PepsiCo Restructuring a Sign of Strength

April 22, 2019

PepsiCo initiated a plan to restructure the company, resulting in layoffs and a temporary cost increase through 2023. While job loss can be perceived as a red flag, the company anticipates that its approach will generate productivity savings and a boost in revenue. In fact, PepsiCo projects that its plan to “simplify, harmonize and automate processes” will result in significant long-term financial growth.

Randy V. Bradley, assistant professor of Information Systems and Supply Chain Management at the University of Tennessee, Knoxville’s Haslam College of Business discusses in an April 2019 Market Watch piece how PepsiCo’s innovative solutions are both appropriate and opportunistic, regardless of the short-term consequences.

Bradley offers five valuable insights regarding PepsiCo’s restructuring plan:

  1. “Automation can create more jobs in the long term.” As employees are let go under the old system, jobs will eventually pick back up as PepsiCo rolls out new automated solutions.
  2. PepsiCo is “becoming more efficient.” The restructuring plan is undoubtedly a bold move, but it is designed to save time and resources that would otherwise be dedicated to temporary, low-risk solutions.
  3. “PepsiCo is being honest.” Unlike other companies’ approaches that cause employees to be uncertain of their fate, PepsiCo plainly communicated the consequences of their approach.
  4. “There can be a human element to PepsiCo’s automation.” Once the company stabilizes these acute changes, it can focus on how to leverage automation by bringing in a new workforce that will manage it.
  5. PepsiCo knows “when not to innovate at all.” The company is being selectively innovative, which showcases its strength and smart business sense, by not making changes to products that consumers have adored for decades.

Bradley believes that PepsiCo is making the right call with its efforts to reinvent complex processes while maintaining the integrity of its existing products.