Soft Sell

Pepsi pursues an aggressive IT strategy as it implements a combination of in-house apps and off-the-shelf solutions throughout the region.

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By  Matthew Southwell Published  March 18, 2002

I|~||~||~|As a franchise business, Pepsi Middle East, North Africa & Pakistan (MENA/PAK) was rarely involved in the IT operations of its bottling plants. However, in 1999 this changed as the soft drinks giant acquired its own bottling operators in Egypt and Jordan. The existing operating systems at these plants were obsolete, had Y2K issues and were not flexible enough to meet Pepsi’s needs.

As a result, the company was forced to adopt an agressive IT strategy and the MENA/PAK division set about finding a set of solutions that suited its specific sales, distribution and financial requirements.

To this end, Oracle Financials was selected for the back end solution. “We wanted an application from someone with a presence in the Middle East market for the Arabic support. In addition, each of our franchise owned bottling operations (FOBOs) had independent legacy systems so we wanted something integrated,” says Carla Eid, business solutions group manager, Pepsi Middle East, North Africa & Pakistan.

However, finding a suitable sales and distribution (S&D) application proved harder as the company’s requirements were particular. In the sales and distribution (S&D) process invoices have to be viewed alongside net loads, empties and ongoing promotions such as discounts. Eid adds that, because the company is sales driven, getting the company’s S&D application right is paramount.

“Our needs are specific to our business and so complex that we could not find any ready-made applications to fit our sales and distribution [model]… We knew that our business was unique so we started to develop from scratch,” she explains.

Rather than build the application in-house the decision was taken to outsource development. Despite the fact that the company knew exactly what it wanted, the decision to outsource was taken because the business solutions group is keen to move away from in-house development.

“We are not a software house, we don’t have the technical skills nor the resources to develop software in-house. Here our role is to do the design and the project management,” she says. As a result, the regional office commissioned Lebanese development house, Astrolabe IT, to build the S&D application from PepsiCo’s design and functionality specifications.

The resulting transaction processing S&D application, called MENA/PAK S&D, has been designed to support the day-to-day business operations of loads and settlements. It handles load, invoice and payment processing as well as handling settlement and net load to invoice reconciliation. The application also manages inventory at the warehouse level as it captures transactions and updates stock levels.

||**||II|~||~||~|At the same time, Pepsi commissioned the development of a data warehousing solution so that it could make the most of the information gathered by the S&D application. Developed by Indian IT shop KPIT using Oracle Express, the Sales Data Warehouse (SDW) solution sits on top of the S&D software and consolidates information — no easy task considering each bottler has several warehouses and distribution centres. For example, Pepsi in Jordan has six separate warehouses.

“We needed something to consolidate the data from our S&D systems in order to discover total sales for each country. We could not do this with the S&D application alone because it only collects sales data for its own warehouse,” explains the business solutions group manager.

Although the necessary applications had been identified, rolling out Oracle Financials, the data warehousing solution and the S&D application was no easy task due to FOBO independence. “We don’t have regional integration so for each operating country you have independent S&D and financials,” she says.

Currently, Jordan is the only country to have implemented the S&D application in all of its warehouses and work on the SDW was completed in August last year. In Egypt, four out of the 22 warehouses have been completed and in Algeria it is a case of one down and two to go. Implementation is due to start in Lebanon and Saudi Arabia later this year.

Eid manages all implementations from the Lebanon office. She is responsible for the first implementation at each bottling plant and bringing local IT staff up to a level where they can repeat the process at the outstanding warehouses.

The necessary skills transfer is started as soon as the project kicks off with the appointed implementation co-ordinator being involved from the planning stage onwards. “They are trained on every task. In addition, there is the official training on the application itself and also on the implementation methodology,” she explains.

Such a task requires substantial project management. Eid uses Microsoft Project and modifies the original plan, which was developed for Jordan, for each location. “Each project takes into account the customisation necessary for each country. We sit with every country team when we start and modify the plan accordingly. Tasks are then assigned and monthly progress reports completed,” she explains.

For the implementation of Oracle Financials consultants are also used, such as Satyam in Jordan and KPIT in Lebanon and Riyadh. Eid explains that consultants were used because of their existing knowledge base. As part of the deployment the consultants analyse each bottler’s requirements and map these to the application before determining the gaps and customising the application. If hardware upgrades are necessary then these are completed at the same time.

Typically, the applications are deployed on a local area network (LAN) within the FOBO. The warehouses are then linked to the head office through leased lines where the SDW and financial applications are hosted.

||**||III|~||~||~|The combination of in-house applications and the off-the-shelf Oracle solution has brought a number of benefits to the company. In addition to improving the data collection process Pepsi is also able to collect more detailed information.

“We can now have data all the way down to the customer — by product, by route, by salesman and by sales channel,” says Eid.

Once collected, the data follows two parallel routes. It is integrated directly with Oracle Financials as well as being submitted to the company’s data warehouse. Integration between the S&D application and financials is achieved via an in-house designed Visual Basic interface. The same programme also runs at the end of the day when the sales operations have been closed and confirmed.

The interfaces linking the S&D application and the SDW solution are written in SQL statements. The programme exports the sales data to a text file before the SDW loads the text file into the system. At the end of the sales day, when all settlements have been completed and the data verified, a clerk exports the data to the SDW program from the S&D application. This creates a text file on the server of each warehouse. The following day head office transfers all the text files to the SDW server before loading them into the data warehouse.

In addition, the S&D application also generates entries for the general ledger system — part of Oracle Financials — which captures all financial transactions and produces financial statements.

The middleware layer “resolves the integration gap between a custom built solution and the ready made application,” says Eid.

The ability to capture and access detailed data in real time and analyse it on an ad-hoc basis has accelerated the company’s decision making. Eid explains that, rather than having to wait until the end of the day to see sales figures, reports can be generated to give cumulative sales for the day at any point.

Consequently, if a new sales situation arises decisions can be made on the spot, rather than relying on predefined reports or hastily created ones. “The SDW allows us to get quick answers to complex or ad hoc queries on the spot. It also allows us to shift from data creation and preparation to data analysis, which is far more important,” she says.

||**||IV|~||~||~|SDW also helps the sales team at Pepsi better identify sales opportunities as Oracle Express Objects are used to analyse the data. For example, the company can identify cross-selling opportunities and offer discounts to customers that are profitable or showing potential.

“If you have more data and the right analysis tools you can improve decision making and create clear objectives for your salesmen. Without this technology you will be making decisions based on gut feelings. Data means more sales for us,” she comments.
The automation of Pepsi’s S&D data capturing has improved the company’s efficiency, reducing the need for intensive manual preparation of reports, sales analysis, and discount & empties tracking. “In some countries we were able to save about 30% of the work time. It helps you to cut a lot of the manual work and therefore head count,” she says.

Control has also increased. Discounts, free cases and empties are now easier to follow through the S&D application. This too saves the company money. “The ability to track discounts online means that the offer can be withdrawn as soon as the predetermined quota has been reached, rather than overrunning,” says Eid.

Oracle Financials has improved the accuracy of financial data, which increases resource productivity and delivers greater budgetary control. In some Middle East countries, Pepsi has succeeded in shortening its monthly financial closing by up to ten days, comments Eid.

From this solid base Pepsi is looking to build on its technology implementation. Already under consideration is a manufacturing suite to further integrate the supply chain and the use of handhelds for sales teams. Eid explains that the integration of handhelds with the S&D application would help solve the problem of capturing customer invoices. “We have tens of thousands of customers in each country and currently it is not feasible for us to capture all their invoices,” says Eid.

“If we want to improve our decision making and our sales we definitely need sales data on all our customers and handhelds is the ultimate solution,” she adds.

Eid believes that by using technology to enable its business objectives the company will retain its lead over its market rivals. Data, she says, is the key.

“It improves efficiencies and helps us identify opportunities and make better decisions. Essentially, it saves money and increases sales.”||**||

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