Management

Information Systems
Project Report
RESOLVING BUSINESS CHALLENGES AT PEPSICO INC USING MIS

Submitted by:
Group 9

Section A

List of abbreviations:

SAP- Systems Applications and Products

FMCG- Fast Moving Consumer Goods

ROI- Return on Investment

ERP- Enterprise Resource Planning

SCM- Supply Chain Management

PBG- Pepsi Bottling Group

SKU- Stock Keeping Unit

S&OP- Sales and Operations Planning

SMART- Measurable Attainable Reasonable and Time bound

PDA- Personal Digital Assistant

ICT-Information and Communications Technology

AMEA- Asia, Middle East & Africa

FIT- Fleet Information Technology

List of Diagrams:

Evolution........................................................................................................................Pg.5

Revenues by segment.....................................................................................................Pg.6

Return on capital.............................................................................................................Pg.6

Future economic profit projections.................................................................................Pg.7

Sales information system................................................................................................Pg.9

Business Scenarios for PepsiCo using MySAP NetWeaver.........................................Pg.10

SAP module..................................................................................................................Pg.11

Enterprise Resource Planning module..........................................................................Pg.12

PepsiCos competitive advantage for using CRM........................................................Pg.13

Supply chain process....................................................................................................Pg.15

Typical Social Vending Outlet.....................................................................................Pg.18

Typical fleet management user interface......................................................................Pg.21

Table of Contents
1

Introduction to PepsiCo
Mission & Values
Evolution
Current Business Scenario/Competitor Analysis
2 Objective, Scope& Limitations of the study
3 Information Systems at PepsiCo
4 Transaction Processing Systems
Sales Information Systems
5 Management Information Systems
Sales Function
i MySAP Business Suite
6. Decision Support Systems
Procurement Function
i. Production Sourcing at Pepsi Bottling Group
7. Information Technology at PepsiCo for competitive advantage
NextGen SMART Handhelds
Social Vending Systems
Inside Scoop
Telematics

8. Conclusion & Recommendations

References

Executive Summary
Since PepsiCos entry into the Indian market in 1989, a number of brands from its assortment have
developed into recognized category leaders. Brand Pepsi is now the 2 nd biggest brand in the country.
PepsiCo has established a strong assortment of brands, a considerable and adaptable distribution network,
and offered the customer with a supply of innovative, refreshing and healthy products.Strategic use of
information technology is a core principle at PepsiCo.
Use of Sales Information System helps the company to collect, consolidate, and utilize data from Sales
and Distribution processing. The company is functioning on a multi-year management information system
transformation plan which contains company-wide SAP-based initiatives and tapped into a solution that
would take two-year to transform production sourcing process. PepsiCos innovative use of telemetry
with the Social Vending System delivers tremendous operational benefits, allowing customers to closely
manage inventory levels and delivery scheduling remotely.

1. Introduction to PepsiCo
PepsiCo
PepsiCo Inc. is an American multinational food and beverage corporation. It was founded by Donald M.
Kendall, President and CEO of Pepsi-Cola and Herman W. Lay, Chairman and CEO of Frito-Lay, after
Pepsi-Cola merged with Frito-lay. Pepsi-Cola was created in 1898 by Caleb Bradham, a pharmacist from
New Bern, North Carolina but soon it got bankrupt in 1931 and later their trademark was bought by
Charles Guth who owned a candy business company. In 1965, Pepsi-Cola became PepsiCo after it merged
with Frito-lay. In 1966, PepsiCo entered Japan and Europe and it began to expand its distribution and
gradually it acquired pizza hut and taco bell in 1978 to have a commanding presence in the global market.
Pepsico as of now has at least has 21 billion dollar brands. These brands are Pepsi-Cola, Mountain Dew,
Lays, Gatorade, Tropicana, 7Up, Doritos, Lipton Teas, Quaker Foods, Cheetos, Mirinda, Ruffles,
Aquafina, Pepsi Max, Tosotitos, Sierra Mist, Fritos and Walkers. The products of these brands are spread
across 200 countries which accounts for a net revenue of $65 billion. Overall it employs approximately
285000 people around the globe. PepsiCo is headquartered in Purchase, New York,USA.

PepsiCo India
PepsiCo entered India in 1989 and today it has a large part of market share in food and beverage business
in India. PepsiCo Indias product mix includes Pepsi, Lays, Kurkure, Tropicana, Gatorade, Quaker and
young. Among these the most popular brands and fastest growing brands are Nimbooz and Aliva.PepsiCo
India currently has more than 6400 employees and 2, 00,000 people are employed indirectly. It has
developed a farming programme with farmers where they help the farmers in getting high quality seeds
and agricultural practices, bank loans, disease control packages etc. To protect the farmers from market
price fluctuations they buy back what they produce at a prefix rate from the farmers. This programme has
transformed the lives of as many as 24000 farmers across nine stakes out of which 45 percent are small
farmers who have a land holding of one acre or less.

MISSION & VALUES

PepsiCos mission is to be the world's premier consumer Products Company focused on convenient foods
and beverages. We seek to produce financial rewards to investors as we provide opportunities for growth
and enrichment to our employees, our business partners and the communities in which we operate. And in
everything we do, we strive for honesty, fairness and integrity.
PepsiCo's responsibility is to continually improve all aspects of the world in which we operate environment, social, economic - creating a better tomorrow than today."Our vision is put into action
through programs and a focus on environmental stewardship, activities to benefit society, and a
commitment to build shareholder value by making PepsiCo a truly sustainable company.

EVOLUTION
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Pepsi was actually made as an energy drink and not as a carbonated soft drink during its introduction
phase. The energy drink was named as Brads Drink named after Caleb Bradham who created this drink at
his drugstore. It helped in digestion and boosting energy. Later it was named as Pepsi Cola, possibly as its
composition were digestive enzyme pepsin and kola nuts. In 1903, Bradham then moved his bottling plant
from his pharmacy to a rented storehouse to meet the demand of the customers and the next year it
showed a profit of 19848 gallons. Six years later, automobile race pioneer Barney Oldfield became the
first celebrity to endorse Pepsi-Cola. It was advertised as a Delicious and Healthful drink.

Pepsi-Cola got bankrupt twice in 1931 and 1939 respectively. In 1931 the reason was due to unstable
sugar

prices and later it was

sold
off to
Roy
C.

then
later

Megargel and
eight years
when
it
again
got
bankrupt its

assets were purchased by Charles Guth. He was the president of a candy manufacturer company called
Loft Inc. He then reformulated the pepsi-cola formula with the help of his chemist to rebrand his
company which was in bad shape at that point of time.
Its competitor, the Coca-Cola Company had the opportunity on three occasions between 1922 and 1933 to
acquire Pepsi-Cola but it didnt show any interest.Pepsi-Cola was renamed as PepsiCo in 1965 after it
merged with Frito-Lay Inc.

CURRENT BUSINESS SCENARIO/COMPETITOR ANALYSIS

Overview: PepsiCo operations are in over 200 countriesand is global manufacturer, distributor and
marketer of food and beverages products. Over the years percentage of revenue has drastically declined in
carbonated soft drinks which was their main segment since its inception into the market and now the

chunk of the revenue comes from non-carbonated drinks and food products. In fact, beverages account for
less than 50% of the revenue and the carbonated soft drinks accounts for 40% of the total 50% revenue
generated by beverages worldwide. In United States, PepsiCos snacks and beverage products have 39%
and 25% market share respectively. Globally PepsiCo operates in six divisions shown below with their
corresponding revenues in percentages.

REVENUES BY SEGMENT

13%
15%

Frito-lay North America

29%
4%

25%

14%

Quaker Foods North A merica

Latin America Foods
Peps iCo Americas Beverages
United Kingdom and Europe
Middle Eas t, Africa and As ia

Investor Relations: PepsiCo was in dismal state until Indra Nooyi came into the picture as CEO in late
2006 and she delivered by showing high net profits, paying dividends to stakeholders and stock buybacks.
But after 2012 it has not been able to maintain the same consistency level in terms of sales figures and
carry the trust with their investors. The investors are now skeptical about the returns on capital that Nooyi
made in 2007 to 2012. To go for market expansion her strategic decision to acquire beverage companies
in developing countries led to investment of 22 billion in 2007 to 66 billion in 2012. But profit hardly
rose and results were depressing. Its return on capital fell from 22% in 2007 to 11% in 2012.

Competitors: The main competitor of PepsiCo in the beverage market is the Coca-Cola Company (KO).
Over the years both have used different strategies to capture the market and so it would be unfair to
compare PepsiCo with Coca-Cola in only beverage segment as PepsiCo has more diverse portfolio of
product mix than Coca-Cola and as of now it focuses more on generating revenues from food and non
carbonated soft drinks. So comparing on a level playing field, Coca-Cola emerges out to be the winner in
carbonated soda beverages as 78% of its sales come from this segment unlike PepsiCo which has only
40%. PepsiCo leads the industry in non-carbonated soft drink innovations.
Coca-Cola does not participate in snacks and food industries and therefore PepsiCo which is backed by
Frito-lay and Quaker brands enjoys a commanding market share of 39% in this segment. Its main
competitor in the overall food industry is Krafts food (KFT). Like the Coca-Cola Company it only
participates in the food industry and not in the soft drink market giving PepsiCo an advantage to capture
more market share through different product mix.

2. Objective & Scope

The objective of the project is to study select Information Systems and new generation technologies used
by global FMCG and beverages giant PepsiCo Inc and its subsidiaries. PepsiCo uses Information Systems
to address and resolve various business challenges and thereby gain competitive advantage in the diverse
markets in which it operates.
The information used to generate this report is based on secondary data and consequently the scope of this
project is limited to select IS used by PepsiCo, based on data available in the public domain. An attempt
has been made to study types of IS like Transaction Processing Systems (Sales Information System),
Management Information Systems (MySAP Business Suite) and Decision Support Systems (IBM
LogicNet Plus XE) used in sales and procurement functions. The new generation technologies used by
PepsiCo like social vending system, SMART handhelds for salesforce etc have also been covered in brief.

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3. Information Systems at PepsiCo

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4. Transaction Processing Systems

SALES INFORMATION SYSTEMS

They support activities for selling & marketing firms products or services.
Senior management: monitor trends affecting product & sales, planning for new products & services,
monitor performance of competitors.
Middle management: support market research; analyze marketing campaigns, pricing decisions & sales
performance.
Operational management & employees: locating & contacting potential customers, process orders,
provide customer service support.
MIS (Sales) at Pepsi Franchisees The franchisees use Sales Information System to generate a variety of
reports like Agent wise sales summary, District wise sales summary, Computerize sales statements
(monthly, semi-annually, annually), Cash Report etc

Sales Information Systems

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5. Management Information Systems

Sales Function
The choice of MySAP Business Suite is designed to provide the firm with an information systems
platform to effectively integrate business processes within the group. At the same time, PepsiCo sought to
attain ceiling operating advantage from its combined businesses. It helps the company with a combined
organizational visibility to meet the industry specific requirements.
With MySAP Business Suite, PepsiCo believes that it will be proficient to make more efficient
distribution and delivery, get better planning and forecasting, increase information transparency and bring
together supplychain and inventory with buyer-facing activities in a single, integrated process. PepsiCo
will implement a complete range of solutions from MySAP Business Suite, powered by the SAP
NetWeaver integration and application platform.

Business Scenarios for PepsiCo using MySAP NetWeaver

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PepsiCo leveraging NetWeaver to drive up ROI and costs down

PepsiCos MySAP Modules

PepsiCo uses the below mentioned shown modules of MySAP Business Suite with R/3 to:
- Integrate operations
-

Even out processes through elimination of legacy systems

Advance planning and forecasting

Network supply chain and inventory with buyer-facing activities in a separate, integrated
procedure
Decrease redundancy and errors that are common in nature of legacy systems
Increase information transparency

SAP Modules

Enterprise Resource Planning (ERP)

The ERP part of MySAP simplifies the operations of daily business in order to cut down costs. This is
accomplished by not transferring the information through diverse divisions as the number of steps needed
to accomplish a lone activity has been reduced. Software customized according to financial and
management accounting is also added to reduce the travel costs. This software is connected to the
production lines and sales application in order to balance expendituresand product sales.

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H um an
R e s o u rc e
M anagem
ent
Sma o
l edsu ol er

M od
u le s
in
ERP

S h ip m e
nt
m o d u le
s

In v e n t
o ry
M anag
em ent

F in a n c ia l
A c c o u n ti
ng
m o d u le

At the point of sale, the data is saved in ERP Sales module, the finance data is updated and sales
statement is generated by the system.The system in addition keeps the track of which distributor
purchased how much quantity and the frequency of sales can be captured.

K e y
a c c
o u n t
m
D ias n
t r i
a
g
e
b u t o r
m e n
d a t a
t
m a n a
g e m e
n t

S a le
s
o r
S h ip
m e n
t
m o d
u le

S
h i
p
m
e
n t

S
a
l
e

Supply Chain Management (SCM)

It is important for PepsiCo that all the suppliers should arrive to the correct plant as PepsiCo has many
number of manufacturing plants located on diverse locations across the globe. To counter the problem for
over inventory keeping, MySAP helps to maintain balance inventory levels by communicating the
message to PepsiCos suppliers. Once the forecasted demand is generated it is communicated to the
suppliers.

15

Following factors are taken into account while forecasting the demand:
- Historical gross sales in addition with the information about sales as of now
-

Recurring changes

Market economic factors

Environmental changes

Customer Relationship Management (CRM)

PepsiCos CRM helps to integrate and store the customer related data from diverse locations. Once the
data is collected, CRM module helps to analyze and burst the data to different locations for decision
making process.

PepsiCos competitive advantage for using CRM

CRM
M odu
le

h e lp
s in

u n c o v e r p o te n t ia l
s a le s o p p o r tu n itie s

d e te rm in e
p ro fi ta b le
c u s t o m e rs

p ro v id e t h e e n t e r p r is e w ith
u p -to -d a te in fo rm a tio n

im p ro v e c u s to m e r s
in te r a c tio n a n d
re la tio n s

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6. Decision Support Systems

PROCUREMENT FUNCTION
Production Sourcing at Pepsi Bottling Group
Production Sourcing decisions for a typical manufacturing company involves crucial decisions like:

What plants should produce what products and when? - Manage and plan for seasonality

At what level should each plant be operated? - Ensure capacity and flexibility

What products should be outsourced to 3rd party manufacturing locations?

How can the overall supply chain costs be reduced?

What are the sources of savings opportunities: material costs, processing costs, or distribution
costs?

Change plans on an ongoing basis as part of a sales and operations process

The Pepsi Bottling Group (PBG), once an integral part of PepsiCo, was spun off into a separate publicly
traded company in 1999. The main mandate of PBG is manufacture, sales and distribution of the Pepsi
Cola beverage brand of PepsiCo Inc. PBG accounts for more than half of Pepsi Cola beverages sold in
North America and about 40% of volume sold worldwide, generating nearly US$ 14 mn in annual sales.
PBG was later merged back into holding company PepsiCo Inc in 2009 as part of business consolidation.

PBGs Business Challenge:

Traditionally, PBGs supply chain planning process was performed manually with a spreadsheet and was
done by each function in the company independently of other functions. Specifically, production plans
were determined at the Business Unit level, independent of other Business Units and did not consider
what was appropriate across the entire network. This implied that usually only one parameter (frequently
production costs) ended up being optimized.
However, focusing only on production costs meant that each manufacturing facility produced just a few
SKUs, thus producing large batches and reducing fixed costs. For an organization like PepsiCo, this
resulted in increased transportation costs as the specific facility producing a certain product may be
located far from the demands market. Alternatively, reducing transportation costs required each
manufacturing facility to produce many SKUs and hence customers could be served by the closest
facility.

17

In 2005, PBG leadership recognized that increased complexity in the bottling landscape and the
competitive nature of the bottling industry required a new approach to production sourcing. Both the
supply chain network and changing consumer preferences drove this complexity. PBGs North American
network (US and Canada) consists of 57 plants producing over 1,200 stock keeping units (SKUs)
distributed to 360 warehouses. Consumer preference shifted from cans to bottles, from carbonated soft
drinks to noncarbonated drinks, and toward shrink film packages. PBG produced these newly preferred
products in limited locations. The end result was over half of PBGs bottling lines operating at capacity
and peak demand outstripping instantaneous production capacity.

The Solution:
PBG leadership decided it was time to take a network-based approach to production sourcing that would
deliver minimized system-wide costs, better customer service and competitive advantage. Finding the
right balance between the two cost components, that is, production and transportation costs, requires
replacing the sequential planning process with a process that takes into account the interaction between
the various levels of the supply chain and identifies a strategy that maximizes supply chain performance.
This is referred to as global optimization.Solving this problem required the capabilities of an
optimization-based Decision Support System, for which PBG chose IBMs LogicNet Plus XE. This
system, which models the supply chain as large-scale mixed integer linear programs, is an analytical tool
capable of considering the complexity and dynamic nature of the supply chain.

Fig. # Supply Chain Processes

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The optimized solution, which was implemented in three stages, recommended a great deal of cross
Business Unit sourcing, a departure from normal business practice. The Finance, Transport,
Manufacturing, IT, and Supply Chain Strategy functions collaborated to build the inputs to the LogicNet
Plus XE model. Business Units and the Transport function used the output of this process to develop their
annual plans. Lastly, the Supply Chain Strategy team monitored adherence to the optimized solution.
As depicted in Fig. #, Strategic Network Design and Supply Chain Master Planning are at the core of the
capabilities required for supply chain excellence. PBG could achieve this by implementing the
Information System solution LogicNet Plus XE provided by IBM.
The LogicNet Plus XE models are also used at PBG to understand:

The tradeoffs between prebuilding product and using outside storage

The cost and impact of potential deals to PBGs system

Future production capacity addition/removal

Risks related to supply chain disruptions

Results:

Reduction in raw material and supplies inventory from US$201 to US$195 million

A decline of 2% in the growth of transport miles

Increase in the return on invested capital from 7.6 percent to 7.8 percent

Reduction in warehouse out-of-stock levels providing an additional 12.3 million cases available
to be sold

About IBM LogicNet Plus XE:

Provided by IBM, LogicNet Plus XEis used for Network and sourcing optimization i.e.location of
facilities, assignment of stores, managing seasonality, and carbon foot printing. Value: 5-15% reduction in
supply chain costs, better service to stores and for on-going multi-plant production sourcing and capital
investment decisions. Value: enhanced S&OP capability, 2-5% reduction in manufacturing costs.

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7. IT for competitive advantage

NEXTGEN SMARTHANDHELDS
NextGen-It is a mobile sales strategy adopted by Pepsico which implements the use of a next generation
wirelesss handheld computer known as SMART(Specific Measurable Attainable Reasonable and
Timebound). the 400 MHz, 64-MB RAM handheld devices ,weighing only about 21 oz can contain a lot
of information. It can strengthen the ability of the workforce to give customers more choice, reduce
invoicing and marketing errors, and leverage the full force of the customer data PepsiCo has been
collecting for years.
Some of the major functions aided by SMART are as follows:
Compare weekly and monthly sales and highlight how actual results compare to quotas
Plan promotions to prevent out-of-stocks by linking demand forecasts for a particular product in a
specific market to a variety of pricing, display and inventory scenarios
Show retail customers color images of new products and packaging options as well as videos of
upcoming ad campaigns
Target promotions to specific accounts based on individual store sales, enabling their best customers to
receive special deals.
An example of the usage of this SMART handhelds is as follows:
Messages can pop up on the PDA screens from headquarters urging a rep in Dallas to offer, say, the Diet
Orange Slice deal only to urban accounts that buy regular Slice but not Diet, and only to those with a
Slice poster on display, thereby increasing the effectiveness of a promotion and reducing sales team
errors. This in turn also reduces time Pepsi products are out of stock out of a particular store and in turn
builds customer loyalty among store managers and claim more shelf space. It also helps in targeting
specific promotions to specific accounts and allows company to give specific deals .

SOCIAL VENDING SYSTEMS

On April 27, 2011, PepsiCo announced the launch of its Social Vending System, a state-of-the-art
networked unit that features full touch screen interactive vending technology, enabling consumers to
better connect with PepsiCo brands right at the point of purchase. A prototype of the Social Vending
System will debut at the National Automatic Merchandising Associations One Show in Chicago, April
27-29.
Using digital technology, PepsiCos Social Vending System enables any user to gift a friend by selecting a
beverage and entering the recipients name, mobile number and a personalized text message. Theres also
the option to further personalize the gift with a short video recorded right at the machine. The gift is
delivered with a system code and instructions to redeem it at any PepsiCo Social Vending system. When

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the recipient redeems his or her gift, theyre given the option of either thanking the original sender with a
gift of their own or paying it forward and gifting a beverage to someone else.
PepsiCos innovative use of telemetry with the Social Vending System also delivers tremendous
operational benefits, allowing customers to closely manage inventory levels and delivery scheduling
remotely, and easily update digital content online, enabling them to change messaging and media content
as needed.Social Vending also enables Random Acts of Refreshment the ability to buy a drink for a
complete stranger through any other Social Vending system. For example, a consumer could send a
symbol of encouragement someone in a city that has experienced challenging weather, or a congratulatory
beverage to a student at a university that just won a championship. The platform holds potential to extend
PepsiCos digital and social programs for its food and beverage brands
A typical Social Vending Outlet is as follows:

INSIDE SCOOP
Inside scoop is a kind of colloquial term which means having the privilege of acquiring some rare or
superior information about a process or system which others lack to access. In the context of
PepsiCo,this term becomes relevant in the context of the recent initiative taken by the management where
it allowed its employees to share the inside stories and other interesting articles to the outside world.In
other words, it was like turning a bit of its intranet inside out. Selected internal newsletter articles are
allowed to be posted on the external social network.

21

This initiative was taken in response to a 2010 survey of Pepsico employees where 65% said that friends
and family ask those questions about PepsiCo or its products, and more than half said they would like
PepsiCo to provide them with information to share across social media channels. That led to a program
aimed at educating employees on what they can and can't share and what questions they can answer on
social media, as opposed to referring them to PepsiCo's official communication channels.
This program gives an opportunity to the employees to act as social ambassadors on the behalf of the
company as they can share something unique about the company on social networks under the specified
regulations.The interesting observation is that about 85% of the content of the internal newsletter is auto
sharable without any modifications. This reduces the cost of customization of the newsletter apart from
attenuating risks. Another important advantage to the company is that it can portray itself as a tech savvy
company through active participation onsocial media networks and digital innovation programs

USE OF TELEMATICS AT PEPSICO:

Telematics typically is any integrated use of telecommunications and informatics, also known as ICT
(Information and Communications Technology). Hence the application of telematics is with any of the
following:

The technology of sending, receiving and storing information via telecommunication devices in
conjunction with affecting control on remote objects.

The integrated use of telecommunications and informatics, for application in vehicles and with
control of vehicles on the move.

Telematics includes but is not limited to Global Positioning System technology integrated with
computers and mobile communications technology in automotive navigation systems.

Most narrowly, the term has evolved to refer to the use of such systems within road vehicles, in
which case the term vehicle telematics may be used.

At Pepsico, telematics is primarily used in the context of vehicle telematics..Vehicle telematics can
improve the efficiency of an organization and is implemented for some or all of the following purposes:
Vehicle Tracking
Trailer tracking
Container Tracking
Cold Store
Fleet Management
Satelite Navigation

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 Mobile data and mobile television

Emergency warning system for vehicles
Intelligent Vehicles and Car Clubs
Auto Insurance

Out of the above mentioned functions facilitated by vehicle telematics,Fleet management and Auto
Insurance are the two most important functions currently operable at Pepsico.They are explained as
follows:
Fleet management:
PepsiCo Asia, Middle East & Africa (AMEA) division has partnered with MiX Telematics of Egypt in
order to achieve its long term goal to maintain its reputation as being ethical,sustainable and responsible.
In 2010, PepsiCo was named among the worlds most ethical companies by Ethisphere. It was also
included in the Dow Jones Sustainability Index for its economic, environmental and social performance.
In 2011, PepsiCo went on to scoop mentions as one of the worlds most innovative, admired companies
with one of the most ethical reputations.The challenges to this goal included ensuring road safety and safe
driving practices in a country having the highest road kill rate worldwide.
The company needed ways to:

Monitor their drivers behaviour

Measure different levels of awareness and behaviour among their drivers

Improve driver safety

MiX Telematics acted as a solution provider when their dealer in Fleet Information Technology (FIT) in
Egypt installed a derivative of FM Communicator in their 3,000-strong sales and distribution fleet. This
derivative was specifically designed for use in regions with high operating temperatures and restricted
GPS access.By providing second-by-second data capturing, driver violation alerts and detailed trip
information, the device would allow for the remote performance monitoring of PepsiCos vehicles and
drivers. F.I.T also helped develop a robust driver performance evaluation programme that would
repurpose the data in a monthly report.

Expected benefits:

With all their fleet data captured and available in real-time, PepsiCo would monitor and evaluate driver
behaviour; track hours of service and distances travelled, and produce fast, reliable HR reports.
Furthermore, they would put into practice a results-based reward and penalisation system for drivers,
encouraging them to embrace safer driving practices.

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Measurable results tracked after one year:

Less risk

Reduced operational expenses

Increased vehicle utilization

A typical fleet management user interface is as follows:

Auto Insurance:
The basic idea of telematics auto insurance is that a driver's behaviour is monitored directly while the
person drives and this information is transmitted to an insurance company. The insurance company then
assesses the risk of that driver having an accident and charges insurance premiums accordingly. A driver,
who drives less responsibly, will be charged a higher premium than a driver who drives smoothly and
with less calculated risk of claim propensity. Other benefits can be delivered to end users
with Telematics2.0 based telematics as customer engagement can be enhanced with direct customer
interaction.

24

Early pilots in the consumer market, and its application inthe commercial fleet market, have provided
evidence thattelematics insurance improves driving and reduces accidents. Pepsi reduced its fleet crash
rates by 80 percent1. In addition,the granular event data that telematics creates enables thecircumstances
of accidents to be more accurately established supporting efforts to reduce fraud.

25

8.Conclusion & Recommendations

26

References
1. PepsiCo Annual Report, 2011. Retrieved February13, 2013, from
http://www.pepsico.com/annual11/downloads/PEP_AR11_2011_Annual_Report.pdf
2. Simchi-Levi, David, Russell Tim, Charles Brad, McLoughlin Tom, Hamilton Paul. (2009).Case Study:
Transforming Production Sourcing at Pepsi Bottling Group. IBM. Retrieved February 18, 2013, from
ftp://ftp.software.ibm.com/common/ssi/ecm/WSW14086USEN.PDF
3. IBM ILOG LogicNet Plus XE. Retrieved February 18, 2013, from
http://www-01.ibm.com/software/integration/sca/logicnet-plus-xe/
4. http://management.fortune.cnn.com/2012/05/29/pepsi-indra-nooyi-2/Retrieved March 1, 2013
5. http://www.wikinvest.com/stock/Pepsico_(PEP)Retrieved March 1, 2013
6. http://www.wikinvest.com/stock/Coca-Cola_Company_(KO)Retrieved March 1, 2013
7. http://www.pepsico.com/company/our-history.htmlRetrieved March 1, 2013
8. http://www.pepsico.com/Company/Our-Mission-and-Vision.htmlRetrieved March 1, 2013

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