PepsiCo’s digital, process, automation efforts pay off amid inflation, supply chain volatility

PepsiCo said its digital capabilities, process improvements, analytics and automation efforts are paying off as the consumer packaged goods (CPG) giant has been able to balance inflation, higher costs, and supply chain disruptions.

Speaking on PepsiCo's third quarter earnings conference call, PepsiCo CEO Ramon Laguarta said the company is balancing both long-term and short-term investments. "We continue to invest in our brands. We're investing a lot in digitalizing the company and some of the long-term sustainability bets that we're making as well," he said.

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Specifically, PepsiCo credited a holistic cost management program as well as the ability to raise prices for its third quarter results. The company said it is driving efficiency with:

• Analytics and data-driven tools for faster decision-making, route optimization and product assortment.

• Automating and digitizing its supply chain.

• Identifying areas of waste throughout the value chain.

• And expanding its global business services model to maximize best practices.

PepsiCo CFO Hugh Johnston said the company's goal is to grow market share and revenue and margins. "We try to price through inflation, and we always set that out as a goal," said Johnston. "But then we also focus on the balance of the cost structure, making sure that we're as efficient as we can possibly be and try and to eliminate waste wherever we can find it."

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Johnston said he expects commodity inflation to continue but has seen some prices for goods come down. He added that PepsiCo has a dispersed basket of commodities in its value chain without any one commodity representing more than 10% of costs.

Laguarta said PepsiCo has become much more digital and "more insightful and precise as a company," but has more work to do. Demand and supply chain forecasting has improved. He noted:

"We'll continue trying to create brands that can stand for higher value to consumers and consumers are willing to pay more for our brands. We'll continue with that philosophy. We'll see where the cost environment goes in the coming years. If anything, these last 2 years have taught us is that we really want to become more agile and more nimble and more flexible, and that's what we're doing across the company."

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Larry Dignan

Editor in Chief (former)

Larry Dignan is the former Editor in Chief of Celonis Media. Before joining Celonis, he was Editor in Chief of ZDNet and has covered the technology industry and transformation trends for more than two decades, publishing articles in WallStreetWeek.com, Inter@ctive Week, The New York Times, and Financial Planning magazine.