The similarities and similarities between the pepsico system in practice and theoris

The similarities ...18 1.1 Pepsico production line system in Vietnam...18 1.2 The production process of carbonated soft drinks at Pepsico...19 1.3 Production line and some equipment...21

OVERVIEW

Vision

Their aim is to become the worldwide leader in comfort foods and beverages by prioritizing purposeful competition This commitment highlights their focus on sustainable practices, ensuring profitability while actively contributing to environmental well-being and community support.

Mission

Their mission is to delight customers with every sip and bite, creating joyful moments through delicious and nutritious products They strive to be the best partner in the industry by driving innovation and fostering significant growth Committed to their communities, they offer meaningful opportunities for associates to learn, grow, and thrive in a diverse and inclusive workplace Additionally, they prioritize environmental sustainability by protecting natural resources and ensuring a prosperous future for generations to come By focusing on delivering exceptional total shareholder return (TSR) and adhering to top-tier corporate governance practices, they aim to benefit all stakeholders involved.

THEORY OF CHAPTER 5

Manufacturing lead time

PepsiCo's plants are primarily device-oriented, resulting in low worker involvement and minimal specialized skills required The company focuses on mass production of standardized products, with facilities worldwide capable of producing between 3,000 to 36,000 bottles per hour, equating to approximately 0.1 seconds per bottle.

For example, The new factory in Quang Nam can reach a maximum capacity of up to

The factory located in the Dien Nam - Dien Ngoc Industrial Zone in Quang Nam Province is one of the largest and most modern facilities, boasting a total production capacity of 850 million liters per year across 10 production lines Currently, 5 of these lines are operational, contributing 300 million liters annually, while the remaining 5 lines are set to be installed and implemented in the second phase.

School of Industrial Management – Manufacturing System Report scale plants compared to other Suntory plants in Japan and PepsiCo plants in the region and internationally.

Unit cost

2.1 How much does it cost to produce Pepsi?

Pepsi maintains low production costs primarily due to the affordability of its ingredients While the exact recipe remains a trade secret, it is evident that components such as fructose syrup, caramel, and glycerin are readily available and inexpensive to source.

PepsiCo benefits from economies of scale, which allows the company to minimize production costs due to its large-scale operations This mass production leads to a decrease in the unit cost price, enhancing overall efficiency and profitability.

2.2 The price of making a bottle of coke

Because of the aforementioned factors, The PepsiCo can afford to make a liter of its beverage at a cost of under 5 cents.

In addition to production costs, companies like PepsiCo incur substantial advertising expenses that impact the overall unit cost of their products.

There are also additional shipping, storage, taxation and other costs that will vary depending on the areas' production All these factors go into the overall cost of producing a bottle.

Despite this, it's safe to assume that the PepsiCo maintains a significant profit margin on the sale of its products.

Routing

PepsiCo operates numerous manufacturing plants globally, where beverage production occurs daily The majority of these beverages are processed and produced at local canning and bottling facilities.

3.1 Following are how the most popular product of PepsiCo - Pepsi-Cola is made.

School of Industrial Management – Manufacturing System Report

Water processing: coagulation and filtration

A traditional method for purifying water involves a sequence of coagulation, filtration, and chlorination to eliminate impurities such as microbes and organic matter Coagulation entails mixing a gelatinous precipitate, typically aluminum sulfate (\$Al_2(SO_4)_3\$) or ferric sulfate (\$Fe_2(SO_4)_3\$), into the water This process allows the floc to absorb suspended particles, making it easier for filters to capture them effectively.

Water sterilization: chlorination and dechlorination

To effectively remove fine floc particles, water is first sterilized by passing through a sand filter After collection in a tank, it undergoes chlorine treatment for a few hours, followed by dechlorination using activated carbon filters to eliminate any remaining organic material Prior to reaching the dosing station, the water is deaerated with a vacuum pump, maintaining a maximum alkalinity of up to 50 ppm.

The bottle washing process is fully automated and occurs within washer machines that consist of three compartments Bottles are placed on a conveyor and undergo a series of treatments, starting with a 4% caustic soda wash at temperatures between 100-150°C in the first compartment They are then transferred to the second compartment for a hot water rinse at 80-100°C, followed by a final treatment with room temperature water in the third compartment Each compartment treatment lasts for 10 minutes After washing, the bottles proceed to an inspection center where any that still contain dust or unwanted particles are removed from the production line.

The dosing station features closed tanks that hold syrups containing flavor concentrates and dissolved sugar To ensure sterility, the syrups are treated with flash pasteurization or UV radiation Subsequently, the syrups are cooled from temperatures of 80-100 °C to 25-30 °C before being transferred to batch tanks.

To prevent unwanted aeration, ingredients must be mixed carefully under controlled conditions The syrup and water are combined in a specific ratio, and to maintain the integrity of the mixture, carbon dioxide (CO₂) is pressurized into the vessels.

Carbonation is the process of dissolving carbon dioxide in a liquid, creating a fizzy effect This occurs under high pressure, and as the pressure decreases, the carbon dioxide escapes from the beverage.

The School of Industrial Management's Manufacturing System Report highlights the importance of pressure in creating effervescence in liquids, which is essential for producing carbonated water To ensure optimal quality, the temperature of the liquid must be carefully controlled, and modern carbonators are now equipped with automatic cooling systems to maintain these conditions.

An automatic filler machine efficiently fills washed empty bottles at a rate of 60 bottles per minute, ensuring they are filled to the neck and sealed with pressure-resistant closures After filling with cold drinks, the containers are allowed to reach room temperature, which is essential for quality Finally, the filled containers are packed into cartons and loaded onto trucks for distribution.

3.2 Packaging Department in Killingly, CT

The PepsiCo Frito-Lay manufacturing plant in Killingly, CT operates continuously with three shifts, closing only for seasonal holidays It features sixty-seven packaging lines, including six for Smartfood, thirteen non-automatic corn lines, and forty-eight automatic lines for corn and potato chips The packaging floor utilizes machines from three primary manufacturers.

Formers are interchangeable components of the packaging line, adjusted according to the different bags in the production schedule Tony Stolo, the operations manager for corn packaging at the Killingly facility, estimates that there are between 115 and 120 formers on the packaging floor, with each packaging line equipped with at least one spare former.

Images of typical former with reference labels

In collaboration with PepsiCo, a design matrix was employed to uphold the first Axiom of axiomatic design, which emphasizes the independence of functional elements The primary focus was on FR0, which pertains to the handling of formers and the time required for their removal and installation This led to the identification of two functional requirements: one addressing sanitation issues related to former handling and the other concerning ergonomic stress on workers Furthermore, FR1 and FR2 were further subdivided to meet the specific needs of the customer, PepsiCo.

From each of the functional requirements, a matching physical domain was created Each physical domain was defined as a system to meet the functional requirements The physical domains are shown below:

The connection between the FR’s and DPs can be visualized through the design matrix created using Acclaro software.

The transportation device effectively addresses the challenges of former sanitation and ergonomic stress related to distance, while the lift assistive device reduces ergonomic stress for employees Each device operates independently within its specific functional domain, allowing for modifications to be made without impacting the overall system.

Volume

4.1 (A PepsiCo franchisee) Varun Beverages Limited

(a PepsiCo franchisee) Varun Beverages Limited

 Total volumes were up 5.4% YoY at 66.14 million unit cases as compared to 62.78 million unit cases in Q3 CY2016.

 India volumes grew 4.0% YoY – International sales increased by 9.4% YoY in Q3 CY2017.

 During 9M CY2017, CSD constituted 80%, Juice – 5% andPackaged Drinking water – 15% of total volume.

 Revenue from operations (net of excise / GST) grew 7.4%YoY in Q3 CY2017 to Rs. 9,634 million led by volume growth of 5.4% and lower spend on discounts / promotional schemes during the quarter

4.2PepsiCo’s Frito-Lay - The Frito-Lay’s manufacturing facility

Frito-Lay's Casa Grande manufacturing facility in Arizona harnesses solar energy to produce a variety of snacks, including potato, corn, and tortilla chips This plant processes approximately 500,000 potatoes daily, showcasing its significant production capacity in the desert environment.

Pepsico India Holdings, based in New Delhi, is set to boost its snack production by one third across its plants in India over the next 18 months, driven by the rising demand for its products.

Pepsico India Holdings MD for the Fritolay Division, Gautham Mukkavilli, announced a significant increase in production capacity by one-third over the next 18 months due to rising demand for their products Although he did not disclose the current production capacity, industry sources estimate it to be around 80,000 tons per annum.

Equipment

The University of the Pacific features a six-wheeled mobile vending machine robot called Snackbot, which is stocked with PepsiCo's Hello Goodness snacks and beverages This healthier selection includes options like SunChips, Baked Lay’s, and sparkling water.

The School of Industrial Management has introduced self-driving robots in collaboration with Robby Technologies and PepsiCo Students can conveniently order snacks through the Snackbot app, with delivery available to over 50 locations on campus at no extra charge These robots boast a 20-mile range on a single battery charge and are equipped to navigate in various conditions, including nighttime and rainy weather, thanks to their onboard headlights and all-wheel drive capabilities.

Snackbot addresses the needs of busy college students, as revealed by PepsiCo's research With three to five Snackbots available on campus, they effectively meet the high demand for convenient snack options.

In July 2002, Pepsi Bottling Ventures LLC (PBV) launched its new $40 million, 200,000-square-foot production and distribution plant in Raleigh, NC, marking the beginning of operations with the first products from its small-bottle PET line By the end of that year, the facility had four packaging lines capable of producing 24 million cases, with plans to increase production to 30 million cases by 2010 These lines generate over 250 stockkeeping units, including a 12-oz can line operating at 1,600 cans per minute, a 1-, 2-, and 3-L PET line producing 40 bottles per minute, a 12-, 16-, 20-, and 24-oz and 500-mL PET bottle line running at 1,100 bottles per minute, and a bag-in-box line with a capacity of 12 bags per minute.

PBV was established in 1999 when PepCom Industries, a subsidiary of Suntory International, merged with five PepsiCo-owned bottlers to streamline PepsiCo's bottling network It holds bottling rights for Pepsi products across most of North Carolina and parts of Long Island, NY The Raleigh facility, along with an upgraded production plant in Winston-Salem, NC, has replaced two older production plants in the state.

The new production facility in Raleigh was primarily established to manufacture Aquafina bottled water, which is the fastest-growing product in the Pepsi portfolio and the U.S beverage industry To remain competitive in a cost-sensitive market, PBV required high-speed production capabilities The investment of $4 million in the Raleigh plant was justified by the need for efficient Aquafina production.

Raleigh and Winston-Salem are key producers of cold-filled carbonated and noncarbonated beverages, while hot-filled products are sourced from other Pepsi bottling facilities or licensed copackers Notable brands manufactured at these PBV facilities include Aquafina, Mountain Dew, Sierra Mist, Diet Pepsi, Lipton Brisk, and Fruitworks.

Dr Pepper, Hawaiian Punch, Sunkist and Nugrape.

The new plant features innovative individual sanitary enclosures, created by ICS Intl., which house the washing, capping, and filling systems for PET lines Unlike traditional beverage bottling plants that utilize a single large filling room with costly sanitary finishes and climate control systems, these older designs are not only expensive to build and maintain but also pose a risk of contamination, as issues in one filler can easily affect adjacent equipment.

The PBV plant is equipped with separate sanitary enclosures for each filling system According to Scott Jamison, vice president of engineering, ICS was selected for their extensive expertise in free-standing clean room technology He praised their exceptional work in constructing the enclosures on-site, seamlessly integrating the monobloc filler guards into the enclosure's design, making the filler an integral part of the structure.

The enclosures feature an epoxy floor that slopes towards a stainless-steel drain, equipped with vision panels and a comprehensive air-quality control system Constructed with insulated sandwich panels, the walls and ceiling consist of stainless-steel panels on both sides, filled with polyurethane foam for enhanced insulation.

Self-supporting enclosures feature modular panels that significantly reduce installation time and on-site civil engineering requirements These clean rooms ensure air tightness with properly sealed piping and conduit openings in the roof and ceiling Each unit is fully equipped with essential components, including lighting, doors, an air filtration unit, air conditioning, and an air exhaust system.

Air-filtration units are designed to maintain enclosure pressure, preventing outside air infiltration while providing 40 air changes per hour These units feature cooling coils to regulate air temperature during summer months With a three-stage filtration system that includes roughing filters, bag filters, and HEPA filters, they ensure an average air quality of Class 1,000.

To prevent the release of air containing sugar or ozone into the Pepsi plant, ICS implemented an air extractor that efficiently removes exhaust air from the enclosure and directs it outside the facility, ensuring a cleaner processing environment.

ICS sales manager Vincent Michel emphasizes that each enclosure is uniquely designed to tightly surround the filling system, minimizing the air volume around the filler to enhance air quality Additionally, this design enables operators to control the machine from outside the room.

 Varun Beverages Limited (VBL or Company)

Varun Beverages Limited is a major player in the global beverage industry and stands as one of the largest franchisees of PepsiCo outside the USA The company specializes in producing and distributing a diverse array of carbonated soft drinks (CSDs) and a wide selection of non-carbonated beverages (NCBs), including packaged drinking water under PepsiCo's trademarks VBL operates numerous large production plants to support its extensive product range.

Zimbabwe – Varun Beverages Zimbabwe (Pvt) Limited, franchise bottler of PepsiCo in Africa has officially commissioned the US$20 million second phase of its manufacturing plant in Harare.

This newly launched state-of-the-art plant features three additional production lines, an addition to the first PET (polyethylene terephthalate) line.

Wokers’skill

PepsiCo is experiencing low worker involvement and specialized skills, leading to recent layoffs driven by automation The company is reducing its corporate workforce and closing factories to enhance efficiency through new technologies As a result, PepsiCo is anticipated to spend millions on severance for affected employees, many of whom will be looking for new job opportunities or may transfer to other branches within the organization.

PepsiCo's choice highlights the increasing demand for knowledge workers, who rely heavily on information for their non-routine and non-repetitive tasks, and are adept at utilizing both structured and unstructured data to drive success.

In PepsiCo Beverages Canada, the Warehouse Technician is responsible for accurately picking orders and performing their duties efficiently to meet the company's standards.

1) Great teamwork and excellent communication skills.

2) Previous operations experience (or similar) preferred.

3) Outstanding organizational skills as demonstrated by your ability to handle multiple priorities, problem solve and meet deadlines or targets.

The Machine Operator Production at PepsiCo Beverages North America operates multiple manufacturing equipment, handling raw materials and managing the filling, capping, sealing, labeling, and packaging of products This role involves removing damaged items, overseeing production and flavor changeovers, and maintaining product inspection processes Additionally, the operator performs basic troubleshooting and minor repairs to ensure efficient equipment operation The position requires the ability to lift and carry cases weighing 20-45 pounds repeatedly, along with walking or standing for most of the shift, which may involve stooping, crawling, and crouching under conveyors.

Position may be required to work weekends and/or holidays Workers must have experience about:

1) Experience with high speed production lines (e.g., high output, high performance equipment, fast paced production environment, etc.)

2) Experience with pallets (e.g., operating a forklift, stacking/bundling product, etc.)

3) Experience operating a packing machine (e.g., stacking, bundling, and wrapping product, etc.)

4) Experience operating a filler machine (e.g., ensuring right mix of product, operating production computer, etc.)

5) Experience operating a palletizer (e.g., building pallets, managing product changeovers, etc.)

Scheduling

Once an employee commences a 5-day/8 ẵ hour shift or a 4-day/10 ẵ hour shift, they must remain on that schedule for the balance of the week.

Subject to business requirements, the 4-day/10 ẵ hours or 5-day/8 ẵ hours per day workweek will be scheduled on a consecutive day basis

In the event that a non-consecutive workweek of either 4 days at 10 hours each or 5 days at 8 hours each is required, the least senior employees within the job classification will be assigned to this schedule The Company commits to clearly indicating the two days of work for employees affected by this non-consecutive workweek arrangement.

Dispatching

What is “Dispatching services” in PepsiCoCo?

Dispatch is a procedure that PepsiCo uses for assigning employees (workers) or vehicles to customers Industries that dispatch include PepsiCo’s emergency services, as well as commercial services.

For example: Pepsi maximises its dynamic routing with ‘Verizon Connect Territories

The transition for route dispatchers at Pepsi was seamless, with Teeter noting that the learning curve for daily dispatchers was significantly easier compared to the previous solution.

Verizon Connect implemented a comprehensive training program, and after just a few days of guidance, users quickly adapted to the system The most noticeable outcome was the simplicity of operation.

Pepsi collaborated with Verizon Connect to enhance the software, tailoring it to meet specific requirements and reporting metrics Teeter noted that this development process proceeded smoothly.

The beverage company sought to achieve efficiencies in its fleet as the changing seasons, as well as changing delivery methods and customer demands created fluctuation in product volume.

The Pepsi Hickory facility produces an average of 3 million cases annually, while the nearby Asheville facility distributes 4 million cases Recently, Hickory has upgraded its route trucks to box trailers equipped with lift gates, allowing for efficient handling of prebuilt orders on mini pallets An electric pallet jack is utilized to transport these pallets into stores, enabling the delivery of various pallet sizes that are pre-filled to match specific route orders This innovation not only saves drivers time during deliveries but also greatly enhances overall productivity.

Two years ago, the company initiated its exploration of dynamic route optimization to enhance efficiency Pepsi aimed to establish consistent delivery schedules, including specific days and time windows, while also allowing flexibility to optimize routes and geography This approach sought to standardize load sizes and minimize the number of daily routes required for deliveries.

Verizon Connect enabled Pepsi to achieve its objectives using a technology called Territories, which provides geographic-centric routing for drivers while maintaining flexibility beyond strict boundaries Unlike traditional competitive routing tools that impose rigid geographic limits, Territories allows for a more dynamic approach to route sequencing.

This new routing solution overcomes the limitations of traditional methods, which are often time-consuming and fail to consider dynamic variables, leading to inefficient routes By relaxing geographic constraints, it enables more intelligent and cost-effective routing while factoring in the daily challenges drivers face.

Dispatchers can monitor the near real-time impact of route adjustments on various factors, including total route costs and daily load sizes.

Teeter explains that you can easily create and modify polygonal territories by adjusting, stretching, or trimming them Each change you make allows you to see real-time adjustments in metrics such as revenue and case numbers, facilitating a more strategic approach to territory management.

Verizon Connect Route with Advanced Territories enabled the company to implement a dynamic routing system, resulting in a 30% reduction in total routes per location each month, equating to approximately 720 fewer routes annually.

(1)https://en.m.wikipedia.org/wiki/Dispatch_(logistics)

(2)https://www.verizonconnect.com/uk/resources/case-study/pepsi-maximizes-its-dynamic- routing-with-verizon-co/

THE SIMILARITIES AND SIMILARITIES BETWEEN THE PEPSICO

The similarities

1.1Pepsico production line system in Vietnam

The factory spans nearly 14 hectares and features advanced technologies, with an initial investment of 56 million USD It stands out as a flagship facility for Suntory from Japan and PepsiCo from the USA, both regionally and globally.

With 10 production lines, Suntory PepsiCo Quang Nam factory can reach a maximum capacity of up to 850 million liters per year Currently, 5 complete lines have been put into operation since April this year with a capacity of 300 million liters a year; The remaining 5 lines will be installed in phase II.

The production line, technology, and products are rigorously monitored in compliance with the standards of the Food Hygiene and Safety Department and the quality management protocols of the parent corporations By integrating modern technology at every stage, we effectively manage and reduce waste, ensuring the production of high-quality finished products Additionally, our affordable pricing makes our beverages accessible to a wide range of consumers, thereby enhancing Suntory PepsiCo's market position and share in the highly competitive Vietnamese beverage sector.

The factory operation brings job opportunities for about 300 direct and indirect employees, mainly local workers.

The factory features 10 state-of-the-art production lines, with an anticipated annual capacity of up to 850 million liters.

1.2The production process of carbonated soft drinks at Pepsico

Prepare the first ingredient is water

The main source of water used is well water treated through the company's system. Through treatment to UV treatment and then through RO separation system to produce pure water.

The ingredients: sugar and water.

Mixing flavorings, colors, and flavoring acids

Dissolve components of flavoring, color, and taste-modifying acid into the solution. Create a unique flavor for the product.

Remove impurities during operation and during machine operation.Removes possible physical impurities in sugar and water raw materials.Preparing for CO2 saturation stage

CO2 saturation is the process of loading CO2 into the beverage to a certain concentration value depending on technology requirements.

In this stage, using pure CO2 used in food in liquid form provided from breweries,alcohol is compressed at high pressure in compression vessels

Double eyelids to preserve the product Create good sensory value for users.Convenient for the process of distributing and transporting products.

After forming, semi-finished products have a temperature ranging from 1 to 20°C Therefore, heat treatment is necessary to elevate the temperature to optimal levels, ensuring ideal conditions for packaging, transportation, and storage.

Finishing the product sou rce:”https://www.foodnk.com/quy-trinh-cong-nghe-san-xuat-nuoc-giai-khat-co-gas.html”

1.3Production line and some equipment

Production line system at pepsico

The equipment in the water treatment system is imported from Korea to ensure complete decomposition (0%) to ensure that the finished water meets pure water standards.

All types of tanks are made from stainless steel, with an insulated shell, ensuring strict compliance with GMP standards.

Plate heat exchanger is a highly efficient heat exchanger, which can be used in fields such as: chemical, metallurgy, beer, beverage, etc.

This equipment is used to mix materials with high efficiency through the processes of mixing, pressing, cutting by high-speed rotation of the propellers at the bottom.

The dual filter consists of 2 independent parts connected to the pipeline and control valve for continuous filtration and improved odor to ensure the health of consumers.

The equipment is constructed from high-quality stainless steel, ensuring safety when in contact with liquid mixtures and complying with international food hygiene and safety standards.

7) Bottle filling and capping equipment

The innovative device combines rinsing, filling, and capping functions into one machine, significantly enhancing efficiency This breakthrough technology optimizes workforce utilization and boosts productivity to three times that of traditional semi-automatic filling machines.

Source”https://ifoodvietnam.com/day-chuyen-san-xuat-nuoc-giai-khat-co-gas/”

The Differents

The production of soft drinks at the manufacturing company starts with identifying essential materials, including sugar, natural flavors, citric acid, caramel color, carbonated water, caffeine, and high fructose corn syrup Notably, carbonated water and sugar constitute at least 95% of Pepsi Additionally, flavoring ingredients like emulsions are incorporated to enhance the beverage's taste.

The manufacturing process begins with water processing, which is essential for ensuring the quality of beverages, as water constitutes a significant component of these products (Pepsico, 2020) To meet quality standards, water undergoes several purification methods, including coagulation, filtration, and chlorination Coagulation involves mixing water with gelatinous precipitates to capture suspended particles, followed by filtration to remove any remaining contaminants Finally, chlorination is applied to disinfect the filtered water by adding chlorine compounds, effectively eliminating pollutants, bacteria, and suspended particles that can affect beverage flavor.

The water undergoes additional filtration, sterilization, and dechlorination in the second procedure Initially, a sand filter removes any remaining floc components, while sanitization eliminates microorganisms After being stored in a tank, the water is treated with chlorine again, followed by dechlorination Finally, carbon filters eliminate organic compounds, and a vacuum pump deaerates the water before it reaches the dosing station.

In the third step, materials are combined at the dosing station, where flavors and dissolved sugars are added to the dosing tank The mixture is then transferred to a batch tank for thorough blending under controlled conditions Syrup and water are mixed in precise ratios, and carbon dioxide is used to compress the containers, ensuring the mixture remains free from aeration.

The fourth stage involves carbonating the solution under high pressure, creating effervescence in the liquid Throughout this process, the temperature is carefully regulated and cooled Finally, the beverage is filled into cans or bottles, sealed under pressure, and stored before being packaged into cartons for distribution to suppliers and customers.

Cost objects and costs incurred in the process:

Cost objects refer to items for which costs are calculated individually or components with independently allocated values A study conducted on campus shops in Berkeley revealed that sales fluctuations are influenced by various factors, including tax excises on soft drinks, marketing campaigns, and elections Seasonal variations in consumption are primarily driven by customer intake patterns However, further research is necessary, as noted by Cornelsen and Smith, to understand the behavioral trends that cause price changes in relation to demand Additionally, brand marketing and consumer loyalty play significant roles in determining product prices, ultimately affecting the overall manufacturing cost.

The packaging process is a significant cost factor in Pepsi Company's soft drink production, necessitating effective cost management strategies Organizations must identify and control various cost types, including direct, indirect, direct variable, and indirect variable costs Direct fixed expenses, such as labor, energy, and packaging materials, are closely linked to product output The cost objects in manufacturing directly impact the final product price, highlighting the importance of implementing cost leadership and differentiation strategies in design and production.

Pepsi employs life cycle costing to analyze the cost implications of a product from production to completion Indirect fixed costs in packaging encompass storage, marketing, and advertising, all crucial for efficient manufacturing and delivery Variable costs fluctuate based on manufacturing methods, with initial direct variable costs arising during the manufacturing process As packaging progresses, costs such as package design and inventory increase Additionally, indirect variable expenses, like utility bills, are not directly linked to the product and do not affect its value.

STRENGTHS OF MASS PRODUCTION IN PEPSICO

Mass production enhances productivity by enabling the manufacture of large quantities in a shorter timeframe This efficiency eliminates the need for workers to search for supplies or tools, streamlining the production process Additionally, mass production ensures uniformity in products, allowing manufacturers to maintain better quality control and providing consumers with consistent expectations.

Utilizing machinery and mass production techniques enables companies to accelerate product development and manufacturing, allowing them to outpace competitors in launching and marketing new products, thereby gaining a significant competitive advantage.

The Rockwell Automation Services Agreement enhances resource utilization and minimizes troubleshooting delays by incorporating TechConnect Support, which offers 24/7 access to technical specialists This remote support enables Pepsi technicians to quickly call for assistance when issues arise, ensuring rapid problem resolution Additionally, Rockwell Automation specialists can conduct remote system diagnostics via an Allen-Bradley modem installed at the Pepsi facility.

Leveraging Rockwell Automation Services & Support has proven beneficial for Pepsi Bottling Group, leading to improved inventory and parts management that reduced downtime and costs By standardizing on Allen-Bradley products, the company eased training and minimized the technology learning curve, resulting in an 8% increase in productivity and less overtime for order fulfillment Additionally, the plant successfully decreased its sensor count from 180 to 46, a 66% reduction, and streamlined its drive styles from several hundred to just 14.

Mass production significantly reduces costs by allowing companies to produce larger quantities with fewer workers By utilizing machines for faster production, manufacturers can complete tasks more efficiently than manual labor This efficiency enables companies to offer their products at lower prices while maintaining profitability.

The small-PET line utilizes two high-speed Lanfranchi bottle unscramblers to efficiently orient bottles upright, ensuring the plant maintains optimal line speed Level sensors in each unscrambler's hopper regulate the delivery elevators, keeping a steady supply of bottles Once oriented, the bottles are funneled into a neck-guided air-conveyance system, propelled by air through the conveyor chamber Additionally, the depalletizing workcell, equipped with three depalletizers, allows two operators to efficiently supply three production lines The introduction of unscramblers at Pepsi has significantly enhanced material handling and reduced labor, addressing the challenges posed by new, more complex bottle designs.

Automation technology in manufacturing enhances worker safety and minimizes errors By taking on strenuous or hazardous tasks, machines are specifically designed to operate with precision, significantly reducing the likelihood of mistakes compared to human workers Unlike humans, machines remain focused and unaffected by fatigue, leading to lower error costs in production.

PEPSICO is enhancing machine safety by utilizing virtual design reviews and augmented reality for technical risk assessments and equipment optimization The company has invested in ergonomic wearables to improve posture and minimize ergonomic risks Furthermore, hands-free remote collaboration tools are being employed for virtual audits and inspections These innovative technologies are offering valuable insights into risks, enabling teams to respond swiftly and effectively.

School of Industrial Management – Manufacturing System Report https://contact.pepsico.com/pepsico/article/how-does-pepsico-protect-the-safety-health- and-well-being-of-its

The Industrial Revolution and mass production have resulted in the emergence of specialized job roles, such as factory workers trained for specific tasks This specialization benefits employers by providing skilled and efficient employees, while also allowing workers to develop valuable skill sets that enhance their job security Additionally, mass production has generated opportunities for individuals to teach specialized skills and train new workers, as well as for those who repair machinery or implement improvements.

PepsiCo seeks to attract creative and innovative talent to achieve immediate success, while also developing new skills and nurturing the next generation of leaders These leaders will possess the necessary skills, experiences, and technological understanding to ensure the company's long-term success.

PepsiCo highlights the rapid evolution of employer skill requirements, leading companies to prioritize soft skills such as communication and leadership over technical expertise As educational institutions struggle to meet these changing demands, organizations are increasingly focused on hiring individuals with strong interpersonal abilities and providing them with the necessary technical training.

The Industrial Revolution marked a significant shift from handcrafted goods produced in small shops to mass production, drastically accelerating the spread of new products and ideas This rapid evolution across industries demonstrates how one innovation can lead to another, transforming the way we create and consume.

Pepsi is leveraging AI technology to innovate in the production of its renowned Frito-Lay potato chips The brand aims to create a method for assessing the texture of its chips without the need for physical handling or damage.

Pepsi has innovated a cutting-edge laser sensor array designed to reflect light beams off completed snack food chips This technology utilizes artificial intelligence to analyze the auditory feedback, enabling precise readings of the texture of the snacks.

WEAKNESS OF MASS PRODUCTION OF PEPSICO

High initial investment

Investing in equipment and materials for mass production requires a significant upfront cost However, if your product gains traction in the market, this initial investment can be recouped over time.

PepsiCo's sponsorship strategies can backfire if associated with the wrong celebrity, potentially damaging the brand's reputation Negative consumer reactions on social media can escalate, especially during celebrity scandals, which may adversely affect the perception of PepsiCo products.

Brand ambassadors play a crucial role in shaping the public perception of PepsiCo, and negative feedback or poor performance from these well-known personalities can significantly damage the brand's image Relying heavily on celebrity endorsements poses a substantial risk to the company's reputation.

Controversial advertisements highlight the responsibility of companies to leverage their influence for societal benefit A notable example is PepsiCo's 2017 ad featuring Kendall Jenner, which faced backlash for trivializing the Black Lives Matter movement This incident underscores the importance of businesses using their power to promote the common good, leading to the ad's removal within a day.

The company has released the following release:

Pepsi aimed to deliver a global message of peace, unity, and respect but acknowledges that it fell short The company expresses regret for any insensitivity and clarifies that it did not intend to downplay serious issues They are removing the content from their site and will prevent any future releases of similar material Additionally, Pepsi apologizes for involving Kendall Jenner in this situation.

This is a huge disadvantage when compared to the positive aspects of living, like gatherings with family members that are consistently promoted in the majority of CocaCola’s commercials.

Inflexible to consumer demand

Mass production emphasizes the creation of a single product in large quantities, making it challenging to adapt to sudden declines in customer demand In the food industry, many products experience fluctuating demand, which can be unpredictable and lead to significant waste, especially for perishable items.

PepsiCo boasts a diverse portfolio with 100 brands within the food industry, strategically providing consumers with numerous choices However, this approach also means that the company is heavily reliant on a single sector If competitors like Coca-Cola expand into new industries, PepsiCo may struggle to maintain its competitive edge.

PepsiCo's heavy reliance on the food and beverage industry poses risks, necessitating diversification into other product segments to achieve global leadership A significant weakness lies in its dependence on the domestic U.S market and major retailers like Walmart, which exerts considerable buyer power, allowing it to dictate prices and squeeze PepsiCo's profit margins Additionally, recent scandals, including the "Aquafina" tap water controversy and the Tropicana Kids orange juice recall, have tarnished PepsiCo's brand image, further complicating its market position.

The failure of products like Crystal Pepsi and Pepsi Blue has significantly impacted PepsiCo, leading to employee demoralization and a tarnished public image These setbacks not only highlighted perceived incompetence within the company but also provided opportunities for competitors to gain market share, ultimately harming the brand's reputation.

Competition and Products perceived as unhealthy: It has heavy opposition from

Coca-Cola and PepsiCo are in fierce competition within the soft drinks market, leading to a fluid customer base that frequently switches brands Over the years, Coca-Cola's leading brands have consistently outperformed those of PepsiCo However, determining which company holds a larger market share is complex and often depends on the specific category of beverages, such as diet versus regular drinks.

Beverage Digest reports that Coca-Cola’s key diet sodas fared better than PepsiCo’s core diets

PepsiCo's soft drinks are often viewed as unhealthy, facing stiff competition from the rising demand for healthier alternatives like energy and nutritional drinks Despite introducing options like Diet Pepsi and Pepsi Zero, the company still prioritizes its traditional sugary beverages In response to shifting market dynamics, both Coca-Cola and PepsiCo have launched their own healthier drink options, yet they continue to experience market share erosion from emerging competitors.

Environmental impact

Mass production can harm the environment due to its high resource consumption To promote ethical business practices and reduce environmental impact, companies should adopt eco-friendly packaging and utilize clean energy sources.

PepsiCo has been identified as one of the top three plastic polluters globally by Break Free from Plastic, highlighting its poor environmental record The company has not implemented significant strategies to enhance the recycling of its bottles.

PepsiCo creates 137,000 tonnes of plastic pollution per year – equivalent to covering

Despite its public commitments and a detailed 16-page progress report, investigations in Latin America reveal that PepsiCo continues to maintain connections with individuals implicated in serious human rights abuses, including kidnappings and intimidation of activists, as well as significant environmental damage due to toxic pollution in Guatemalan waterways.

PepsiCo is proclaiming it received top scores in WWF’s ( World Wildlife Fund) scorecard and was recognised for ‘leading the way’ Yet WWF described the company as

PepsiCo received a disappointing score of 2.8 out of 10 for its efforts to improve its supply chain, indicating that the company is "not yet in the starting blocks." This ranking contradicts the positive image PepsiCo is trying to project in its public relations campaigns, which may mislead consumers worldwide.

PepsiCo asserts its dedication to halting deforestation; however, recent reports reveal that its suppliers have been involved in the destruction of vital rainforests in Southeast Asia's Leuser Ecosystem, which is the sole habitat on the planet where Sumatran elephants, orangutans, tigers, and rhinos coexist in the wild.

SOLUTIONS

Solutions for environmental impact

To tackle the bad effects of the Pepsi’s products on the environment, they have come up with 4 innovative methods of packaging solutions:

Pulpex, The World’s First Fully Recyclable Paper Bottle

PepsiCo is embracing sustainability through innovative packaging solutions, such as the Pulpex bottle, as part of its pep+ (PepsiCo Positive) transformation This initiative aims to place sustainability at the core of its operations and inspire positive change for individuals and communities.

PepsiCo, in collaboration with a consortium of global consumer goods companies, is pioneering the development and scaling of the first fully recyclable paper bottle, contributing to sustainable manufacturing practices and environmental stewardship.

The Pulpex bottle is poised to revolutionize packaging with its sustainable design, crafted from responsibly sourced pulp certified by the Forest Stewardship Council Fully recyclable in standard paper streams, this innovative bottle effectively holds liquids while offering a unique opportunity to establish a new packaging format This advancement is crucial for fostering a more circular and inclusive value chain.

PepsiCo is committed to sustainable packaging solutions for its beverage and food products, including innovative food packaging technology The company is launching a fully compostable snack bag made from plant-based materials, starting with its Off The Eaten Path brand, available at select U.S retailers This new packaging generates 60% less greenhouse gas emissions compared to traditional packaging and significantly reduces plastic waste.

We are committed to fostering a circular food packaging system and, recognizing the significance of this initiative, we intend to offer our technology to other companies free of charge.

Pepsi Moves To 100% Recycled Plastic (rPET) In Key Market

Pepsi plans to transition all its branded products in the U.S to 100% recycled PET (rPET) bottles by 2030, with 11 European markets achieving this goal by 2022 To promote recycling awareness and sustainability, Pepsi launched a consumer-focused platform in the U.S linked to fall football, while a campaign in Europe for Pepsi MAX emphasizes the message, “Nothing tastes better than a 100% recycled bottle.”

The packaging shift is expected to reduce greenhouse gas emissions by around 30% per bottle, extending beyond the Pepsi brand to include 7UP, Mountain Dew, Lipton Iced Tea, and Mirinda in select European markets Thanks to technological advancements in the appearance, functionality, and availability of recycled plastic materials, we are accelerating our progress and aiming for further improvements in packaging sustainability.

To enhance sustainability, it is essential to improve the recyclability of our packaging while also developing innovative business models that minimize or eliminate single-use packaging SodaStream, which operates in over 40 countries, is expanding its offerings by introducing PepsiCo flavor options such as Pepsi Zero Sugar, Lipton, and bubly in 23 markets.

The SodaStream Professional platform enables users to customize their drinks sustainably in locations such as college campuses, offices, and travel hubs By the end of 2022, it will broaden its offerings to include functional beverages and enter over 10 new markets, aiming to help consumers eliminate more than 200 billion plastic bottles by 2030.

Our company is committed to creating a sustainable future, and we believe that implementing innovative packaging solutions is key to reducing waste and advancing towards a world where packaging is never discarded.

Solutions for consumer demand

PepsiCo has set out an ambition to cut the sugar in its drink brands and shift its snacks portfolio towards ‘healthier options’ in Europe:

Sugar reduction in soft drinks

PepsiCo announced plans to reduce the average added sugars in its soft drink portfolio, which includes popular brands such as Pepsi-Cola, Lipton Ice Tea, and 7UP, by 25% by the year 2025.

PepsiCo aims to achieve a 50% sugar reduction by 2030, building on its 2019 baseline Garrett Quigley, General Manager and Senior Vice President for Categories in Western Europe, expresses confidence in the company's ability to meet these goals, stating that the reformulation ceiling for its soft drink brands has not yet been reached He highlights the success of shifting PepsiCo's UK portfolio to zero sugar options following the introduction of the sugar tax, indicating that comparable results can be replicated in other European markets.

Here are four pointers for any entrepreneur considering diversifying a company:

To create value for customers, companies should focus on diversifying their offerings Initially, we provided pest control services, but our long-term vision was to transition to technology-based solutions, recognizing their greater value We identified home security as a significant opportunity, as it is essential for families and homes Unlike pest control, which is needed only once or twice a year, home security offers a vital service that customers rely on daily.

To successfully expand into a new market, it is crucial to possess expertise in that area After identifying a valuable idea, we ensured it aligned with our experience and capabilities, recognizing that not all intriguing concepts are viable without the necessary systems and teams Key questions to consider include whether we can effectively deliver the service and if it fits our business model We identified significant growth potential in the underserved home-technology market, allowing us to successfully enter and expand due to its compatibility with our door-to-door sales strategy.

Leverage your company's strengths to drive growth While selling pest control services was not a long-term focus, it was crucial in establishing a robust sales team and a solid business model Similarly, a strong foundation in home security facilitated our expansion into home automation and solar power services By capitalizing on existing strengths, we were able to seamlessly explore and implement innovative ideas for company growth.

To successfully expand a business, it is essential to have the right team in place Preparing your workforce for the transition is crucial; as we explored new opportunities, we enhanced our teams by recruiting key talent and offering comprehensive training across all departments.

The recent changes have significantly impacted both our employees and customers across North America, highlighting the importance of clear and cohesive messaging from leadership We discovered that fostering excitement among our employees is key to successfully engaging customers with our new direction; informed and passionate employees lead to more enthusiastic customers While there is a natural tendency to stick to the status quo for safety, we recognize that the most successful businesses embrace innovation and change With each change and expansion, our goal is to reinvent the industry and pioneer new approaches.

Solutions for investment

Initial expenses primarily consist of material costs and labor, accounting for 75% of the total Effective management involves purchasing individual components, designing systems for maintenance and refinement, and employing a sufficient number of trained workers to handle these parts This necessitates a well-structured plan that requires regular updates based on consumer needs.

The School of Industrial Management emphasizes the importance of utilizing appropriate tools to meet manufacturing system demands This report will explore various strategies for reducing expenses related to both raw materials and labor.

To reduce the overall cost of your product, consider redesigning it by analyzing and negotiating the prices of expensive components with suppliers By being aware of competitor pricing, you can encourage suppliers to lower their prices Additionally, strategically rethink your product by eliminating non-essential parts, such as secondary packaging, which can be particularly beneficial for e-commerce businesses This approach, known as value engineering, focuses on removing non-value-added processes to enhance efficiency and drive down costs.

Implementing lean manufacturing principles focuses on minimizing waste across seven categories: overproduction, inventory, conveyance, correction, motion, processing, and waiting By adopting a mass-customized inventory approach, products are manufactured only upon order, aligning production with market demand and preventing overproduction Efficient product movement ensures that items are not returned to the production line, allowing both products and workers to move in a streamlined manner, significantly enhancing efficiency and reducing time delays.

Negotiate with your suppliers As mentioned previously, negotiations with your suppliers are fruitful in optimal reduction of costs One way to approach a supplier is to enter

The School of Industrial Management's Manufacturing System Report highlights the implications of long-term agreements, which can restrict flexibility in supplier changes due to contractual obligations for exclusive raw material sourcing However, this reduced flexibility may be offset by the advantages of achieving a lower final price over time.

Regionalizing suppliers of ancillary services can significantly reduce transportation costs and enhance vertical integration by positioning them closer to your production site Although achieving this may be challenging, offering substantial incentives during negotiations can encourage suppliers to relocate nearer to your factory.

To optimize costs, consider utilizing part-time labor while minimizing overtime usage Full-time employees often receive bonuses, profit shares, and additional benefits like housing and cars, which can be alleviated by hiring more part-time staff While overtime may seem like a quick solution to boost production, it can lead to increased expenses that gradually erode profit margins.

Hiring "on-call" workers offers significant advantages, as they typically earn lower wages due to fewer working days These employees are often highly specialized in their fields, which helps reduce training costs for employers.

Automating processes is essential in today's technological landscape, where advancements like the Internet of Things (IoT), AI-driven deep learning, and robotics in manufacturing are minimizing the need for human involvement in product development and assembly Automated inspection and part identification not only save time but also reduce errors, significantly lowering the chances of damage control Although implementing an automated system demands a considerable initial investment, it ultimately yields a highly positive return on operational costs over time.

Job satisfaction can decline when employees are required to perform the same tasks repeatedly, leading to decreased motivation and increased turnover rates.

Visual Communication in Mass Production

Effective workplace techniques, such as visual communication, play a crucial role in mass production environments By implementing visual cues, employees receive ongoing reminders of their tasks and deadlines, enhancing productivity and clarity in their work.

Implementing floor markings in a facility enhances the visibility of product flow during the manufacturing process, facilitating easier tracking of operations and identification of potential issues This system also aids employees in navigating their designated work areas, reducing the likelihood of mistakes and improving overall workplace efficiency.

Mass customization relies on mass production to thrive, enabling the rapid creation of personalized products at low costs This approach allows manufacturers to effectively respond to consumer preferences without imposing high prices For instance, furniture companies often provide customers with the option to select various fabrics or components, balancing the efficiency of mass production with the demand for individualized items.

Consumers increasingly prioritize customization, with research from Heliyon indicating that many develop emotional connections to products tailored to their preferences To stay competitive, manufacturers should explore ways to integrate mass customization into their operations.

Tiêu đề	The Similarities and Similarities Between The Pepsico System In Practice And Theoris
Người hướng dẫn	Dr. Le Phuoc Luong
Trường học	Hochiminh City University of Technology
Chuyên ngành	Industrial Management
Thể loại	Manufacturing System Report
Năm xuất bản	2022
Thành phố	Ho Chi Minh City

Định dạng
Số trang	42
Dung lượng	16,66 MB