• PepsiCo locations will sell process waste/by-product at production facilities on an ongoing basis. 
• This could include unsaleable raw ingredients, defective packaging like mislabeled bottles or damaged materials, potato peels and off-cuts, starch, etc. 
• Procurement is heavily involved in the process of selling assets, often acting as the broker e.g., finding buyers and negotiating the best price and recently in some cases, have eliminated brokers completely. 

• Process waste sales are recorded in the gross sales line in the P&L. If this is counted as productivity, should we record it as an one off. 

• Can the income from these sales be reported as Productivity?
• If yes - how do we calculate the savings? What's the qualifying criteria. Where will this be reported?
• If no - how do we track these savings as part of their performance reporting?

• Process waste or by-product sale is not productivity on its own. 
• Generally, reduced waste is productivity for Supply Chain. 

Governance

• It can be counted as procurement Productivity if it meets the following criteria. 
  • It should be of recurring nature and fit, form, function should be the same. 
  • Procurement helps sell the same items at a better rate vs PY. Increase in selling rate is the key driver of productivity. 
  • More scrap sales in dollar terms vs PY simply due to higher business activity or vol doesn't count as productivity. Similarly, a reduction in volume has no bearing on Productivity. 
  • Better price vs market also doesn't count as productivity. 
  • If a market index exists, strip out the impact of market changes (either positive or negative) to calculate Productivity.