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PepsiCo's (PEP) Micro-Fulfillment Center to Enhance Delivery

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Zacks Equity Research
·3 min read
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In response to the growing online demand due to the coronavirus pandemic, PepsiCo, Inc. PEP has opened a micro-fulfillment center in Joliet, IL. The state-of-the-art facility comes with precautionary measures for COVID-19, faster delivery facilities with lower costs and reduced costs of floorspace. Notably, PepsiCo has become one of the first companies to launch a micro-fulfillment center. This new facility will help the company serve customers more quickly and in a more convenient way.  

Through the fulfillment center PepsiCo will join hands with retail partners to create an end-to-end solution to enhance its operations. This solution will be backed by Dematic, which is one of the leading automation suppliers. Currently, the fulfillment center is in testing phase, for which it has received positive feedback. The high level of automation at the facility is likely to enable PepsiCo to serve 7.5 times more units an hour, which reflects a sharp rise from the traditional warehouse operation.

Notably, shares of this Zacks Rank #3 (Hold) stock have gained 3.7% year to date against the industry’s decline of 4.5%.

What Else You Need to Know?

PepsiCo remains focused on driving efficiency and effectiveness, by lowering costs and investing these savings to develop scale and core capabilities. In 2019, the company delivered more than $1 billion in productivity savings, on track with its goal of generating productivity savings of at least $1 billion annually through 2023. The company expects to achieve this productivity goal through savings generated from restructuring actions. These actions are likely to position the company to further simplify, synchronize and automate processes; re-engineer the go-to-market and information systems; simplify the organization; and optimize its manufacturing and supply-chain footprint. Savings from the productivity and restructuring plans are expected to go drive the top line and margins in the long term.

Apart from these, the company is gaining from resilience and strength in the global snacks and food business as well as improvement in the beverage category. Also, strong volume growth and robust pricing actions bode well. Moreover, its strong portfolio of brands, a responsive supply chain and flexible go-to-market systems are likely to help maintain continued supplies amid the coronavirus pandemic.

Looking for Solid Food Stocks? Check These

Newell Brands NWL has a long-term earnings growth rate of 2.9% and a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Unilever UL has a long-term earnings growth rate of 4.7% and a Zacks Rank #2 (Buy).

Procter Gamble Company PG, with a Zacks Rank #2, has a long-term earnings growth rate of 7.6%.

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Unilever PLC (UL) : Free Stock Analysis Report
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PepsiCo, Inc. (PEP) : Free Stock Analysis Report
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