Distribution:

They lack behind in catering the rural areas and just concentrating in the urban

areas.

3. Low consumer knowledge:

They are unable to enhance local consumer‟s knowledge.


4. Lack of soft drink:

Lack of soft drink “know-how” as a result of diversified business units and

generalist managers

OPPORTUNITIES:

1. Increase Population:

As almost in all over the world growth rate is increasing which in turn increases

the demand of products and necessities and especially in Asia the market is

growing at a faster rate as compare to other continents. So they have to attract

new entrants.

2. Changing social trend:

As in all over the world people are rushing towards fast food and beverage

because of life which has become much faster, it provide the company a favor to

capture this fast moving market with its take away product.

3. Diversification:

They may enter in garments business in order to promote their brand name, by

making sports cloths for players which represent their name by wearing their

clothes.

4. Distribution of snack foods:

They have opportunity of distributing Pepsi snack foods in the world.

THREATS:

1. Imitators:

They also have a problem of imitators as receives complaints from customers

that they find take product in disguised of Pepsi‟s product.

2. Government Regulation:


They face problem if government employ taxes on them which force them to

raise the price of their product.

3. Corporation’s shortage problem:

Again this is also a serious threat from it suppliers as if supplier is unhappy with

the company. He may reduce the supply and exploit the company. This action

will surely affect the production process.

4. Non-carbonated substitutes:

Non-carbonated substitutes, such as juices and tea brands are maintaining a

strong foothold in the market.

5. Political instability:

The big threat to Pepsi in Pakistan is Political instability and civil unrest.

6. Threat of labor strikes:

They have external threat of labor strikes and power outages in Pakistan.

SWOT Analysis of PepsiCo. Multan

Strengths: Leadership, Extensive Training System, Validated Quality & Food Safety

Systems (Four National Quality Awards & Two International Food Safety Awards).

Weaknesses: Illiterate Trade (Product Handling Issues)

Opportunities & Threats: Majority is of Price Focused Customers (Can

be deceived by Low Priced; Low Quality products).

CONCEPT APPLICATION

Systems of Operation Prevailing in PepsiCo:


There are some systems of operation prevailing in PepsiCo. These systems mainly

constitute major part of operations being performed within the organization. These

systems are organized and formulated in such a way so as to provide a best quality

product to customers. Few of systems are as follows,

Supplier Qualification System

Food Safety System (SOP)

Training System

Standards and Specifications System

Quality Management System

Validation System

SCADA System

Feedback System

Supplier Qualification System:

Supplier qualification system describes how a supplier qualifies for the availability of

raw material to the PepsiCo. This system has a complete check on the purity of the

material. It can be analyzed through this fact that Pepsi Cola International (PCI) itself

gives approval to the suppliers through different procedures of testing the raw

material.

Raw Material Suppliers

Sugar Layyah, Shakar Ganj (JDW)

CO2 Pak Arab, Supreme, BOD

Concentrate/ Flavor PCI (Hattar Chemicals)


Water is extracted from the turbines which are 300 meter below the surface level of

earth. Now, samples of each raw material are collected and sent to the PCI for

testing and approving the quality of raw material. Only those suppliers qualify who

are able to fulfill the PCI standards and measures.

Food Safety System:

Food safety system involves SOP which is acronym of “Standard Operating

Procedure.” This procedure is specialized for maintaining the safety of product and

food delivered by PepsiCo. Each step in SOP is documented step and is approved by

Top Management.

Training System:

Training system involves the following steps:

Training Need Analysis

Training Analysis

Training Refresher


Above mentioned hierarchy determines that how the training is performed within

the hierarchy and it also determines the frequency that which member of hierarchy

is being trained after which time of interval. For example, labor is the person in

hierarchy who is being trained most frequently and general managers are being

trained after 1 or 1.5 years.

Training Need Analysis determines need of training that where the training is

required. This involves all of the Top Managers, Managers, Executives,

Chemists/Operators, and labor. Only the difference is of time span that after how

much time, training is needed. For example, Top Managers require training after 2

years and chemists and labors require training after 3-6 months.

Training Analysis determines that how properly training is being performed and

what is the outcome of training either outcome is positive or negative.

Training Refresher actually refreshes the training system overall prevailing within

the organization, and it identifies where the training required now. Through training

refresher training need analysis is performed. Hence, it makes a cyclic process of

training system. Training system is important for performing the operations in a

smooth and flawless way.

Standard and Specification System:

Standard and specification system plays important role for maintaining the previous

record of the product. Standard and specification system deeply analyzes that how

the operations are to be performed. Let‟s take the example of sugar. Sugar is raw

material of Pepsi, 7-up, Mountain Dew and Mirinda. For maintaining the quality of

product the factors like

Amount of sugar


Color of sugar, and

Quality of sugar

All are taken into consideration that each product requires a specific amount of each

raw material and quality, quantity and color for making a product according to its

standards and specifications.

Quality Management System:

Quality management system assures the quality of product. HACCP is a system

which is recognized and specialized for QMS. HACCP is the acronym of “Hazard

Analysis and Critical Core Processes.” It is actually approach towards improving the

quality of product through different methods, strategies and policies. After ISO 9001,

HACCP is mandatory in PepsiCo.

In Pepsi, processes run in the following way

Raw Material Processing Packaging Warehousing

So, from raw material to warehousing HACCP is applied in all processes for

maintaining the quality of product.

Validation System:

Validation system is also called as verification system in PepsiCo. This system verifies

the overall processes that either they are being performed in a proper way or not. R

& R Gauge supports the validation system because it actually measures the

Repetitiveness and Reproduction of a process that how a process is producing a

reproductive and consistent result as its outcome. This system is periodic and is

successful for forming the process flow in linear and smooth way and it actually

causes the processes to streamline in a single and regular path.


SCADA System:

SCADA is acronym of “Supervisory Control and Data Acquisition.” SCADA system is

used to monitor, control, and alarm plant or regional operating systems from central

location. In Pepsi Multan, this system was introduced before 6-7 years nearly in

2006. It is actually a quick and intelligent check on the overall performance of

operators and labors working within the organization. This system gives the real

time analysis and clear picture of performance of workers, machinery, equipment

and operating tools. This system has the advantage that if any person tries to be

careless or indifference about any process then through this system he would easily

be caught and would be punished by his supervisors.


Feedback System:

Feedback system in Pepsi is of two types

Direct Customer Feedback

PCI Method of Feedback

Direct Customer Feedback involves direct complaints and problems of customers

related to product, its delivery, and taste of the product. A proper Quality

Complaint Management System is prevailing in the PepsiCo. which is designed for

customers‟ complaints regarding Pepsi Products. Through this method Pepsi receives

direct feedback from the customers and then plan further improvement and tries to

sort out the complaints of customers.

PCI Method of Feedback is unique and different from other companies. Pepsi Cola

International silently collects bottles from different shops and markets and then

checks the quality of bottles, taste of product and then analyze the results of bottles

collected from the shops. By checking the taste and quality of product PCI gives

feedback to that franchise of which the bottles have been collected. If that franchise

meets the standards of PCI then that franchise is awarded on quarterly, semiannually

or annually basis.

Processes involved in making a Complete Product

All of the processes involved in manufacturing a bottle are depicted in the flow

diagram given below. It is clear for the diagram that how the processes are

performed in a significant manner and in a sequence to get the desired outcome of

processes.


Filling Process

Filling process involves several steps. First there is a syrup room for preparing syrup

of product i.e Pepsi, 7-up, Mirinda etc. then there is a filtration room and then there

is a finished syrup room where syrup is ready for further processing. This prepared

syrup mixes with CO2 and concentrate of a specific product. Each product has

specific flavor/concentrate for its manufacturing. When these three components are

mixed in tanks then a cool temperature product is ready and from here it is filled in

glass or pet bottles depending on the machinery which is specified for pet or glass

bottles.


External and Internal Suppliers

For this particular process, there are specified suppliers for each component

contributing in manufacturing of a product. Syrup is prepared from water and sugar.

For water there are internal suppliers and water is brought from 300 meter below

the surface level. Suppliers of sugar are external because they are provided by

Layyah and Shakar Ganj (JDW). For CO2, Pak Arab and Supreme are the suppliers and

these are external suppliers. For flavor/concentrate, PCI is supplier of it and it is

external supplier of this raw material.

Capacity

“Capacity is the limiting capability of a productive unit to produce within a stated

time period, normally expressed in terms of output units per unit of time.” This is

actually the intensity with which a facility is used. This intensity is increased through


overtime. Other way of increasing the capacity is to engage in subcontracting when

it is feasible.

In Pepsi, the capacity measure in output form is the number of crates produced.

There are two production units having different lines. The first unit contains 3 lines

and allocated for 250 ml. Pepsi, 7UP, Dew & Mirinda. The second unit contains 2

lines and produces 1 & 1.5 liter bottles. These lines are flexible in a sense that

through one line you can produce multiple brands having a set-up time of 2 hrs.

They are not fully utilized. The capacity of one line is 1100 bottles per minute but it

is being operated at 800 to 900 bottles per minute. The reason is that, the bottles

move very fast that may cause serious accidents by breaking into small pieces. There

are 3 shifts working in Pepsi cola. The total capacity of 5 lines is 160,000 crates per

day. But the average utilization of 5 lines is 100,000 crates per day in peek season.

Demand Forecasting

Planning and control for operations requires an estimate of the demand for the

product or the service that an organization expects to provide in the future. Since

forecasting should be an integral part of planning and decision making, the choice

of a forecasting horizon (a week or a month, for example), a forecasting method

with desired accuracy, and the unit of forecasting (dollar sales, individual product

demand.) should be based on a clear understanding of how the output of the

forecast will be used in the decision process.

SHAMIM & COMPANY (PVT) LTD uses the historical data for forecasting demand. As

the company has seasonal business so the demand is high in the month of March,

April, May, June, July, August and September. Sixty percent sale of the company

takes place in these months. This is the peak season for the company.

Company makes the sales forecast on the basis of historical data. For example, if a

company wants to forecast the sale for June 2012. They will take the data of last five


year in order to forecast the sale for June 2012. They also take into account the

current trend factors.

Level of Forecast

The Pepsi cola forecast the demand for their products on aggregate level. Then they

forecast demand for Pepsi, 7up, Mountain Dew and Miranda individually.

Competitive Priorities and Capabilities

“The competitive priorities are the operating advantages that firm‟s processes must

possess to outperform its competitors.” Shamim & Co. has the competitive priorities

of high-performance design and consistent quality.

High-Performance Design

Actually Pepsi is getting the competitive edge in our region on the basis of its

quality and the quality is its taste. Through a complete marketing research they

found that sweet taste is liked more by this region. That‟s why in Pakistan Pepsi is

dominant soft drink and it has almost 75% shares in this market. On the other hand

when we look internationality then Coca Cola is the leading company. So Pakistan is

a big market for the Pepsi, where Pepsi is generating a lot of revenues.

Consistent Quality

Another major and the strong aspect of the Pepsi in Multan is that they are

producing a consistent quality according to the PCI standards. The low quality

bottles and the damaged bottles are not dispatched towards the market. Pepsi has a

lot of checks and balances on its output level.

In-House Core Processes

In Pepsi following are the Core Processes which are being performed In-House,


Customer Relationship Process

Supplier Relationship Process

Order Fulfillment Process

Out-Source Core Processes

Out-Source core process is only one process which is managed outside the

organization and that is “New Product/Service Development.” This is planned by

PCI and other franchises only follow their instructions.

Order Winners and Order Qualifiers of PepsiCo.

In case of Material all suppliers who qualify the PepsiCo. standards matrix for

supplier qualification and the relevant audits are order winners and qualifiers for

PepsiCo.

In case of Product only those distribution and retail outlets qualify who have proper

storage and supply guidelines of PepsiCo. products along with specific commercial

clauses.

Hierarchy of Project Managers in PepsiCo.

Project Managers are in the following hierarchy in Pepsi,

Plant Lead Team Project Manager Project In charge Project Execution Team

First of all project lead team is selected for a specific project. This team actually

designs the project team and decides who is to perform specific functions. Project

manager, project in charge and project execution team all are selected by project

lead team. And then according to the strategy all of the tasks are performed.


Elements required for Project Life Cycle:

For Project Life Cycle following elements are required,

Master Plan Plan B Resources Technical Details SpecificationsSME

Execution Validation Sign off.

A master plan is designed for a project to be acted upon. Plan B is prepared as an

alternative of master plan and it is also of equivalent to the first plan. Then

resources are allocated according to the need and requirement of the project.

Technical details are listed down that which technology is going to be used for the

particular project. Then specifications are settled for the project that which resource

is allocated to the specific path of project. Then there is Subject Matter Expert who

critically analyzes the whole project and then tells about possible solution of the

problem which is being faced during the project completion.

After a complete analysis of SME there is execution of the project in which project is

performed actually. Validation of the project is checked through R & R Gauge that

how the processes are producing consistent and repetitive results. After verification

of the project there is phase of sign off in which project is completed and all the

tasks have been performed according to the plan.

Processing Cycle of Pepsi:

Processing cycle of Pepsi includes different steps through which a product is passed

out. From raw materials processing till the bottle in customers‟ hand all of the steps

are given in the following diagram,


Project Team Selection Criterion:

Plant Lead Team decides criterion for selection of project team members respective

to the subject project. Project leader is the SME (subject matter expert) of that area.

Team members must possess relevant experience and successful track record.

Internees are attached for future skill pool development.

Market Analysis and Competitive Priorities:

In Pepsi market analysis includes only market segmentation. They just set their

target markets and then apply their marketing strategies upon that specific area.

They believe that need is automatically determined through these market segments

and there for there is no specialized need assessment criterion.

Competitive priorities include a consistent quality and customized product range.

They believe on their consistent quality of products and this is actually an award

winning situation for the organization. Their products are customized i.e according

to the demand of the customers. Hence, we can observe a trend of Pepsi that they

very rarely launch new products and mainly they produce specialized and

customized products for their customers. Although they are producing their


products in bulk and there is line flow but there is no versatility in their products.

So, they compete on these grounds with their competitor i.e Coca Cola.

New Product/Service Development:

In Pepsi there is development of new products only in PCI and it gives the approval

of new product/service development. Let‟s take the example of PepsiCo. Multan, it is

manufacturing only four products as these are Pepsi, Mountain Dew, 7-Up and

Mirinda and diet Pepsi and 7-Up are also being manufactured in the PepsiCo.

Multan. So, PepsiCo. Multan is not manufacturing all of the products of Pepsi

because PCI has control over it.

Improvement of Processes:

In Pepsi there is no re-engineering of processes instead processes are improved

through annual maintenance of the processes. There is improvement of machinery

which is being used through whole of the year within the organization. During

annual maintenance all parts of machinery are separated and each part is cleansed

with great care. If any part requires renovation then that part is renovated and this is

how they improve their processes.

Strategies for Competitor Analysis:

For analyzing the competitors‟ behavior, Pepsi usually make strategies for consistent

quality, prices and marketing strategy. Consistent quality is actual tool for their

reputation in the market and they have strong grounds for their quality. Prices they

charge for their products are also according to the competitors‟ prices. Actually

prices are set by the Pepsi and its competitors have to keep their products‟ prices

according to it because their product will not be able to sell in the market. They

have a strong marketing strategy for competing with its competitors. They make


segments for their products and then distribute it according to the settled prices

and plan. So, these are the tools of Pepsi for competing with the competitors in the

world market.

Core Competencies:

In Pepsi, there are specialized 19 Key Elements which constitute the core

competencies of Pepsi. Few of key elements are given below

Leadership

Trainings

Specs and Standards

Validation/Verification

QMS/HACCP

Feedback System

Maintenance for Production

Regular Audits

Pepsi Multan has strong Leadership and they compete with others due to this factor.

They have won many awards and they are actually quality achievers because there

are audits which take place on quarterly, semiannually and annually basis. These

audits are of different types and performance of each franchise is observed keenly in

these audits. Pepsi Multan has won the awards of consistent quality on quarterly

basis and this is possible only due to strong leadership. Training system and all

other competencies have been explained earlier except Regular Audits.


Regular Audits are performed in Pepsi and they are actually performed by PCI. PCI

send their foreign agents to check the performance of processes and performance

of franchises working in different countries. One example of these audits is that a

person from Canada came to Pepsi Multan for surprise audit and he started

checking the performance of employees, workers and machinery working in the

organization. After a complete audit session, he has given scores to the Pepsi

Multan and they scored 875/1000. So, this score is clear depiction of their strong

leadership, training system and other elements which are prevailing within the

organization.

Employees’ Working Schedules:

In Pepsi, employees are working in proper timings and work schedules. Timing of

employee entry and exit is fixed and they have to work for specific time. If, in case

of emergency or in any uncertain condition, employees can take leave and go for

vacations. There is a complete HR Department which is responsible for such type of

cases and they are performing their tasks for this purpose. They handle all the

matters very carefully that the employees of Pepsi are very much happy and content

with their performance and with their organization.

Effective Supplier Relationship:

Effective supplier relationship is observed in Pepsi. All of the suppliers are

recognized by PCI and they are assured for providing a best quality raw material for

the Pepsi. As we have mentioned above that raw material constitute of sugar, water,

CO2 and concentrate or flavor. Sugar and CO2 are provided by authorized suppliers

and PCI checks the quality of raw material. This builds effective relationship of Pepsi

with its suppliers that they trust their suppliers and raw material provided by them.

Bottleneck:


Bottleneck for Pepsi are

Distribution Area

Illiterate Distributors

Area Limitations

Distribution area is bottleneck for Pepsi because sometimes they face problems

regarding distribution of products and their sales of products get limited due to

narrow distribution area.

Illiterate distributors are also bottleneck for Pepsi because these distributors do not

deliver products on time to the retailers and this is the reason of spoiled products

which are delivered to the customers. By holding the products for a longer period

the taste of products can be spoiled and it would cause the image of Pepsi can be

destroyed through this indifference attitude.

Pepsi Multan is facing problem regarding area because it is considered as backward

area where there is no such population and usually people of low class live there.

So, Pepsi has uncertainty that at any moment they can move from this place and

arrange their set up to other place. This is also a bottleneck for Pepsi.

Global Strategies:

As we have observed earlier that Pepsi is following different international standards

and policies to achieve global position in the world market. They are following

specialized systems by adopting different ways like leadership, training system,

HACCP, ISO 9001, and franchise based system all are approaches towards achieving

Global Position in the world market. Hence, by following these international

guidelines and rules for food safety Pepsi is moving ahead for Global Position.


CONCLUSION:

Through above discussion it can be concluded that,

Pepsi has a complete and well-settled systems of operations through which it

is easily for them to perform their functions in a proper and arranged manner.

Several systems which are prevailing in Pepsi are building its pillars very

strong internally and externally. For example, they have very strong and

competent workforce working for their organization and outside the

organization they have very strong image of their company. So, it is beneficial

for them to run their processes in an organized way.

Pepsi is maintaining its quality through following rule of HACCP and applying

QMS in the organization. Food safety system actually provides a hygiene

factor for its customers. This system is actually specialized and provides

accuracy to the processes being performed within the organization.

Pepsi is using different systems for its processes and operations. One of the

important systems which we have observed in Pepsi is SCADA system and we

have actually seen the whole SCADA system application and its proper use in

their production area where Pepsi and its co-products were being

manufactured. This system is actually a real depiction of what is being

performed inside the processing house.

Most fascinating thing about Pepsi is that they take care of cleanliness at a

greater level. Every department and processing house which we have visited

was very much neat and clean from inside. This assures the quality of their

product that how they take care of their customers‟ health.


Training System, as mentioned above is specialized and it concerns the

cleanliness of labors who work inside the processing houses and rooms. For

example, they gain the training of their dresses, their nails, their hair and

other factors of cleanliness to ensure that nobody is causing problem in their

processes due to his personal cleanliness. Therefore, time span of training of

labors is very frequent and it is performed repeatedly after 3-6 months.

Pepsi has strong supplier and customer relationship and it is getting stronger

day by day through consistent quality and providing the product which meets

the standards of PCI. Advertisements are also causing their relationship to be

stronger because new customers get attracted and old customers are retained

through following the parameters of quality of product.

Pepsi Multan is trying to overcome its bottlenecks which are causing

hindrance in its product distribution and product delivery.

Pepsi is a renowned company and it has competed other brands and established the

number 1 position by understanding the customer psychology, by assuring quality

of product, by introducing ingenuity in products, by enlarging its product base, by

intense and jazzy advertisements, and by sponsoring the sports in Pakistan. The

word for marketing success is to remain in spotlight and that is what Pepsi is doing.

Pepsi has tense competition with Coca Cola for about 80 years and it has overtaken

it. Purpose of this project is to study the operations which are being performed in

the organization and the strategies which Pepsi is applying in Pakistani market for its

product Pepsi Cola. Pepsi has aggressive marketing plan and quick diversity in

creating new ideas and attracting new customers. They are actually customer

focused instead of business focused. Parent company takes major steps to maximize

and continue with the consistent quality of products. Quality complaint management

system (QCMS) is working with 25 employees to get customer complaints. So, all


these explained proves that Pepsi is a top quality product and it is working on the

organized operations and these operations are responsible for producing a high

quality product and for achieving customer satisfaction from the product.


QUESTIONS:

1. What are the systems of operation strategy in Pepsi?

2. Which of the core processes are being performed in house and which are

outsourced in PepsiCo?

3. How processes get improved in PepsiCo? Either they are improved or re-

engineered?

4. How project team is selected in PepsiCo? Which qualities are taken into

consideration?

5. What are performance indicators in PepsiCo? Which measures are taken for

performance indicators?

6. Who are order winners of Pepsi?

7. Who are order qualifiers of Pepsi?

8. What are the global strategies of Pepsi?

9. What are their strategies for implementing change?

10. How they analyze market either through market segmentation or need

assessment?

11. What strategies they are opting for competitor analysis?

12. What are the core competencies they have?

13. What they do for employees who want to work in flexible hours and some work

in fixed hours?

14. Which communication method is mostly used to explain complex problems?

15. How much supplier relationship is effective in PepsiCo?

16. What is the hierarchy of project managers in project management?

17. How mission and vision statement fulfill the Global objectives of PepsiCo.?


18. Which issues are mandatory for the company to follow the parent company

rules?

19. To attain the best quality of raw material, which strategy is used?

20. From where raw materials are purchased?

21. How raw materials are tested for maintaining the best quality?

22. What is the strength of PepsiCo. that have made its position remarkably stable?

23. What is SOP? How is it effective in making quality product?

24. What are the processing steps in PepsiCo.?

25. What are the methods for feedback? Is there any organized system for this

purpose?

26. What parent company PCI do for maintaining the good quality of the product?

27. What is the marketing strategy of Pepsi?

28. To make consistent quality product, PepsiCo. tests the product, how it rank its

quality?

29. This company is customer focused or business focused?

30. How HACCP supports in formulating vision and mission statement of company?

31. What is the benefit of approved supplier?

32. What are bottlenecks for PepsiCo.?

33. In which category PepsiCo. lies?

34. How audits are performed in PepsiCo.?

References and Bibliography:

Pepsi Cola Bottling, District Jail Road, Multan

Muhammad Danish, Manager Quality Control, Pepsi Cola Multan


Major Muhammad Farooq, Sales Manager, Pepsi Cola Multan.

http://www.essaycoursework.com/coursework/pest-analysis-on-pepsico-

plc.php

http://www.studymode.com/subjects/pest-analysis-of-pepsi-in-pakistan-

page1.html

http://stepheny.hubpages.com/hub/pepsi-swot-analysis-with-other-soft-drinks

http://kninn.blogspot.com/2009/11/swot-analysis-of-pepsico.html

http://www.studymode.com/subjects/pest-analysis-of-pepsi-in-pakistan-

page4.html

http://www.slideshare.net/purki/swot-analysis-pepsi#btnNext

http://www.essaycoursework.com/coursework/pest-analysis-on-pepsico-plc.php

http://www.essaycoursework.com/coursework/pest-analysis-on-pepsico-plc.php

http://www.studymode.com/subjects/pest-analysis-of-pepsi-in-pakistan-page1.html


http://stepheny.hubpages.com/hub/pepsi-swot-analysis-with-other-soft-drinks

http://kninn.blogspot.com/2009/11/swot-analysis-of-pepsico.html



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