PepsiCo
PepsiCo is a world leader in convenient foods and beverages, with revenues of about $25 billion and over 142,000 employees. The company consists of the snack businesses of Frito-Lay North America and Frito-Lay International; the beverage businesses of Pepsi-Cola North America, Gatorade/Tropicana North America and PepsiCo Beverages International; and Quaker Foods North America, manufacturer and marketer of ready-to-eat cereals and other food products. PepsiCo brands are available in nearly 200 countries and territories.
PepsiCo Takes the Procurement Challenge
As one of the world's largest companies, the volume of purchases at PepsiCo's Frito-Lay division is immense - the company buys from and makes deals with a huge number of vendors for everything from raw materials for potato chips to office supplies. Purchase to Pay, the company-wide procurement system, was created to track a variety of processes from product purchases to procurement management to vendor selection and payment.
PepsiCo's Frito-Lay division identified procurement processes as a huge opportunity for creating cost-savings within the company. With this in mind, they decided to reengineer the Purchase to Pay process.
Frito-Lay wanted to develop a standardized system that would allow them to track and analyze purchases. This would ultimately allow Frito-Lay to negotiate volume discounts with vendors and control individual, or "maverick" purchases that are above negotiated prices.
Improving the Bottom Line with Business Intelligence
To gain control of their procurement processes, Frito-Lay chose BusinessObjects and WebIntelligence along with Oracle's OPM. Business Objects solutions provide users with powerful and easy-to-use reporting functionalities, with the added benefit of being highly scalable. "Ease of use, scalability and support are some of the reasons why we chose the Business Objects solutions to be an integral part of PepsiCo's Business Intelligence strategy," said Tien Nguyen, Vice President of Application Services at PepsiCo Business Solutions Group.
PepsiCo has taken a big step into the future by streamlining the Purchase to Pay process. The projected savings for 2000 are around $10 million. The savings for 2001 and the next several years are anticipated to be about $43 million. Within the next few years, the majority of business intelligence (BI) reporting done at Frito-Lay will be done using solutions from Business Objects. As users learn the system and as Frito-Lay develops more reports, users are expected to experiment with ad hoc queries and dig deeper into the data.
Scalability and Extranet Provide Solution for the Future
Scalability is an important factor for Frito-Lay - it will allow them to expand the new Purchase to Pay system, helping to standardize the process throughout all of PepsiCo. Eventually, all functional groups inside each division of PepsiCo will be able to use the Purchase to Pay system for business analysis, trend analysis, and data mining. Currently, the Frito-Lay division has 3000 users on WebIntelligence, with plans to expand this to more than 4000 next year. "The real value in Purchase to Pay comes in the ability to analyze our spending patterns and identify cost saving opportunities," explains Yelak Biru, Business Intelligence and Integration team member. "Business Objects is the ideal solution for this, and we can replicate the benefits as we extend it across our corporation."
As more and more users get involved with the new Purchase to Pay system, they'll have access to reports via the web - anywhere, anytime. For example, Frito-Lay typically pays vendors upon receipt of goods. During any month, the company may receive multiple deliveries from a vendor and will cut a check for each of those deliveries. Using the BusinessObjects/WebIntelligence solution, PepsiCo plans to provide vendors with an itemized statement that details each bill of lading, invoice number, the amount of each check, and the grand total, via an extranet.
Quick Facts
Organization
Many of PepsiCo's brand names are over 100 years old, but the corporation is relatively young. PepsiCo was founded in 1965 through the merger of Pepsi-Cola and Frito-Lay. Tropicana was acquired in 1998 and PepsiCo merged with The Quaker Oats Company, including Gatorade, in 2001.
Challenge
Create a procurement system that leverages Frito-Lay's size and purchasing power in order to negotiate volume discounts
Solution
- Provide users with powerful and easy-to-use procurement reporting
- Control individual, or "maverick," purchases that are above negotiated prices
Benefits
- Projected savings over several years are more than $50 million
- Flexible solution can scale across corporation and offer deeper insight to power users
- Ability to improve vendor relations by feeding back procurement information to vendors via itemized monthly statements
For More Info
Visit Pepsico website www.pepsico.com