Table of content

Executive Summary…………………………………………………………………………………………….

Operations Management at PepsiCo…………………………………………………………………………………...

Competitive Strategy

Marketing and Distribution Strategies……………………………………………….

Design of Goods and Services

PepsiCo SWOT Analysis………………………………………………………………..

Quality management and continuous improvement………………………………………………………

QUALITY CONTROL PROCESS  (COCA COLA)……………....................................................

recommendation……………………………………………………………………………………….

conclusion…………………………………………………………………………………………………..

References……………………………………………………………………………………………………
Executive Summary:

PepsiCo is a large company dealing with food, snacks and beverages; it is approximated to be worth
$39 billion and has employed 185, 000 employees. The company comprise of three main divisions
located in Latin America, North America and its international subsidiaries. Operational management
is an important aspect in the modern corporate world; it an important part of an organization and a
strategic department in the organizational structure.
The company offers a wide variety of products in order to meet customer demands, needs and
preference. They select product choices that promote healthy lifestyles. PepsiCo is headquartered in
the city of New York. Operations management is the design, operations and the improvement of an
organization’s systems that facilitate the creation and the delivery of a company’s products and
services. The company deals in the production of beverage products:
Diet Pepsi, Gatorade mountain dew, thirst quencher, Tropicana and Aquafina bottled mineral water,
the company also deals with savory food snacks like Fritos corn chips, cheetos and lay potato chips;
other products of the company are food products which include cereals and cakes. (Scribd, 2011, p. 4
Operations management is defined as the planning, scheduling and controlling of all the activities that
can transform organizational inputs into finished goods and services. Operations management focuses
on effective planning in an organization and the control of manufacturing through the application of
such concepts as engineering, quality management, production management, accounting and
management system
Operational management entails the making use of all the resources available to produce finished
products or services and to meet customers’ needs in a cost-effective manner. Operations management
places a lot of focus on the management of the processes involved in production and distribution of
the products. The processes involved in operations management are the creation and distribution of
products (Heizer, & Render, 2011).
Other activities that are related to operations management are the management of purchases,
controlling of inventory, quality control, storage and overall logistics. All these can be realized
through efficient and effective processes (Heizer, & Render, 2011). Conclusively, it can be said that
operations management is the set of all the activities which enhance the creation of goods and services
by transforming inputs into outputs (Scribd, 2011).

Pepsi Co. Vision, mission and core valuesPepsi Co.’s vision is “to deliver top-tier financial
performance over the long term by integrating sustainability into our business strategy, leaving a
positive imprint on society and the environment.” (“PepsiCo”, 2018). Pepsi Co. imply this vision
statement to endlessly improve beverage and food products as well as the market, the society, the
economy and the environment for a better and healthier future(Allison, 2017). The vision emphasizes
PepsiCo's business expectation of high financial performance. Besides, it indicates PepsiCo
responsibility to integrate sustainability in its business activities. PepsiCo’s vision also take account of
corporate social responsibility.PepsiCo’s mission aims at providing consumers across the world with
affordable, delicious, complementary and convenient food and beverage products from healthy
breakfasts, towholesome daytime beverages and snacks and finally to healthy evening treats
(“PepsiCo

Introduction

Operations management is concerned with the processes involved in the production and distribution
of goods and services (Slack, Chambers and Johnston, 2010, pp 34-60). Operations management
entails all the steps involved in the creation of the products and services until they reach to the
consumer. The goal of any operation manager is to make this process effective and efficient (Hill and
Hill, 2017, pp 18-54). Besides operations, management encompasses other related disciplines such as
inventory control, procurement and supplies, quality analysis and stock keeping. The operations
management process employed by a company depends on the nature and type of good the company is
producing (Heizer, 2016). Thus, operations management covers the entire production system. It is
present in banking systems, hospitals, and automobile industries among others. Operations
management includes both the daily operations of a firm and the strategic operations of the firm
(long-term). A company’s operations manager is tasked with oversight of the production and
distribution process of the goods and services of a firm.

Pepsi Company is an American multinational company that specializes in the production of beverage
products. It is the primary competitor for Coca-Cola Company. Pepsi is renowned for its beverage
products Pepsi Cola, Mirinda, Tropicana among others. Caleb Braham pioneered the company’s
operations when he invented Pepsi Cola. Caleb hoped his product would replicate the success of the
rival product coca-cola. The product quickly gained popularity, which led to Caleb branding it in 1898
and incorporating the Pepsi Cola Company in 1902. However, the world war one proved detrimental
to the operations of the company. During the world war one, Pepsi Cola Company was repeatedly
reincorporated in a bid to ensure it became profitable (Thain and Bradley, 2014, pp 18-22). At the
beginning of 1931, the company was bought by Charles G. Guth. He merchandised the operations of
Pepsi Company. He employed the knowledge and skills of qualified chemists to come up with new
and better drinks. Guth also held leadership positions in Loft Inc, a company that specialized in the
production of candies. Several legal battles ensued which led to Guth losing the leadership position of
Pepsi company. In 1941 loft, Inc and Pepsi Company formed a merger and adopted the name Pepsi
Cola Company. During the 1950’s Alfred Steele, a former C.E.O of Coca-Cola Company assumed the
leadership position in Pepsi Company. Alfred emphasized on sales promotions and market
expansions. Alfred’s effort led to significant growth in Pepsi Company revenues and assets. In
subsequent years, the company embarked on mergers and acquisitions, for instance, the merger with
Frito Lay in 1965. Currently, Pepsi Company has productions departments in over two hundred
countries. The tremendous growth of Pepsi Company is attributable to the uniform standards of its
products.Pepsi Company has revolutionalized the operations of beverage industries in the World. The
company has various investments ranging from beverage industries and cereal industries. Thus, the
work of an operations manager in Pepsi Company cannot be underestimated

Supply Chain

The supply chain in a company is aimed at maximizing the value of products generated. Supply value
chain is considered as the difference between the value final products and the costs incurred at the
time of filing the customer’s request.
The supply chain at PepsiCo is determined by the location and capacity of production, warehousing
facilities and the products to be manufactured, storage and transportation. A good supply chain should
be well planned and a firm supply chain strategy should be implemented. In PepsiCo, an important
decision is where the production plant should be situated. PepsiCo has ensured that the production
process is automated for efficiency.
The company also manages the transportation for the delivery of their products and they also have
arrangement for third party for product procurement. The shipping department of the company is
responsible for orders while the transport department decides matters of delivery to ensure that goods
reach safely. In the company, material sourcing and planning is also an important stage of supply
chain.
Regarding the source and the supply of raw materials, PepsiCo has identified both local and foreign
suppliers who can supply raw materials at negotiated prices. At the stage of raw material supply,
capacity building is necessary since the forecasting of sales and the planning of production depends
on the capacity of this stage. All supplies to the company are audited by the quality control section.
Distribution rests with the company’s decision and it depends on the past performance of the
distributor
The alignment between the supply chain strategy and PepsiCo’s business strategy is achieved through
proper utilization and the deployment of supply chain drivers. Managing the supply chain process
involves overseeing the relationship between suppliers and customers, controlling inventories and
forecasting demand as well as getting feedback concerning what is happening in whichever link of the
chain (Scribd, 2011).

Competitive Strategy

PepsiCo operates in a competitive and a challenging environment and it achieves its competitive edge
by providing customized products and services that meet the tastes and preferences of its consumers.
Competitive strategy examines how a company strives to achieve competitive advantage; competitive
advantage is that extra edge that a firm has over other industry peers. The company’s capability to
manage its operations can only be transformed into their competitive advantage if they identify and
tap their resources.
There are three main aspects that give PepsiCo a competitive advantage in order to favorably compete
at the international market, these are: muscular brands, proven ability for innovation and their
powerful market systems. The company has a mission to increase the value of the investment of its
shareholders and it tries to achieve this through sales growth, control of costs and investment of
resources wisely.

The company believes that its commercial successes and competitiveness rest with provision of
quality and value for its customers. It provides products that are safe, economically efficient and
healthy. PepsiCo strives to maintain its competitive strategy by ensuring sufficient production of their
goods, selling of their goods at reasonable prices and also ensures that the products are much available
in the market (Bachmeier, 2009).

With the boom experienced in the food and beverage market, PepsiCo has developed a strategic plan
which will enable them to at the top of their competitors by selling their goods at affordable and
friendly prices, providing more healthy meals options and great and quality services for their
customers. Health and safe foods are necessary especially in this era where people are increasingly
becoming health conscious. This will give PepsiCo an upper hand over its competitors.

PepsiCo operates in a competitive and a challenging environment; it achieves its competitive edge by
providing customized products and services. Without strategies, a company can not withstand the
competition at the market. To maintain its competitiveness, PepsiCo employs competitive strategies
that enable it to compete with seasoned players in the market like Coca-Cola.
it can only achieve this through ensuring that its marketing strategy is effective, its pricing is fair and
that there is efficiency and quality in its production. The company’s competitive and supply chain
characteristics are demonstrated below. (Scribd, 2011)

Marketing and Distribution Strategies

The central reason as to why companies do not perform well is due to the strategy that they apply.
Marketing strategy is one of organizational characteristic and it is instrumental to the performance of
the company. For a company to respond effectively to market competition, good marketing strategies
are a necessity.
PepsiCo has a well designed and developed local and international programs for marketing,
promotion and advertising programs which have the potential to support its various brands and to
enhance their brand image. The company also has an effective quality control department which is
responsible for ensuring that quality of the products is maintained.
The promotion of programs is also charged with the responsibility of packaging and coordination of
selling efforts. PepsiCo’s competitive strategy exists to provide a lot of products quickly and
consequently, their supply chain materializes the availability of these products. The company employs
various marketing and promotional strategies so as to enhance its volume of sales. The company, for
example, contracted Tiger Woods to run a promotion on a Gatorade brand called Gatorade tiger.
Other notable promotional strategies are: the Pepsi throwback campaign which involves offering a
drink with a sugar content of the original product. They also run a promotion with the NFL and super
Bowl particularly to market Pepsi and Doritos. One mega promotion by the PepsiCo was the running
of a promotion dubbed Pepsi stuff promotion which involved accumulation of points by the customers
upon the purchase of any Pepsi product (Scribd, 2011).

Distribution Strategies
Concerning distribution, PepsiCo utilizes two main distribution strategies: direct and indirect
distribution channels.
Direct distribution: this concerns the handling of important accounts; these important accounts are the
different wholesalers, the restaurants and hotels, for example, Pizza hut, metro and KFC which are
critical points of sale. These accounts are fundamental in terms of competition. Direct distribution
also involves export parties.

Indirect distribution: this is achieved though several base market distributors as well as outstation
distributors. Before settling for a distributor, there are guiding principles which are adhered to in
assessing the capability of any distributor. These criteria include the fleet of vehicles which are run by
the distributor, the number of cases of empty bottles and cash deposit to be used as a security

In product distribution and manufacturing, the company utilizes distribution channels from the
bottling plants up to the truck lines. PepsiCo has attempted to develop a system of product
differentiation so as to distinguish their products from that of coke. Its main target market was the
American teenage market.

It has focused its efforts on developing campaigns that enhance the culture of soft drinks in schools. It
has sought to achieve this by developing and building contracts with America schools. The company
distributes its products by use of vending machines (Bachmeier, 2009).

Inventory Methodology

Inventory management is a critical operation in any organization. This is because it involves

identifying and selecting the best method of inventory control. Before selecting an organization’s
method of controlling inventory, it is imperative to factor in mind the product demand.

There are different modes that companies consider in selecting their inventory methods but the
common denominator is that companies should ensure their mix of inventory types can satisfy the
demands of the customer and that it should deliver the needed profit and cash flow (Bachmeier,
2009).

Since PepsiCo operates in the food industry, inventory controls can be quite challenging due to the
perishable nature of the goods; improper handling may lead to food-borne disease, this makes it
necessary to have food-services inventory controls that can tract the movement of the goods, raw
materials and products.

The inventory should be in position to tract several products at a go and particularly an entire quantity
of stock from their destination, the inventories can also be tracked in batches, this is necessary since
batches can be assigned codes or numbers that will facilitate the keeping of relevant data regarding
Operational Policies

Managing PepsiCo is a heavy task and being in charge of its daily operations is enormous duty and
quite challenging. To achieve and to manage PepsiCo successfully, it is imperative that there should
be adequate infrastructure and up to date information and communication technology. Fruits
availability is at the centre of PepsiCo company policies since it is its primary product. The company
communicates its policies to all those in the supply chain including their animal welfare policy.
PepsiCo has very strict corporate standards which guide their operations and accountability of its
employees. PepsiCo polices take care of areas like corporate governance, human, environmental and
talent sustainability. Human sustainability policies, for example, are programs like food and safety,
responsible marketing and healthcare reforms. The company has tight environmental policy that
guides its agriculture and packaging programs (PepsiCo, 2011).

Technology and Operations at PepsiCo

PepsiCo Company also utilizes technology in its operations. The launch of Social Vending System
which is an interactive vending technology has facilitated the company’s connection with the
customers at the purchase terminus. This technology enables the customers of PepsiCo to make gifts
to their friends through the internet connection.

The use of telemetry has reaped a lot of benefits for the company’s operation. It facilitates close
management of levels of inventory by the customers which can enable them to deliver schedule via a
remote station without having to travel (PepsiCo, 2011). The company also signed a three year
contract with Combine Net to use its Truckload manager so as to advance its truckload transportation
Organizational Structure

PepsiCo is considered the pioneer and the king in the production of beverages. It is well known all
over the globe for its trademark drink Pepsi and other Quaker products. In the year 2007, the company
changed its organizational structure from two to three units. The company before 2007 had two units
PepsiCo North America and PepsiCo international. After the restructuring, the company added one
unit and the three units were “Pepsi America Foods, PepsiCo America beverages and PepsiCo
international” (Scribd, 2011, p. 1).

PepsiCo is considered an organization fit for adaptation. The company is in continuous exercise of
improvement and innovation so as to ensure their products fit the demand of the customers and
furthermore maintain relevance in the market.

The organizational structure of the company is a decentralized one and decisions regarding operations
are executed by different business units but are guided by the company policies and corporate ethics.
The company is headed by a Chief Executive Officer (CEO). Under the CEO are Vice presidents who
are in charge of various departments and all are answerable to the chairman and the board. The
expansion from two to three units was as result of its rapid growth.

The company also has Scientific Advisory Board which report on the company’s corporate social
responsibility and undertakes research relating to the challenges facing the company. The company
also has regional advisory boards in its operations outside US who guide the company’s health,
safety, compliance and innovation. The overall Chief Executive Officer (CEO) also doubles as the
chairman of the company (PepsiCo, 2011).network and to enhance efficiency in transportation
(CombineNet, 2007).

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.
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.

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.

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.

Supply chain visibility

Once products arrive at stores and customers begin buying them, PepsiCo’s supply chain management
system maintains visibility into the location and condition of those items at all times. This is done
through point-of-sale technologies that tell vendors which products were sold and how quickly they
moved off the shelves. When a store sells a product, it uses a POS system to send the information
electronically to PepsiCo. The data tells Pepsi-Cola how much of each item was sold, where that item
is located within the store, and what price the item was sold. This data then moves on through the
supply chain management process until everyone can see how quickly things are selling and what the
customer demand really is. This helps PepsiCo better manage inventory levels and product lifecycles
to know when to refresh its items with new designs or flavours.

Customer relationship management

Supply chain management is all about customer service. PepsiCo’s system helps maintain strong
relationships with customers, both large and small. The company uses feedback surveys of thousands
of customers each year to learn what they like, don’t like, and want to see more of. This information is
gathered through personal contact with the retailers and through focus groups and online surveys.
PepsiCo uses the information to improve its products and services while also working with retailers
through a unique customer focus group called Retailer Advisory Councils. These councils consist of
12 different retail customers who come together every year to discuss their needs and issues regarding
product delivery, pricing policy, merchandising programs, and more.

Collaborative planning, forecasting, and replenishment

PepsiCo has established an integrated planning and forecasting process closely linked with its IT
system so that the entire supply chain management system works in concert. All members of
PepsiCo’s supply chain management team, from regional distributors to store owners, use the same
data, so they all have the same information on hand at any given time. This collaboration helps
PepsiCo to save money and plan more effectively. For example, by analyzing the data from POS
systems and EDI technology combined with external market data, PepsiCo can predict when products
will be sold out and how quickly they will need to be replaced. The company can then work with
distributors in advance to ensure that their orders are placed at just the right time so that products

Product lifecycle management

Product lifecycle management is a vital part of the supply chain management process. It involves a
constant effort to evaluate and manage products to move efficiently through total distribution, from
production to retail sales. Suppose products have a long lifecycle before being sold out. In that case,
PepsiCo can change the product mix or replenish it more often, so there are always newer products
available. This helps drive demand for overall product categories and also cycle in new products when
appropriate. This is done with the help of POS data, which allows for tracking of products through all
aspects of the supply chain management system. It also helps to streamline some operations and
inventory controls while raising efficiency levels in others.

If PepsiCo identifies a mature or dying product category, it can eliminate that product’s distribution
channels altogether. This allows for more efficient distribution of Pepsi-Cola products and the
product’s packaging, which can save money. arrive before demand disappears.

Strategic sourcing

PepsiCo uses strategic sourcing to make the best use of its resources and keep costs down. This
involves analyzing how each supply partner contributes to overall supply chain management before
choosing which partners will be managed via collaborative processes. When evaluating potential
business partners, PepsiCo looks at several factors, including price, service levels, responsiveness,
performance history, innovation capabilities, and environmental performance.

Once a business partner is chosen, PepsiCo sets up a master agreement that outlines all requirements
and expectations. The master agreements are then broken down into individual contracts that outline
the specifics of each arrangement to keep costs low while meeting customer service levels.

Supply chain management at PepsiCo works closely with the procurement team to evaluate the best
sourcing options. This allows PepsiCo to find new opportunities for cost reduction while working
with its supply partners to meet customer needs.

Quality management and continuous improvement

Quality assurance is an essential part of supply chain management at PepsiCo. It works with suppliers
to develop quality focuses and requirements, which can help improve their overall efficiency and
create consistency across the supply chain. This consistency allows PepsiCo to maintain product
integrity and high-quality service levels for its customers.
PepsiCo uses a variety of tools to ensure the highest quality product is delivered to customers. These
include:

Supplier certification programs such as its Deming Award for Supply Chain Partner Excellence;
PepsiCo’s supplier code of conduct; and An evaluation program that includes both internal and
external audits, which are all performed by an independent third party.

Performance measurement analysis.

PepsiCo uses a variety of tools to monitor its supply chain management performance, including:

Internal metrics that show what is happening throughout the PepsiCo system; include sales
measurements, throughput, and inventory turnover.

External metrics are reported to customers and used for benchmarking purposes; These include
service level agreements (SLAs) and on-time delivery performance.

Financial metrics that show how supply chain management impacts the company’s financial
performance; include ROI, ROA, and net income.

Measuring and analyzing performance is the only way to accurately picture how effective supply
chain management is. PepsiCo uses multiple metrics to get the most precise performance evaluation.
This allows management to make changes where necessary to meet customer needs while controlling
as much as possible and keep operations cost-efficient and sustainable.

PepsiCo SWOT Analysis

PepsiCo’s current position as the second biggest firm in the global food and beverage market is based
on the company’s ability to wield its strengths to continue growing. The company grows despite an
increasing level of market saturation. This SWOT analysis shows that PepsiCo is positioned to grow
and reach the top position in the global food and beverage industry. The SWOT analysis framework
identifies the strengths and opportunities that the firm can tap to address its weaknesses and business
threats. As a global company, PepsiCo must address the issues shown in this SWOT analysis to
minimize barriers to its global performance.

PepsiCo’s Strengths (Internal Strategic Factors)

PepsiCo’s continued global growth and prominence reflects the company’s strengths. This aspect of
the SWOT analysis framework outlines internal strategic factors that enable firms to fulfill their
business goals. The following are the most significant strengths of PepsiCo:

Strong brand image

Broad product mix

Extensive global production network

Extensive global distribution network

As a successful global company, PepsiCo has one of the strongest brands in the market. This strength
enables the firm to attract consumers to its new products. In addition, the broad product mix
represents PepsiCo’s increasing ability to reach various markets and segments, such as through Frito-
Lay products, Quaker products, and Pepsi products. PepsiCo’s extensive global production and
distribution networks are strengths that support the company’s international growth and expansion
strategies. In this aspect of the SWOT analysis, PepsiCo’s strengths are sufficient to support its global
growth strategy.

PepsiCo’s Weaknesses (Internal Strategic Factors)

PepsiCo suffers from a number of weaknesses that act as barriers to international growth. The internal
strategic factors that limit organizational development are considered in this aspect of the SWOT
analysis framework. The following are PepsiCo’s main weaknesses:

Low penetration outside the Americas

Limited business portfolio

Weak marketing to health-conscious consumers

PepsiCo derives about 70% of its revenues from markets in North America and South America. This
weakness indicates that the company has not yet maximized potential revenues outside the Americas.
In addition, PepsiCo operates primarily in the food and beverage industry. This is a weakness because
it maximizes the company’s vulnerability to risks in the food-and-beverage market. Also, PepsiCo
fails to effectively market many of its products to health-conscious consumers. This aspect of the
SWOT analysis highlights weaknesses that PepsiCo must address through changes in its growth
strategy.

Opportunities for PepsiCo (External Strategic Factors)

PepsiCo has opportunities for continued global growth. In this aspect of the SWOT analysis
framework, external strategic factors that provide options for business improvement are identified.
PepsiCo’s opportunities are as follows:

Business diversification

Market penetration in developing countries

Global alliances with complementary businesses

PepsiCo has the opportunity to diversify its businesses, such as by acquiring a complementary firm
that is not in the food and beverage industry. Another opportunity is for PepsiCo to increase its
penetration in developing countries to generate more revenues from markets outside the Americas. In
addition, PepsiCo can create alliances with complementary business to increase its market presence.
Based on this aspect of the SWOT analysis, PepsiCo has significant opportunities to strengthen its
business resilience.

Threats Facing PepsiCo (External Strategic Factors)

The food and beverage industry experiences a variety of threats. External strategic factors that could
reduce business performance are considered in this aspect of the SWOT analysis framework. In
PepsiCo’s case, the following are the most significant threats:
Aggressive competition

Healthy lifestyles trend

Environmentalism

Aggressive competition is a major threat against the company. The influence of the Coca-Cola
Company is especially significant against PepsiCo. In addition, the healthy lifestyles trend is a threat
against PepsiCo’s products, many of which are seen as unhealthful because of their sugar, salt, or fat
content. Also, environmentalism threatens the company in how consumers negatively respond to
product waste and lifecycle issues. This aspect of the SWOT analysis indicates that PepsiCo must
reform its strategies to overcome the threats to business.

Product Planning:

Shamim and company works under licensee of Pepsi Co., as explained earlier. At present Shamim and
Company does not possess the ownership of any product. All of its products are originally owned by
Pepsi Co. New York. Franchiser gives concentrate and sets quality standards for it products. Company
just follows these standards and produces beverages.

Uptill 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 cackes.
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.

In a dynamic market the company may expand, add or relocate new facilities, which means that
location decisions are made the life of a company.

Location decisions are important due to following reasons.

– Competition.

– Cost.

– Hidden effects.

– Factors that effect the location decisions are

– Market related factors.

– Tangible Cost factors.

– Transportation.

– Labor availability and costs.

– Energy availability and costs.

– Water availability and costs.

– Site and construction cost.

– Taxes.

– Intangible Factors.

– Legal regulation.

– Community attitude.

– Expansion potential.

– Living conditions.

Operations Planning:

Product Planning:

Shamim and company works under licensee of Pepsi Co., as explained earlier. At present Shamim and
Company does not possess the ownership of any product. All of its products are originally owned by
Pepsi Co. New York. Franchiser gives concentrate and sets quality standards for it products. Company
just follows these standards and produces beverages.

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 cackes.
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.

In a dynamic market the company may expand, add or relocate new facilities, which mean that
location decisions are made over the life of a company.

Location decisions are important due to following reasons.

– Competition.

– Cost.

– Hidden effects.

– Factors that effect the location decisions are

– Market related factors.

– Tangible Cost factors.

Location Design
Location of manufacturing operations can have a graet impact on operating cost, profit and price at
which products are offered. As far allocation is concerned the company’s strategy consists of selecting
the location from which the potential market will be served. The location of facility involves the
commitment of resources to long range plan.. Location of industry is selected on the basis of

Availability of raw material on cheap prices and maximization of profits.

Proximity to potential customers.

 In plant location objective is to minimize the sum of all costs, not only today’s but long term cotsts.

There may arise four questions for facility aspects.

1. Types of facilities needed.

2. Location of facilities.

3. Design / Layout of facilities.

4. Capacity planning.

QUALITY CONTROL PROCESS  (COCA COLA)

A Tour through Our Scientific Manufacturing Processes

The Coca-Cola Company ensures the supreme quality of its beverages by employing globally
accepted and validated manufacturing processes and Quality Management Systems. Let us now take
you through the processes and Quality Assurance Programs followed by our world-class
manufacturing facilities in India

Testing Source Water For Plant Site Selection

The site for our manufacturing plants are finalized only after the source water has been tested for all
requirements of potable water. The analysis is always conducted by independent third party accredited
laboratories. The source water is then properly protected and re-tested periodically to ensure that it
conforms to international standards.

The water is then drawn through sealed pipelines into the storage tanks placed in secured water
treatment areas of the manufacturing plant.

Water Treatment – Know the Chemistry Of Purity

The first step in the process of manufacturing soft drinks is to disinfect the water using globally
approved chlorination procedures. This ensures that all micro-organisms including pathogens are
destroyed. It also removes organic and inorganic impurities caused by oxidation of heavy metal ions.

The second step is the filtration at the molecular level, which is achieved either by
coagulation/flocculation or reverse osmosis. Contaminants commonly removed by this process
include:
Dirt, clay and any other suspended matter in the water.

Microbial matter (including bacteria, yeast, moulds, virus, protozoa).

Heavy metals and compounds which may cause an off-taste.

The third step to stop potential contaminants is water purification using granular activated carbon
filters. The granular activated carbon, with its large and porous surface area, ensures effective removal
of trace levels of organic compounds (including pesticides and herbicides), colour, off-taste and
odour-causing compounds using the principle of absorption.

The last step is polishing filtration, which is passing water through high efficiency 5-micron filters to
ensure every drop of treated water is free from any activated carbon fines and is safe for use in
beverages.

The Purity Of Our Sugar Is Crystal Clear

Our sugar selection process is as stringent as our water purification process. The sugar, bought from
high-grade authorized mills, is cleaned with a globally acclaimed carbon treatment process. A purified
sugar syrup is created which is then blended with the soft drink concentrate.

Carbon Dioxide Meeting International Purity Standards

We procure carbon-dioxide, meeting international purity standards, from authorized suppliers. The
gas then goes through stringent quality control checks before it used in the beverage.

All the three primary ingredients used in beverage, the syrup, treated water and carbon-dioxide, are
blended as per The Coca-Cola Company’s specifications.

The Automated Bottling Process

We use a fully automated process to recycle the glass bottles returned from the market. These bottles
are sanitized at high temperatures with specially formulated cleaning agents. They are then
transported to the filler after a thorough visual inspection. After they are filled, in a high-speed
automated filling machine, the bottles are capped/crowned, date coded and packed into crates/cartons.

The complete manufacturing process has a well defined and structured Quality Control and Assurance
Program.

All the manufacturing facilities employ qualified, experienced and trained professionals for
manufacturing and testing of our products.

All the bottling facilities follow the Good Manufacturing Practices requirements as applicable to the
food industry. All manufacturing equipment fulfil the stringent requirements of GMP and sanitary
design:

Many organizations establish a material review board, consisting of engineering, manufacturing

quality control, marketing and a customer reprentative to review proposed rework of defective parts
that are out side the standards of blueprints qualifications. Approval by all the members must be
received before rework can proceed.

Purchase Of Raw Material:

Direct raw material for the products include the following items.

i) Sugar

ii) Concentrate

iii) Treated water

iv) Empty bottle

v) Amonia and Carbon Dioxide.

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

Sugar Quality Testing:

Purchase of sugar is a critical step in the purchase of raw material. When sugar bags are arrived at the
plant that time it has to pass through a strict quality check. In fact sugar quality is very very important
in the production of the beverages.

Water Treatment Tests:

The company has installed four tubewells to meet the requirement of water. The extracted water is
then treated for the use in the final processing. At different staged of treatment tests include:

1 Upper tap tests.

2 Sand filter and carbon purifier test

3 Water softness test.

For this purpose the company has prepared forms for the record of these tests which are signed by the
shift incharge after each shift. If he observed some abnormality he stops supply from one container
and provides the required water through other container. The company has two containers for the
supply and storage of trated water. The closed container is then sanitized and washed back. The
sanitation and washing back of containers is also done at regular basis, after ten days.

Recommendations

The first recommendation that I would make to PepsiCo is that they should focus more on creating
products that can be considered healthy alternatives to their customers. People these days are looking
for ways to eat better and stay healthy, and PepsiCo has barely tapped into that market potential.
PepsiCo can go about this in two ways: 1. Creating new brands that provide healthy snacks or
beverages, and 2. Making their existing products more healthy. Overall, this focus will give PepsiCo
an edge in an environment where unhealthy snacks and beverages are starting to become less and less
profitable every day.
The second recommendation I would have for PepsiCo would be to expand their focus out of the US
and into foreign markets. PepsiCo does already have a global presence, but by far the market that they
emphasize the most is in the US. Foreign consumers, especially ones in developing countries, are
looking for ways to improve their lives. The demand is there for American brands and products. By
expanding their focus, PepsiCo would not be so susceptible to market fluctuations in the US. This will
make PepsiCo a stronger company and give them that much more of an edge overall.

Ultimately, PepsiCo is a great company. They have survived for nearly one hundred years by listening
to consumers and providing products that they want. As long as they are able to maintain this strategy,
they are likely to be a successful company for many years to come.

Conclusion

Operations management is an important function in an organization since it concerns the relationship

with the organization’s strategy. Operations management plays a key role in the development of a
company strategy hence enhancing competitive advantage of the company. An example is the
planning process which assists the organization in minimizing costs while gaining advantage in
competitiveness and cost.

It is therefore necessary for an organization to manage its operations as a measure of boosting its
organizational strategy. From the analysis of PepsiCo operation strategy, it is evident that consistency
in production, innovative products and the quality of products are order winners whereas speed, cost,
efficiency and innovation are the order qualifiers. This has resulted in an enhanced market share and
massive consumer buying power.

PepsiCo is a market leader and a household name in the food and beverage industry. It has strong
marketing strategy covering all its subsidiaries which are placed under the supervision of the mother
company. Its prices, quality of the products and marketing brand enhance its competitiveness. Due to
the strong nature of competition in the industry and shrinking market, there is need for a firm to have
well designed strategies so as to maintain its market position.

References

Bachmeier, K. (2009). Analysis of Marketing Strategies Used by PepsiCo Based on Ansoff’s Theory.
New York, NY: GRIN Verlag.

CombieNet. (2007). PepsiCo Chooses CombineNet’s Advanced Sourcing Technologies for North
American Transportation. Combine Net. Web.

Heizer, J., & Render, B. (2011). Operations management (10th ed.). Boston, MA: Prentice-Hall.

PepsiCo. (2011). PepsiCo Introduces Social Vending System, the Next Generation in Interactive Vend
Technology. PepsiCo. Web.
Scribd. (2011). Operations management problem in Pepsi. Scribd. Web.