PepsiCo Supply Chain Management Essay

Introduction translate concatenation Management is the military summons of cookery, implementing, and controlling the operations of depict kitchen range with the purpose to satisfy guest requirements as competently as possible. render train anxiety spans altogether movement and storage of crude(a) materials, work-in- do by stock, and finished goods from point-of-origin to point-of-consumption. It is a cross running(a) approach to managing the movement of au naturel(p) materials into an organization and the movement of finished goods erupt of the organization toward the check consumer. Supply ambit management is as well as the conclave of art and science of improving the way party finds the dim components it require to make a carrefour or service and deliver it to customers. It seeks to lift competitive fulfilance by closely integrating the internal functions in spite of appearance a f posernity and in effect(p)ly linking them with external operations of providers and channel members. More everyplace, this has been a prominent concern for both large and sm both companies as they strain for ruin shade and higher customer satisfaction.In a go forth arrange, a association links to its provider upstream and to its distributors downstream in order to serve its customer. The goal of deliver chain management is to deliver maximum customer service at the humiliatedest possible appeals. Companies forthwith argon competing supply chain-to-supply chain rather than opening-to-enterprise requiring for to a greater extent intimately affiliated relationships. Customer trades and supply chains are no longer throttle by physical proximity, and agate line linees are sourcing from and managing a greater payoff of widespread partners and channels. Success of a company now depends on effective international supply chain management, its world power to deliver the decline intersection point to the right market at the right beat. The complexity involved in managing supply chains that span continents and dominate markets necessitys strategies and schemes that are adapt subject. Managing Supply Chain for spherical Competitiveness takes a strategic look at every(prenominal) of the incumbrance functions of global supply chain management which intromits product design, cooking and forecasting, sourcing, step to the foresourcing, manufacturing, logistics, statistical scattering, and fulfilment. An physical exercise to illustrate this theory on the supply chainmanagement is the PepsiCo, Inc.Pepsi Co HistoryPepsiCo, a Fortune 500, American Multinational Corporation is low the nutrient consumer product industry and is the human race leader in comfortable foods and drinkables. The Pepsi brand and other Pepsi-Cola products account for nearly trio of the total cushioned drink gross revenue in the United States. In order for the company to make sure that their products pass away the customers, the comp any needs a efficient supply chain solutions. It was founded in 1965 finished the merger of Pepsi-Cola and Frito-Lay. Tropicana was acquired in 1998 and PepsiCo co-ordinated with The Quaker Oats corporation, including the Gatorade in cc1. PepsiCo offers product choices to rival a broad course of needs and preference from fun-for-you items to product choices that contribute to healthier lifestyles. PepsiCo owns some of the worlds approximately popular brands, including Pepsi-Cola, Mountain Dew, Diet Pepsi, Lays, Doritos, Tropicana, Gatorade, and Quaker.Coca-Cola Company in market range for the first time in 112 old age since both companies began to compete. Other brands include Caffeine-Free Pepsi, Diet Pepsi/Pepsi Light, Caffeine-Free Diet Pepsi, Caffeine-Free Pepsi Light, Wild red-faced Pepsi, Pepsi Lime, Pepsi Max, Pepsi Twist and Pepsi ONE,7 Up ,Aquafina (Flavour Splash, Alive, and Twist/Burst),Propel Fitness Water, SoBe, Quaker Milk Chillers. The Frito-Lay brands are Cheetos,Fritos,Go Snacks, James Grandmas Cookies, Hamkas, Lays, Miss Vickies, Munchies, Sandora, Santitas, The Smiths Snackfood Company, Sun Chips, Kurkure, Tostitos and some of the Quaker Oats brands include Aunt Jemima, Capone Crunch, Chewy Granola bars, Coqueiro, micro snickums, Cruesli, FrescAvena, King Vitaman, Life, Oatso Simple, Quake, Quisp, Rice-A-Roni, and Spudz PepsiCos MissionPepsiCos everyplaceall mission is to maturation the value of shareh one-time(a)s investment. They do this through sales growth, approach controls and wise investment of resources. They believe their commercial success depends upon offering quality and value to their consumers and customers providing products that are safe, wholesome, economi recally efficient and environmentally sound and providing a fair return to their investors while adhering to the highest standards of integrity. A customer while purchasea bottle of Pepsi will consider product quality, footing and handiness of the prod uct. Thus, Pepsi centrees its competitive strategy as to producing sufficient variety, reasonable prices, and the availability of the product.Pepsi chief operate officerIndra Krishnamurthy Nooyi has been the chief executive of PepsiCo since 2006. During her time, healthier snacks have been marketed and the company is striving for a net-zero carry on on the environment. This focus on healthier foods and lifestyles is part of Nooyis Performance with Purpose philosophy. In 2007, Nooyi spent $1.3 trillion on healthier-alternative brands standardized Naked Juice, a California maker of soy drinks and organic succus. Today, beverage scattering and bottling is infrataken primarily by associated companies such as The Pepsi Bottling Group and Pepsi Americas. PepsiCo is a SIC 2080 (beverage) company. PepsiCo has also recently acquired a 50% stake in U.S.- handbagd Sabra Dipping Company. PepsiCo also has formed partnerships with some(prenominal) brands it does not own, in order to conk out these or market them with its own brands.Competitive and Supply Chain StrategiesIn its business, diversity and inclusion provide a competitive advantage that drives business results. Its brands appeal to an extraordinarily diverse array of customers and they are sold by an equally diverse group of retailers. It belowstands the needs of our consumers and customersUses diversity in our supplier base and in boththing we do. Commitment to purchase from a supplier base representative of our employees, consumers, retail customers and communities. Developing partnerships with nonage-owned and women-owned suppliers helpers us manikin the world-class supplier base we need. Creates mutually beneficial relationships that expand PepsiCos sphere of activity. It helps build community infrastructure by providing employment, teaching, role models, buying from other minority and women-owned business and supporting community organizationsFigureThus the major sustainable advantages that give PepsiCo a competitive edge as they operate in the global marketplace1. Big, muscular brands,2. Proven ability to infix and crap several(predicate)iated products and3. Powerful go-to-market outlines.PepsiCos Supply Chain ManagementDifficulties without Just-in-TimeWhen an operation of the company was not just-in-time based, the demand or payoff planner strived to hone production-oriented goals and objectives such as equipment example, labour efficiency, throughput and uptime. Optimizing these goals often leads to run large quid sizes that are dependent on the availability of raw materials. This hones the equipment and labour utilization but the production planners and handlers had not been looking at the expense of the large picture. The sourcing or purchasing managers strived towards reducing companys spending overall. This manager merged suppliers offering products or materials at the lowest per unit be through buying in volume. They blush got the shipping and freight be included in the purchase price, which led to the attract in the price of the commodity.Purchasing managers foc apply on getting the best price, not lay into consideration the supplier performance and reliability. The logistics/ ecstasy manager was tacked with getting raw materials in and the finished goods out of the production process and seek to optimize the impartation and distributing ne 2rk. This manager think on the lowest cost and reliability of the logistics or transportation solutions. But lowest cost could only be attained if the purchasing group negotiates a delivered cost package pass over with the supplier and the supplier is responsible of the reliability and performance of the carriers or transporters. approach with using Just-In-Time (JIT)When it comes to delivering high cost and perishable products to manufacturing sites, just-in-time (JIT) remains one of the near cost-effective supply chain solutions. In JIT process, on time manner of speaking is an absolute necessity. Just-in-Time (JIT) is a philosophy that defines the manner in which a manufacturing system should be managed. It enhances customer satisfaction in terms of availability of options, effrontery ofquality, prompt delivery times, and value of money. The Pepsi brand and other Pepsi-Cola products accounted for nearly one-third of the total soft drink sales in the United States. In order to assure that PepsiCos trims reaches bottlers as needed during the production had to reach them JIT, they partnered with 3PL provider Penske Logistics to manage its transportation. Penske also provides wareho usance management for two Pepsi scattering centers in North America. I2 TransportationI2 Transportation is a part of end to end solution for planning, execution, and management of the entire transportation cycle. It is designed to modify an organization to utilize and manage an entire transportation web, as nearly as flinch cost while improving transport performance. I2 transportation is designed to employ sophisticated optimisation and information techniques to define and guess alternative transportation strategies. It is also designed to provide comprehensive info management, analytics, and reporting of key transportation cost and service trade-offs. ImplementationPepsiCo frozen two objectives for transportation management. One was to achieve an on-time delivery rate at 99.1% and another was to descend transportation cost.It empowered with optimized processes and engineering science that enable the team to perform at the highest possible take. With the application of new technology that provides greater supply chain visibility, offend organized data, and access to higher level of real time or near real time information, even the best team can improve their performance. In 2000, Penske converted Pepsis transportation management technology from propriety software to i2 transportation optimisation solution. i2 transportation platform was enhanced with the addition of interface between the two companies. In addition, Penskes partnership with Business objects provided comprehensive supply chain data from its data warehouse, analysis and management applications. Penskes with use of i2 transportation could track performance at every stage in the process which addd flexibility and provided greater control over the transportation operation.This increase in visibility made it easier to keep track of shipments, revise routes and schedules to take on unforeseen changes and implement alternative plans to counter delays. By Penskes pose a solution in place to track andmeasure every shipment, Pepsi has been able to provide an on-time delivery performance of swell up over 99 percent. Pepsis transportation is coalesced to a central location to reduce costs. Penske also provided a nationwide carrier rate re-negotiation and service perspicacity which improved cost structure and achieve on-time delivery goal. With this central ization, permits negotiation in a large scale to secure the best rates and services. Further more(prenominal) than, Pepsis orders are received electronically and optimized to ensure lowest transportation cost. groundbreaking technology is deployed to select the lowest cost carrier, find the best routes and consolidate shipments. Optimal load configuration ensures maximization of each transportload (2003). In summary, PepsiCo employ the JIT process to its supply chain management. To make this possible, Pepsi partners with Penske that has provide them with i2 transportation optimization solutions which has satisfies their consumer with the on-time delivery and with the benefit to the company for it has also reduce transportation cost.I2 Supply Chain VisibilityWith shorter lifecycles and lead timesto customers demanding faster results and more responsive service. Globalization and outsourcing have added to the complexity, resulting in more diversified supply chains. The human bo dy of supply chain partners, as well as the amount of geographical dispersion, has increased dramatically as a result. To ensure that their order-to-delivery performance is not impacted, companies need to have greater coordination and visibility into the material attend across the supply chain.Increase Global VisibilityWith Companies have access to global visibility into all of their critical supply chain activities and partnerships. It allows organizations to respond more quickly and effectively to a wide range of unplanned and potentially disruptive supply and demand events. Supply- cerebrate events can include production bottlenecks, ful contactment delays such as port strikes and customs delays, and supplier shortages. Demand-side events might include customer orders that are greater than forecasts or changes to orders that have already been placed. I2 Supply Chain Visibility is designed to manage these events, assess their impact, and orchestrate a rapid and practical resol ution while providing a unified judgement of the supply chain. The solutioncan also incorporate packaged business process packs for replenishment, fulfilment, and manufacturing, and these packages can be configured to meet customer-specific requirements. i2 Supply Chain Visibility also enables companies to close the loop between traditional planning and execution processes. It enables better understanding of orders, stock-take, and logistics data.Powerful FunctionalityThis solution incorporates pre-built work flows that integrate data across order management, warehouse management, logistics, and arsenal applications for the flow of both interior(prenominal) and international goods. A series of predefined, extensible events and exceptions support each workflow and a visual studio allows workflows and events to be extended, configured, and customized to meet specific enterprise requirements.i2 Supply Chain Visibility delivers a robust technology that is scalable and extensible, an d that operates smoothly in a distributed computing environment.Extensive CapabilitiesInbound and outgoing tracking of order, inventory, and logistics flowsDomestic and international flows that track multi-leg and multi-modal shipments Visibility into exceptions and events across orders, inventory, and shipmentsRole-based views for buyers, suppliers, analysts, and 3PL vendors in high spirits degree of permissibility and privacy controlsTrack-and-trace inventory across multiple locationsConfigurable event espial mechanism and customizable event management workflowsEvent chaining such as linking of related events, audit trails, context-based paradox prioritization and all-inclusive notification options including e-mail, e-mail digest, pagers, and cell phonesCalendars, internationalisation (i18n), and multi-time zone support enabled Integration to underlying applications for intelligent resolution and to veto event recurrenceRoot-cause, event trend, and performance analysis capab ilities event subroutine library with over 100+ out-of-box events supportedFast, web-based supplier enablement and transaction supportBenefitsException-based managementEnd-to-end supply chain visibility and event management toolsCustomer-specific solutions for replenishment, fulfillment, and manufacturingThe ability to forecast and respond to supply/demand eventsThe option to move from calendar-based to event-driven planning and re-planning.Increased employee productiveness Reduced process, personnel, and expediting costsImproved customer, supplier, and partner communications. real-time decision supportE-solution by Hewlett Packard (HP)PepsiCo signed a deal with Hewlett Packard in 2006 to help improve its supply chain management and increase overall efficiency. The seven year deal involved the overhaul of current IT solutions with PepsiCo and focused on updating server environments as well as ensuring a new infrastructure which benefitted operations and increased overall cost-savin g. In particular, HP introduced a number of new solutions which helped to encourage stronger customer relationship management and supply chain management. PepsiCo had also opted for BT as its network provider to ensure the e-solution is fully implemented. The supply chain management solution reduced costs as well as enhanced current service supplying online and via its communications networking system. By standardizing and optimizing its server environment, PepsiCo International is better flex to meet its changing business needs and in turn provide better service to customers anywhere in the world.Pepsi BottlingPepsi Bottling Group is the worlds largest manufacturer, vender and distributor of Pepsi-Cola beverages. With annual sales of nearly $11 billion, the companys fastest growing segment is non-carbonated beverages, including the number one brand of bottled water supply in the U.S., Aquafina, as well as Tropicana juice drinks and Lipton Ice Tea. As part of a 24/7 production op eration, the companys Detroit place ships about 27 gazillion cases per year. Production at the plant begins as empty bottles are unloaded from trucks via conveyor and transported to a depalletizer. From on that point, theyare, rinsed, modify and sent to a filling machine (filler speeds at the plant veer based on bottle size, ranging from 350 to 1,000 bottles per minute). The bottles leave the fillers and make their way to a packaging machine, and then to a palletizer. Each pallet is wrapped for distribution and moved to the warehouse for shipping.The challengeThe plant uses a variety of sensors to admonisher bottles as they travel through the sequence of steps and to manage the flow to the individual stations. Line sensors match the speed of the conveyor. The companys inventory of sensors swelled over the years to include more than 120 different varieties. Many of these included multiple styles of the same product stocked under different brands. A similar problem was developi ng with its drives inventory, which had grown to over 50 different part numbers. The wide variety of sensors made it more and more more complex and time-consuming to replace a faulty device. notwithstanding its fast, high-performance machinery, the change magnitudely lengthy and more frequent downtime was beginning to impact the companys ability to meet its productivity goals.In addition, operating costs were on the rise due to the excess spares inventory. Because of the extensive number of sensors they had in inventory, including multiple styles and brands, simply finding the right replacement resulted in an hour of downtime. A more strategic approach to maintenance was necessary, as even the smallest of delays could cost the plant thousands of dollars in lost production and overtime. cunning that effective parts management and fast, reliable equipment repair lies at the substance of efficient manufacturing, the company explored ways to get its inventory and maintenance proce sses under tighter control. Thats when it decided to turn to Rockwell mechanization for help.The Pepsi Bottling Groups Detriot plant reduced its number of sensors from 180 to 46, a decrease of 66 percent, by standardizing it sensors inventory to Allen-Bradley products. This reduced downtime and inventory costs.The solutionThe first task undertaken by Rockwell Automation was to conduct an Installed Base Evaluation a plant-wide inventory discernment to determine the exactnumber of sensors and drives the plant currently had in stock. following it needed to figure out what products were actually needed and which ones could be eliminated. To streamline its operation, Rockwell Automation recommended that Pepsi standardize its entire sensors inventory on Allen-Bradley products. The local distributor, McNaughton-McKay galvanising Company (Mc&Mc), helped design a migration plan to help ease the cost of this inventory conversion. Although all the drives employed at the plant were Allen-B radley brand, many were older models representing a multitude of drive families. To simplify its drives inventory and upgrade its technology at the same time, Pepsi converted all of its drives to the Allen-Bradley PowerFlex family of AC drives. A exposit cross-reference chart developed by Rockwell Automation now provides technicians with a quick and easy way to identify failed and replacement parts, as well as installation instructions. To ensure reliable availability to spare parts, Pepsi set-up a Rockwell Automation Services conformity that included parts management.With the agreement, Pepsi pays a intractable monthly cost for their spare parts, which are owned and managed by Rockwell Automation but stocked on-site. The agreement allows Pepsi to reduce its upfront expenses, have prompt access to spares, reduce carrying costs, and update its control technology cost-effectively. The agreement also includes an in-service warrantee, so the parts dont go out of warranty until they are actually used for the warranty period. To help the company better utilize its internal resources and reduce costly troubleshooting delays, the Rockwell Automation Services Agreement included TechConnect fight. This remote support service provides the plant with 24/7 access to Rockwell Automation technical specialists. When a problem occurs, Pepsi technicians can call for immediate troubleshooting assistance to resolve it as quickly as possible. To help facilitate problem resolution, Rockwell Automation technical specialists can also perform remote system diagnostics through an Allen-Bradley modem installed at the Pepsi facility. This helped Pepsi minimize insecurity and reducing long term costs.The resultsLeveraging Rockwell Automation Services & Support has proved to be a smart decision for Pepsi Bottling Group. The improved inventory and parts management capabilities helped reduce downtime and inventory costs, andstandardizing on Allen-Bradley products eased training requir ements and minimized the technology learning curve. These benefits have ultimately enhanced productivity by 8 percent and reduced the overtime required to fill orders. In addition, the plant was able to reduce the number of sensors it uses from 180 to 46, a decrease of 66 percent. Likewise, it was able to reduce the number of drive styles from several hundred to 14.Packaging as a tool for Supply chain managementGS 1 standards (bar codes)RFID tags for real-time stock replenishmentsCommercial Security offerings mould & pilferageOnline supply chain visibility across the chainPack preventative for the consumerPepsi-Cola Saved $44 million by switching from corrugated to utile p at long lastic shipping containers for one litre and 20-ounce bottles, conserving 196million pounds of corrugated material.Palletization cost vs. value creatorKey supply chain cost optimizer through an structured supply chain approach Drive standards pallets/trucks Pallet pooling servicesPalletization Roadma pPepsiCos Frito Lay Supply chainFrito-Lay is the snack food division of PepsiCo and the largest supplier of potato and corn chips in the world, currently holding 40% of the market share globally, and selling its products in 120 countries.StrengthFrito-Lay is succeeding against a multitude of competitors in a fierce, yet slow-growth industry, selling approximately 4.5 billion packages of snacks per year. In order to achieve this, the company has erudite how to masterfully create, innovate and manage all aspects of its supply chainusing high-tech IT systems that allow it greater control over its production processes and distribution network.Supply chain in USASupplier Base Frito-Lays supplier network for potato chip production has fewer than 100 individual suppliers. outline UsedSeveral years ago, Frito-Lay approached its potato suppliers to seek those farmers willing to concentrate on cultivating a limited number of potato varieties, with a focus on producing the most appealing tast e and quality potato chip for the consumer. Frito-Lay then offered these farmers long-term signalizes, which made it easier for the farmers to get financing and for Frito-Lay to achieve more efficient, profitable economies of scale in other areas of the value chain. It is noteworthy to have-to doe with that steps like these that insure a stable supply of raw material are important to a company who purchases 2.3 billion pounds of potatoes and 775 million pounds of corn annually.From supplier to retailerFrito-Lay traditionally relied upon its in-house fleet of trucks to transport products from its plants to its 1,900 warehouses or 200 distribution centers. However, as the company expanded, operations managers realized that it was not economical to hit every product at every plant, and therefore began specializing at particular locations. On the other hand, logistics became increasingly difficult and distances grew longer, and thus, Frito-Lay learned to exploit the benefits of truc k carrier services, employing Menlo Logistics to handle route planning. Menlo was able to reduce the carrier base by 50% and negotiate nation-wide discounts with other carriers.RetailersThe last stop involved is the 400,000 stores across the nation that carries Frito-Lays snack food products. The company utilizes their own technological systems to show stores how reallocating shelf space, for example, can produce larger profits. Retailers are also provided with Frito-Lays Profit-Vision Program, which allows retailers to analyze their sales and compare it to national performance statistics. At the same time, Frito-Lay benefits from the program because it convinces retailers to assign more shelf-space to their products.Strengths of IT corporationTracks the logistical movement of products throughout the supply chain, from acquiring the raw materials to final delivery, by utilizing its 848 tractors, 2,251 trailers, and a fleet of thousands of local computer-equipped delivery trucks. E mpowers its regional managers with access to vast amounts of information on their databases that can be used to effectively guide them in their distribution decisions. It is able to powerful assess demands across all of its products due to the availability of point-of-sale data and an impeccable IT system, giving planners the ability to discern consumer trends and appropriately prepare production plans. Its managers can be proficient in determining levels of inbound supplies, raw materials, the allocation of the companys production capacity, and logistical details for truck routing. The companys ability to target local demand patterns with effective promotion and delivery systems results in persistingly optimizing profit margins and reducing inventory and unneeded costs.Competitive advantagesThe company tries to captivate its customers by developing extensive databases that record who their customers are and exactly what they want. They focus on being the most reliable, quality-dr iven suppliers who provide services through the retail channel by means of collecting as much information along the way and utilizing it to credit their weaknesses and capitalize on their strengths. Despite only delivering potato and corn chips, relies on its ability to add unparalleled value in its distribution channel. Its customers have it off that when they do business with Frito-Lays, they arent simply buying a product to shelve in their stores, but incorporating an advanced information system with hopes of increasing sales and profits.Supply chain in IndiaHorticulture produce in India is for the most part marketed through traditional channels. A typical marketing chain for horticultural produce consists of several players as shown in FigurePepsiCo is one of the pioneers of contract nation in India since 2001 Their experience in contract farming has cover many crops potato, basmatirice, tomato, chili, peanut, oranges and more recently sea weed. PepsiCos operations started in India started in the region of Punjab in collaboration with state government. PepsiCo Indias jutting with the Punjab Agro Industries Corporation and Punjab Agriculture University remains one of the most ambitious contracts farming projects in the country.Pepsi Tropicana Supply ChainBackgroundOf the four principal scattering Centres (DC) in the U.S. the jersey City, N.J. DC is responsible for the supply of Tropicana juices in all states in the Northeast U.S., and all Canadian provinces. tee shirt City houses a unit load capacity Automated Storage and Retrieval formation (ASRS) that is fully integrated into an Automated Warehouse System (AWS). The center handles chilled subvention orange juices, and blended juices from concentrate as well as shelf stable juice products from either Florida or local co-packers. Products vary consort to package size, and juice type and style, giving rise to approximately 200 Stock Keeping Units (SKU), each facing random demand from customers. J uices get down already palletized and variously pre-packaged, and are unloaded according to demand, and moved into the ASRS area.The island of Jersey City Distribution Center (DC) of Tropicana is responsible for the supply of Tropicana juices in all states in the Northeast U.S., and all Canadian provinces. Premium orange juice from Florida represents approximately 65% of the shipments, and has an approximate shelf life of 65 days. The Jersey City DC receives five Tropicana Unit trains from the production facility in Florida weekly. Each train has approximately 45 refrigerated cars. Juices arrive already palletized and pre-packaged in paperboard containers and plastic and glass bottles. Two types of unloading procedures are currently in practice cross-docking and warehousing. Cross docking normally is used for customers receiving a single product types or transfers to a smaller distribution center in Whitestone, NY. Each train usually contains 8 to 10 railcars that can accommodate c ross-dock delivery.ProblemsThere are three major problem areas related to the current practices in Tropicana.1. Ordering policy of the individual retailers. At the moment, Tropicana manages the inventory orders for about 10% 20% of the retailers. This process is called CRP or continuous replenishment program. The Tropicana customer service department administers the ordering of those individual customers. From the supply chain perspective, this is mutually beneficial for both the customers and the warehouse. The advantage of the warehouse is that it is able to centralize the demand information of individual stores in its replenishment decisions of juices shipped from Florida to Jersey City. The retailers benefit from in time delivery and less stock out cost. Individual stores contribute the other 80% 90% of the orders, which are not under Tropicanas control. This is subject to random variation and hence uncertainties of demand on the warehouse. One approach would be to create an i ncentive for the customers to exit their ordering function to Tropicana. This is the so-called supplier-retailer coordination problem. A carefully designed set up system will benefit each and every player in the supply chain network. This may require the design of contracts or cost sharing agreements with the customers.2. Central ordering of juices that are shipped to the distribution center. Currently there are five trains of juices scheduled to arrive weekly from Florida. The company neer ships partially filled trains from Florida. The Jersey City distribution center sometimes builds up inventory of certain classes of juices that are close to their expiration date, and the company has to get rid of them either at a very low price with sales promotion or donate them to charity. A carefully designed and sophisticated coordination of ordering policies will reduce the chances for these problems and result in savings. At the same time it will increase the fill rate because the addi tional capacity gained from more reasonable ordering can be used for ordering more juices of the type that cause trucks to wait in the yard.3. Combining marketing strategies with inventory levels and other factors.Marketing strategies such as sales incentives can influence demand. Foreseeing an inventory buildup problem, the company can use marketing (and mainly pricing) as a tool to either increase demand (when certain items build up) or reduce demand (when meager inventory is available).Solution1. Tropicana, a unit of PepsiCo, implemented i2 Supply Chain Strategist to model manufacturing logistics operations to include co-packer operations.2. The model involved over 30 manufacturing and distribution facilities and the seasonal demand of over 20 product types. 3. Tropicana used i2 Supply Chain Strategist to execute hundreds of scenarios and sensitivities, producing data that provided insights into areas where the company could rationalize system capacity at manufacturing facilitie s and increase efficiencies within brisk distribution and logistics systems.Limitations of Pepsi Supply Chain over Coke1. PepsiCo has duplicate distribution systems for its beverages. Coca-Cola has for the most part maintained distribution of its entire beverage line-up through its bottlers.2. Pepsi bottling system is more fragmented than Coca-Colas3. In a consolidated system negotiations involve fewer players and therefore take less time to gain agreement, which may be why the Pepsi system has lagged in system efficiency efforts. PepsiCo and its bottlers have established a purchasing cooperative to gain purchasing power in buying raw materials.4. While PepsiCo has been prosecute international beverage acquisitions, those investments will take time to produce satisfying operating income5. PepsiCo consolidation puts pressure on the independent system bottlers to more readily consider agreements for warehouse distribution.