Pepsico Pakistan Term Paper

Assignment: Employee behavior Profile

Submitted By: Adil Nazakat.

Noshaba Yasmeen.Noshaba Hameed.

Ikram Tariq.

Submitted to: Sir Shazil.

Dated: 30/05/2012.

Table of Contents

S.No Contents Page #

1. Introduction 3

2. Inventory 4

3. Firm’s Characteristics 5

4. Organizational Structure 6

5. Location. 7

6. Location Factors. 8

7. Product Planning. 9

8. Layouts. 10

9 Manufacturing Process. 11

10 Support Facility. 12

11 Inventory Management. 13

12 Personal. 14

Introduction:

PepsiCo, Inc. is founded by Donald M. Kendall, President and Chief Executive Officer of Pepsi-Cola and Herman W. Lay, Chairman and Chief Executive Officer of Frito-Lay, through the merger of the two companies. Pepsi-Cola was created in the late 1890s by Caleb Bradham, a New Bern, N.C. pharmacist. Frito-Lay, Inc. was formed by the 1961 merger of the Frito Company, founded by Elmer Doolin in 1932, and the H. W. Lay Company, founded by Herman W.Lay, also in 1932. Herman Lay is chairman of the Board of Directors of the new company; Donald M. Kendall is president and chief executive officer. The new company reports sales of $510 million and has 19,000 employees. Major products of the new companies are:

Pepsi-Cola Company - Pepsi-Cola (formulated in 1898), Diet Pepsi (1964) and Mountain Dew (introduced by Tip Corporation in 1948).

Frito-Lay, Inc. - Fritos brand corn chips (created by Elmer Doolin in 1932), Lay's brand potato chips (created by Herman W. Lay in 1938), Cheetos brand cheese flavored snacks (1948), Ruffles brand potato chips (1958) and Rold Gold brand pretzels (acquired 1961).

Mountain Dew launches its first campaign "Yahoo Mountain Dew ... it'll tickle your innards."

In Pakistan Shamim & Company has completed 29 years of its operations. It is operating under the license from Pepsico Newyork, US. Operations management functions are being successfully implemented by management. A brief summary of operations management functions studied by this group are described below.

Product Planning:

At present new product decision is taken by the top management. Demand for new product is investigated by production manager- terms of raw material, machinery operations, and quality. For this purpose he can get guidance from constructions. Finance department evaluates financial viability. Sample production is conducted. Response from buyer in terms of satisfaction and company’s ability to meet the requirement helps in deciding to produce new product.

Process Design:

In the company process is continuous supply of concentrate is critical but process can be automated. Process is flexible and production on plant can be changed within one hour. Production on plant can be changed within one hour. Production is of large scale and covers a wide area for the distribution of the product.

Facility Design and Layout:

Facility design and physical layout of plant, supporting facilities and building is provided by the parent company that is PEPSI COLA International. Transportation costs with the plant are minimum. Physical layout provides maximum utilization of available space by optimizing costs.

Inventory:

Company is not using the quantitative methods for calculating economic order quantity, reorder point, safety stock and annual inventory cost. The company does not give importance to control inventory cost. Lead time is usually 2 days and in an exceptional case it can be up to 4-5 days. This also one reason that EOQ, ROP, lead time are calculated using qualitative techniques, by estimates of experienced managers.

Material Requirement Planning:

Company produces beverages and uses Sugar, Carbon Dioxide, Ammonia and concentrate as raw material. Soft drink is a seasonal product. Most of the sale is done during summer season. Concentrate is bought from the franchiser PepsiCo. Sugar is bought directly from the sugar manufacturers of the area. CO2 is prepared within the premises, which is enough for the full capacity of two plants. When during samara 4 plants are in working, CO2 is purchased from the outside suppliers.

Quality:

Quality standard are followed at each and every step. Shamim & CO. has won best quality award for many times by PepsiCo competing all the Asian countries. Quality control labs are fully equipped. Quality controllers are at home in their jobs. That’s why the quality control efforts are recognized by the international management of Pepsi cola. This “serves as motivator for the organization, on no compromise on quality”.

Company Profile:

Pepsi co. is in-fact a corporation listed in the New York Stock Exchange USA. It is the owner of globe products like Pepsi Cola, Team, and Mirinda etc. Being owner of the products they give the rights of manufactures of its products to different countries. All over the world, the products are standard. If you buy a Pepsi from a remote area like Talamba and from Washington D.C., you will find absolutely same taste and color. Franchisees have to follow these standards; otherwise they have to face penalties from the real owners of the product. In Pakistan there are 10 units of Pepsi cola are working. Each unit has its own license of production. And each unit has its own territory in which it can sell its products. No unit can interfere in the area of other unit.

Brief History:

Shamim and Company was introduced in 1967 as a (Pvt.) Limited company. It started its production in 1968. In the early stages it was famous with the name of 7-up factory. Because 7-up was its first product. The other brands were introduced after 7-up. Pepsi Cola, Mirinda and Green Mirinda have been different products of Shamim and Co. Since its introduction. At present 7-up, Pepsi Cola and Mirinda are being produced.

Company Characteristics:

Shamim & Co. is the biggest soft drink manufacturing unit in Pakistan with its four plants having full capacity of 50,000 crates per day. Company covers area of Southern Punjab including Sahiwal, Mianwali, Rajan Pur, Bahawalnagar and Khan Pur.

Organizational Structure:

Location:

Location has important impact on company’s ability to compete and on its exposure to risk from external factors. In a dynamic market the company may expand, add or relocate new facilities.

Location decisions are important due to following reasons:

1. Competition.2. Cost.

3. Hidden effects.

Factors that affect the location decisions are:

1. Market related factors.2. Tangible Cost factors.

3. Transportation.

4. Labor availability and costs.

5. Energy availability and costs.

6. Water availability and costs.

7. Site and construction cost.

8. Taxes.

9. Intangible Factors.

10. Legal regulation.

11. Community attitude.

12. Expansion potential.

13. Living conditions.

Steps in Location Selection are:

- 1) Select the general region, select generally acceptable communities.

- 2) Select appropriate sites within communities.

- 3) Determine method of evaluating community site combination.

- 4) Compare sites and select one.

Shamim and company are located near MDA chowk Multan in province of Punjab. The site of company is not of some strategic value. Because Shamim and Co. covers a large area of Southern Punjab. So there is no importance of site with reference to the other cities of this area. Any way; site of the company is considerable for Multan. As the major proportion of population lives in Cantt. And Down town (city). The site is nears to these both areas. In this way transportation cost to these 2 areas in very less. In this way it can serve its customers effectively and efficiently.

Location Factors:

1. Market Related Factors:

As the unit is located in Multan which is heart of its selling territory. In this way transportation cost is not high. Mean while its major revenues are collected from Multan and Bahawalpur. In so far Multan is concerned, transportation cost is minimum and Bahawalpur is only 60 miles away from Multan. In this way Multan is the city which can supply the product in all areas of its territory on right time.

2. Labor Availability:

Cost of labor is very important while setting up a plant. As there were villages in the west of the company when it was inaugurated. So labor was in ample supply at cheaper cost. But now all over the unit there are suburb colonies. But labor supply in still not a problem.

3. Energy Availability:

As the plan requires a large amount of electricity. Electricity is available at location on similar prices like all other areas of Pakistan.

4. Water Availability:

As the plant also requires huge amount of water, and at the site underground water is easily available.

5. Social Response:

Public opinion is very favorable toward the company. Mean while the organization is not causing any pollution.

6. Expansion Potential:

In the early days of production, there were expansions potential in unit. So the unit is expanding by putting 2 new plants. But at the moment there is no expansion potential.

7. Departmentalization:

There are six departments in the company, which are

1) Production

2) Marketing

3) Finance

4) Sales

5) Shipping administration

6) Personnel.

In each dep’t. There is a manger which is responsible for the working of his department to the general manager. A manager has an assistant manager. Managers there are Shift Incharge in production and supervisors in sales. They control the activities of operatives.

1. Product Planning:

Up till now the company has not produced any product of its own and there is no concept of product planning in future as well, because the management considers it a very theme to introduce a new brand of their own. In the brand like Pepsi Cola and 7-up are selling in the market like hot cakes. Meanwhile the people in Pakistan are reluctant to purchase Pakistan branded beverages and we don’t find any successful domestic brands of soft drinks in Pakistan. That’s why the management does not have any motivation to do product planning.

Shamim and company is a cold drink manufacturing unit that comprises of four plants to produce drinks. Investing in such a unit involves large investment of capital for long period of time, and requires considerations of all types.

2. Operations Planning

Process Design and Facility Layout

Having done the location selection company design a building, select the appropriate process technology and equipment and arranges it in away so that it has greatest potential to meet the strategic demand of organization. Experience and informed judgment are useful guides to layout decisions. Computer models are available to assist in deicing factory and office layout.

The type of operations to be performed in a facility, influence the facility’s needs and layouts. Equipment involved effects the layout. Facilities must be designed for the efficient operations in the organization.

Layout for Operations:

Facility is designed in numerous ways to support this work to be done within each facility numerous factors must be considered. Amount of available space and its shape. Design objective is very imprint. Some of layouts are:

· Retail layout.

· Office layout.

· Distribution and ware house layout.

· Manufacturing layout.

Manufacturing Layouts

Job shop Layout:

It is also called layout by process, functional layout. Any particular item in the job shop may require a unique sequence to convert the req. material to the desired and item. All people and equipment that perform the same function are grouped together.

Flow Line Layout:

Involved the arrangement of activities in some sort of line along which a service receiver or product process moves. This is called lay out by process. Machines or pieces of assembly equipment are located along the route over which product travel and are arranged in the sequence required by production plan. The path of flow may follow straight line or any other shape.

Layout by Fixed Position:

Organization chooses to bring the necessary people and equipment to the item being produced. Work item does not move from one operation to another. Fixed position layout may be used because the work item is too fragile, too bulky, and too heavy to move without complications. Fixed position method necessitates the use of portable equipment.

Many organizations find that no fixed type meets their needs but instead that combination of types works well.

Manufacturing Process:

In Shamim & Co. manufacturing process is as follows;

Water Extraction:

Raw water is extracted from the sources. It is treated to remove its hardness. Here water is tested in lab to check it harness. If water has some Co3 or Hco3 it is drained and again soft water is used in the preparation of syrup.

Preparation of Syrup:

Syrup is prepared with sugar, concentrate and water. This syrup is heated up to 90 C to get it pasteurized. This hot syrup is cooled down and stored in the tanks. Here lab testing of syrup is done to check its quality standard.

Production:

Syrup is sent to Carbon Cooler. During flow of syrup from tanks to Carbon Coolers, Ammonia and Carbon Dioxide are mixed in the syrup.

In production process empty is feded from one side. This empty is washed and light check is done to see quality of washing.

From Carbon Cooler syrup goes to the Filler. At filler syrup is filled in the empty bottles, and Cap Crown is fixed on the bottles. Here and operator looks after the filling process. He can increase, decrease or even stop production speed accordingly.

Filled bottles are tested in lab. By taking samples. Light check is done to check the level of syrup in bottles and cheek some solid partials. The overfilled or under filled bottles are separated. If some particle is found in some bottle it is also separated.

After light check bottles passed under a printer and code is printed on the bottles, with this code the date of manufacturing and shift time can be identified.

When all checking process is done the bottles are cased in the crates.

The whole process of manufacturing is automatic. It required a little supervision. Raw material is put from one side and filled bottles come out of the process.

Support Facilities:

Support facilities are carried out in such a way that the direct operations can function smoothly. Support facilities are essential for operations. Some of departments to be considered in layout are

· Inventories, material and suppliers.

· Tool room.

· Inspection and quality control.

· First aid.

· Maintenance.

· Safety and security.

· Clerical and bookkeeping.

· Tube well.

· Air-conditioning plant.

· Transformer.

· Equipment for work shop.

· Bailing press.

· Parking facility.

· Canteen.

· Emergency situation analysis.

· Medical facility.

Considerations for inventory layout are considerable.

Inventory Management:

An inventory system is collection of people, equipment and procedures that function to keep account of the quantity of each item in inventory and to determine which item should buy or produce in what quantities and at what time. Some inventory systems require transaction reporting to keep track of every instance in which units are added or taken from the existing inventory at Shamim & Co. can be classified into five categories.

- General items.

- Part items.

- Electric items.

- Lubrication items.

- Stationary items.

Control of Inventory:

At the end of each month, store prepares a monthly consumption report. This report includes the detail of all the inventory items which were consumed by the production dep’t. Of Shamim & Co. during the month.

In this way the inventory is controlled in the Shamim & Company.

Quality Control:

The quality control should

1. Define specific product and service quality level requirements.

2. Determine the relationship of design and process characteristric to output quality and related process requirement.

3. Determine methods, personnel and equipment for measuring quality.

4. Measure and record the quality achieved.

5. Trigger corrective processes when actual quality varies from the acceptable quality.

Specification of quality requirements begins in market research continues as part of the product design activity, and culminates in the quality specification and design subsystem output.

Personnel:

Briefly, individuals must be selected and trained to carry out the measuring process. The capability necessary and number of individual required, selected and trained for implementation of measuring procedures. Development of the skills of quality control personnel is a continuous process as products. Processes, the equipments and procedures evolve.

Purchase of Raw Material:

Direct raw material for the products includes the following items.

I) Sugar

ii) Concentrate

iii) Treated water

iv) Empty bottle

v) Ammonia and Carbon Dioxide.

From above items only concentrate is provided by the franchiser. All other raw material is purchased by the company itself.

Finished Bottle Tests:

When the bottles are filled at filler, the chemist takes sample after every half hour. If any deviation from the standard is found the whole batch is drained before going in market.

A microbiological test is also taken by the chemist after a week of production. If any kind of germs growth is found the stored bottles are declared rejected.

The management of PepsiCo is also conscious about quality standards of its products. So the quality inspectors of Pepsi Cola International take sample of different brands from the market, check it in the laboratory and send the results to PepsiCo. In case of any deviation from the standards the management of PepsiCo sends advice or strict warning to the concerned unit according to the degree of sheerness.

Role of PepsiCo:

PepsiCo is the franchiser of Shamim & Company and it has full responsibility for the quality of Pepsi Cola and other product line. So the franchiser has arranged a system through which they buy some bottles from the market which are produced by the Shamim & Company and it is checked in laboratory of New York. This system also shows that the company has been trying to make a rigid quality control system in order to provide better product to its customers.