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    Table of Contents

    Acknowledgement .................................................................... 2

    Introduction .............................................................................. 3

    Raw Materials ........................................................................... 4

    Production Process ................................................................... 5

    Forecasting ............................................................................. 5

    Capacity Planning .................................................................... 6

    Scheduling............................................................................... 8

    Inventory Management ........................................................ 13

    Quality Assurance ................................................................. 14Employee Motivation ............................................................ 17

    Location and Facility ............................................................. 18

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    Acknowledgment

    ALL praise to Almighty ALLAH , our creator who bestowed on us the meaning oflife, and helped us in all possible ways and gave us strength to complete this report inthe given allotment of time. We would like to dedicate this report to our parents with

    greatest gratitude whose love and prayers have always been a source of strength forus.

    We would like to take this opportunity and convey our sincere gratitude towards ourmentor and coach instructor _____________for his effort to give his proper guidanceand advice throughout the duration of our project

    Ultimately, special thanks to our group members for their full co-operation andsacrifice their time to implement the job. We feel grateful that with their spirit of co-operation and dedication our project can be completed within this period .

    Nevertheless, we are deeply indebted to our seniors for their encouragement, lendinghands and support which produces more efforts to finish our report successfullywithout any delay during the progress of the project .

    Furthermore, we are most impressed with their attitude of willingness to share theirown ideas and experiences at any time. This made us gain a lot of knowledge fromthis course and it had deeply enhanced our understanding about ProductionManagement and gave us more exposure to the real world of business.

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    IntroductionLay's (also known as Lay's in Canada, Walkers in the United Kingdom and Ireland,Smith's in Australia, Chipsy[1] in Egypt, Poca in Vietnam, Tapuchips in Israel,Margarita in Colombia and Sabritas in Mexico) is the brand name for a number of

    potato chip varieties as well as the name of the company that founded the chip brand

    in 1932. A company owned by PepsiCo since 1965. Other brands in the Frito-Laygroup include Fritos, Doritos, Ruffles, Cheetos, Rold Gold pretzels, and Sun Chips.

    History

    In 1932, salesman Herman Lay opened a snack food operation in Dorset, Ohio and, in1938, he purchased the Atlanta, Georgia potato chip manufacturer "Barrett FoodCompany, " renaming it "H.W. Lay Lingo & Company."[citation needed] Lay criss-crossed the southern United States selling the product from the trunk of his car. In1942, Lay introduced the first continuous potato processor, resulting in the first large-scale production of the product.

    The business shortened its name to "the Lay's Lay Lingo Company" in 1944 and became the first snack food manufacturer to purchase television commercials, withBert Lahr as a celebrity spokesman. His signature line, "so crisp you can hear thefreshness," became the chips' first slogan along with "de-Lay-sious!". As the popularcommercials aired during the 1950s, Lay's went national in its marketing and wassoon supplying product throughout the United States.

    In 1961, the Frito Company founded by Elmer Doolin and Lay's merged to formFrito-Lay Inc., a snack food giant with combined sales of over $127 million annually,the largest of any manufacturer. Shortly thereafter, Lays introduced its best-knownslogan "betcha can't eat just one." Sales of the chips became international, withmarketing assisted by a number of celebrity endorsers.

    In 1965, Frito-Lay merged with the Pepsi-Cola Company to form PepsiCo, Inc. and a barbecue version of the chips appeared on grocery shelves. A new formulation of chipwas introduced in 1991 that was crisper and kept fresher longer. Shortly thereafter,the company introduced the "Wavy Lays" products to grocery shelves. In the mid tolate 1990s, Lay's modified its barbecue chips formula and rebranded it as "K.C.Masterpiece," named after a popular sauce, and introduced a lower calorie bakedversion and a variety that was completely fat-free (Lay's WOW chips containing thefat substitute olestra).

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    In the 2000s, kettle cooked brands appeared as did a processed version called Lay'sStax that was intended to compete with Pringles, and the company began introducinga variety of additional flavor variations.

    Frito-Lay products currently control 59% of the United States savory snack-foodmarket.

    Raw Materials

    1. Potatoes

    The potato is a starchy, tuberous crop from the perennial solanum tuberosum of thenightshade family. The word may refer to the plant itself as well as the edible tuber. Inthe region of the andes, there are some other closely related cultivated potato species.Potatoes were introduced outside the andes region four centuries ago, and have

    become an integral part of much of the world's food supply. It is the world's fourth-

    largest food crop, following rice,wheat and maize. Long-term storage of potatoesrequires specialized care in cold warehouses.

    2. Vegetable oil

    A vegetable oil is a triglyceride extracted from a plant. Such oils have been part ofhuman culture for millennia.[1] the term "vegetable oil" can be narrowly defined asreferring only to substances that are liquid at room temperature,[2] or broadly definedwithout regard to a substance's state of matter at a given temperature.[3] for thisreason, vegetable oils that are solid at room temperature are sometimes called

    vegetable fats. Vegetable oils are composed of triglycerides, as contrasted withwaxeswhich lack glycerin in their structure. Although many plant parts may yield oil,[4] incommercial practice, oil is extracted primarily from seeds.

    3. Salt

    Salt is a mineral substance composed primarily of sodium chloride (nacl), a chemicalcompound belonging to the larger class of ionic salts; salt in its natural form as acrystalline mineral is known as rock salt or halite. Salt is present in vast quantities inthe sea where it is the main mineral constituent, with the open ocean having about 35grams of solids per litre, a salinity of 35 . Salt is essential for animallife, and"saltiness" is one of the basic human tastes. The tissues of animals contain largerquantities of salt than do plant tissues; therefore the typical diets of nomads and inuitrequire little or no added salt, whereas cereal-based diets require supplementation.Salt is one of the oldest and most ubiquitous of food seasonings, and salting is animportant method of food preservation.

    4. Spices

    A spice is a dried seed, fruit, root, bark, or vegetable substance primarily used forflavoring, coloring or preserving food. Sometimes a spice is used to hide otherflavors.

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    Spices are distinguished from herbs, which are parts of leafy green plants also usedfor flavoring or as garnish.

    5. Flavors

    Barbecue-flavoured potato chips, which were introduced in 1958, were the onlyflavour available other than the conventional salted chip until the early 1990s. Despitemany new flavours since, the original is still the selection of 79% of consumers. Theflavour usually made and distribute according to region wise.

    6. Food colour

    Food colouring, or colour additive, is any dye, pigment or substance that impartscolour when it is added to food or drink. They come in many forms consisting ofliquids, powders, gels and pastes. Food colouring is used both in commercial food

    production and in domestic cooking. Due to its safety and general availability, foodcolouring is also used in a variety of non-food applications including cosmetics,

    pharmaceuticals, home craft projects and medical devices

    7. Packing material

    Packaging is the technology of enclosing or protecting products for distribution,storage, sale, and use. Packaging also refers to the process of design, evaluation, and

    production of packages. Packaging can be described as a coordinated system of preparing goods for transport, warehousing, logistics, sale, and end use. Packagingcontains, protects, preserves, transports, informs, and sells. in many countries it isfully integrated into government, business, institutional, industrial, and personal useand other additives.

    PRODUCTION PROCESS

    1. Forecasting 2. Capacity Planning3. Scheduling4. Managing inventory5. Assessing quality6. Employee motivation7. Location and Facility

    1. Forcasting

    The Lays chips company follow the forcasting method as usually other companies do.

    It first consider it past 10 to 12 years chips demand in a market and supply as well and

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    than make an analysis for Production forcasting. As for the year 2013 , Lays has beenforcasted to produce 50,000 tons chips. This forcasting is depend on the datainterpretation and analysis and how much the consumer are expecting to demand forthis product in a given year.they have to make their production capacity available andto maintain a place to hold the finished goods all based on the basis of forcasting ofdemand and production for a given year.

    They have to keep all the processes relating to manufacturing and producing up todate , so that the target of forcasted amount can be achieved timely, and they wonthave to suffer from any delay or quality compromise. Forcasting is the major areawhere the company have to work on very critically and consider all the variable andmodels in mind. They should consider the season , the time in year, the age group ,

    population , region , coposition and etc.

    If the company fails to forecast the right amount of chips to be made, either they willrun out of inventory and will loose costumer or if the inventory excesses the neededdemand , they whill have to stock the remaining quantity for more time which mayget expired in between.

    After forcasting they have to conduct capacity planning analysis , which is now givenfollows.

    2. Capacity Planning

    Capacity:

    Amount of output a system is capable of achieving over a specific period of time .

    Capacity planning

    Capacity planning is central to the long-term success of an organization. It can playintegral role in growth of a firm and ensure maximum profitability .

    The plant has been designed for an initial annual production capacity of 25,000t,which is expected to grow to 50,000t/y with the addition of two production lines by2013. This will double Frito-Lay's production capacity in Russia to 90,000t/y .

    Lays conduct their capacity plans at two scales :

    i. Long-term capacity plans:

    Which deal with investments in new facilities and equipments covering therequirements for at least two years into the future.

    ii. Short-term capacity plans:

    Which focus on work-force size, overtime budgets, inventories, etc .

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    Capacity Planning

    Pepsico focuses on long term strategic decision that establishes overall levelresources .

    Three major capacity decisions are kept under consideration while planning

    production of Lays:

    i. How much capacity to be installed , ii. When to increase capacity and

    iii. How much to increase

    Determinants of Effective Capacity

    Many decisions about design of the production system and operation of the production system may have an impact on capacity .

    Following are the main factors that can effect capacity planning decisions :

    i. Facilities ii. Product or services

    iii. Process iv. Human resource considerations v. Operations

    vi. External forces .

    Economies and Diseconomies of Scale

    Economies scale: The concept which states that the average unit cost of product can be reduced by increasing the rate of output .

    Best operating level: The annual output which results in the least average unitcost .

    Diseconomies of scale : Above a certain level of output, additional volume ofoutput results in ever-increasing average unit costs. This phenomenon isreferred to as diseconomies of scale .

    Developing Capacity Alternatives

    To enhance capacity management, the following approaches to capacity alternativescould be developed :

    i. Designing flexibility into the systemii. Differentiating between new and mature products or services

    iii. Taking a big -picture approach to capacity changes iv. Preparing to deal with chunks of capacity v. Attempting to smooth out capacity requirements

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    3. Scheduling

    Scheduling is an important tool for manufacturing and engineering, where it can havea major impact on the productivity of a process. In manufacturing, the purpose ofscheduling is to minimize the production time and costs, by telling a production

    facility when to make, with which staff, and on which equipment. Productionscheduling aims to maximize the efficiency of the operation and reduce costs.In layschips Production Process the Scheduling process are as follows.

    Potatoes are placed into the machine for peeling and to check If all Potatoes areaccording to the quality standard. All

    potatoes in a raw from are moving in a

    sequence into Machine towards peeling viamachinery. If any Potato will find not uptothe quality standard or spoiled, It will betrash out from the machine and will notmoved for further process.

    Before potatoes go to the cutting machineworkers check, If there are any defects onthe vegetables or not.If there are some theyare cut out, All the potatoes which have

    been passed from the above stage are nowcame into this process after peeling all thestandard quality potatoes.There are specialsorts of potato, which are acceptable forchips-making, such sorts have highercontent of starch. Now all the potatoes willmove to the further process, and will Gofor manually check out by the employees ,If all peeled potatoes are upto the standard

    quality.

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    At this stage workers will check all the potatoes which have been peeled , Ifthey are In a eatable from and none ofthem got damaged during peelingdamaged during peeling process, theworkers will trash it out and will eithersend it for recycling or trash it. All theworkers regularly have a medical anda certificate that they are healthy, andthey all wash their hands beforeworking.

    Here the quantity and weight of Potatoes arechecked here workers check the quantity andweight of potatoes manually also.Peelingdoes in the abrasive barrels with periodicalmoving first needed quantity of potato isweighed in a special bunker to go to the

    barrel.

    After verifying the quantity andweight of potatoes they moved forthe further process where the are cutinto thin slices . Cutting, each pieceshouldnt be thicker than 2mm .

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    Now after cutting the potatoes into the thinslices, They are moved in to the next stage,where all potatoes slices get fried in oil.Thevery heart of chips production line afrying bath. The whole world has noanalogous equipment, It has been madespecially for PepsiCo and forbidden to beshown.

    All the sliced potatoes after cominginto the fried portion get fried invegetable oil .The chips are fried intostandard machine according tostandard time . Thin potato pieces arefried during 3 minutes attemperature 081 degrees Celsius . Oiland potato of high quality guaranteeof good taste of chips.

    while getting fried , they check it, if all thechips are being fried according to definedstandard . This is a plant of PepsiCo, wherechips Lays are produced . It has beenopened recently in the city Azov of Rostovregion.

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    The chips are passing thourghmachine after being coocked by the

    process of machine. Chips are now prepared and moving towards the nextstage to check if all chips are cookedwell , any chips which remainuncooked will be sorted out and trashout . Check of quality is necessarydaily,The machines should be checkand keep upto date and maintain it.

    After getting friend, all the chips movefuther and gahtered at one point . Herethey remain for few mintues to get cold . Right after the addities are added underthe supervision of one specializedAssembly Line Worker . Thats thestage when all additives are added to thechips. Their main constituent is salt.

    Several different tastes of Lays chipshave already been introduced that whythey have to be sorted out at this point.

    After mixing the Potatoes withadditives , the next stage is to sortthem out according to their differentfalvours. Chips of three different tastesmaybe made simultaneously.

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    This is an specialized machine , through whichall the different kinds of chips flavours get

    spereted in to separate layer , and than theyget filled, Into different packaging depending

    on their flavours.

    After sorting out chips of differentflavours automated, they are automatically shifts in to the nextstage for packaging.

    Packaging

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    After sorting them out according todifferent flavours, they are shifted intothe next stage for packaging.Thefactory may produce 50 thousand tonsof ready product annually. Soundsfantastic!. after getting chips packed into their package , They proceed furtherto get packed in to cartons, there theworkers are standing into the assemblyline and manually placed all the small

    packs of chips into big cartorn and pack the cartons accordingly .

    4. Inventory Management

    Inventory Management of PepsiCo

    The Frito-Lay Kern plant is a 375,000 sq.ft processing and warehouse facility, whichsits on 640 acres, or one square mile, of property in Kern County, California, USA.This site has the ability to operate independently of any city or county infrastructure

    by providing its own electrical power, compressed air, domestic water, and wastewater treatment systems. The site

    produces 6.2mW of electrical energyvia a co- generation operation. Theco-generation plant also produces steamfor the heating of water and oil in themanufacturing process. Two domesticwells supply the plant with 1.2 milliongallons of water a day, and maintainemergency water storage for fire

    protection. The facility also provides awastewater treatment facility, which isin turn applied to a 325-acre alfalfa

    farming operation. With recent plantexpansions, the manufacturing processes have the ability to produce on ten different product lines, achieving over

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    standards of best practices for ensuring quality and, in many fields, serve as the basisfor regulation. Barnes1 notes that "ISO 9000 guidelines provide a comprehensivemodel for quality management systems that can make any company competitive ".

    An important element of quality assurance is the collection and analysis of data thatmeasure the quality of the raw materials, components, products, and assembly

    processes. Exponent statisticians can help companies comply with ISO 9001standards by developing good data collection and analysis techniques during thedesign, development, and production stages. Specifically, Exponent statisticians areexperienced in :

    Acceptance sampling Statistical process control (SPC), including Six Sigma techniques Troubleshooting studies

    Acceptance sampling is conducted to decide whether a batch of product (e.g., suppliercomponents or finished units) is of acceptable quality. Rather than testing 100% of the

    batch, a random sample of the batch is tested, and a decision about the entire batch is

    reached from the sample test results. Acceptance sampling was originally developedduring World War II to test bullets; since then, numerous military and civilianstandards have been developed to encompass various types of quality measurements,and testing and sampling methods. Exponent statisticians are familiar with thesestandards and can assist clients in evaluating available alternatives sampling byvariables vs. attributes, use of single vs. double or multiple sampling, rectifying vs.non-rectifying with respect to nonconforming items to determine an appropriatesampling plan .

    Statistical Process Control (SPC) is an effective method of monitoring a production process through the use of control charts. By collecting in-process data or random

    samples of the output at various stages of the production process, one can detectvariations or trends in the quality of the materials or processes that may affect thequality of the end product. Because data are gathered during the production process,

    problems can be detected and prevented much earlier than methods that only look atthe quality of the end product. Early detection of problems through SPC can reducewasted time and resources and may detect defects that other methods would not.

    Additionally, production processes can be streamlined through the identification of bottlenecks, wait times, and other sources of delay by use of SPC .

    Troubleshooting Studies If a problem is identified in the end-of-the-line product, atroubleshooting study can be conducted to determine whether changes in certaininputs (e.g., raw materials or process characteristics) are associated with the outputvariables. Such studies involve the analysis of contemporaneous data recorded on

    production inputs and outputs. Statistical regression techniques or classificationmethods can detect associations between raw materials or process attributes and end-of-the-line product outcomes. Although these observational studies cannotdefinitively prove the existence of a cause-and-effect mechanism, results oftroubleshooting analyses may suggest potential targets for corrective actions, as wellas off-line experiments or further measurements and analyses to confirm the rootcause of the manufacturing problem.

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    After completing the Production and packaging the quality assurance employeesare verifying the Product weight , as if it isin standard weight and well Packed and

    parepared. If any problem finds at thisstage They conduct internal audit formanufacturing process To ensure if allemployees are performing their dutiesAccordingly and all machines are working

    properly.

    There is a lab , where the samples of all

    the products and flavours are tested before dispatching it to the buyers or sales point. As lays chips is an eating brand,therefore the company has to be verysensitive in testing it accurately andincase of any problem either in quality ortastes may lead to loose costumers andmarket share.

    As you may see not many people work

    here.The process is automated. Its forthe better, none of us would like to knowthat different people have touched your

    food.

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    Precise weighing of the complete stockis done at the end , when the production

    process comes to an end.

    6. Employee Motivation

    Frito-Lay, a key business unit within PepsiCo , is a market leader in the snack foodindustry. We are the makers of some of Americas favourite snack foods including,FRITOS, LAYS, DORITOS, CHEETOS, AND TOSTITOS.

    Frito-Lay's success is directly related to our employees' constant focus on results,growth, and innovation. It's the talented, motivated members of our team who ensurethat we continue to lead the industry and set the pace.

    Frito-Lay is committed to creating a diverse, inclusive and welcoming workplace forall employees. Our people are our greatest asset, and there are numerous excitingopportunities.

    Frito-Lay has manufacturing facilities in a variety of locations and our front line salesforce serves customers in all 50 states. If you are interested in employmentopportunities as a Front Line Sales employee or a Manufacturing/Operations positionsuch as Packer, Warehouses, Over the Road Drivers or other hourly positions, bothfull time and part time.

    This study also focuses on the employee motivation among the employees ofPepsiCo. They are currently adapting many financial and non-financial motivationschemes. But they could find only marginal increase in the motivational level that is

    http://www.pepsico.com/http://www.pepsico.com/http://www.pepsico.com/http://www.pepsico.com/
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    reflected in performance and productivity.Managements basic job is the effective utilization of human resources forachievements of organizational objectives. The personnel management is concernedwith organizing human resources in such a way to get maximum output to theenterprise and to develop the talent of people at work to the fullest satisfaction. It is asingle line production unit which needs full effort of the employees to attain the

    organizational goal. The HR team of the organization currently provides manymotivation schemes but they are not sure whether they have concentrated all thefactors that affect the level of motivation.To identify the various factors that affect the employee motivation, this study has

    been carried out in the organization.

    7. Location and Facility

    Facility location is actually a term used in operation management, facility location orlocation analysis is done so that the better uses of the location can be understood. Thecompany by understanding the materials and production process done nearby thelocation can save ample time in production process and also save a lot in terms of

    transportation cost. And also the company can find out optimum position for thelocation of the company so that all the factors that are needed will be not a longdistance from the company.

    Some of the benefits in location analysis include:

    You get a thorough knowledge of all the factors involved in the production,and ways through which the materials that are needed in the production caneasily be accessed.

    When you do a proper location analysis for your facility you will also comeacross alternate substitute materials that are readily available and will costless.

    You can save a lot on transportation cost for materials, labour, import andexport.

    The materials will be available at a comparatively low cost. The best way to get a task done is by finding out ways through which the task

    can be done. Location analysis helps you in those aspects. Allows to you differentiate between practical positions to place your facility.Like for example, you cannot build a hazardous facility in a residential area.

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    Gives you access to cheap labour, and needed raw materials like waterelectricity and many more.

    Helps in a smooth running of an organization, by seeing to that all that is possibly needed is readily and easily available.

    Also has very easy access to production, distribution and sale of the products. Allows you to outperfo rm your competitors facilities

    Once you have found the optimal location then you will very easily overcome all theissues that you are likely to face and have a smooth running of an organization. Whenyou plan accordingly, you will also be prepared to face some minor hindrances.

    In Location and Facility after getting all the Produchts packed they are shifted in tothe in to the warehouse which are located in near due to saving transportation cost.These all cartons are pull through a wheeler to keep stored in a warehouse.

    After shifting all the products in awarehouse , These all cartons are than

    packed in a single unit through the helpof plastic coating to save the cost ofholding inventory and to savetransportation cost. They all are thanmade available for at the point of sale.

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    This is a stock warehouse of Pepsico to hold all the Finished goods inventory , as thegoods are ready they transfer all the goods here and make them available to transfer atthe point of sale or to fulfill any order which they have to place to their buyers.