Pepsico Supply Chain Case Study

Application

I applied through college or university. The process took 2+ months. I interviewed at PepsiCo (Orlando, FL) in March 2013.

Interview

I went to a campus career fair where I handed my resume to a recruiter, 2 weeks later I was pre-selected for an interview and an information session the evening before for a presentation about the PepsiCo Company. The next day, I had a 1:1 interview with a guy in sales. A month later, I was invited to Orlando for the 2nd round of interviews. I later find out from the dozens of candidates from my school, the other 3 people from my campus that made it to the 2nd round had all been invited to a plant tour, which I was not invited to.

After checking into the hotel, a dinner was held for all candidates to meet each other and various PepsiCo representatives that included people from HR and plant directors. Welcoming remarks were done where you can basically ask them anything, then they give you a packet which contains the schedule for the next day and a case study. The morning of, while checking out from the hotel, I received a phone call asking me where I was, the schedule was wrong by 2 hours, which basically messed up the rest of the day for everybody. At the PAB regional office, various rounds of interviews were conducted containing questions about behavior, leadership, teamwork, and the case study, so know your resume! This process was extremely unorganized with the interviewers running back and forth looking for their candidates to interview while trying to stick to the schedule.

Interview Questions

  • Campus Assessment Center - Operation Case Study

    Tomorrow morning, you will be meeting one on one with a NAB manager to discuss this case study. To prepare for the discussion, you should review the case study and answer the questions that follow. Be prepared to answer follow-up questions during the discussion,

    It’s 3:30PM on Wednesday, and you are the night loading Product Available Supervisor at PAB’s Denver Production and Distribution Center. You have just arrived at work, and are ready to start a hand off discussion with the first shift supervisor. She quickly lets you know that she has heard that there has been an unforecasted sales promotional ad for Pepsi 12 packs at Albertson’s, and she thinks it may case a product availability issue for tonight’s load out. As you walk by the message board, you also see a note that two of your loaders have called in sick for tonight’s shift which will leave you terribly shorthanded, and you also find out that there is an issue with some of the equipment in the plant and you need every available resource in order to fix it in order to prepare for the load out.

    You then check your voice mail and find you have two messages. The first is from the Plant Manager who copied your boss on the message. He wants to meet with both of you to discuss improvements, including changes to the layout of the pick area. The second is from your manager asking to meet this afternoon about the recent down turn in bulk loading productivity. Specifically he would like to see the performance metrics for all individual loaders.

    1. What would be your course of action to address these situations?
    2. What are some key questions you need to ask and consider when resolving these situations?   Answer Question
PepsiCo 2013-05-20 16:13 PDT

PepsiCo is the second biggest player in the global food and beverage industry. To maintain this position, PepsiCo’s operations management (OM) practices must effectively address business needs in the 10 strategic decision areas. These decision areas refer to the aspects of business that need to be streamlined together to achieve optimal performance. PepsiCo’s continuing international growth and expansion also warrant continuing reforms in such operations management practices. However, PepsiCo’s operations management approaches are generally appropriate for the global organization. Thus, PepsiCo’s policies and approaches effectively address the main issues and concerns linked to the 10 strategic decisions of operations management.

PepsiCo has an integrated approach to the 10 strategic decisions of operations management (OM). This approach considers variations in PepsiCo’s business areas and markets, as well as different productivity requirements based on product, market conditions, and other variables.

PepsiCo’s Operations Management, 10 Strategic Decision Areas

1. Design of Goods and Services. The objective in this strategic decision area of operations management is to match goods and services, organizational capacity and market demand and preferences. PepsiCo’s operations management does so through market-based research and development and product innovation. For example, PepsiCo conducts market research about current trends, such as consumer lifestyles. The results of such research are used to determine future directions of PepsiCo’s products, such as future variants of Pepsi.

2. Quality Management. This strategic decision area has the objective of optimizing quality based on business and consumer expectations. PepsiCo’s operations management aims to provide the highest quality products under the company’s “Human Sustainability” goals. For example, new PepsiCo products are usually improved variants, such as low-calorie Pepsi products and less-salt Frito-Lay products.

3. Process and Capacity Design. Capacity utilization and process efficiency are the emphases in this strategic decision area of operations management. PepsiCo aims to maximize its productivity-cost ratio in this area. For example, the company’s manufacturing facilities are designed with high-output assembly lines. Also, many of PepsiCo’s production processes are automated for optimal efficiency.

4. Location Strategy. PepsiCo has many company-owned facilities and partner-owned facilities in strategic locations. Such an operations management approach is based on this strategic decision area’s objective of maximal reach to target markets. In PepsiCo’s case, such facilities are located in key areas near most retailers. PepsiCo is especially interested in large retail outlets and food service establishments with high sales volume.

5. Layout Design and Strategy. Efficient movement of people, materials and information is the operations management concern in this strategic decision area. In PepsiCo’s case, spaces are designed with efficiency and productivity in mind. For example, layout design in PepsiCo production facilities is centered on the principles of assembly line production and total quality management (TQM).

6. Job Design and Human Resources. PepsiCo’s human resource management addresses this strategic decision area through a combination of global corporate HR practices and divisional HR practices. The main operations management objective in this area is to ensure the adequacy of PepsiCo’s workforce. For example, PepsiCo has an HR policy and job design process for Frito-Lay, and separate HR policy and job design process for Quaker Foods. However, all of these policies and processes comply with PepsiCo’s corporate standards and “Talent Sustainability” policy.

7. Supply Chain Management. This strategic decision area focuses on operations management practices that optimize the supply chain to match demand for materials and intermediary products. PepsiCo’s approach is to diversify and distribute its supply chain hubs. For example, the company operates supply chain hubs for each regional market. In this way, PepsiCo optimizes response times to fluctuations in demand.

8. Inventory Management. PepsiCo’s inventory management emphasizes automation. Adequacy, scheduling, and cost minimization are the key objectives in this strategic area of operations management. PepsiCo does so through computerized monitoring of inventory. Inventory managers can access real-time data to help them make decisions.

9. Scheduling. Facility and human resource schedules are the primary concern in this strategic decision area of operations management. PepsiCo facility managers implement human resource schedules based on local data. However, automated scheduling is also used for some of PepsiCo’s production space schedules.

10. Maintenance. PepsiCo’s maintenance concerns are widely varied, considering the company’s wide array of products and markets. This strategic decision area of operations management focuses on adequate workforce and other resources that grow with the business. PepsiCo continues to hire individuals and promotes from within the organization to grow its workforce. Facilities are expanded, constructed or acquired to support PepsiCo’s growth.

Productivity at PepsiCo

PepsiCo’s operations management practices ensure high performance and productivity. The company uses different measures or criteria to evaluate actual productivity. The following are some of the productivity measures used at PepsiCo:

  1. Batches per facility per day (PepsiCo production facility productivity)
  2. New product ideas per year (product R&D productivity, such as for Pepsi)
  3. New accounts per year (marketing productivity)
References
  • Kachwala, T. T., & Mukherjee, P. N. (2009). Operations management and productivity techniques. PHI Learning.
  • Lawrence, K. D., & Weindling, J. I. (1980). Multiple goal operations management planning and decision making in a quality control department. In Multiple Criteria Decision Making Theory and Application (pp. 203-217). Springer.
  • Liu, S., & Jiang, M. (2011). Providing Efficient Decision Support for Green Operations Management: An Integrated Perspective. INTECH.
  • Najdawi, M. K., Chung, Q. B., & Salaheldin, S. I. (2008). Expert systems for strategic planning in operations management: a framework for executive decisions. International Journal of Management and Decision Making9(3), 310-327.
  • PepsiCo 2014 Annual Report.
  • PepsiCo Inc. (2012). PepsiCo Announces Strategic Investments to Drive Growth.
  • Schrunder, C. P., Galletly, J. E., & Bicheno, J. R. (1994). A fuzzy, knowledge‐based decision support tool for production operations management. Expert Systems11(1), 3-11.
  • Verdaasdonk, P. (1999). Defining an information structure to analyse resource spending changes of operations management decisions. Production Planning & Control10(2), 162-174.
  • Verdaasdonk, P., & Wouters, M. (2001). A generic accounting model to support operations management decisions. Production Planning & Control12(6), 605-620.
  • Wild, R. (1983). Decision-making in operations management. Management Decision21(1), 9-21.

10 Decision Areas of Operations Management, Case Study & Case Analysis, Food and Beverage Industry, Operations Management, PepsiCo

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