Thinking Out Loud: PepsiAmerica's CIO Ken JohnsenBy Ellen Pearlman
CIO INSIGHT: What's the key business challenge that you're using wireless to address?
KEN JOHNSEN: Our business has changed quite a bit over the past 100 years, but our distribution method really hasn't. We've gone from supporting something like 50 different SKUs, or beverage types, to something like more than 300, due to more product and packaging innovations new products like Mountain Dew Code Red and Pepsi Blue. It adds a lot of complexity and the old way doesn't work anymore. There isn't room on the truck or on store shelves for all these new SKUs and the marketplace is much more competitive. Our challenge now is to use a new team of sales agents to take over the customer relationships and use wireless devices to help them leverage information about individual customers, routes, stores, mix, pricing and so forth, to sell more. On the back end, wireless devices can help drivers do a better job with delivery and inventory management, and put more emphasis on the customer service side of the equation. All of that plays to our need to shift our focus from selling the traditional carbonated soft drinks to the waters, teas, juices and new-age beverages, which will account for much of our sales growth going forward.
What's the hardest aspect of this project?
We have a lot of people who have been doing the same job for 30 years driving trucks, selling Pepsi, Diet Pepsi and so forth and we're finding that we need to keep focusing on the changes in how people do their jobs. Everybody's familiar with Pepsi. They know how much they can sell it for, and how many cases they're likely to sell. Drivers are having a much harder time anticipating how to price and sell new beverages. We also have had to get the drivers of the delivery trucks to feel comfortable letting go of control of the customers. I don't know that we're there yet on all counts.
I would think it's a change for the customer, too.
Some customers don't like it, some do. It used to be a very easy process that didn't require them to think about things; they could just get their order replenished. But now they are being asked to think about which are the right products to have in their stores. From the sales side, we think there is some advantage to that.
Management-wise, what are you doing to ease some of the changes?
We've created location-site champions and said, 'Okay, you're accountable for making sure that things happen here.' That was one of the lessons we have learned in this. As people adapt to wireless, start using it and start becoming advocates of the solution, it's going to make it easier for other locations. I think the more we can get people involved in managing change, the better off we'll be.
What technologies are you using to execute the new strategy?
The whole solution, taking us from the old conventional delivery model to the new pre-sell model, has over 12 IT-specific components. For example, we give handhelds to the salespeople. The truck drivers use the same handhelds, but they are equipped with a delivery application. Then we have routing and logistics software. We have the CRM application itself, a telephone sales model for some of our institutional customers. We have the truck-loading software, three or four different software applications to get the trucks loaded and routed correctly. On the CRM front, a big challenge was going from a mainframe to a Web-based application. A mainframe is just up and running, and you connect to it. A Web-based application has a PC, a Web browser, a WAN infrastructure that you've got to pay close attention to, as well as a Web server, a database server, an application server and the database. All of this requires a lot of management to make sure that everything is working correctly, and I think it's been a challenge to make sure that all those components are up, running, performing correctly, and that everything is moving between all the pipes correctly. That's something we probably underestimated and, at first, did not emphasize enough.
What issues do you face with wireless technology?
If you don't get the orders in today, you can't load the trucks that night, and you can't deliver tomorrow. In some of our pilot locations in IowaCedar Rapids, Urbandale and Marshalltown we didn't have the greatest wireless coverage for transmitting the orders. The wireless environment was very new to a lot of the staff, and it was a big challenge and shall continue to be a challenge as wireless communication evolves into a more workable, reliable communications tool.
We typically are not early adopters and are not interested in getting out on the bleeding edge of things. But we see enough benefit and value in being able to wirelessly transmit orders throughout the day, as opposed to having to batch them at the end of the day, because of the impact it has on the back end. We also have the new delivery and the 802.11b LAN stuff in warehouses and distribution centers to transmit all the information. After we're done rolling out this wireless pre-sell model, we're going to look at potentially enhancing our picking capability in the warehouse, potentially leveraging RFID, but that stuff is not in this part of the project. That's the future.