Frito - Lay, the massive Dallas - based subsidiary of PepsiCo, has 5 5 plants and 5
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FritoLay, the massive Dallasbased subsidiary of PepsiCo, has plants and employees in North America. Seven of FritoLays brands exceed $ billion in sales: Fritos, Lays Cheetos, Ruffles, Tostitos, Doritos, and Walkers Potato Chips. Operations is the focus of the firmfrom designing products for new markets, to meeting changing consumer preferences, to adjusting to rising commodity costs, to subtle issues involving flavors and preservativesOM is under constant cost, time, quality, and market pressure. In the food industry, product development kitchens experiment with new products, submit them to focus groups, and perform test marketing. Once the product specifications have been set, processes capable of meeting those specifications and the necessary quality standards are created. At FritoLay, quality begins at the farm, with onsite inspection of the potatoes used in Ruffles and the corn used in Fritos. Quality continues throughout the manufacturing process, with visual inspections and with statistical process control of product variables such as oil, moisture, seasoning, salt, thickness, and weight. Additional quality evaluations are conducted throughout shipment, receipt, production, packaging, and delivery. The production process at FritoLay is designed for large volumes and small variety, using expensive specialpurpose equipment, and with swift movement of material through the facility. Productfocused facilities, such as FritoLays typically have high capital costs, tight schedules, and rapid processing. FritoLays facilities are located regionally to aid in the rapid delivery of products because freshness is a critical issue. Sanitary issues and necessarily fast processing of products put a premium on an efficient layout. Production lines are designed for balanced throughput and high utilization. Crosstrained workers, who handle a variety of production lines, have promotion paths identified for their particular skill set. The company rewards employees with medical, retirement, and education plans. Its turnover is very low. The supply chain is integral to success in the food industry; vendors must be chosen with great care. Moreover, the finished food product is highly dependent on perishable raw materials. Consequently, the supply chain brings raw material potatoes corn, etc. to the plant securely and rapidly to meet tight production schedules. For instance, from the time that potatoes are picked in St Augustine, Florida, until they are unloaded at the Orlando plant, processed, packaged, and shipped from the plant is under hours. The requirement for fresh product requires ontime, justintime deliveries combined with both low raw material and finished goods inventories. The continuousflow nature of the specialized equipment in the production process permits little workinprocess inventory. The plants usually run This means that there are four shifts of employees each week. Tight scheduling to ensure the proper mix of fresh finished goods on automated equipment requires reliable systems and effective maintenance. FritoLays workforce is trained to recognize problems early, and professional maintenance personnel are available on every shift. Downtime is very costly and can lead to late deliveries, making maintenance a high priority. Discuss how Operations Management is applied at FritoLay to keep it successful in the industry?
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