Organizations are always designing and managing products, services, processes, and the supply chains. These are the various operations that are undertaken by firms in their efforts to add value into their outputs and satisfy the needs of the consumers. All these are undertaken with certain objectives in mind and almost all organizations have their individual ones. These efforts are undertaken systematically until they can guarantee the attainment of objectives. This paper looks at the management of the operations management objectives at PepsiCo.
2.0 Operations management
Operations management is the process by which an organization designs and manages output, processes, and the supply chain. It also considers the various initiatives like acquisition, improvement, and application of various organizational resources that enable it function effectively (Kupferschmid, 2001 pg 660).
Just like any other function of a firm, operations management is also categorized into strategic and tactical levels. Whereas the former is concerned about the long term operations of the firm, the latter mainly deals with the short term agendas. These long term actions include the determination of the sizes and locations of the business, structures in the organizations, and the formatting of the supply chains. The short term ones include mainly the plant layout, equipment acquisition, and replacement. In addition to these, there are operations that are undertaken in any organization. These include inventory management, production control and scheduling, quality management, resource handling, and machine repair and maintenance (Inman, 2006 pg 602).
3.0 PepsiCo Operational process
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Headquartered in New York, PepsiCo has grown from a small firm to among the leading food companies and largest companies in general around the world. PepsiCo specializes in beverages which include both the non carbonated and carbonated drinks and the snacks which include chips and other foods. The notable thing about the company is that it presents its different products in different brands which imply that its operations must be very flexible to accommodate all of them. The company's vision is to be the leading food manufacturer in the world and this it aims at achieving through a quality process at its plants.
PepsiCo deals in the production of beverages. In order to arrive at the final product, there are various stages that are undertaken. These follow each other swiftly and are properly designed to complement one another. The following is a representation of the flow of events in the manufacture of beverages at PepsiCo.
First, all the ingredients that will be used in the production process are gathered. These include kola nuts, flavor oils, vanilla beans, sweeteners, and water. They pass through a rigorous quality checking process to ensure that they are of the required quality.
The production process then follows suit. These ingredients are mixed in their required quantities by both machines and employees. Since the company is a multinational, it has to consider the various markets that it operates in. For the domestic market, the ingredients are mixed with distilled water at the company's bottling firm then packed in air tight bottles and cans ready for transportation to various distribution outlets.
For the foreign markets, this process would prove cumbersome and so the company sends the ingredients to its subsidiaries in the various markets that it operates in (PepsiCo bottling, 1997). After these subsidiaries receive the ingredients, they send them to the local bottling firms where as in the above case, they are mixed with distilled water and packaged ready for transport. They are then dispatched to the various distribution outlets before being sent to wholesale and retail outlets for selling. Since not every foreign market has a bottling firm, some markets will have to rely on others for their stocks. These markets receive their packaged beverages from the relevant bottlers which are then stored in warehouses. It is from here that the distributors, wholesalers, and retailers will get their supplies from.
4.0 PepsiCo Performance Objectives
The operation process converts inputs into outputs in addition to addition of value to them. The output must be of the right quality, quantity, and price as well as correctly timed so as not to inconvenience the consumers. These above named factors will much determine the extent to which the needs of the consumers will be satisfied and must therefore be well taken care of. To the firms, should they produce outputs that have these specifications cost effectively, they can greatly increase their levels of profitability. All these factors that apply to consumers and producers are the objectives of the operation processes. As such, there is need to acknowledge them in order to maximize the interest of both these parties.
Always on Time
Marked to Standard
For PepsiCo, there are certain objectives that have been identified for its production process. These include cost, quality, speed, dependability, and flexibility. These are implemented in various ways in efforts to support the organization's strategic objectives. The following is a discussion on each of the objectives.
The type of output that results from the operations will determine the consumer demand, purchase decision, and even the level of loyalty. A high quality output can guarantee high sales and revenues. Companies need to tread cautiously when implementing this objective. Quality is an objective that aims at ensuring that the drinks that result from the production process conform to the legal requirements and are free of any defects that might reduce their utility or even harm the consumers.
In the operation process, the company has set up raw material checks before they are used in the process. Only those that meet the requirements are allowed into the process. The water to be used in mixing the ingredients also has to be distilled to further guarantee the quality of products. Finally, the drinks are packaged in air tight containers to reduce chances of impurities finding their way into the drinks. These containers also have spaces that are filled with carbon dioxide which is a preservative.
Concerning speed, the production process must be fast enough to produce output to meet the market demands. This mainly relates to the ample duration that will guarantee the absence of stock outages in the stores or market in general. A superior process will have the capacity to produce the drinks at the right time and can further extend to reduce lead time in certain cases. The production line at PepsiCo is automated. Such processes are fast and can produce output in large quantities in addition to reducing the delays that can be caused by humans (Howlett, 1996 pg 106). The final ingredients are sent before being mixed with water which guarantees their fast transportation to the various foreign markets.
A dependable production process is one that can be described as reliable in performing its functions. The operations should be able to produce output at any given time if need be. This implies that they always have to be in perfect running conditions and free of breakdowns that can be negative to the production process. The operations are maintained in perfect condition and are incorporated with the latest technological innovations which guarantee their capacity to handle demand at any given time (Kirkland, 2009 pg 50). There are always standby engineers and technicians who will attend to any malfunctions that have been identified by the control systems installed in the process. Finally, the company undertakes periodic maintenance and repair to increase the efficiency of the process.
The operations also need to be flexible and especially for a large company like PepsiCo. With its wide global market, it has to be able to produce a variety of products. This is due to the broad differences in preferences, tastes, and needs of these consumers that must each be taken care of. The operations must therefore not be rigid to only suit one process but a wide range of processes. PepsiCo has an operation process customized to produce a wide range of its products. The company's process can produce a wide range of product categories which mainly include; cola drinks, energy drinks, and carbonated and non carbonated drinks. This is evidence that the process is flexible and can handle a wide range of needs. Further, it can opt to either send fully prepared drinks or final ingredients to be mixed with distilled water to subsidiaries in markets abroad.
The costs that are incurred in the course of operations will much influence the selling price and even the amount of revenues that a company stands to enjoy. The operation costs must be at their minimum and it is only an effective system that can guarantee this. In reducing the operation costs, the company has undertaken various measures. It produces a number of drinks categories in large scale which enables it to gain from the economies of large scale production (After buying Quaker, 2001). This implies that it is able to reduce the marginal costs of these products to a great extent. Further, the prepared ingredients are sent to the various foreign markets with only one step to complete the production process. The subsidiaries on receiving the ingredients will only be required to add water. This reduces the bulkiness of the products while in transit that could have caused additional costs to be incurred by the company.
5.0 PepsiCo Control Systems
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Control systems are devices that are installed in the processes to manage, direct, and regulate their various operations. PepsiCo has implemented some control systems that are aimed at performing various functions and the following are the major ones.
There is a linear control system that mainly identifies any malfunctions of the various machines in the production of soft drinks. This sends signals to the main control room where the officers in charge are able to identify the nature of the problem and take remedial actions. This linear control system can be used to improve the design of the process in that those areas that are always breaking down or experience malfunctions can be marked and further investigated to identify the real causes of these occurrences (Kleindorfer et al, 2005 pg 482). This might include the replacement of the machines in these specific areas with other new and technologically superior ones. In addition, there can also be a customization of the areas such that they are able to function effectively incase the problem does not involve machine efficiency.
There are quality checks which are installed at the material receiving areas. These are able to sort out quality raw materials from the inferior ones in order to increase chances of quality output (Rudnitsky, 1995 pg 43). With the data on the quality of material, PepsiCo can be able to identify the areas which yield quality materials and increase their acquisition while simultaneously reducing on those that do not. In addition, there are also laboratory tests which are conducted on the final products to confirm that the various components as well as their concentrations are in the required ranges. These can be used to improve the design of the production process in that the elements which are found to deviate from the standard are identified and the specific area of their undertaking improved.
PepsiCo has also launched an intelligent crop management technology, i-Crop, which will be used by farmers to monitor their crops. Since the ingredients used to prepare the drinks are mainly plant products, PepsiCo has to make sure that the farmers are able to rectify any problems that might possibly be experienced during the plant growth period. This will be deployed to the farmers so that they can sort the high quality materials from the inferior ones to avoid sending low quality materials to the factories. As a result, the material quality checks at the factory can be done away with to reduce the number of operations to a manageable level thus increasing efficiencies and cost savings (Gaimon, 2008 pg 5).
With the explosion of the internet, various technological innovations are fast emerging. These are applicable in many industries and PepsiCo has to consider adopting some of them to better its operations. The following are some of the key ones that would best increase its effectiveness and efficiency levels.
First, there is i-Crop that has been discussed previously. Even though the company has adopted the innovation, it is mainly on a testing initiative and not all farmers have been supplied with the innovation. With an increased level of quality input, PepsiCo can reduce its staff level and eradicate the material quality check section. Second, there has been software to integrate the companies' intranet and internal networks with internet and other mobile communications devices. With the adoption of this technology, the employees would be flexible. There would be no need for a control room as the linear control system can convey messages to all employees with the communication gadgets in order to take actions. This would result in redundancy of employees in the control room and collective responsibility for all the employees (Hoffman, 1998 pg 1). The employees will also have to be trained on how to handle or rectify a wide category of job descriptions and processes in the operations.
Finally, there is the automation of the testing procedures. Beverage companies no longer have to keep testing each specimen of output as they only have to prepare one quality sample which the automated tester can relate to. In case of wide deviations, the device can detect them fast enough to halt the production process. In the event of acceptable standards, the device approves and accelerates the process which can result in faster operations.
With the adoption of these technological innovations, PepsiCo stands high chances of improving its operations.
Operations management is very important in any organization. This is because it contributes to the attainment of goals by ensuring that factors which can hinder this quest or lead to negative deviations from the goals are removed. The operations at PepsiCo are highly technical in addition to their high speed and having the latest technological innovations. These guarantee the attainment of its goals which mainly are categorized under quality, speed, dependability, flexibility, and cost. In order to protect them, the control measures that have been identified above need to be considered more closely and efforts made towards their implementations. It is with these that the company can decrease the chances of operations deviation from the normal flow or expectations.