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Pepsi: Principles of Supply Chain Management


To begin with, it should be stated that Supply Chain Management is one of the most crucial factors, required for successful business development. The fact is that these principles are generally intended for improving the cooperation practices with the suppliers and consumers of the company’s product or services. The company, which was selected for the analysis is Pepsi. Taking into consideration the transnational activity of this company, the Supply Management principles of this company require particular precision and flexibility of the basic structure. (Geary and Zonnenberg 2000)

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The legal implications, which the company pursues generally entail the fulfilling of all the reached agreements and concluded contracts. In the light of this fact, it should be emphasized that numerous factors form the legal perspective of SCM performance, and the legal image of the SCM practices performed by Pepsi entail legally reasoned relations with all the dealers and consumers. Originally, the main part of the problems arise with the global logistics component of the SCM, as various legal environments are touched upon. (Pohlen 2004)

As for the matters of ethical implications, it should be stated that most researchers conclude that the main aim of most successful companies in the creation and keeping of the target audience, which is transformed into consumers. These should not be regarded as the source of income, but their needs and requirements should be satisfied. The same is with the suppliers.

Importance of Measures

The fact is that the system of measures and estimations is significant for the estimation of the progress or regress of any development, company, action, etc. Originally, the system of measures are intended for two aims: the creation of the appraisal–punishment system, and the setting up of the goals (evaluation of the current and desired position).

As for the Supply Chain Management principles, it should be stated that the key measures are related to such factors as resources, output, and flexibility. On the one hand, it may seem that these factors can not be measured accurately; nevertheless, SCM practices require a precise evaluation of all three factors. (Andersen 2002)

Taking into consideration the existence of the integrated and non-integrated metrics, it should be emphasized that Pepsi practices the implementation of both. Such a combination of various systems provides the required flexibility level for the adaptation of the system for the various business, legal and economic environments.


The table of metrics evaluation will be based on the principle of the correspondence of various indicators to the key SCM factors such as Resources, Output, and Flexibility. The evaluation will be represented in % (how the regarded indicators influence the regarded factors)

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Resources Output Flexibility
Scheduled Orders to Customer Request 80% 15%
Delivery Performance to Request Date 95% 15% 40%
Delivery Performance to Commit Date 100% 70% 5%
Perfect Order Fulfillment to Delivery 20% 45% 20%
Fill Rate by Order/Product Line 15% 35% 20%
Upside Production Flexibility: Principal constraint 30% 80% 15%
Key Components or Material Availability 95% 5%
Direct Labor Availability 5% 30% 90%
Internal Manufacturing Capacity 5% 95% 10%
Days Sales Outstanding 30% 10%
Average Payment Period for Production Materials 30% 30% 10%
Total Inventory Days of Supply 20% 50% 25%
Cash-to-Cash Cycle Time 80% 5%


Finally, it should be emphasized that the Supply Chain Management principles, which are emphasized and analyzed in the paper are crucial for the allover performance of any company. The factors of the metrics, which are essential for Pepsi Company indicate its performance from the point of view of the SCM.


Geary. S & Zonnenberg, J. P, “What it means to be best in class”, Supply Chain Management Review,USA 2000.

Andersen, A., Performance management: don’t build your own, Manufacturing Systems, November, USA, 2002.

Pohlen, T., n.d., A framework for developing Supply Chain metrics, University of North Texas, USA, 2004.

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