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After-effect of Pre-selling

By Mel Duvall  |  Posted 2003-05-01 Print this article Print

The choice of a new generation is rife with options. Will Pepsi prove itself to be up to the challenge?

After-effect of Pre-selling">

After-effect of Pre-selling

The big bottlers are trying to do their part by moving away from the traditional direct store delivery (DSD) system. Under DSD, the same person who takes orders at stores also delivers the products and stocks them on shelves.

But now they are moving to a pre-sell system that separates the jobs of sales, delivery and merchandising. The new method will give Pepsi salesmen more time to sell because they won't have to solve inventory problems and other backroom issues.

Under DSD at Pepsi Bottling Group, for example, an agent went to the same store four or five times per week. Each visit lasted an average of 75 minutes—just four minutes of which were spent actually selling.

Under pre-sell, the goal is to get selling time up to about 20 minutes, every few days.

Each bottler has devised its own technology map to get to pre-sell. Pepsi Bottling Group and PepsiAmericas both rolled out Symbol's handheld hardware last year. But PepsiAmericas runs mainly packaged sales software called RouteXpress from Extended Technologies in Dallas. Pepsi Bottling Group wrote software with Shelflink Inc. in Cambridge, Mass., using Microsoft's .NET tools and Java.

Pepsi Bottling Ventures, meanwhile, last year rejected Symbol. It upgraded its Intermec hardware, based on its past record for rugged reliability and a new color display. "We're all on different timelines and have different priorities for getting things done," says Steve Paladino, vice president of information technology and corporate treasurer for Pepsi Bottling Ventures in Raleigh, N.C. "We don't exactly have the luxury to coordinate our efforts."

Beyond the direct command of either PepsiCo or the bottlers, however, are labor unions that provide drivers.

With pre-sell comes a loss in commissions for drivers who once sold as well as delivered Pepsi products. For example, if Teamsters in Local 792 in Minneapolis must give up the sales piece of their jobs, they will lose the 6.26% commission on their route sales that they get today. With commissions and base pay, average wages are $25 or $26 per hour; some drivers reach $30 per hour.

Pepsi may make up some of the cutback, but not all, says a union official who asked not to be named. "Pepsi is maybe willing to look at $21 an hour. It would mean a pay cut," he says.

A year ago, Teamsters Local 744 in Chicago struck PepsiAmericas for two weeks, in part over proposed changes involving pre-sell that would have cut members' pay.

The new five-year contract signed last June requires the bottler to negotiate with the union any changes to delivery and allows pre-sell to start in Chicago this coming September.

The bottlers have launched pre-sell in nonunion regions or in spots where labor relations are excellent. At PepsiAmericas, for example, Iowa is up on pre-sell and Symbol hardware, and Ohio began in March.

PepsiCo hopes the new handheld technology at the bottlers, and soon at Frito-Lay, will transform the sales pitch.

For example, the new Symbols at Pepsi Bottling Group have 64 megabytes of memory, five times the 12 megabytes of the old Intermec models. The added room allows for color images of in-store displays, new products and new packaging. Sales agents can also access a year or more of customer buying history, an improvement over the six weeks' worth usually available before.

The software also suggests ways to sell, and sell more, to a given customer by analyzing product shipments, price and point-of-sale activity with seasonal and holiday trends as well as geographic buying patterns.

If it's Wednesday and a sunny, 90-degree weekend is predicted, the application might put up a screen suggesting the salesman offer a 2% discount on Diet Pepsi if the customer buys 10 cases of slow-moving Pepsi Blue. Using sales history, the software might note this store's customers buy heavily on 2-for-1 sales of 6-packs of Pepsi cans but don't take so well to promotions that offer 50 cents off six-packs of plastic bottles.

"At the end of every order, you can tell, 'Am I winning or losing today?'" said Paul Hamilton, director of supply chain at Pepsi Bottling Group, speaking at a conference last fall.

But the store managers who are the targets of these fancy expanded sales methods may not stand still for it, literally.

At an A&P supermarket in New York on a recent morning, trucks from seven different food and beverage companies visited from 10 a.m. to 11:30 a.m. Store managers are often too busy to stop for 20 minutes to listen to a sales pitch.

Several managers at grocery and drug stores say they are content to let Pepsi representatives back their rigs up to the loading dock, haul in the cases and put them on the shelves. Few store managers even know the names of their Pepsi guys.

"They leave the paperwork behind and that's all I need to know," says Freddie Russo, an assistant manager at The Food Emporium supermarket in Yorktown, N.Y.

"They have vendors coming in from every different direction," says Dennis Tuttle, director of information systems at Pepsi-Cola Bottling Co. of Delmarva, an independent bottler in Salisbury, Md. "The guy may resent you for wanting 20 minutes of his time."

The Pepsi Challenge

Still PepsiCo thinks pre-selling, combined with the business process optimization plan, will set up salesmen and deliverymen to carry out the Power of One; to finally move Pepsi soda, Frito-Lay snacks, Quaker breakfast foods and Tropicana juice as if the different products come from a single company. But the question remains: Does PepsiCo have the commitment to see it through this time, or will it have to experience more pain first?

While PepsiCo appears more committed to achieving efficiencies this time around, that's not enough, says BevMark's Pirko. "In terms of the kind of change that is possible, the kind of change that will really make this company work much more effectively by using information— I think that still really is a dream."

Contributing Editor
Mel Duvall is a veteran business and technology journalist, having written for a variety of daily newspapers and magazines for 17 years. Most recently he was the Business Commerce Editor for Interactive Week, and previously served as a senior business writer for The Financial Post.

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