Kronos Delivers Bottom-Line Results to PepsiAmericas Through Improved Productivity and Compliance

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PepsiAmericas Inc. is the No. 2 anchor bottler in the entire Pepsi system. With 125 distribution and manufacturing centers in 18 states, more than 15,000 employees around the globe, and annual sales of $3.2 billion, PepsiAmericas is a big company doing big business.

Running such a large operation inevitably leads to operational challenges. PepsiAmerica’s troubles began with an aggressive growth and acquisition strategy that led to a 100 percent increase in headcount in less than five years. Burdened by cumbersome manual payroll processes that couldn’t effectively handle this significant increase in employee headcount — or the complex pay policies such a diverse group required — the company saw unproductive time, effort, and money adversely affect its bottom line.

PepsiAmericas realized it needed an automated workforce management approach. Or, as Payroll Manager Adele McCarty puts it, “We needed Kronos!” Implementing the Kronos® Workforce Central® suite, including the Workforce Timekeeper™ application for time and labor, allowed PepsiAmericas to automate its entire payroll approach. The outcome has been increased productivity, better control of labor costs, and improved compliance with pay rules and policies.

For its achievements, Kronos recognized PepsiAmericas with a Best Practices Award for using Kronos technology to simplify complex pay rules on a large scale. The Kronos Best Practices Awards are presented annually to those organizations that achieve excellence in the application of Kronos technology.

Aggressive acquisition strategy reveals manual payroll problems

When it was relying on an inefficient, manual payroll system while undergoing explosive growth, PepsiAmericas couldn’t even imagine such success. “We grew from 4,800 hourly and salaried employees to almost 12,000 domestic employees,” says McCarty. “Our existing payroll function just couldn’t handle that many employees. Part of the problem was the overwhelming number of employees we had to process in a short amount of time. But as headcount grew, we also gained a lot more pay rules and union policies that took a lot of time and effort to apply correctly and consistently.”

At the heart of the problem was the way — or ways — PepsiAmericas collected employees’ labor data. Most of its 125 sites used different data collection methods, ranging from a DOS-based automated solution to mechanical time clocks and paper timesheets. Once the data was collected, PepsiAmericas’ payroll specialists had to interpret more than 70 union contracts for more than 5,100 union employees, 1,000 pay rules, and 860 company-specific work rules. “Our payroll specialists had only two days to input hours and earnings into the main payroll system,” she says. “Invariably this caused problems: long hours, excessive overtime, keying errors, or even missed deadlines.”

Automated system saves time, increases accountability, controls labor costs

After carefully researching several vendors, PepsiAmericas selected Kronos and its powerful Workforce Central suite. “We chose Kronos because it enabled us to easily configure our specific pay rules, which meant we would successfully automate most of our payroll process,” explains McCarty.

One of the first steps in the process was installing 175 Kronos data collection terminals. “This was important because it gave us one consistent way to collect employees’ time and attendance data across the entire enterprise,” she adds. Now, instead of filling out paper timesheets, PepsiAmericas’ employees only have to swipe bar-coded ID badges through the terminals and their data is collected immediately. The elimination of paper forms and manual processes has significantly improved productivity and helped reduce labor costs.
With this automated approach, employees’ labor data is fed directly to the Workforce Central application, where it is stored for later payroll processing. This process is seamless, with Workforce Central interfacing directly with PepsiAmericas’ PeopleSoft payroll system.

The automated Kronos solution has helped PepsiAmericas accomplish a significant implementation objective. “One of our primary goals was to give the accountability for managing employees’ time to the employees, supervisors, and managers, not the payroll specialists,” says McCarty. “Implementing Workforce Central has helped us achieve this goal.”

Automatic pay rules application mitigates compliance issues

“The Kronos system also offers a powerful pay rules engine that applies our specific pay and work rules to employees’ time and attendance data,” she adds. “This means that our payroll specialists don’t have to interpret pay policies or union contracts anymore.” This is no small feat. “Prior to implementing Workforce Central, union grievances as a result of pay issues were common,” she says. Not anymore. “Since we’ve been using the Kronos solution, not a single union grievance has been filed due to payroll discrepancies.”

Solution streamlines complex paid-time-off calculations

Another key improvement has been PepsiAmericas’ newfound ability to administer average hourly rates for vacation and holiday pay for commission-paid employees. “With approximately 4,600 hourly employees on a compensation plan that includes commission earnings for product delivery, calculating holiday and vacation pay used to be a very tedious process,” says McCarty. “For example, our truck drivers’ pay is based on commissions, so the rates we use for calculating paid time off are based primarily on their prior year’s W-2 earnings.”

The Kronos system was able to provide the solution. “At each stage of the rollout, we calculated the average hourly rate for each driver and added pay codes in Workforce Central,” McCarty explains. “These codes are used only when commissioned employees request vacation, personal, or holiday pay. Now commissioned pay is automatically calculated.” She also points out that they were able to create separate vacation checks in increments of 40 hours, a step that eliminated multiple manual processes.

PepsiAmericas intends to continue improving internal processes and eliminating errors as it strives to maximize its investment. “Workforce Central has helped us automate manual methods, improve overall efficiency, and increase productivity,” says McCarty. “And all of this has had a very positive impact on our bottom line.”

Project benefits

• Automated payroll process eliminates time-consuming manual processing to boost productivity and better control labor costs
• Increased visibility shifts accountability for employee time from payroll staff to employees and managers
• Centralized administration of nearly 2,000 pay and work rules minimizes compliance risk