Coca-Cola vs. Pepsi: An outbound logistics comparative analysis for India Jonathan MarquetKris OTooleSanjit Kumar SahooPareenay Ad Waala Mehrotra Kagiso Mamabolo3Continent Master of Global ManagementProfessor Course: Global Supply Chain Management

Content1Introduction12Indias main challenges13Coca-Cola23.1Introduction23.2Global Distribution Strategy23.3Coca-Cola in India33.3.1General information33.3.2Distribution channels43.3.3Demand forecasting63.4Challenges63.4.1Hub-and-spoke system73.4.2Information systems73.4.3RED84Pepsico94.1Global Distribution Strategy94.2PepsiCo in India94.2.1General Information94.2.2Distribution Channels114.3Challenges144.3.1Rate Cutting144.3.2Too near Wholesalers144.3.3Communication of schemes154.3.4Duplicate Brands154.3.5Refrigerator problems154.3.6Maaza Scheme154.3.7Reverse Supply Chain Management155Conclusion166Bibliography16

IntroductionVigorous competition within the beverage industry has been well documented. With such a highly contested market containing a few dominant firms, organizations are constantly in pursuit of ways to achieve optimal efficiencies. As this is the case, a high performing supply chain management (SCM) system has become critical to a firms success. This report will provide a thorough comparative analysis of the SCM strategies employed by the two leading organizations competing in the beverage industry: Coca-Cola and Pepsi. The analysis will be focused on the Indian market and specifically in the field of outbound logistics. Indias main challengesThe Council of Logistics Management defines SCM as:The systematic, strategic coordination of the traditional business functions and tactics across these business functions within a particular organisation and across business within a supply chain for the purpose of improving the long term performance of the individual organisation and supply chain as a whole .Main problems faced by companies in India are:1. High cost of Logistics - Logistic cost is 13% of Indias GDP in comparison to 11% in Europe and 9% in US. Of the total cost transport represents 39% while warehouse, package and inventory accounts for 24% of total cost (365 businessdays.com). Higher logistics costs are mainly due to poor infrastructure in the country.1. Physical Infrastructure a bottleneck Insufficient infrastructure bottlenecks and distribution channels restrict the scope to reach consumer of product nationwide. Though the country has developed the largest road network in the world, yet the regional concentration of manufacturing in Indian but geographically diversified distribution activities as well as infrastructure bottlenecks, e infrastructural facility is not compared to developed countries. A lot of infrastructure development ye needs to be done in terms of better road connectivity. The lack of GPS technology and to some extent the lack of IT in the warehouses have been a bottleneck also the delay in infrastructure in comparison to other developing countries like China, Brazil is acting as a hindrance in GSCM.1. The low acceptance of integrated third party logistics (3PL) Apart from the infrastructural challenges, business in India doesnt have the access to the best supply chain services for a variety of reasons. The low acceptance of integrated 3rd party logistics firm in India is one part of the problem. The cost difference between the 3rd party logistics firm and existing transport firm is wide. Shippers have a hard time justifying the cost of 3PL even though they would be receiving high technology support and also good quality services from such a provider. Further the above mentioned infrastructure development acts as a hindrance for 3PL in operating efficiently.1. Cost of Quality Services According to industry analysts, logistics cost in India are among the worlds highest. Also the delivery time for cities outside metros is also uncertain. Technology Usage and inadequate investment in IT - Technology usage is very low in India it restricts the scope of increasing productivity and efficiency (365business.com). Though India is a leading exporter of IT yet most of the companies in India still are inhibited in terms of usage of these technologies. For companies that use IT services have a clear bias in usage of standalone IT system. There is still a long way for Indian companies in terms of usage of technologies that are in sync with the recent developments in the world. The sooner the companies start accepting the changes in the IT industry and are comfortable in usage of these technologies. The SCM would become much more smoother and streamlined.Coca-ColaIntroductionCoca-Cola is an American brand that is the global market leader for sparkling beverages. The invention of the Coca-Cola beverage is well-known across the globe. In 1886, pharmacist John Pemberton was actually trying to develop a new medicine when he invented Coke. Even now, the exact recipe of Coke is one the worlds best kept secrets. As the drink became increasingly popular, the first Coca-Cola factory opened in 1894 in Vicksburg, Missippi. Presently, Coke is active in more than 200 countries and serves more than 1.7 billion beverages a day, including Sprite, Fanta and Coca-Cola. Coca-Cola has become very popular, in part, due to its successful marketing strategy which it adapts from country to country. Global Distribution StrategyCoca-Cola uses a franchising system to distribute its drinks around the world. Coca-Cola manufactures the syrup, concentrates and beverages, owns the brand name and decides on the marketing strategy, while bottling companies around the world buy the syrup and concentrates and then produce the different drinks. Therefore Coca-Cola is using two types of systems: Company Owned Bottling Operations (COBO) and Franchise Owned Bottling Organisation (FOBO). The former is a 100% subsidiary bottling plant of the Coca-Cola Enterprise, while the latter is a franchise company who has the rights to produce the final product and distribute it within a designated area. (Dubey, 2014)Coca-Colas supply chain and distribution system has been vital for the survival of the company in a sluggish market. Because of increasing concerns over health, the market for Carbonated Soft Drinks (CSD) has been negatively affected. In several schools in the US for example, CSD have been banned since 2006. When ex-CEO Nevell Isdel came back as CEO in 2004, his main tasks was to save the ship from sinking. Therefore he decided to improve and change Coca-Colas network of bottlers. He decided to consolidate all the companys owned bottlers and increased the interest in their bottlers partners through the purchase of stakes. He believed by combining the production and distribution system, Coca-Cola would be able to respond more quickly to changes in the market (Gupta, 2008). To make sure the quality of its products does not vary, Coca-Cola set up a strong communication network with its suppliers. Through the Supplier Guiding Principles, Coca-Cola clearly communicates its values and expectations with its suppliers. Coca-Cola in IndiaGeneral informationUntil 1977, Coca-Cola, was the market leader in India regarding CSD. But when the new government required Coca-Cola to hand in their secret formula, Coca-Cola didnt agree and they were forced to leave India. This was the sign for Coca-Colas main competitor PepsiCo to enter the Indian market in 1988 by creating a joint-venture with Punjab Agro Industrial Corporation and Voltas India Limited which lasted until 1993. In 1994, one year after PepsiCo ended the joint-venture, Coca-Cola re-entered the Indian market after the new Indians Liberalization Policy. By that time, Coca-Cola noticed a big change in the market. An Indian player, Parle brothers, successfully marketed Thums Up, Maaza and Limca. To beat their competitor, PepsiCo, Coca-Cola acquired Parle brothers in 1993. After a sluggish start, where Coca-Cola unsuccessfully wanted to sell the American way of living, Coca-Cola became more and more important through its deeper understanding of the Indian Market. In 2005, Coca-cola and PepsiCo had a total market share of 95%. Coca-Colas share was equal to 52.4%. (Gupta, 2008)Figure 31: Manufacturing locations Coca-Cola India

Copied from Hindustan Coca-Cola. (Hindustan Coca-Cola, 2015) Presently, Coca-Colas Indian operation consist of 50 bottling operations of which 25 are owned by the company itself and 25 through franchises. Next to the owned companies, Coca-Cola India has a network of 21 independent contract packers which manufacturers several drinks for Coca-Cola. Coca-Cola India has developed a distribution system which can overcome Indias main challenges. 700,000 retail outlets, 8000 distributors and small 10 tonne open bay three wheelers successfully deliver Coca-Colas product to its end consumer. Coca-Colas business model in India is shown on Figure 3.2. (Gupta, 2008)Figure 32: Business Model Coca-Cola India

Source: Copied from Krishna. (Krishna, 2010)Distribution channelsHindustan Coca-Cola Beverages Pvt. Ltd. (HCCBPL) formulated four routes according to the type of customer (Titus, 2012):1. Key Accounts: These are key customers who have a large share in the total share of Coca-Colas sales. These customers mostly consist of fine clubs, restaurants, hotels, and buy Coca-Colas products in large quantities. Because of the higher bargaining power, the customers benefit from 15 days to one month credit. 1. Future Consumption: These are outlets, such as super markets, Food courts & Departmental stores, of Coca-Cola who hold inventory for future consumption to make sure the product is available whenever the consumer needs it.1. Immediate Consumption: This category consist of educational institutions, small bars, canteens, unorganized retailers. Because of the small volumes, little inventory is held. Therefore Coca-Cola has to replenish these types of customers on a daily basis. 1. General: This category is often use in rural areas where the density of population is much lower. The four main groups of customers are replenished through a direct route or an indirect route. The type of route is determined by the type of the bottler. For COBOs, a direct route is used, while indirect routes are used for FOBOs. The direct route is shown on Figure 3.3. When Coca-Cola uses a direct route, it means the bottling unit or partner manages sales, delivery, and merchandising. Therefore, a FIFO-inventory system is used. By using a First-in First out system, Coca-Cola makes sure expiration of products are limited and an easy & accurate cost calculation will be used as goods will be priced according to their purchasing price. Figure 33: Coca-Cola's Direct Route India

Source: Copied from Krishna. (Krishna, 2010)When an indirect route is using, an organization which isnt part of Coca-Cola will be responsible for the sale and distribution of the product. To guarantee the quality of the service, the distributor has to full certain requirements which are listed in Figure 3.4. Figure 34: Coca-Cola's Indirect Route India

Source: Copied from Krishna. (Krishna, 2010)The average order size of the distributor or the retailer will depend on the seasonal demand, which is predicted through a variety of factors (see below). However, Coca-Cola uses a different order system for distributors and retailers. Retailers have to order by contacting the Distributor Representative while Distributor can order by calling the local manufacturing plant. Ordering can take place on a daily basis and the lead time is in normal circumstances around two days. The retailer will bear the costs to transport the goods from the distributor to its retail location while Coca-Cola will be responsible for the distribution expenses when transporting the goods to the distributor. To reduce the supply time, Coca-Cola works 24h/7. The daily distribution is represented by Figure 1-5. (LBSIM, 2012)Figure 35: : Daily distribution Coca-Cola India

Source: Copied from LBSIM. (LBSIM, 2012)Demand forecastingAs Coca-Cola is still growing in India, it is difficult to make accurate forecasts. Therefore, Coca-Cola India uses a mix of a bottom-up (salespersons) and top-down (management) approach. These forecast are firstly done on a region-level scale. This will result in more accurate and more precise data. Afterwards, these forecasts are broken down in cities and towns by the sales manager who is in charge for the specific towns or cities. A variety of factor are used when forecasting the demand (LBSIM, 2012):1. Historical data1. Economic parameters1. Seasonal variations1. Festivals, events, ceremonies, sport events,1. Weekly reviews in order to adapt the monthly forecastChallengesFigure 1-2 shows the business model for Coca-Cola India. This image confirms that the use of COBO and FOBO are important mechanism for Coca-Cola. In India, Coca-Cola company is divided in four regional head offices: Haryana, Mumbai, Hyderabad and Kolkata. Throughout India, there are more than 50 manufacturing plants, which are shown by Figure 1-1 By doing so, Coca-Cola tackles Indias problem of geographical spread and the differences in taste one will face within India. (Krishna, 2010)Hub-and-spoke systemTo be successful in rural areas, Coca-Cola moved away from a centralized approach towards an hub-and-spoke system. Through this system, bottles are no longer sent directly from the factories to the retailers, but they are first sent to an hub, where they are transported to smaller inventories called spoke-centres when orders are coming in. By doing so, Coca-Cola was able to cut cost. Before the hub)and)spoke system was used, bottles faced long-haul journeys in large vehicles. This lead to diseconomies of scale as demand is different from region to region in India. By changing the approach, Coca-Cola was able to offer a more tailored service. Cost were saved as well as the type of vehicles changed. For transporting the bottles from the factories to the hubs, large vehicle are used, medium vehicles are used for the transportation between. (Wharton University of Pennsylvania, 2010)Information systemsWith a country as geographically vast as India and a technological infrastructure so primitive, especially in rural areas, information flows from retailers to manufacturers are notoriously slow-moving. In order to remedy these challenges, Coca-Cola initiated Project COLA (Countrywide Outbound Logistics Automation). COLA is developed around the ERP system and is designed to cover all functions including manufacturing, sales, distribution, finance and logistics. (Goswami, 2008)According to an article featured in Network World, The first step in creating an accurate picture was setting up a Distribution Automation System (DAS) -- a transaction system that kept all sales movement accessible. A DAS system has been used in several FMCG companies in India. At Coca-Cola, it was tailored to meet specific requirements that included 'centralized masters' and a day-end transaction summary for MIS analysis. The objectives of the software were to provide complete transparency and control to distribution operations, while adding value to certain marketing operations. The article goes on to elaborate that, The backbone of the system is a number of small but critical applications These apps collect information from the bottom of the distribution pyramid. Among these is a handheld device that is installed in trucks. (Goswami, 2008)

The Cooler Tracking System (CTS) is another integral application in this solution - a sticker on the refrigerators, monitored by sales executives. CTS keeps track of:- number of coolers in inventory- coolers installed - coolers under maintenanceThe final application of this system is the ROADnet Route Optimizer. Goswami writes that, The application runs on a mobile device with GPRS carried by business development staffers. Their job is to make rounds on fixed routes and check the availability and arrangement of Coca-Cola products. Since they keep track of what needs replenishments, they can also bunch together outlets that need restocking. This helps with dynamic route optimization and ensures that delivery trucks do not make too many unnecessary runs from the plant (Goswami, 2008). This allows Coke to monitor real time sales, up-sell and cross-sell its depots, and increase the quality and effectiveness of its performance tracking. (Goswami, 2008)REDRED (Right Execution Daily) is a supply chain management strategy Coca-Cola implemented in 2006. It serves primarily as an outline and performance indicator for distributors. Its use is integrated among all of Coca-Colas distributors and bottlers. For instance, Hindustan Coca-Cola Beverages Pvt. Ltd. (HCCBPL) indicates that RED (Hindustan Coca-Cola, 2015):

Provides a ready reckoner in the form of Picture of Success to the Feet on Street to ensure consistency and high standards of execution in around 450,000 RED outlets across the country. Helps drive creation of a soft drink culture ensuring easy availability to the consumers across rural and urban clusters. Extensive support is provided by HCCBPL to help build the business of a customer as he moves up the Pyramid from Basic Product Availability to Chilled Availability evolving into Activated Chilled Availability. HCCBPL creates strong customer value by evolving customers from provider of basic product to delivering an experience to the consumer.

Hellenic Bottling Company articulates the specifics as well as the importance of the RED system as well by indicating that (HBC, 2015):The level of our execution success in the market is monitored and improved through a pioneering 360 degree process called Right Execution Daily (RED) and developed in the Coca-Cola System which consists of creating the plan of success for each channel, defining the standards for execution excellence, tracking actual performance through market surveys, providing guidance on strategic decision,and coaching our sales force while rewarding successful performance.

PepsicoGlobal Distribution StrategyThe companys products reach the market through the following three channels: direct store delivery (DSD), customer warehouse, and third-party distributor networks. PepsiCo chooses the relevant distribution channel based on customer needs, product characteristics, and local trade practices. Several Distribution channels can be found for PepsiCo:1. Direct Store Delivery: Under the DSD system, PepsiCo delivers products directly to retail stores. Of the three channels, DSD enables PepsiCo to merchandise with maximum visibility. Its more suitable for products that are restocked often and are sensitive to promotions and marketing.1. Customer warehouse: The customer warehouse system is a less expensive distribution channel. Its ideal for products that are less fragile and perishable, have lower turnover, and are not purchased impulsively.1. Third-party distributor networks: PepsiCo distributes food and beverage products to restaurants, businesses, schools, and stadiums through third-party food service and vending distributors and operators.As PepsiCo uses a Pull-method globally, a good forecasting method is needed. Therefore, a combination of three forecasting methods is used. The following methods are used in combination for the purpose of sales and demand forecasting:-1. Time-Series Method: Historical demand data can be effectively used to forecast future demand.1. Qualitative Method: Using historical data and market intelligence as a guide, PepsiCo management practices their own judgment to determine the demand forecast. A yearly demand plan is forecasted in this way which is then further divided into monthly, weekly and daily plans accordingly.1. Causal Method: Causal forecasting assumes that the demand forecast is highly correlated with certain factors in the environment such as the state of the economy, interest rates, and product pricing that can cause a change in the demand. An example is how by introducing a product variant, such as Pepsi Twist, can influence demand for the original product that is Pepsi.PepsiCo in IndiaGeneral InformationPepsiCo entered India in 1988 by creating a joint venture with the Punjab government-owned Punjab Agro Industrial Corporation (PAIC) and Voltas India Limited. This joint venture marketed and sold Lehar Pepsi until 1991, when the use of foreign brands was allowed. Pepsi bought out its partners and ended the joint venture in 1994 and has now grown to become the countrys largest selling food and Beverage Company. Being one of the largest multinational investors in the country, PepsiCo has established a business which aims to serve the long term dynamic needs of consumers in India.PepsiCo Indias expansive portfolio includes iconic refreshment beverages such as Pepsi itself, 7 UP, Mirinda and Mountain Dew, in addition to low calorie options such as Diet Pepsi, hydrating and nutritional beverages such as Aquafina drinking water, isotonic sports drinks, Gatorade, Tropicana 100% fruit juices, and many other beverages.To support its operations, PepsiCo has 36 bottling plants in India, of which 13 are company owned and 23 are franchisee owned. PepsiCos business is based on its sustainability vision of making tomorrow better than today and its commitment to living by this vision every day is visible in its contribution to the country, consumers and farmers.In order to ensure a good supply chain strategy, Pepsi co. plans two years in advance. It has several contracts with manufacturers and receives raw material on a convenient basis. The company also decides where production plants are to be placed. The production process is 65% automated. The company has to provide and manage transport for the delivery of products as well as the arrangement of third party services for the procurement of products. The shipping department handles orders and the transport department decides the vehicles for safe delivery. Material planning and sourcing is carried out as well. Sources of supply of raw material both local and foreign are identified and terms and conditions are negotiated. Capacity planning is also done at this stage. Sales forecasting and production planning depends upon the capacity of the organization. Distributors are also decided by the company, keeping in mind past performances.Figure 41: Distribution Channel PepsiCo India

Fig 1: Supply Chain of PepsiCo. IndiaCompany follows hub and spoke model of distribution. A hub and spoke network is a centralized, integrated logistics system designed to keep costs down.For the urban cities, direct distributors are appointed by the company, which are supplied directly by the company depots against bank transfer of money. These distributors appoint salesman for which they are provided subsidy from the company, whose job is to market the products of the company. The schedule of the salesman is repeated for every week.For rural India, the distributor receives the supplies from urban distributor against bank transfer of money. The major benefits of hub and spoke model can be underlined as:1. Reduced Capital for Inventory and Lowering Facilities Costs0. Reducing the number of warehouses significantly reduces rent and other building expenses such as utility and maintenance expenses. In addition, lower operational and administrative overhead is achieved as taxes, insurance, telephone and other facility overhead is eliminated.0. Reducing the number of warehouses and centralizing inventory dramatically decrease the amount of inventory carried. Only the hub needs to carry a lengthy supply and nodes can switch to a more economic Just-in-Time inventory method.0. Moving equipment becomes easier as logistics becomes simpler to manipulate.1. Economies of scale result in cost savings 0. Mass shipping and receiving of larger quantities will lower inbound and outbound shipping costs0. Centralized purchasing lowers per unit, shipping and administrative time as operating supplies can be purchased in larger quantities0. Inventory control is better by not having to reconcile as many locations.1. Routing0. For a network of n nodes, only n - 1 routes are necessary to connect all nodes; that is, the upper bound is n - 1. For example, in a system with 10 destinations, the spoke-hub system requires only 9 routes to connect all destinations, while a true point-to-point system would require 45 routes.Distribution ChannelsPepsiCo India has adopted intensive distribution strategy the companys main focus is to reach all its markets.Intensive distributionA Strategy of intensive distribution is characterized by placing the goods or services in as many outlets as possible. When the consumer requires a great deal of location convenience, it is important to offer greater intensity of Distribution. This strategy is generally used for convenience items such as Tobacco, gasoline, and soap, snack foods & bubblegum.Manufactures are constantly tempted to move from exclusive or selective distribution to more intensive distribution to increase their coverage and sales and one can find Pepsi in nursing homes, confectionery shops, and departmental stores.Channel membersThere are four channel members apart from company factory and consumer. These are, in order of product forwarding: 1. Godown: These are the hub. They receive products directly from the factory and their function is to store products and forward them to distributors as and when orders are placed. They dont have any margin but are company owned and are paid directly by the company.1. Distributor: Pepsi doesnt have any separate stockiest, only distributors are present. They receive products from the godowns and supply to wholesalers and also directly to retailers. They appoint a salesman for retailing, and for this they get subsidy from company. Their margin depends on whether they are supplying to wholesaler or directly to retailer and vary from 2% to 5% according to company, but in reality it is lower as they sometimes sell at lower prices to increase volumes. This leads to rate cutting. They also get various schemes from the company, which are generally to be forwarded to retailers and wholesalers. There are 6 distributors of Pepsi in Gurgaon. 1. Wholesalers: They buy from distributor and supply to either retailers or nearby village wholesalers. There are more than 100 wholesalers of Pepsi in Gurgaon and surrounding areas. They try to get products as cheap as possible and for this they often ask for bulk discounts from distributors. They also try to get products from distributors of other states. They have very strong networking and huge storage capacity. There margin is 2% to 3%, depending upon the product and the price which they are able to get from distributors. Sometimes, they also get scheme from the distributor. At present, there is a scheme in half liter bottles for wholesalers, i.e. they get 4 bottles extra on buying a whole carton. Wholesalers are generally not exclusive to Pepsi and also carry other company products. Interestingly, most of the wholesalers are common with Coca Cola because of the same nature of business and same target shops. Wholesalers generally dont get credit from distributors because they try to find the lowest price in the market and buy, and thus they are generally not loyal to any distributor. Also, the responsibility of transportation of good lies on the wholesaler and he is responsible for any damage to goods.1. Retailers: Retailers cater to the customers. They buy either from the wholesaler or distributor, depending on ease of purchase, relations and credit policy. Wholesalers generally supply them on credit. According to a wholesaler, he supplies to the retailers on credit and has maintained different rates depending on the credit days. If the retailer pays him within 30 days, he supplies on normal rates, but if the retailer pays after 30 days then he charges a premium. Retailers of Pepsi vary from small pan shops to big departmental stores and restaurants. The margin to retailers is from 14% to as high as 18% depending upon the product and rates they get from wholesalers. There are also schemes for retailers. Presently, they get 3 bottles extra if they buy a full carton of half liter bottles.Distribution Channels RedefinedPepsi is proactively addressing these emerging trends by approaching distribution and channels in a much broader way. They are shifting emphasis from mere reach or availability expansion to touching consumers with a 3- way convergence- of product availability, brand communication and higher level of brand experience. They are thus going beyond delivering products and creating greater engagement and interaction around the purchasing experience.Figure 42: Pepsi's Reinvention

Pepsis reinvention of distribution is built on an understanding of emerging consumer trends, the retail environment and the growth drivers of our brands.Pepsis distribution system is a key external resource. Normally it has taken years to build and cannot be easily changed. It ranks in importance with key internal resources such as manufacturing, research, engineering and field sales personals. It represents significant corporate commitment to set policies and practices that constitute the basic fabric on which is woven an extensive set of long run relationship.Process Views of a Supply ChainPepsi has a seasonal demand. Just in time concept is applicable in non-seasonal period and not applicable in seasonal period. All processes that are part of the procurement cycle, manufacturing cycle, replenishment cycle, and customer order cycle are push processes. Pepsi Sales order and processing: The Shipping Manager receives sales order from Sales Team, distributors through telephone, fax & email one day before dispatch. The sales are made to base distributors on advance payment against orders then shipping manager plans according to the demand of distributors on daily basis. The ensure the quality, several processes have been implemented which are discussed below. Improvement with using Just-In-Time (JIT)1. When it comes to delivering high cost and perishable products to manufacturing sites, just-in time (JIT) remains one of the most cost-effective supply chain solutions. In JIT process, on time delivery is an absolute necessity.1. 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, assurance of quality, prompt delivery times, and value of money.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 enable an organization to utilize and manage an entire transportation network, as well as reduce cost while improving transport performance. I2 transportation is designed to employ sophisticated optimization and data techniques to define and evaluate alternative transportation strategies. It is also designed to provide comprehensive data management, analytics, and reporting of key transportation cost and service trade-offs.ImplementationPepsiCo set two objectives for transportation management. One was to achieve an on-time delivery rate at 99.1% and another was to reduce transportation costs. It empowered with optimized processes and technology that enable the team to perform at the highest possible level. With the application of new technology that provides greater supply chain visibility, better organized data, and access to higher level of real time or near real time information, even the best team can improve their performance. The benefits can be listed as follows:0. Exception-based management0. End-to-end supply chain visibility and event management tools0. Customer-specific solutions for replenishment, fulfilment, and manufacturing0. The ability to forecast and respond to supply/ demand events0. The option to move from calendar-based to event-driven planning and re-planning. Increased employee productivity0. Reduced process, personnel, and expediting costs0. Improved customer, supplier, and partner communications.0. Real-time decision supportChallengesRate CuttingRate cutting from wholesalers is a major problem, faced by distributors. Certain direct distributors keep profits as low as 1% and then sell to wholesalers so as to take bulk orders, while wholesalers themselves keep profits as low as 0.5% and sell to smaller village wholesalers and retailers so as to make bulk orders and this causes the rate cutting problem, as few retailers do not buy from the distributors because they can get their orders cheaper from wholesalers.Too near WholesalersOne of PepsiCos major problems is the existence of wholesalers that are too near which leads to rate competition between the two wholesalers.Communication of schemesAt times few wholesalers only get to know about the schemes of the month after many days and they are not able to take the benefits of it.Duplicate BrandsThere are many duplicate brands existing in the market and taking advantage of the illiterate population in rural areas by selling spurious PepsiCo beverages. These brads offer very high margins for retailers and distributors.Refrigerator problemsSome retailers demand a company refrigerator regularly and are not willing to store PepsiCo products in their own refrigerators and these retailers are generally big and imperative and theres always a threat that a competitor could provide them with refrigerators and restrict them from selling Pepsi products.Maaza SchemeOne of Pepsis major competitors in India is Maaza which is a successful brand of Coca-Cola. Maaza became and still is a very popular brand in India and retailers who were told to only house Pepsi products started keeping Maaza and this adversely affected Pepsi sale and posed great challenges for distributors and wholesalers.Reverse Supply Chain ManagementWhenever a retailer/wholesaler/distributor starts a business with Pepsi they first need to buy empty bottles from Pepsi and then the next time they are supplied with filled bottles in return of empty bottles. This process calls for great efforts of wholesalers and distributors.

ConclusionAs illustrated by the report, the Indian environment alone presents a number of obstacles that must be overcome in order to build and maintain a successful SCM system. With respect to Coca-Cola and Pepsi, it has been shown that the two competitors utilize many similar SCM methods but maintain some key strategic differences as well. While both utilize COBO and FOBO strategies as well as hub-and-spoke systems, they each have unique strategic philosophies, such as Cokes Project COLA. As has been clearly indicated by the report, Coca-Cola and Pepsi both face numerous challenges, and while each company utilizes SCM differently, it is clear that continued investment for the improvement of SCM will be of critical importance to the competitiveness and long-term success of the companies. BibliographyBharti, H. (n.d.). Indian Institute of Foreign Trade: Supply Chain Management PepsiCo. Retrieved from Slideshare: http://www.slideshare.net/hiteshbharti/project-report-scm-pepsi-coDubey, P. (2014). Project Report on the Outbound Supply Chian at Coca-Cola. Retrieved from Shanti Business School: http://www.slideshare.net/Prashantvd/cocacola-summer-internship-report-30083765Goswami, K. (2008, February 19). Coca-Cola's secret formula. Retrieved from Network World: http://www.networkworld.com/article/2283950/infrastructure-management/coca-cola-s-secret-formula.htmlGupta, V. (2008). Project Report on Coca-Cola Company. Retrieved from http://www.slideshare.net/VikasGupta12/final-reportoncocacolaHBC. (2015). Customers. Retrieved from HBC: http://www.coca-colahellenic.com/aboutus/customersHindustan Coca-Cola. (2015). How We Execute. Retrieved from Hindustan Coca-Cola: http://www.hindustancoca-cola.com/How_we_execute.aspxHindustan Coca-Cola. (2015). Network. Retrieved from Hindustan Coca-Cola: http://www.hindustancoca-cola.com/networks.aspxKrishna, A. (2010). SEGMENTATION MODEL OF COCA-COLA. Patna.Kumar, L., Kumar, R., Mishra, R., Goyal, S., & Khanna, S. (2013). PEPSICO: SDM Project. Retrieved from Academia.edu: https://www.academia.edu/5636073/Pepsi_Co_SDM_2_C01_2013LBSIM. (2012). Coca-Cola: Sales and Distribution Management. Retrieved from http://www.slideshare.net/ITBRANCH/sales-and-distribution-management-at-coca-colaMishra, A. K. (2015, December 5). Study of Distribution channel strategy of PepsiCo. Retrieved from Slideshare: www.Slideshare.net: http://www.slideshare.net/nityniharika/study-of-distribution-channel-strategy-of-pepsico-for-the-positioning-of-the-product-in-varanasiPalathinkal, D. J. (n.d.). Strategies for High Volume Supply Chain. Retrieved 2015, from web.mit.edu/: dspace.mit.edu/bitstream/handle/PepsiCo India. (2015). PepsiCo India. Retrieved from PepsiCo: http://www.pepsicoindia.co.in/Raj, R. (2013, February 3). Supply Chain Management PepsiCo. Retrieved February 25, 2015, from Management Paradise: http://www.managementparadise.com/pongal1990/documents/7790/pepsicos-supply-chain-management/Singh, P. (2012, October 11). Sales and Distribution Strategy of PepsiCo. Retrieved February 21, 2015, from Slideshare: http://www.slideshare.net/parthsingh18/pepsico-sales-and-distributionSultan Bhatti, M., Zaman, B., Hameed, A., & Hooria. (2012, June 15). PepsiCo. Retrieved from Slideshare: www.slideshare.net: http://www.slideshare.net/MSBhatti/pepsico-13335465Titus, R. (2012). COCA COLA IN INDIA: A STUDY ON PRODUCT PORTFOLIO AND. International Journal of Research in Finance & Marketing, 360-378.Wharton University of Pennsylvania. (2010, May 6). Coca-Cola India: Winning Hearts, Minds and Taste Buds in the Hinterland. Retrieved from http://knowledge.wharton.upenn.edu/article/coca-cola-india-winning-hearts-minds-and-taste-buds-in-the-hinterland/

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