Question

Frito-Lay, the massive Dallas-based subsidiary of PepsiCo, has 38 plants and 48,000 employees in North America. Seven of Frito-Lay’s 41 brands exceed $1 billion in sales. The production process at Frito-Lay is designed for large volumes and small variety, using expensive special-purpose equipment, and with swift movement of material through the facility. Product-focused facilities, such as Frito-Lay’s, typically have high capital costs, tight schedules, and rapid processing. Frito- Lay’s 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. Cross-trained workers, who handle a variety of production lines, have promotion paths identified for their particular skill set.

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 12 hours. The requirement for fresh product requires on-time, just-in-time deliveries combined with both low raw material and finished goods inventories. The continuous-flow nature of the specialized equipment in the production process permits little work-in-process inventory. The plants usually run 24/7. This means that there are four shifts of employees each week.

a. Develop an ITO and SIPOC model based on information in the scenario.

b. Apply four V’s of operation on Frito-Lay. Mention each V as high, moderate or low with one liner reason.

c. Suggest how we can determine the productivity in this case. No calculation is required, just show possible data.

d. Make a comparison how operations of Frito lay is different from a service restaurant (you can assume a restaurant of your choice).

e. Given a bakery located opposite to your proposed service restaurant makes 1,500 loaves per month with a labor productivity of 2. 344 loaves per labor-hour. Calculate number of workers working there? (Hint: Each worker works 160 hours per month. )

Answer 1

a. ITO model:

Inputs: Raw materials (potatoes, corn, etc.), specialized equipment, cross-trained workers

Transformation process: Large volume production with small variety, quick material movement, high utilization production lines, continuous-flow nature of specialized equipment

Outputs: Finished food products, shipped to customers

SIPOC model:

Suppliers: Raw material suppliers (potato and corn farmers)

Inputs: Raw materials (potatoes, corn, etc.)

Process: Production process using specialized equipment, cross-trained workers

Outputs: Finished food products (chips, snacks)

Customers: Retailers, consumers

b. Four V’s of operation on Frito-Lay:

Volume: High volume due to the large number of plants and employees, as well as the high demand for their products.

Variety: Low variety due to the production process being designed for large volumes and small variety.

Variation: Moderate variation due to the need to manage perishable raw materials and tight production schedules.

Visibility: Low visibility since the production process is designed for efficiency and speed, and not for customer interaction.

c. To determine productivity in this case, we can track the output of finished food products and compare it to the inputs of raw materials and labor hours. We can also track the efficiency of the production process by measuring the utilization of the specialized equipment and cross-trained workers.

d. Frito-Lay's operations are different from a service restaurant in several ways. For example, Frito-Lay's production process is designed for large volumes and small variety, whereas a restaurant's operations require more flexibility to accommodate a variety of menu items. Additionally, Frito-Lay's production process relies heavily on specialized equipment and the efficient movement of material through the facility, while a restaurant's operations rely more on the skills and interactions of its employees with customers.

e. Number of workers in the bakery:

Labor productivity = Output / Labor hours

2.344 = 1,500 / (x * 160)

x = 3.22

Rounding up, there are 4 workers in the bakery (since you cannot have a fraction of a worker).