Pepsi 2006 Annual Report Download - page 38

ity is assigned and performance mea-
sured. Some highlights include:
• To address certain risks related to the
demand for our products, such as
consumer health concerns about
product attributes and ingredients,
we continued to focus on the devel-
opment of products that respond to
consumer trends, including formulat-
ing products to lower sugar, fats, and
sodium and adding ingredients and
new products that can deliver nutri-
tional benefits. For example, at FLNA
we introduced a new portion control
line of 100-calorie offerings, and we
also switched to NuSun sunflower oil,
an oil containing 90% mono- and
polyunsaturated fats and less
saturated fat than most other cook-
ing oils, for our Lay’s and Ruffles
potato chips. Internationally, we
reduced the amount of saturated fats
in our Walkers crisps in the United
Kingdom by 70% and the amount of
salt by 25%. Beyond providing more
nutritious product choices, and in an
effort to help address the growing
concerns regarding childhood obesity
trends in the U.S., we joined with the
Alliance for a Healthier Generation —
a joint initiative of the William J.
Clinton Foundation and the American
Heart Association — to set voluntary
beverage guidelines for U.S. schools
that limit portion sizes and establish
voluntary guidelines for snacks and
side items in U.S. schools.
• To help ensure that we maintain our
reputation for providing safe conve-
nient foods and beverages, we
enhanced the coordination of our
division-led product integrity efforts
through the PepsiCo Product Integrity
Council (PPIC), a cross-functional
forum to share leading practices and
confer about areas of potential risk.
Through the PPIC, we completed a
third-party review of our food safety
and food security programs which
helped identify opportunities to bet-
ter leverage internal best practices
across all of our businesses.
Furthermore, we enhanced our prod-
uct sampling and testing protocols.
• We continued to enhance our infor-
mation technology infrastructure and
application systems by upgrading our
networks and updating or retiring
older infrastructure and systems. We
signed a multi-year managed services
contract to consolidate PI’s technol-
ogy infrastructure into three data
centers and another multi-year ser-
vices contract to provide and manage
PI’s data network. The data center
services will provide full system and
data protection and backup and
recovery capabilities, and the data
network services will enhance
security and provide 24x7x365
monitoring and response capabilities.
We expect to fully implement both of
these service contracts over the next
three years.
• With respect to our BPT initiative, we
continue to build on our learnings
and incorporate these into the met-
rics used to monitor the project.
Specific actions taken this year
include revising the overall project
structure, project resources and time-
lines. We also continue to invest in
process and control resources to build
a more automated control environ-
ment that remains compliant with the
Sarbanes-Oxley Act.
• To address supply chain risks, we
continued to assess our capability to
mitigate potential business
disruptions and increased the coordi-
nation of our efforts across IT disaster
recovery, crisis management and busi-
ness continuity. Having recognized
the potentially significant impact of a
pandemic such as avian influenza on
our employees and our business, we
formed a cross-functional, cross-divi-
sional Pandemic Planning Team that
worked to develop strategies and
tactics to mitigate that impact.
• Against a challenging trade environ-
ment, we continued to work to
ensure consistent and equitable trade
practices across our customers, to
deliver value-added product innova-
tion and differentiation, to achieve
the most effective trade spend across
customers and channels through pro-
ductivity programs, and to more
effectively communicate to our cus-
tomers the economic advantages of
our direct-store-delivery (DSD) system.
• To address risks relating to legal and
regulatory issues, we have launched
an enhanced PepsiCo Code of
Conduct training program in multiple
languages. We also improved the
functionality of our employee hotline
to better enable reporting of compli-
ance and ethics concerns and
enhanced our process for handling
reported incidents and ensuring
appropriate corrective action.
Furthermore, we completed environ-
mental and health & safety audits
that will help focus our mitigation
efforts in these areas going forward.
• As part of our ongoing efforts to
maintain a talented workforce, we
continued to focus on leveraging
diversity and inclusion, designing the
right organizational model to meet
our business needs and ensuring we
have the talent base necessary to lead
our growing businesses. Tactically, we
worked to expand the breadth and
depth of our succession plans and
reinforced our focus on managing
our people through an increased
emphasis on people development as
part of our performance manage-
ment process.
• To manage our risks related to raw
materials, we continued to reduce
our input cost volatility across our
total portfolio by employing various
hedging strategies where appropriate
and as market opportunities arose.
We also continued to utilize our scale
to achieve maximum value across our
commodity portfolio and to ensure
adequate supply. In addition, we have
developed strategic global supplier
solutions to help minimize volatility.
36
We continued to focus on
leveraging diversity and
inclusion, ensuring we have the
talent base necessary to lead
our growing businesses.
267419_L01_P27_81.v2.qxd 2/28/07 4:08 PM Page 36