Pepsi, Crocs Benefit from New IBM Frameworks

This week at the National Retail Federation conference in New York City, IBM announced a new Consumer Products Industry Framework that aims to help clients reduce costs and increase revenue through improved consumer relationships, supply chain analytics and e-commerce capabilities. In addition, the company announced that software from a number of recent acquisitions -- Coremetrics, Sterling Commerce, Unica and Netezza – has expanded its IBM Retail Industry Framework. Companies that are reportedly winning business and lowering overhead with these frameworks include Pepsi Beverages Company (PBC) and Crocs.

Specifically, PBC is using the IBM Consumer Products Industry Framework to bring manufacturing flexibility to its supply chain. Market data showed that consumer preferences shifted from carbonated drinks to noncarbonated drinks and from cans to bottles. However, PBC produced these newly preferred products in a limited number of plants leading to service problems during periods of peak demand.  To build the desired level of manufacturing flexibility into the supply chain network, PBC matched production sourcing decisions with consumer preferences each trimester. In this strategy, sourcing decisions were based on total supply chain costs, including manufacturing, transportation, and warehousing costs as well as customer service requirements.  The transformation resulted in the following:

• Pepsi reduced raw material and supplies inventory from $201 million to $195 million;
• Pepsi cut 2 percent transport miles even as revenue grew;
• An additional 12.3 million cases of Pepsi beverages became available to be sold due to reduction in warehouse out-of-stock levels. The reduction in warehouse out-of-stocks effectively added one-and-a-half production lines without any capital expenditure by Pepsi.

Similarly, Crocs, a world leader in innovative casual footwear for men, women and children, has implemented IBM software to create a smarter supply network.  

"Crocs is looking holistically at our supply chain operations to gain both customer and operational benefits," says Scott Crutchfield, senior vice president of Global Operations, at Crocs.  "With these efforts, we have enhanced our global inventory visibility across our direct and wholesale operations and improved the accuracy of our available-to-promise information. This visibility enables us to meet our commitments to our wholesale customers, including major retailers, in a timely and accurate fashion."

The IBM Retail Industry Framework and the IBM Consumer Products Industry Framework are intended to clients build an integrated platform for all of their operations based on industry standards. They combine IBM's entire software portfolio, including WebSphere, Lotus, Information Management, Tivoli and Rational products and full range of IBM server and storage products, industry-specific offerings and consulting expertise of IBM Global Business Services.