Wireless Technology: SCM For a New Generation
To support an improved sales and distribution model, PepsiAmericas swaps old handhelds for advanced mobile computing technology.
Why did the supermarket run out of your favorite soda the weekend of your family reunion? Maybe it's because in traditional soft drink distribution, sales and delivery are a single process. The route driver stops at a store, finds out what the manager wants, unloads the order from his truck, and leaves an invoice. If the store needs 30 cases of diet cola but the truck has only 20 left, the store makes do with less until the driver's next visit.
That model doesn't work anymore, says Ken Johnsen, chief information officer at PepsiAmericas, the second-largest anchor bottler of Pepsi-Cola products. PepsiAmericas' portfolio has burgeoned in recent years: it now includes everything from sodas, bottled water, iced tea and coffee drinks to New Age juice blends, not to mention varieties such as Pepsi Blue and Mountain Dew Code Red. Throw in a cornucopia of packaging options—20-ounce bottles, two-liter bottles, 12-ounce cans, 12 packs, 24 packs and more—and you need a psychic to predict how much of what to load on a truck.
"We've gone from fewer than 50 SKUs to more than 300," says Johnsen, whose company bottles and distributes beverages in 17 states in the central United States, as well as in the Caribbean and eastern Europe. But a truck can hold only so many cases. "When you sell from an inventory that you loaded based on what you thought you'd sell at 5:30 a.m., you don't always have what you need come 2 p.m. "
Beside that, "selling SoBe energy drinks is a little different from selling cases of 12-ounce cans," he points out. Today's soft drinks require sales representatives with specialized training.
Delivering What the Customer Ordered
In a push to increase sales, PepsiAmericas decided to separate sales and delivery in its larger U.S. markets. An account sales manager will visit a store to discuss its needs, promote products, and take orders. The next day, a delivery agent will drop off exactly what the customer ordered.
To support this new process and other improvements, PepsiAmericas is converting from a variety of business systems to PeopleSoft's enterprise resource planning (ERP) suite, with applications for sales, inventory, customer relationship management (CRM) and purchasing, among others. It's also rolling out a mobile computing system using both wireless local area network (WLAN) and wireless wide area network (WWAN) technology. The hardware for that system comes from Symbol Technologies, Holtsville, N.Y., and the software and integration services from Extended Technologies Corp. (Xtech), Dallas.
Delivery agents for PepsiAmericas already use handheld computers—older, DOS-based machines without wireless communications. Before starting a route, a driver inserts the handheld in a communications cradle at the distribution center to download the data he needs to complete his work. During the day, he uses the handheld to enter customers' orders. At the end of the shift, he once again inserts it in the cradle to upload route accounting data to PepsiAmericas' sales system.
PepsiAmericas will replace that handheld device with Symbol's PDT 8000, a rugged unit running the Windows Pocket PC operating system. The PDT 8000 features a color screen, numeric keypad, and integrated bar-code scanner.
Account sales managers can use their PDTs to record customers' orders. Several times a day, they upload that data to the sales system at the DC, using the Verizon Wireless network wherever coverage is available.
As order data arrives, "we can start building trucks for the next day," Johnsen says. That gives the DC a head start on loading orders and ensures that all customers get what they need—not what the driver happens to have left.
Symbol can integrate hardware for WWAN communications into the PDT, and PepsiAmericas hopes to use that technology some day. But in the short term, sales managers will send and receive data by tethering their handheld computers to cell phones. That's because wireless coverage varies greatly from place to place, and wireless data solutions vary from carrier to carrier.
"We're a little more on the bleeding edge than we would care to be in our dependence on wireless networks for such a mission-critical application," Johnsen says.
PepsiAmericas has many customers and DCs in rural areas with spotty wireless coverage. When account managers can't get a signal, they clip a wireline modem onto the PDT and transmit their data over conventional phone lines.
Technology in the PDTs also supports impressive sales presentations, notes Bob Schrieb, director of product marketing at Symbol. A sales rep could use it, for example, to show the customer photos of an end cap the company wants to put in the store, or to run videos of new Pepsi commercials.
PepsiAmericas hasn't yet determined whether it will tap those particular bells and whistles, "but those extras were defined as future requirements" when the company evaluated handheld systems, Johnsen says. "Those are things we see as potential opportunities."
Agents See the Difference
For delivery agents, the PDT 8000 offers a lighter, faster, more up-to-date handheld with a new user interface, but it will perform basically the same functions as the old handheld computers, Johnsen says. The agents will see a big difference, though, when it's time to exchange data between their handheld computers and the host system. Instead of carrying the units into the DC to insert in communications cradles, the agents will leave them in their trucks, sending and receiving data over the WLAN.
Wireless local networking offers two main advantages, Schrieb says. "First, you run at the speed of your network, vs. going to a serial cradle, which only runs at serial speed. So you actually update the devices faster over the wireless LAN."
Also, it gives the delivery agent one less task to do in the DC. "I don't have to worry about going to some kind of breakout room and putting my device in a cradle," he says. Instead, the agent attends to other responsibilities in the DC while the unit in the truck sends and receives data.
The Joy of Wireless
"The wireless local area network eliminates all the docks and cabling that has to be done in our distribution centers," Johnsen says. "The transmission of the day's invoices and the whole route settlement and reconciliation process can happen in the facilities without having to physically dock the devices." That saves money because the WLAN requires much less infrastructure than a wired communications system for handhelds.
"Some of our distribution centers run 150 to 200 routes, and they're large facilities," Johnsen explains. "You have to have a room big enough for 150 docks, and all the cabling and patch panels." As most of the delivery agents arrive with their handhelds at about the same time, "that room becomes kind of a madhouse."
Delivery agents will also carry portable printers to generate invoices. PepsiAmericas is still weighing options for linking those printers to the PDTs. Agents might attach both of them to the docking cradle in the truck, which means a driver would return to the truck to print an invoice. But the company is also considering wireless connectivity between the printer and the PDT, Johnsen says.
In smaller markets, delivery agents will continue to do sales too, but they also will exchange their old handhelds for the Symbol PDTs. "The Xtech software that's running on the delivery handhelds is capable of taking an order as well," Johnsen says. These driver will use the WLAN to exchange data with the host system but will not employ wireless wide area communications.
Target Rollout Date: 2004
PepsiAmericas plans to have the PeopleSoft applications running at all 120 U.S. locations by the end of September. Once it finishes conducting pilots with the handheld units in November, it will start rolling them out as well, Johnsen says. The company expects to implement the new mobile system at all of its locations by the first quarter of 2004.
When the rollout is complete, officials at PepsiAmericas expect the new business model, and the technology supporting it, to help boost sales. Separating sales from delivery will create a corps of account managers who are trained to focus on customers' needs, says Johnsen.
Also, the new system will allow PepsiAmericas to load each truck with exactly the products its customers require. "It allows us to draw on our true inventory, as opposed to the inventory of that person's truck," he says.
The results: well-stocked store shelves and consumers happily pouring out the soft drinks they like best.