PepsiCo CPO rides wave of market quirks, culture and cola

For virtually every topic of contemporary significance in the world of purchasing, from ingredient safety to environmental sustainability, Mitch Adamek has had a critical experience. Many of those experiences weren’t foreseeable even 20 years ago, but times have changed and new issues have emerged. He sums it up simply: “This is not your grandfather’s procurement organization.”

He speaks of the group he oversees as chief procurement officer for PepsiCo. Adamek’s team is responsible for securing the sweeteners, resins and other items and services that culminate in a liter of Pepsi-Cola, a can of Mountain Dew and a bottle of Aquafina water, to name only a few of the beverages sold by PepsiCo.

Aside from the sub-parts and -parcels of a refreshing PepsiCo beverage, there are other considerations that figure into the mix. At the forefront: diversity. Adamek said it’s a vital component of the corporate culture and the bottom line.

“Pop” culture

“Supplier diversity has been a key part of what we do for 25 years,” he explained. “PepsiCo is a performance-driven company with hard quantitative and qualitative goals.”

“We strive for 10 percent diversity spend growth every year in each category, but we also have qualitative goals for the development and introduction of new suppliers into each category,” Adamek explained. “Everyone knows their goals and we track the numbers on a quarterly basis. We have a very good track record of hitting our objectives.”

He gives credit to Fred Canady, PepsiCo’s vice president of supplier diversity, for the assist. “Fred and his team work with me and the category procurement leaders to increase and improve diversity in our supply chain,” said Adamek. “They have improved our supplier database by leaps and bounds.”

Multicultural advisory boards also provide insight for developing initiatives, meeting goals and identifying key areas in which PepsiCo can help advance its diverse suppliers. Adamek adds that supplier diversity is not just the responsibility of purchasing officers, diversity associates and advisory boards, however. “It’s a holistic effort where everyone’s on board,” he said, adding that, while PepsiCo doesn’t have a formal program for mentoring minority suppliers, procurement managers work individually with suppliers to help them achieve long-term stability.

PepsiCo, a global company, is helping pave the way for diverse suppliers overseas, as well. It has helped launch the Minority Supplier Development in the United Kingdom and the Canadian Aboriginal and Minority Supplier Council, both of which are affiliated with the New York-based National Minority Supplier Development Council.

It’s a partnership that suits PepsiCo, which was largely a North American company in the 1990s, but much of its revenue growth in the past five years has come from its international division.

Intricacies and idiosyncrasies

Hitting domestic supplier diversity benchmarks is not without challenges. Adamek said there are few minority suppliers of direct packaging and sweeteners, for instance.

“They would be competing against the likes of Cargill and Ball Corp.,” he said, adding that PepsiCo has a sound Tier II program. “We work with our majority suppliers to find opportunities for minority vendors.” For example, he has asked the majority bottle makers to seek out a minority supplier for preforms, the molded item that is used for forming bottles.

Two other major stumbling blocks complicate the business environment today, according to Adamek. “We’re seeing credit challenges and rising commodity costs, but we’re working within our existing supplier diversity base and doing what we can to prompt growth in the bottles and cans areas. A large part of what we spend is in the indirect category, but we must find ways to increase spending in direct areas,” he explained.

“Our procurement professionals are spending more time on the emerging parts of procurement, including sustainability, food and ingredient safety and commodity management. And we are definitely more globally focused, spending more time in China, Mexico and Russia. We have a lot of things to tackle, but we’re not losing our focus on supplier diversity.

“Our 25-year focus on supplier diversity has brought in more diverse suppliers and that has benefited PepsiCo in many ways,” Adamek continued. “But our diverse suppliers would also say that we’re helping them build wealth in their communities because we’re helping them grow, and we are committed to building longterm relationships.”

Even though PepsiCo hit the billion-dollar diversity spend mark last year, the company is already at work tackling the $2 billion mark. It’s a goal Adamek is confident the company will achieve.

“We’ve got a very inclusive culture here, and our diversity program is robust,” he said, “But we’re far from finished. Let’s just say we still have a lot of runway left.”