Pepsi Reverse Logistics Submitted By: Sameer Narang Siddhartha Gupta Shelza Gupta Sonia Walia Surbhi Sharma Vikas Hooda

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 SORTING²
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

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Pepsi Reverse Logistics Submitted By: Sameer Narang Siddhartha Gupta Shelza Gupta Sonia Walia Surbhi Sharma Vikas Hooda

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PEPSI

Total Market Sales

Raw Material Used For Bottles

Forecasting is relatively Forward. One to many Distribution points. Product Quality

Combined inspection/ selection/sorti ng

Reprocessing or Direct recovery

 GRADING OPERATION- Expensive test

 RECYCLING- glass is processed in order to get the

 REDISTRIBUTION- bringing the FILLED BOTTLES

NO BOTTLE CANNOT BE REPAIRED OR REFURBISH ED

SORTATION AND TESTING

CAN THE BOTTLE BE REUSED? YES BASIC PROCESSING

FORWARD LOGISTICS TAKES PLACE

TATA ACE, Auto, TATA 407

Minimum 250 sq m Self owned/rental 4 DAYS

DISTIBUTOR COLLECTS BOTTLES FROM

4000- 4500 Outlets

 Physical condition of truck

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GRADING OPERATION- Expensive test

RECYCLING- glass is processed in order to get the

REDISTRIBUTION- bringing the FILLED BOTTLES

Physical condition of truck