The APQC Blog

Why PepsiCo Supply Chain Innovation Matters Organization Wide

APQC recently spoke with Rich Beck, Senior Vice President of Global Supply Chain Operations for PepsiCo, about the organization’s global supply chain innovation efforts.

PepsiCo is a global food and beverage organization with net revenues of more than $66 billion and a product portfolio that includes 22 brands that generate more than $1 billion each in estimated retail sales. PepsiCo’s main businesses – Quaker, Tropicana, Gatorade, Frito-Lay and Pepsi-Cola – make hundreds of foods and beverages distributed globally.

Beck is responsible for leveraging the experience and capabilities of PepsiCo’s supply chain organizations around the world, while driving critical initiatives across the company’s food and beverage businesses. Among other responsibilities, he oversees the relationships between PepsiCo Global Operations and the company’s Research & Development, Procurement and Marketing functions to build flexibility and efficiency into PepsiCo’s manufacturing processes and product/packaging designs.

Rich Beck will be a keynote presenter at TCU’s 2015 Innovation in the Supply Chain Conference, June 3 - June 5. Attend the event to learn how PepsiCo is transforming its supply and logistical networks, driving supply chain innovation, and building unique relationships with suppliers around the world to grow the business.   

How does PepsiCo use innovation in its supply chain to benefit the entire organization?

At PepsiCo, there are five global priorities that all impact the supply chain:  brand building, innovation, execution, productivity, and driving cash returns. With respect to innovation in the supply chain specifically, there are three key drivers:  1) environmental sustainability; 2) technology advantage; and   3) digitizing the value chain.

Environmental sustainability is an integral part of PepsiCo’s Performance with Purpose vision which guides everything we do, from seed to shelf and throughout every part of our supply chain. One of the ways we operationalize Performance with Purpose globally is by finding innovative ways to reduce both our impact on the environment and our operating costs, which is good for the business and the planet. For example, Frito-Lay North America has more than 280 electric trucks, one of the largest all-electric delivery truck fleets in the U.S. With respect to water conservation, we recognize water as a fundamental human right. PepsiCo and the PepsiCo Foundation, through various partnerships, are on track to help six million people gain access to safe water by the end of this year. We’ve improved our operational water use efficiency by more than 20 percent per unit of production since 2006.  With regard to waste, we recycled or reused nearly 93 percent of total waste generated at company-owned manufacturing facilities in 2013. Globally, 22 manufacturing plants have achieved zero waste sent to landfill and 48 have achieved near-zero waste sent to landfill. We’re also seeing tremendous promise with alternative energy solutions such as landfill gas, solar, and even rice and oat hull biomass boilers. We hope to replicate these cutting edge innovations and best practices across the globe in the coming years.  

Technology is another driver of innovation that provides advantage to PepsiCo’s supply chain. One of the innovations that PepsiCo is exploring is 3D printing.  For example, RUFFLES® Deep Ridged used 3-D printing technology to create optimal potato chip prototypes. We also use the latest in automation technology to enhance plant efficiency and to better meet customer needs more effectively. This is especially helpful with some of our older plants. We’re also following trends in vehicle technology. One area of interest to us is a concept for trucks called platooning where the front driver is in control and two trucks follow behind at a safe distance, like a bike team ‘drafting’ off one another. We see potential with platooning to realize fuel savings. In addition, the emergence of e-commerce as a new distribution channel is another driver that is changing the way we interact with and serve our customers and consumers. We’re building new e-commerce capabilities, looking at how to retool the form and function of products and packaging as well as our supply chain models. 

Digitizing the value chain at PepsiCo is about end-to-end integration of our supply chain from a systems and digital perspective, from strategy to execution. There are several different steps we are taking in this area to explore the possibilities. For example, the Internet of Things (IoT) is important at PepsiCo. This is a relatively new term which describes a hyper-connected world where smart technology touches and impacts everything. We are introducing this concept into some of our systems. Mobility and cloud-based applications are big focus areas for PepsiCo as well. The computing power that is now available on tablets and smartphones allow people to do just about anything.  Personally, I don’t think that industry as a whole has fully realized or embraced the true potential of mobile. My dream is to help advance mobile technology at PepsiCo so access and use is ubiquitous, from the boardroom to the frontline, and applying the technology in innovative ways that will revolutionize our supply chain and how we do business.