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Project Administration within Pepsi New Product Commercialization. by John Ellingham Sr. Manager - Commercialization, Pepsi Cola R&D and Ed Mahler President, Project Administration Institute and PMI Westchester. Agenda. John Pepsi R&D Who We Are How We Support the Business
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Project Administration within Pepsi New Product Commercialization by John Ellingham Sr. Manager - Commercialization, Pepsi Cola R&D and Ed Mahler President, Project Administration Institute and PMI Westchester
Agenda John • Pepsi R&D • Who We Are • How We Support the Business • R&D’s Challenges • Role of Commercialization Engineering • Project Administration – Benefits to Commercialization Engineering Ed • Project Administration Defined • Initiation challenges and solutions • Planning process • Status update process • Management views • The repository • Backup • Summary: What’s been accomplished
Who We Are Pepsi Cola’s Worldwide R&D is located in Valhalla, NY Product Development & Innovation Process Development & Commercialization Ingredient & Flavor Technology Technical Insights
New Product Process STAGE 1 NEEDS/OPPORTUNITY IDENTIFICATION STAGE 2 IDEAS STAGE 7 POST LAUNCH STAGE 3 FEASIBILITY STAGE 4 DEVELOPMENT STAGE 5 COMMERCIALIZATION & TEST MARKET (TM) • Research • Integration • Dissemination • Post Launch Review • Trade Product Quality • Business Performance vs. Plan • Ideation • Screening • Assessment • TM Preparation • TM Execution • TM Evaluation / Optimization • Refinement & Validation • Feasibility & Planning • Optimization & Final Validation • Commercialization & Planning Stage 6 - BROADSCALE LAUNCH GATE 5 GATE 4 GATE 3 GATE 2 GATE 1 Involves cross functional efforts from many stakeholders… Product Development, Marketing, Consumer Insights, Finance, Engineering, Operations
R&D’s Role Raw Materials ManufactureConcentrateComponents FinishedProducts Syrup Customer Consumer Concentrate Company Focus Bottling Company Focus R&D Focus Our Business Is Unique and Complex…
Situation Assessment We have evolved from an organization that manufactured carbonated soft drinks… … and salty snacks Key Challenges: • Globally, consumers demanding more variety • Keep pace with greatest growth opportunity in international markets • Innovate faster with less … to one of the largest food & beverage companies in the world through growth and acquisition
Portfolio Growth 1986 2004 CSDs Non-Carbs • Pepsi • Pepsi / Diet Pepsi • Caffeine Free Pepsi / Diet Pepsi • Pepsi Max • Wild Cherry Pepsi / Diet Pepsi • Pepsi & Diet Pepsi Twist • Pepsi & Diet Pepsi Vanilla • ONE, EDGE • Mt. Dew • Regular & Diet • Caffeine Free Dew and Diet Dew • Code Red & Diet Code Red • Live Wire • Pitch Black • Paso de Los Toros 7-Up (Int’l.) • Slice Manzanita Sol • Mug Kas • Patio Mirinda • Dukes Yedigun • Sierra Mist (Reg & Free) • Evervess Mixers CSDs • Juice/Drinks • Dole • Citrus Hill • Tropicana Juices • Trop Twister • Trop Juice Drinks • Tea • Lipton Brisk • Lipton’s Iced Tea • Water • Aquafina • Aquafina Sparklng • Flavor Splash • Coffee/Dairy • Frappuccino • Double Shot • Isotonics • PI Gatorade • New Age Beverage • SoBe • Pepsi • Pepsi • Diet Pepsi • Pepsi Light • Mt. Dew • Mug • Patio • Mirinda • Teem Our Portfolio has grown considerably with minimal increase in resources
Role of Commercialization Engineering In support of Pepsi’s rapidly expanding product portfolio, Commercialization Engineering wears many hats Responsibilities • Support during Development Stage • Consumer test productions, feasibility • Leadership for manufacturing assessment & capability for both concentrate and bottling systems • Processing, yield • Field trials • Documentation • PM in Commercialization and Launch stages • Identify resource requirements • Stakeholder & team alignment • Schedule development & maintenance • Ongoing facilitation, communication, & risk management • Support key productivity initiatives and new manufacturing platform feasibility and assessment
Impact of Portfolio Growth on Commercialization • 18 CE’s on staff • Managing 80+ projects, ~70% international, ~30% domestic • Average 3-6 projects per engineer ongoing • 70% with < 5 years experience with Pepsi • Serving many masters/audiences • Cross functional team (marketing, development, procurement, operations, quality) • Senior management/HQ • International liasons (BU’s, production facility personnel) • Average launch time frame has been compressed • 2 months for “off the shelf” products (International only) • Typically 6-7 months for most new products • ~1 yr for more complex projects (Product + Process + Package) • Planning process tended to be reactive rather than pro active • Schedule updates occurred for management meetings rather than to help manage the project and risk
Project Management Challenges • The Commercialization group is being challenged… • Do more with less • Communicate more effectively • Manage compressed and constantly changing project schedules
Centralized Project Administration Creation of a central Project Administration function has enabled the Commercialization Engineering group to become more effective Benefits • Planning, re-planning, & reporting service throughout project • From project identification through completion • Centralized repository - all project information available on network • Single source for plans and related information • Planning and reporting standards enabled • Daily group manager report issued • Sort by PM, Status Date, # of Changes, etc. • Biweekly status updates and reports provided to PM • Team Highlighted To Do’s; Late or Slipping Tasks • Format and content consistency • Key milestones locked down – Team and Management Views • Management Reports: Dates filtered & extracted from plans
Centralized Project Administration Benefits • Plan Integrity • Dependency logic discipline captures ripple effect of slippage and late tasks • Consistent resource identification • Team members contained in a shared pool • Identified by functional group • No filtering of negative information • Centrally Located Portfolio of Plans and Templates • Functional support group processes integrated • Documentation • Operations • Procurement • Analytical Services • Previous plans are leveraged to build new • Over 70+ projects active, 70+ completed since inception
Centralized Project Administration Benefits • Building Staff PM Skills & Practices • Developing and using a senior level PA allows • Mentoring of inexperienced project managers • New project managers become effective more quickly • Ensuring the process represents the interests of the organization • Management of… • Time • Scope • Communication • Data • Risk
Cost of not doing effective project administration Plan integrity reduces risk associated with task slippage • Cost of risk = Cost of negative event * Probability that the event will happen • Project Example - Cost of missed milestone date for Trade Sample shipments due to late graphic handoff: • As a result, 1 major East Coast retailer has refused to stock new item for 2 weeks wasting the coupon drops and ads • Example estimates: • $2.5K lost revenue per week per retail outlet * 20 regional outlets * 2 weeks + $20K unproductive advertising per week * 2 weeks = $140K = Cost of negative event (Task slippage) • Cost of risk = $140K * 5% probability = $7K • Alternative cost of risk: Air freight costs to ship required samples to all locations ~ 20 locations * $200 = $4K Multiplying by the total number of projects completed per year 100 projects * $4K = $400,000/year
Cost savings associated with project administration Centralizing Project Administration provides a 10% improvement in productivity plus the previously mentioned benefits • Assumption • Proper planning, tracking, and reporting of schedules is required for efficient use of resources, improving productivity, minimizing surprises and risk. • To accomplish this, 18 Project Managers need to spend 10% of their time minimally to plan, track, replan, and report their projects • This time estimate does not include • Archiving and backup of the data • Any training needed to perform the work • Result • 1.8 PM’s of effort to do project administration • The PA Equation • One PA adds 1.8 PM’s, a net gain of 0.8 + the benefits mentioned
Project Management Challenges We’ve moved from… To… • Inconsistent planning & delivery • Use of terms and definitions • Views tailored by the author • Updates depending on urgency • Moving targets = Heroics • Unsure of affects of date changes • Over allocation of resources • Inability to quantify causes • Inconsistent or no archiving of • Plans • Documentation • Consistency in communication • Format and content • Views tailored to the audiences • Regular update schedule • Plan integrity • Dependency logic & the ripple effect • Resource schedule identification • Tracking metrics & history • Centralized repository • Single source administration function • Redundant daily backup
Centralizing Project Administration
Centralizing Project Administration How its done • Project Administration Defined • Initiation challenges and solutions • Planning process • Status update process • Management views • The repository • Backup • Summary: What’s been accomplished
Project Administration Definition • Project planning, tracking and reporting • Components • Responsibility for planning, tracking and reporting • Mechanics of planning, tracking and reporting • Centralizing project administration is shifting the mechanics, not the responsibility, to a Project Administrator (in the project office)
Initiation • Challenges • “I manage without this kind of planning” • “I like doing my own plans” • PA – friend or foe • Solutions • Start with 1 project & someone that wants to do it • Flexibility • Availability • Responsiveness • No fault project management • Cookies • Management encouragement/mandate
Planning Prerequisites • PM must be a SME • PM must have a timeline/wish list with the major milestone dates of the project • PM knows who will do the tasks, how long they will take, and what has to happen before they can be done • One on one, with a team member, or with the team using a projector
MAINSTREAM PEACH - LINE EXTENSIONSField Ready - US Timeline MARCH APRIL MAY JUNE JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER Full Distribution 12/26/2005 3/7 CLT Tech Center Production TBD MARCOM TBD OPCOM 4/4 Field CLT 10/17 Bottlers Receive TRM & Start-Up Info 5/2 Full CLT Results 5/30 CLT/BASES Tech Center Production 10/31 Concentrate Production (Arlington) 6/6 Volume Forecast by Market & Package 6/6 Bottler Technical Requirements Defined 11/14 Concentrate Available for Order 6/13 Conc. Assess. Doc. 11/21 Concentrate and Packaging in Plant 6/27 Field 2nd CLT/BASES 7/4 All Bottler Letter (Marketing & FRT) 11/28 Arlington Approval 7/25 Topline Results from In-use Test 12/5 Product to Sales Centers 8/1 FINAL FORMULA 12/26 Full Distribution 10/3 Issue MIs and ACTs 7/4 Sales Forecasts Due to Bottlers 10/3 TRM Approval 9/26 Beverage Doc, MI and ACT Approval 8/1 Bottlers Order Packaging 9/26 Marketing Implementation Guide Distributed 8/1 Beverage Specifications finalized 9/26 Concentrate Scale-Up (Arlington) 8/1 Final Artwork handoff to GC 9/12 Plant Trial #2 8/8 Concentrate Scale-Up (Valhalla) 8/8 Draft Beverage Documents 9/5 Plant Trial #1 (Trade Sample Production) 8/22 Raw Mat. Procurement (ROD) 8/29 Yield Study 8/22 LIS handoff to Graphics Updated: 02/17/05
The Planning & Tracking Activity Portfolio Manager PROJECTS ARE CONFIDENTIAL
Plan Construction Integrity Rules • Tasks • All have Predecessors, successors, & no constraints • Except • External dependencies “<” (no predecessor, preferably only one) • External deliverables “>” (successors optional) • Timing indicators “=” (provides date targets for key milestones) • Fixed duration preferably </= 2 wks • Resources • Identified from master resource plan • Working for $1/hour (enables earned value in person-hours) • Work effort >0 except milestones
Planning – Results of the 1st construction meeting PROJECTS ARE CONFIDENTIAL
Planning - Communication Management PROJECTS ARE CONFIDENTIAL
Preparation for Tracking - Projects requiring update PROJECTS ARE CONFIDENTIAL
Tracking – 8/21 Status and the ripple effect (cont’d.) Target date slippage
Tracking & Reporting Integrity Rules • To Do’s • To Do’s are either on schedule, rescheduled, or unknown • Rescheduled & unknowns have a reason in the Notes column • Tasks added or deleted are flagged in the Notes column • Reporting • Continuity • Why things changed • Key target date changed from to • Project metrics • Highlight risks, concerns, caveats, information not revealed by the metrics
The Network Based Project Repository The Repository
MAINSTREAM PEACH - LINE EXTENSIONSField Ready - US Timeline MARCH APRIL MAY JUNE JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER Full Distribution 12/26/2005 3/7 CLT Tech Center Production TBD MARCOM TBD OPCOM 4/4 Field CLT 10/17 Bottlers Receive TRM & Start-Up Info 5/2 Full CLT Results 5/30 CLT/BASES Tech Center Production 10/31 Concentrate Production (Arlington) 6/6 Volume Forecast by Market & Package 6/6 Bottler Technical Requirements Defined 11/14 Concentrate Available for Order 6/13 Conc. Assess. Doc. 11/21 Concentrate and Packaging in Plant 6/27 Field 2nd CLT/BASES 7/4 All Bottler Letter (Marketing & FRT) 11/28 Arlington Approval 7/25 Topline Results from In-use Test 12/5 Product to Sales Centers 8/1 FINAL FORMULA 12/26 Full Distribution 10/3 Issue MIs and ACTs 7/4 Sales Forecasts Due to Bottlers 10/3 TRM Approval 9/26 Beverage Doc, MI and ACT Approval 8/1 Bottlers Order Packaging 9/26 Marketing Implementation Guide Distributed 8/1 Beverage Specifications finalized 9/26 Concentrate Scale-Up (Arlington) 8/1 Final Artwork handoff to GC 9/12 Plant Trial #2 8/8 Concentrate Scale-Up (Valhalla) 8/8 Draft Beverage Documents 9/5 Plant Trial #1 (Trade Sample Production) 8/22 Raw Mat. Procurement (ROD) 8/29 Yield Study 8/22 LIS handoff to Graphics Updated: 02/17/05