PepsiCo: keeping supply chains resilient
PepsiCo is a company with a large, global and complex supply chain. In Europe, PepsiCo's territory spans over 50 markets and has over 60 manufacturing plants and hundreds of distribution centres.
Creating an efficient and resilient supply chain has always been critical to how PepsiCo gets its products to consumers across the region. The global pandemic has put supply chain resilience into even sharper focus for the entire food and drink industry, and when you add climate change to the equation, creating more resilient supply chains becomes a priority as PepsiCo collectively create a more sustainable food system.
Achieving that requires technological innovation, at scale and across the industry. At PepsiCo, digitising the supply chain has been a key focus for a number of years and has invested in new technologies, which have played a significant role in enabling us to react quickly to recent disruptions such as the COVID-19 pandemic or environmental challenges.
Utilising prescriptive analytics during COVID-19
Prescriptive analytics has been a core capability for the business, enabling insights on how to optimise the supply chain to influence positive outcomes in the future. I like to think of the technology as a digital supply chain doctor. The doctor diagnoses a problem you have and prescribes you medicine. If the medicine is effective you get good results, but if it isn’t you go back to your doctor who may prescribe you something else – and that is too how prescriptive analytics work for us.
Our “doctor” is software which draws on hundreds of sources of data from across the business, as well as externally, to model a digital twin of the supply network and recommend the best “prescribed” approach to have a more efficient and less environmentally intensive network.
It helps us identify opportunities for emissions and productivity improvements, and to test and model around different scenarios, such as the best places to manufacture products to serve customers.
As is the case for most businesses, the scenarios PepsiCo have been navigating over the past few months are a first for the company – such as border closures across Europe and restrictions on working hours which could lead to reduced operational hours. By having the technology as an inhouse capability, PepsiCo has been able to draw on the expertise of the team to undertake dynamic modelling against potential challenges. This gave us data driven insight and created models and algorithms, which were important for the response and helped ensure PepsiCo has agility in its decision making and contingency planning.
Moving to virtual manufacturing in lockdown
Following lockdown in some markets, contractors working on new line start-ups were required to urgently return to home countries. To adapt, PepsiCo instigated digital technologies to enable the virtual start-up of new supply chain lines ensuring there was no impact on product launches during lockdown.
One example is in Russia, where PepsiCo remotely supported the critical phase of validation of new product lines across five facilities using You See What I See digital glasses, static cameras on machinery and Zoom to conduct virtual sessions and training. Through cross functional collaboration and the new agile process, PepsiCo was able to meet all deadlines for the production line start-ups.
Continuing to innovate in agriculture
Resilience is a theme which has become particularly pertinent over the last few months but global food systems continue to face challenges as a result of climate change and inevitably this means PepsiCo need to work now to address that impact.
PepsiCo is a business built on agriculture and across Europe alone PepsiCo partners with over 3,900 farmers. PepsiCo are continually investing in developing precision farming technology and techniques and working with farmers to embed those practices to improve efficiencies and manage resilience at the start of the ingredients supply chain.
By using the latest technology to gather data, farmers and growers can gain insights to help improve farming practices so they can increase the quality and yields of their crops while ensuring they use just the right amount of water and maintain soil quality – this is helping us manage risk.
PepsiCo use crop monitoring technology with the farmers in 14 markets across Europe to help growers see how their crops are performing and the reasons behind any changes. PepsiCo used the crop monitoring system to track potato varieties and seed supply over the past number of years and last year the benefits from this program became evident. During the heavy rainfall in Europe in the last harvesting season, PepsiCo were able to work more closely with local farmers, based on data insights from the crop monitoring technology to extend the season and avoid crop loss. This is an area that every food supply chain will have to manage in the future given the unpredictability that climate change brings.
Supply chain disruption is part of every business. Whether or not you can plan for disruptions or they appear quickly like COVID-19, innovative technologies can help you adapt. PepsiCo has been investing and embedding such innovations into the business and have seen the effects clearly in the past few months. Building resilience and creating efficiencies in the supply chain should be a priority now more than ever for the whole food and drink industry.