Client Profile
Pepsi Latin America Beverages operates across Mexico, the Caribbean, Central America and South America. Major Brands include Pepsi, Diet Pepsi, Gatorade and Tropicana.
Business Challenge
PepsiCo’s Latin America Beverages business unit had grown dramatically in operational complexity, due to the aggressive expansion of new products and the integration of multiple large acquisitions. As the first decade of the 2000’s was nearing a close, Pepsi LAB was handling over 2.5 million SKUs, and operating across 46 countries through a network of 6 concentrate plants, 7 franchise offices, 22 bottlers, 76 distributors and 9 co-packers.
The tremendous growth in brands and SKUs, combined with the increasingly more complicated legal and supply chain structure, was stretching the operating effectiveness and efficiency of the entire organization. Pepsi’s people, processes and information technology platforms were becoming extremely strained. The former highly decentralized, back office operating platform was outdated and no longer meeting the needs of the organization.
These constraints led to:
- Limited operating scalability – unable to respond to organizational/strategic change without requiring additional staff
- High cost transaction processing model
- Lack of process standardization across the regional offices
- Duplication of key activities across various levels of the organization
- Insufficient, inaccurate, and/or unreliable reporting data to provide adequate and timely visibility into the business
- Lack of enterprise tools
- Internal control challenges due to decentralized operating environment
Pepsi’s finance department needed to adapt its organizational structure, business processes and systems architecture to meet these challenges. The LAB division would need to improve standardization of their processes, systems, and organizational structure to better manage the dynamic and increasingly complex operating environment.
Solution & Approach
Auxis utilized a Lift and Shift approach for the stand up of the new SSC to ensure a rapid implementation while minimizing risk. The initial implementation focused on the locations which would provide the most significant cost savings opportunities: Brazil and Florida. This approach front-loaded the primary financial savings, and ensured a rapid investment payback period.
The first wave of operations migrated to the SSC was completed in just six months and included the Brazil franchise operations, Global Export Logistics & Accounting operations (Florida), Regional Headquarters Administration (Florida), Caribbean franchise operations (Florida) and Mexico franchise operations. A structured migration approach was deployed across all locations to ensure the quality, completeness and timeliness of individual country transitions. Key migration activities included as-is process documentation, to-be process redesign, detail procedure documentation, job redesign, classroom training, job shadowing and hyper care support. The implementation activities also included the build out and staffing of a brand new facility, and the selection and implementation of several enabling technologies (e.g. imaging & workflow).
After the initial Go Live, there was a three month period of operational stabilization to ensure stability of operations and service delivery excellence, before commencing with the Phase II Country roll-ins. Phase II Country roll-in include operations in Colombia, Guatemala, Venezuela and Peru.
Results
- Over 40% IRR on project investment.
- More scalable operating platform- ability to better handle growth through increased process standardization, functional specialization and automation.
- Reduced operational complexity.