PepsiCo and Anheuser-Busch cooperate in reducing supply chain costs

Filed in archive Partnerships on October 19, 2009

Indirect cost reduction is a typical first-wave cost reduction activity for procurement organization (because it's relatively easier compared to direct cost). Apparently two of the world's largest beverage makers, PepsiCo and Anheuser-Busch have decided to cooperate in this area to reduce their supply chain cost.

According to About Logistics, The PepsiCo and Anheuser-Busch agreement will allow them to jointly purchase goods and services not directly related to making drinks, such as computer hardware, office supplies, facilities services, transportation, and maintenance, repair and operating supplies.

The combined purchasing power allows both companies to cut costs at a time when increasing sales is not an option. Suppliers that are left out of the new purchasing arrangement will be unhappy, while favored vendors could use it as an opportunity to increase volume and expand the number of products they are selling to the two companies. With this type of procurement agreement, some rationonalization of the combined supplier base is expected, however neither company have determined how much money the procurement agreement will save them.