operational management

1. Operational
Management
In
Frito Lays
Presented by:
Shoaib Zafar
Mehwish Iftikhar
Salma Malik

2. Frito-Lay, Inc. is the division of PepsiCo that manufactures,
markets and sells corn chips, potato chips and other snack
foods. The primary snack food brands produced under the
Frito-Lay name include Fritos corn chips, Cheetos cheese-
flavored snacks, Doritos and Tostitos tortilla chips, Lay's
potato chips, Rold Gold pretzels, Ruffles potato chips and
Walkers potato crisps (Europe) each of which generated
annual worldwide sales over $1 billion in 2009.

3. History
Frito-Lay began in the early 1930s as two separate companies, The Frito
Company and H.W. Lay & Company. The two merged in 1961 to form Frito-
Lay, Inc. Four years later, in 1965, Frito-Lay, Inc. merged with the Pepsi-Cola
Company, resulting in the formation of PepsiCo, Inc. Since that time, Frito-Lay
has operated as a wholly owned subsidiary of PepsiCo.
As of 2010, Frito-Lay operates production plants, distribution centers and
regional offices in more than 40 countries, with its Frito-Lay North America
headquarters residing in Plano, Texas. Within North America, Frito-Lay owns
(and in some cases, leases) approximately 1,830 distribution centers, warehouses
and offices. The division also maintains 55 production plants. Its President and
Chief Executive Officer is Tom Greco.

4. Pepsi Co Business Unit

5. “At frito-lay, our success lies in our commitment to provide quality products under
some of the world’s most beloved brand names.As a part of pepsico, we’re also
committed to performance with purpose – working with world class talent to
make sure what is good for our business is what is good for everyone.”
Tom greco, frito-lay CEO
Quality Management

6. Frito lays is very concerned about the quality of its products. Its uses TQM to
make sure that all of its ingredients (potatoes , corn , cheese, etc. ) are of consist
quality and uniformly combined in its manufacturing plants so that each product
remain fresh until the expiration date on the package. Frito lays is ISO 9000
certified and manufacturing suppliers to be certified too.
Frito lays uses SPC to ensure quality.
Statistical Process Control:
Step 1. Set a desired quality standard and a range.
Step 2. Determine the sampling technique and the frequency of measuring
performance.
Step 3. Measure performance and plot it on SPC chart.
Step 4. Use the exception principle.
Quality Management

7. Production Process

8. The company actually has two customers groups:
-Who eat the products
-Who sell the products
Frito lay uses a repetitive process for its high volume products and batch process
for its lower volume products.
Frito lay uses the latest technology: Computer integrated manufacturing. Its sale
staff was one of the first to use handheld computers to transmit sales and
inventory data back to headquarters so that everyone with access could find out
how many of each product had been sold, were in warehouses, and were on route
delivery.
Operations

9. Frito lays has almost 50,000 employees, of which more than one third areRSRs
( route sales representatives) Their job includes driving the product to retailers,
merchandising, taking orders, and negotiating for additional shelf space. The
performance of the RSRs was generally measured using sales figures, because the
job was paid on commission. But when Frito lays discovered it was having
difficulty meeting profitability goals because of low productivity and high turnover
of RSRs, other performance measures were introduced to help solve the
problems. Supervisors now evaluate each RSR on sales task, driving and delivery
tasks and merchandising tasks.
Managing Human Resource

10. Supply Circle Management

11. 1. Solar concentration
2. Photovoltaic
3. Water recovery system
4. Co generation System
5. Biomass boilers
6. Stack heat recovery
7. Packaging
8. Food scrap recycling

12. There are 4 types of inventory at Frito-Lay:
Raw materials (the potatoes, seasonings, packaging material, etc.),
Work-in-process,
Finished chips in a bag,
MRO.
Its really exciting that the whole journey often takes less than one day. The
inventory from the time the potatoes (12 semi-trailers full each day, at 50,000
pounds of potatoes per trailer) are loaded at a farm near each plant, unloaded,
washed , sliced, seasoned, baked, bagged, boxed, loaded for delivery, shipped to
supermarkets, and put on a shelf. It’s a real eye-opener to see how fresh the
product at the store can be.
Inventory And Material
Requirment

13. Frito lays plans and schedules the production and delivery of its product. Its raw
material includes tons of potatoes, corn, cheese, and many other ingredients, which
it buy on a just in time basis from suppliers to make the product (work in process
and finish goods inventory) that are shipped to customers. Its offers just in time
inventory to most of its customers, as it restocks shelves frequently so that many
customers carry no inventory at all – its all on the shelves.With in its supply chain
management program, Frito lays uses enterprise resources planning to integrate all
its B2B and EDI activities with those of suppliers and customers. When products
are delivered and sold , data are sent in real time so that supply, production, and
inventory information can be adjusted quickly for effective inventory control.
Scheduling

14. Maintenance