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PepsiCo: Process mining both proactive and preventative for CPGs
PepsiCo used Celonis Process Mining and Execution Management to reduce spoilage and improve the distribution of finished goods in Latin America.
The project, outlined on a Food Dive Webinar on process mining and tackling inefficiencies in consumer product goods (CPG) companies, was detailed by Kishan Pandya, Senior Director of Process Re-Engineering, PepsiCo. Pandya was joined by Lindsey Peters, Celonis' Global Retail and Consumer Goods Industry Lead.
On the webinar, Pandya highlighted a common issue in CPG distribution—the distribution and logistics behind finished products. "In Latin America, write-offs were occurring because finished goods coming into the warehouse were expiring," said Pandya.
Also see: 2023 Gartner® Magic Quadrant™ for Process Mining Tools | Press release
PepsiCo began looking into the issue with simple analytics tools, but Pandya said the CPG giant "couldn't get under the hood." Pandya, a process excellence veteran who was at Mars Inc. and JPMorgan Chase & Co. before PepsiCo, said Celonis partnered with PepsiCo and used its Execution Management System (EMS) to surface what products were driving most of the write-offs and provide transparency into processes.
"Using Celonis we were able to find the root cause and pinpoint problems. Celonis also gave us an automation to see when a product was about to expire and send emails to the distribution center associates," explained Pandya. "An alert system like (EMS Action Flows) can lead to preventing write-offs because you know what you need to act on. There's also value in labor productivity and sustainability improvements."
The ultimate cause of the PepsiCo write-offs was essentially finished goods arriving to the facility and already having lost shelf-life before an associate could take the product to the next step (e.g. sending it to the next facility or customer, etc). As a result, these finished goods would expire and thus be written off. "Celonis made visible problems the team wasn't aware of," he said.
Peters noted that the PepsiCo use case was just one area where process mining can solve business problems. After all, CPG companies have to efficiently procure and move raw materials, such as sugar, through supply chains and then distribute finished products. "EMS reveals and fixes inefficiencies and connects data across processes with a 360-degree view," said Peters. "EMS doesn't replace systems but acts as an orchestration."
For CPG companies, supply chain is a hot topic because there's a lot of complexity from procurement to all the upstream processes, said Peters. "The CPG supply chain has so much complexity. And then so many processes upstream such as logistics, distribution and transport processes," she said. "And it goes beyond those processes to orders and inventory as well as accounts payable and accounts receivable. That complexity has enabled CPG companies to unlock value in process mining."
Pandya added that financial processes at CPG companies are also key areas for process mining. Processes such as Accounts Payable, Accounts Receivable and invoicing are horizontal areas that provide business value across industries.
"Most companies have multiple processes in place to enable their core operations from order-to-cash to hire-to-retire," said Peters. "Processes are in place across all aspects of our customers' businesses."
Other key topics on the Webinar include:
The recognition of process mining. Pandya said companies realize process mining is mission critical when they "start realizing that they don't really know why things are happening within processes." This realization is critical to digital transformation efforts and cost savings.
Why process visibility matters. With process visibility provided by Celonis, companies can see where their problems and challenges are and address them, said Pandya. "The goal in all of this is to be proactive and preventative with a real-time view of what's happening," he said.
The long-term case for process mining. Peters said businesses will continue to see inefficiencies and continual improvement is an ongoing project. "Regardless of the economic environment, Celonis is a tool that will help you identify inefficiencies," said Peters. Pandya agreed that process mining is "a long-term capability as well as a short-term one."
"It's a short-term capability because of the ease of implementation and low cost," said Pandya. "You can also unlock value in a short time. Long-term process mining is about futureproofing your business. It's a multi-year journey because ultimately you want to go after end-to-end processes. After initial processes you want to go bigger and bolder and continue to optimize."
Business alignment matters. Pandya said stakeholder support is critical to realizing value. Peters added that Centers of Excellence (CoEs) and leadership engagement are key to business alignment. "We hear from customers that they wish they had leadership buy-in sooner. Change management is also key," said Peters.
The importance of Systems Transformation in SAP S/4 HANA migrations. Pandya added that process mining can also help with mission-critical system transformations. "When you implement and do a big upgrade you are very likely to have more process inefficiencies when you get to the new system and platform if you don’t improve upon your processes,” he explained. “And one way to avoid that is to use Celonis. You can use Celonis to improve and de-risk your implementation.”
“Celonis can be used to avoid process inefficiencies in an SAP instance. It’s part of systems transformation hygiene,” said Pandya, adding, “If you have the same problems as before, your implementation may not be seen as a success. It's that prevention mentality."
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