Web Extra: Pepsi's Next Generation

By CIOinsight  |  Posted 04-14-2003

Web Extra: Pepsi's Next Generation

With soda sales in a slump, Pepsi's largest bottler, Pepsi Bottling Group Inc., is turning to technology to help its salespeople push new products and get a better handle on customers. The goal? Sell more soda, of course. PBG's vice president for supply chain logistics and technologies Paul Hamilton sat down recently with CIO Insight Reporter Debra D'Agostino to explain how.

CIO Insight: When was the NextGen project conceived?
Hamilton: It got its start with the hardware—we use the Symbol PDT 8000 device—about 18 months ago. Symbol Technologies Inc. developed an industry-specific piece of hardware for us, and since then has gone on to sell it to the whole industry. We developed it from November 2001 until about April 2002, and deployed it from Labor Day until Thanksgiving of last year. About 12,000 folks in the U.S. have that piece of hardware, so that's the platform.

And are those 12,000 all delivery agents?
It's a combination of sales folks and delivery folks. About half are delivery and half are selling.

So you have specific sales agents in addition to your drivers?
In general, our work force sells today and someone else delivers your order tomorrow, and that's the easiest way to put it. So we have a dedicated sales force, and a dedicated delivery force.

So your delivery people aren't actually doing the selling?
Right, in most cases. We have what we call off-truck, conventional sales force that do sell right off their truck, but we are shifting away from that into a total pre-selling model.

Now before this, the delivery people pretty much handled the entire relationship with the retailers, is that right?
For large formats, they haven't for years. But at the same time, you had a salesperson go in and take an order and a delivery person go in the next day, so those two people really own the store. But the sales individual owns what got sold inside. And so historically the delivery folks did not own the store for large formats. I should say recently, that is within the last five years, they have not.

Why is that better than having the delivery guys do the selling?
For a couple of reasons. One is that our SKU portfolio is growing more complex all the time. So rather than be constrained by whatever you can fit on your truck at one time, when you separate the two, the salesperson is [free to] sell whatever, and then we just dispatch the number of trucks and deliver whatever products we have sold.

I think I read somewhere that your SKUs have gone from something in the range of 50 to 300 in a matter of just a few years, is that right?
Yes, that's about right. But essentially that's the work we are trying to do, to give that salesperson the ability to sell the complete portfolio and drive the business and separate that from the need to optimize the delivery side of the business. And when I say delivery, it's really the service side, because the delivery person goes in and sort of owns the backroom and getting that product and merchandising, etc.

So when you started this pilot in Dallas, how did it work?
We started in a location, first a small number of routes, then a whole location, then a market unit, then a business unit, and then we're done with that and we do a rollout for the other business units.

Why did you choose Dallas?
It's a good representative market for us. We have a lower share, so it stresses the application's ability. Also, Frito-Lay is there, and we do a lot of partnering with them on things so they are able to see what we're doing and vice versa with us.

Frito-Lay has done some work on sales automation as well. Have you had conversations with them?
We meet every quarter to share what we're doing. In fact, in many of the larger initiatives, we have assigned who takes the lead. So Frito-Lay is taking the lead on item price synchronization and store managed inventory, and we are taking the lead on this particular project, so we don't duplicate our efforts. But in general we are independent. We have the same goals, but we are in different categories.

So they work on one project, you work on another, and in the end you share results so you can take the best practices from each and you both benefit?
Yes. It isn't that we divide all projects that way, but in some things that are global and dealing with item pricing synchronization kinds of work. We'll decide, we'll pick a point company for projects, and it just depends on the project.

So it's basically shared knowledge and best practices throughout the lines of business at PepsiCo?
Yes, though with us it's mostly with Frito-Lay, because they are Direct Store Delivery, as we are.

Just getting back to Dallas, when you did the pilot, was it creating a dedicated sales force or turning the drivers into salespeople?
Just the selling application.

So they already had the PDAs?
Yes, the handhelds were rolled out last year.

So the whole country got the PDAs, and then the test program for Shelflink's application happened in Dallas?
Yes.

Paul Hamilton Interview, continued

And then it's going to get rolled out throughout?
We have this ongoing work to segment our selling in terms of how we sell, off the truck to pre-sell and so on. Last year we did our hardware platform, got the whole country on that, and now we're right smack in the middle of this new selling application and then some of those other things we talked about in the future will come after what we do with the selling. We had no infrastructure in place, we needed to get that new functionality to the sales reps and delivery drivers, they had to have this infrastructure in place.

So the handhelds were the infrastructure, and now the Shelflink application is the next step that allows you actually to use the data and turn it into valuable selling information. And then the next step down the road is more automation, sensors, that kind of thing? Our whole objective in all that we do is to drive the customer's business and make our sales force not have to worry about routine tasks. So if I didn't have to think about how to get information, if I can just make that transparent to them, that's what I will do.

So what's the timeframe for the test pilot and subsequent rollout nationwide?
The platform is out there for all our work force. So the application that we developed with Shelflink is complete, and we have gone through what we call proof of pilot and concept. We typically do that in the spring and take the summer off, because that's our peak selling season.

Your "100 Days of Summer," right?
Yes, that's right, and then we deploy in the fall. So we are on that type of a schedule right now with the application side. A separate body of work is what we're doing on segmenting our selling resources. That happens regardless of what we do with the application.

You don't want to mess with the summertime sales.
No, we don't. This is not something we want to get wrong. So we will roll it out when we are confident that it delivers against out-of-stock inventory 100 percent, and then we will roll it out.

Are the PDAs also being used to monitor how well the salespeople are doing?
In the new application we'll give them new information about their route before they even walk out the door, so they will know who they are going to sell to, what opportunities they have, what issues might have cropped up the night before, so they will get sort of a snapshot of their route, using various visual cues and icons about selling opportunities or issues that might arise. And then store by store they will have specific information about what they have to do. Then they will get ongoing information on just how they are doing in basic volume for that account and so on. They will be able to have what we term mini business reviews with the store owner about how that account is doing and how to grow the business.

How does this project fit in with PepsiCo's strategy of "One Voice to the Customer"?
The challenge we have at PBG is that when we sell to Wal-Mart, so do a couple of other anchor bottlers, and so we need to have tools to help us drive the category across all Wal-Mart stores, regardless of whether it's the PBG part of town or the PepsiAmericas part of town. So we work very closely with PepsiCo to develop those tools like this application, so that's how we see it from our perspective. PepsiCo provides us a lot of global information about our customers. That's their role. They own the brands, they own some of the larger customer calls. So they give us a lot of good information and we work in lockstep with them.

But you're a separate company.
We're completely independent. Three years ago we were a division of PepsiCo and now we are an independent company. In many cases we work with PepsiCo to make sure that we are complementary to whatever they might be doing with the other anchor bottlers, but we are totally independent. We have a great and healthy relationship, and a healthy tension between the two companies.

How much of this is PBG wanting to do this versus PBG having to do it in order to stay competitive?
I'd say that right now, it is all because we want to do it. Our competition has the same desires we have, and they're a great competitor, so we know they're going to figure out some things someday that will make their business better for them. So we keep that never-satisfied approach, with the ultimate goal of driving that retailer's category. We actually don't worry about what Coke's doing. Other folks do, we don't.

So what is the ultimate goal of all of this?
It's really too early to tell right now. I'd say, simply put, it's to help our salespeople drive our customers' business. And the only way they can do that is to know about you specifically. And so giving our salespeople all the information about what's unique about that individual customer is what we're trying to do. At the end of this rainbow, what we're trying to do is drive category growth. Category growth for our customers on the selling side, and great service on the delivery side. That's the goal, and to do it faster than the competition. That's essential.