March 23, 2006



Posted: 07.04

Pouring It On

At the heart of the struggling CPG industry, Pepsi and Coke turn to mobile technology in their fight for market share.
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By Matt Purdue

Frequent readers of Mobile Enterprise have become accustomed to stories trumpeting the promise of moving information and workflows to the field. By enabling wireless communications, data access and enterprise applications at the point of contact, experts and technology vendors tell us, companies can become more efficient and effective, save money and drive revenue.

Well, you can forget all that.

Promises mean nothing to the leaders in consumer packaged goods (CPG), because these companies, perhaps more than any other, rely on field employees to uncover efficiencies and stimulate business. Promises don’t move product—the field force does. Clearly CPG companies have been selling successfully for decades—try to remember the last time you couldn’t find your favorite icy beverage when the craving hit you. But today’s CPG firm must be more svelte than ever. Today the $2 trillion sector finds itself facing a new brand of trouble.

Novel product categories are waning, according to consulting firm McKinsey & Co., as CPG companies struggle to identify new cash cows. The “innovations” that once wowed shoppers—from disposable razors to juice boxes—are now yesterday’s news. “Since the late '90s the industry has not matched its earlier strides in value, quality and convenience,” writes Mark McGrath, a director in McKinsey’s Chicago office. “CEOs are awakening to the notion that this may not be the growth industry that it once was.”

When it comes to selling consulting services, a bit of drama never hurts. But the fact remains that the CPG world faces immense challenges. Now its leaders are increasingly turning to mobile and wireless technology to squeeze efficiencies out of supply chains and maximize sales in the field. Few other businesses require such tight integration between consumer wants, retailer needs and supply chain capabilities. Smart CPG executives are discovering that mobile solutions can harmonize these three components.

“Consumer goods is a detail-oriented, execution-focused business,” writes McKinsey’s Peter Freedman, a director in the London office. “CEOs have to get many things right. Today they're pushing to drive profit margins and top-line growth at the same time. They often get one or the other, but it's rare to get both.”


PepsiCo is the world’s No. 2 soft drink maker, but this is one company that has become synonymous with not resting on its laurels. PepsiCo constantly battles Coca-Cola to chip away at the drink leader’s market share. Pepsi Bottling Group (PBG), a PepsiCo spinoff, continually goes mano a mano with Coke. PBG, which went public in 1999, is the largest Pepsi bottler in the U.S. PBG sells more than half of all PepsiCo beverages in North America, 40 percent worldwide and bottles 20 billion soft drinks each year.

PBG’s sole reason for being is moving PepsiCo beverages from the warehouse to the retailer. Their mission statement tells the tale: We sell soda. With more than $10.5 billion in annual sales, PBG, based in Somers, N.Y., also markets such diverse products as Dr. Pepper, Aquafina water and Lipton teas. And they do a vast majority of this business on the road, via what is known in the industry as direct store delivery, or DSD. PBG’s mobile customer reps drive the equivalent of 240,000 miles per day and the company purchases some 15,000 truck tires per year, or 18 million pounds of rubber.

PBG’s strategic goal in deploying mobile technology is as straightforward as its mission statement: to increase the levels of customer service and productivity of 6,000 reps at the point of sale. “We are inside our customers’ stores on 20 million occasions every year, but we only have a few minutes of the store manager’s time to make a sale,” notes Paul Hamilton, PBG’s VP of supply chain logistics. “To make the most of these selling opportunities, we need to arm our frontline workers with relevant and easy-to-access real-time information that goes way beyond the basics of the past.”

The basics of the past included 4-pound handheld computers that reps used to perform basic route accounting. When PBG went shopping for new hardware, they could not find a device on the market to meet its needs. But Symbol Technologies, based in Holtsville, N.Y., had something interesting on the drawing board. PBG waited six months for Symbol to roll out its PDT 8000, a rugged, 15-ounce Microsoft Pocket PC device.

The PDT 8000 had the features PBG desired: 300MHz Intel processor; 64 MB of RAM; 64,000-color display; touchscreeen; keypad; barcode scanner; and integrated wireless radio. (Symbol has since upgraded the PDT 8000 with a faster processor and other advances.) In 2002, PBG purchased units for every sales and delivery person in the United States.

PBG also delved into mobile software. The application had to handle route management data, real-time demand forecasting, inventory management for a growing number of SKUs, promotional information and even training programs. For all this, PBG turned to vendors uniquely qualified in this realm. Shelflink, now called Eleven Technology, was tabbed as the primary software developer. The company was launched in Cambridge, Mass., by Tom First and Tom Scott, founders of Nantucket Nectars, to bring their DSD experience to enterprise mobility.

Eleven began work with PBG by customizing Eleven’s off-the-shelf presales application. The challenge was intense. “We needed a consistent application that didn’t require a lot of time to ramp up to productivity,” recalls Nate Quigley, president of Eleven. “The application had to be very intuitive, so a new user could pick up the device, hit the street and be productive.”

Leveraging their expertise with Microsoft’s development tools, Eleven programmers worked with .NET Compact Framework and Visual Studio .NET. The component-based nature of the tools enabled developers to work so smoothly that they finished the project in six months, according to Quigley. “We would show up, do an iteration, take comments and feedback, integrate those into another build and be back later in the week to get feedback again,” he says.


Dubbed SMARTselling (specific, measurable, attainable, relevant and timebound), the mobile software essentially puts the power of a corporate server into the hands of PBG customer reps. Eleven uses iAnywhere Solutions’ SQL Anywhere Studio running on the handhelds to control database management and data synchronization. Customer reps start their day by syncing with PBG’s central Sybase ASE database via a dial-up connection (or Wi-Fi link if they are on a corporate campus).

Strategically, the mobile solution enables two dynamics, according to Raymond Brown, PBG’s director of supply chain technology. First, it gives reps information about customers and identifies opportunities against which they can market, upsell and cross-sell. Second, it provides reps with scheduled priorities.

In terms of customer contacts, SMARTselling prompts reps to offer relevant products. It tries to match a retailer’s order quantity to demand by modeling replenishment needs with historical data. The software instantly runs regressions of shipment, price, display, advertising, seasonality and other factors and then uses probability simulation to estimate demand.

Reps also employ SMARTselling to manage retailer contracts so they can enforce agreement points such as in-store displays and discount pricing. This element, along with a software filter that prevents a rep from selling a product that a retailer is unauthorized to buy, cuts costs, drives sales and reduces the number of disputed invoices.

The power of the technology also enables reps to utilize multimedia sales and promotional aids. Running in full motion and full color on the handhelds, these messages reinforce marketing concepts across the sales force and help reps target pitches at just the right time and place. Reps can also use a scorecard function in SMARTselling to track how each account is performing on a weekly, monthly and yearly basis. Managers use this data to supervise and guide their reps.

Although PBG won’t release empirical benefits as the rollout continues, iAnywhere points to a number of positive changes:

• upselling and cross-selling have increased;
• PBG has improved time-to-shelf for new products and promotions:
• out-of-stock situations have been reduced;
• invoice disputes have dropped;
• costs for printing and distributing sales and training materials have been cut.

“We believe that our use of this application will help us significantly enhance our competitive position, while at the same time delivering tangible benefits to our retail partners,” says Hamilton. “There is nothing like it in today’s marketplace.”

[author bio]
Matt Purdue, former editor-in-chief of Mobile Enterprise, is a journalist based in New York City.

Coke Is It

Pepsi isn’t the only beverage company gulping down mobile technology. Coca-Cola Enterprises (CCE), the world’s largest producer and marketer of non-alcoholic beverages, plans to roll out SAP’s Direct Store Delivery solution. CCE hopes the mobile technology will better integrate field sales, inside sales and logistics teams, reduce costs and enhance customer service.

According to Franz Josef Schoppengard, VP of SAP’s supply chain management group in Valdorf, Germany, CCE could eventually deploy the software to all 30,000 mobile sales and service reps in North America and Europe. CCE first signed on with SAP in 1997 and has since implemented applications in areas such as inventory management, product planning and supply chain management. CCE’s next step is to extend this ERP technology to the field.

“DSD … is their key, the heart of their processes,” Schoppengard says. “This is how they deliver 80 to 90 percent of their goods.” CCE plans to replace a home-grown mobile application running on laptops with a handheld-based solution. CCE has yet to reveal which hardware, or even which operating system, it will use.

Schoppengard says the first phase of the software will be delivered to CCE later this year, with deployment scheduled for 2005. The two parties are so confident, however, that they recently announced a partnership to codevelop DSD applications for other companies in the beverage industry.

Matt Purdue, former editor-in-chief of Mobile Enterprise, is a journalist based in New York City.
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