Operation Management Project

Operation Management at Nestle Juices

Submitted by: Rizwan Ahmed Babar Azhar Rizwan Younas Imran Younas

Summary
In this project we will analyze the operation management at the Nestle Juice factory. Nestle is the world's leading nutrition, health and wellness company today and was founded in 1866 by Henri Nestl. It has employed around 250,000people and has factories or operations in almost every country in the world. Since its inception Nestle has provided quality products to its customer by providing product and packaging innovation. Nestle juices is Pakistans number one and fastest growing food company. The company is trying to differentiate themselves from the rest of the competition in Pakistan by adopting latest product development techniques and processes. In this detailed project we have covered the topics related to product development and processes that juice production goes through. Quality management is inspected thoroughly and supply chain management at Nestle is studied. First of all we have gone through industry analysis, which include Porters five force analysis and PEST analysis. Then we have completed company analysis and also given the brief introduction of company in this section. The section of company analysis include vision statement of Nestle, High quality standards of Nestle, vision statement of Nestle Juices, Mission of Nestle, Company main objectives, its structure, Juice manufacturing factories, SBUs within Nestle, Brands in Nestle, Its current Earnings and other financial stats and in the end SWOT analysis. Then we have examined product design phases at Nestle. Process phases are examined and value chain was examined in detail. Quality management at Nestle follows the process phases, followed by supply chain management at Nestle. In the end we have given recommendations.

INDUSTRY ANALYSIS PORTERS FIVE FORCES ANALYSIS

Michael Potter's five forces framework can be used to determine whether the industry is attractive enough to sustain a small or medium size enterprise. The five forces of Entry, Rivalry, Substitutes, Buyers and Suppliers jointly determine the intensity of competition and profit potential for a small and medium size firm in a given industry or market sector. The focus at this stage is at the industry level because industry dynamics and profits of necessity dictate profits of other firms that enter the industry.

Threat of New Entrants

The threat of new entrance means, when any company that is not operating in that product category or the company that start it new venture see a opportunity in this field like juices, and based on that they decided to enter in this market. So the current company that is operating in the market has a Low threat for the new entrance. Nestle is big organization being it competitor is not an easy task. There is some barrier for the new entrance like Economies of Scale, Product Differentiation, Capital Requirements, Switching Costs, and Access to Distribution Channels, Cost Disadvantages, Independent of Scale, and Government Policy.

Bargaining Power of Suppliers

The company needs raw material, labors, component and other supplies. This requirement leads to buyers-suppliers relationships between industry and the suppliers. Suppliers, if powerful can exert an influence on the producing industry, such as selling raw materials at high price to capture some of the industry profits. The bargaining power is low because Nestle doesnt rely on any supplier. They produce their own raw material. Even they have no reliance on the distributors. They have their own factory trucks to supply the material and have their own distribution network.

Bargaining Power of Buyers

Buyer power is the most important factor of porters fiver forces model, because buyer are the consumers of the product. For nestle its a major impact factor because the competition is intense & competitors have the same products that may differs in quality but are providing the same needs. For that particular reason we can say that Nestle have high bargaining power from buyers.

Threats from Substitutes

Substitute products refer to products in other industries. To the economist, a threat of substitutes exists when a product demand is affected by the price change of a substitute product. A close substitute products constrains the ability of firms in an industry to raise prices. Nestle have a major threat from it substitute products from other competitor due to which there product can lost the market share, there are many competitors so the threat from substitutes product are high.

Competitive Rivalry
The big factors determining the strength of rivalry is how actively and aggressively are rivals employing the various weapons of competition in jockeying for a stronger market position and seeking bigger sales. Many local companies have entered market and there is also great threat from established companies. Nestle also face lot of HIGH competitor rivalry.

Conclusion
We can conclude from above observation that whether the company is MNC or local it will face the tough competition from its competitors because competitive edge is the most volatile thing in business world now-a-days. Companies are reactive & they react to the change. We can conclude that the FMCG industry is unfavorable for the new entrant to enter in the market. However existing firms can control these five forces & attain the edge over their competitors as nestle is following a sound strategy.

PESTLE ANALYSIS
PESTLE analysis is a powerful tool to visualize your external surroundings, which enables you to understand the external factors such as Political, Economic, Social, technological, Legal & environmental affecting your business. So for understanding Nestls position in the market & to visualize the Nestls position among its competitor Pestle analysis is the best technique to understand the external forces.

Political & Legal Forces

FMCGs have to pay heavy taxation, changes in any taxation system can badly affect Nestles productivity & sales (profits). Nestle company also follow law related to employees like government announce minimum salaries of an employ Rs. 6000. Foreign trade regulation does not affect the overall policy and the working of the Nestle because they operate nationally not internationally. The government stability also plays a great role for any industry. In Pakistan government face lot of difficulty from the side of terrorism and also its activity that badly effect environment of the country which is totally very upset.

Economic Forces
Now in Pakistan inflation rate is almost 22.3%, so if any increase in inflation rate then increase in prices of Nestle products which eventually affects the Nestle Pakistan Economy growth rate accelerate is 7% and plus which eventually affect the Nestle productivity & sales.

Social Forces & Cultural

Today people are more health conscious so Nestle products by identifying this need of the people they are also producing health conscious products with more elements of pure & quality, which create the market for Nestle & trend of its products in the market About the environmental concerns of Nestle products are the symbol of good health & nutrition no matter which product is under consideration.

Technological forces
Nestle focusing concentric and conglomerate diversification because in present era it is not possible for any organization to exist in market for long run by providing just one product. Product innovation is becoming more necessary for the organization because of globalization people are becoming aware about the changes being taken place around them so in order tackle the situation nestle is focusing on product innovation. Now by the help of technology Nestle maintain the efficient scale of production which normally called economies of scale. Nestle has R&D department and Nestle total spending on R&D 70 millions.

COMPANY ANALYSIS
Nestl is the world's leading food and beverage company, with sales of about CHF 83 billion. It has 230,000 employees world-wide and operates 520 factories in 82 countries. Its products are available universally, including such remote markets as North Korea, and they are sold under a number of brands such as Nestl, Nescafe, Nestea, Maggie, Buitoni, Perrier and Friskies. Company belongs to more than 200,000 shareholders, today; Nestl is about twice the size of its nearest competitor in the food and beverage sector. The company is in business for over 130 years.

VISION
Nestl aim is to meet the various needs of the consumer every day by marketing and selling food of a consistently high quality. The confidences that consumers have in our brands is a result of our companys many years of knowledge in marketing, research and development, as well as continuity - consumers relate to this and feel they can trust our products.

High quality and collaboration

Our objectives are to deliver the very best quality in everything we do, from primary produce, to choice of suppliers and transport, to recipes and packaging materials.

Vision Statement of Nestle JUICES

The strategic priorities of Nestle Juices are focused on delivering shareholder value through the achievement of sustainable, capital efficient and profitable long term growth. Improvements in profitability will be achieved while respecting quality and safety standards at all times. Nestle JUICES envisions to grow in the shortest possible time into the number one Beverage Company in Pakistan with the unique ability to meet the needs of consumers of every age group through development of a large variety of beverage categories of the highest quality.

CORPORATE MISSION
Nestls brands and products are the focus of continual innovation and renovation so that they meet and exceed our consumers' expectations. We seek to ensure that our products are available whenever, wherever and however our consumers want them.

OBJECTIVES
Nestls purpose is to offer safe, tasty, convenient and nutritious foods to improve health and well-being of consumers of all ages all over the world. To meet the needs and desires of todays and tomorrows consumers, Nestl is strongly committed to Research and Development (R&D) to improve existing products and develop new foods with specific health benefits.

Company Structure
Nestle head office in Pakistan is in Lahore. It also has its registered office in Lahore. Nestle has divided the whole Pakistan in to three Zones. Northern Zone Central Zone Southern Zone Nestle has 8 regional offices in all over Pakistan. These offices work under their respective zonal offices.

Factories
Nestle has two factories in Pakistan for the production of juice items. One near Sheikhupura near Lahore (29 Kilometer on Lahore Sheikhupura road) Second in Kabirwala near Multan (Khanewal raod, Distt. Kabirwala)

Zones
Zone of Food and beverages are shown below
Zone
Food And Beverage Europe AMS Food and Bevearge Amercia AOA Food and Bevearge Asia, Oceania and Africa

Targeted Ares
Europe United States of America, Canada, Latin America and Caribbean Asia, Oceania, Africa and Middle East

Strategic Business Units (SBUs) and Marketing

Below are some SBUs of Nestle Strategic Generating Demand Unit Business Excellence Generating Demand Dairy SBU Coffee & Beverages SBU Chocolate, Confectionery & Biscuits SBU Ice Cream SBU Food (Culinary and Frozen food) SBU Pet Care SBU

BRANDS
The main brands of Nestle are Coffee Nescafe, Nespresso, Tasters Choice, Ricor, Ricoffy, Bonka, Zogas, Loumidis Water Poland Spring, Nestl Pure Life, Arrowhead, Vittel, Deer Park, Levissima, Perrier, S.Pellegrino, Ozarka, Contrex, Ice Mountain, Zephyrhills, Nestl Aquarel, Hpar, Acqua Panna Other beverages Nestea, Nesquik, Nescau, Milo, Carnation, Libbys, Caro, Nestomalt, Nestl Dairy - Shelf stable Nestl, Nido, Nespray, Ninho, Carnation, Milkmaid, La Lechera, Moa, Klim, Gloria, Svelty, Molico, Nestl Omega Plus, Bear Brand, Coffee-Mate Ice cream Nestl, Antica Gelateria del Corso, Dreyer's/Edy's, Drumstick/Extrme, Maxibon/Tandem, Mega, Mvenpick, Sin Parar/Sem Parar/Non Stop, Delta Infant nutrition Nestl, Nan, Lactogen, Beba, Nestogen, Cerelac, Nestum, Neslac, Guigoz, Good Start HealthCare nutrition Nutren, Clinutren, Peptamen, Modulen Bouillons, soups, seasonings, pasta, sauces Maggi, Buitoni, Thomy, Winiary, Torchin, Osem, Totole, Haoji Frozen foods (prepared dishes, pizzas, small meals) Stouffers, Lean Cuisine, Hot Pockets, Buitoni, Maggi, Wagner, La Cocinera Refrigerated products (cold meat products, dough, pasta, pizzas, sauces, snacks) Nestl, Buitoni, Herta, Toll House, Sabra Chocolate, confectionery and biscuits Nestl, Crunch, Cailler, Galak/Milkybar, Kit Kat, Smarties, Butterfinger, Aero, Polo Nestl Professional Chef, Davigel, Minors

EARNINGS
For 2011 the Nestl Group reported sales of CHF 83.6 billion and 7.5% organic growth on top of good growth in recent years. The organic growth was composed of 3.9% real internal growth and pricing of 3.6%. Foreign exchange had a negative impact of 13.4% and divestitures, net of acquisitions, a further 4.2%, mainly Alcon. Excluding the impact of the sale of Alcon, sales were down by 4.8%. Following are the highlights The Group's trading operating profit was CHF 12.5 billion. The margin increased 60 basis points (90 basis points in constant currencies) to 15.0%. Nestl Continuous Excellence in all areas of the company continued to create significant savings ahead of target, helping to partially offset major input cost pressures. Higher input costs increased the cost of goods sold by 190 basis points. Total marketing costs were down 100 basis points, mainly the result of leveraging our sales and marketing structures. Consumer facing marketing remained at almost the same level after two years of double-digit increases, which allowed us to further build our market positions in most categories. Administrative costs were down 80 basis points. Net profit was CHF 9.5 billion, up 8.1% on a continuing basis. Sales by activity breakdown: 27% from drinks, 26% from dairy and food products, 18% from ready-prepared dishes and ready-cooked dishes, 12% from chocolate, 11% from pet products, 6% from pharmaceutical products. Sales by geographic area breakdown: 32% from Europe, 31% from Americas (26% from US), 16% from Asia, 21% from rest of the world.

Full year sales and operating profit margin overview

MARKETING
Nestle hold strong reputation for high quality brands. In major markets, trade marketers are frequently rated highly in customer surveys on professionalism and service. They don't believe in 'one brand fits all' and thats their marketing strategy. They have a strong, diversified global portfolio well focused and defined offers a brand for all key consumer and market sectors.

STRATEGIES ADOPTED BY NESTLE

Business principle
Nestl is committed to the following Business Principles in all countries, taking into account local legislation, cultural and religious practices: Nestl's business objective is to manufacture and market the Company's products in such a way as to create value that can be sustained over the long term for shareholders, employees, consumers, and business partners. Nestl does not favor short-term profit at the expense of successful long-term business development. Nestl recognizes that its consumers have a sincere and legitimate interest in the behavior, beliefs and actions of the Company behind brands in which they place their trust and that without its consumers the Company would not exist. Nestl believes that, as a general rule, legislation is the most effective safeguard of responsible conduct, although in certain areas, additional guidance to staff in the form of voluntary business principles is beneficial in order to ensure that the highest standards are met throughout the organization. As a global food manufacturer and marketer, Nestl takes into consideration local needs, cultural differences and consumer preferences as well as attitudes concerning the use of ingredients derived from genetically modified crops.

Global commitment
Nestl firmly supports the principles of the United Nations Global Compact and is committed to reflecting these in its business principles and practices. Search for trust: A basic reason company has grown to be the world's largest food company is that consumers have learned to trust its brands. Additionally company introduced the Nestl Seal of Guarantee and emphasized corporate logo. This Seal of Guarantee is a visible sign of companys corporate responsibility for the safety and quality of every product, which leads to maintain consumer confidence and trust in this corporation Nestle companys Success is built on quality: Quality is the cornerstone of companys success. Every day, millions of people all over the world show their confidence in company by choosing Nestl products. This confidence is based on our quality image and a reputation for high standards that has been built up over many years. Every product on the shelf, every service and every customer contact helps to shape this image. A Nestl brand name on a product is a promise to the customer that it is safe to consume, that it complies with all regulations and that it meets high standards of quality. The customer comes first: Trade customers expect excellent service, correct information and timely delivery. Consumers consider taste, appearance and price when they make their choice. Companys task is to understand what customers want and respond to their expectations rapidly and effectively. All customers expect good quality at a reasonable price. Customers are central to companys business and company always respects their needs and preferences. Nestl's Position on Technology: From its inception more than 130 years ago, Nestl has built its business on successfully applying scientific breakthroughs and technological innovations while taking full responsibility for the quality and the safety of its products. Nestl supports a responsible application of gene technology for food production based on sound scientific research. Consumer information and labeling: Consumers confidence in the food they are buying is supported by having access to information. Nestl's Consumer Services are well equipped to provide this access and thus are the first source of information, including the use of ingredients, derived from genetically modified crops, in Nestl products.

SWOT ANALYSIS
STRENGTH
Below are areas where the strength of Nestle Lies Its a company that does not depend on personalities. Leaders in Dairy Products. Long term experience. Innovative products. Designative packaging. Innovative planning and ideas. Wide variety of brands.

WEAKNESSES
Below are the areas where, Nestle is weak Supply Chain Exports

OPPORTUNITIES
Below are the opportunities available for Nestle High credibility Ability to secure more credit. Available means for expansion. Improving trends Industry leadership. Consumer preference. Fewer competitors. Dedicated workforce Untapped rural market.

THREATS
Some threats to Nestle are Highly competitive market (multinational companies are very organized and financially strong). Increasing prices of raw materials. Competitors like Opler, Shezan, Coca Cola breverages, Halla, Askari, Pure water, Nurpur dairies, and Prime yogurt.

PRODUCT DESIGN AND PROCESS DESIGN Core Competency

Core competency is defined as one thing that a company can do better that its competitor. For Nestle, the core competency lies in its quality and brand name.

Product Development
It includes phase of Planning, concept development, system level designs, design details, testing and refinement and production ramp up.

Planning Phase
In this phase, product type is selected based on Nestles corporate strategy and market demand. Nestle has introduced many product for specialized market and as they believe that one product cannot serve all the customers. They believe in quality product and wellbeing of customers. They believe in building trust of customer.

Market Demand Analysis

In this stage Nestle, research the market and develop alternate product categories. Concept are developed related to design and features of product.

Product Ingredients
In this process Nestle defines the product architecture and composition of product. What would be the ingredients and what would be its nutrition value is decided in this phase.

Design Detail
In this phase Nestle define the complete composition of product, its packaging and the nutrition value it will provide to customer.

Testing and refinement

Prototype is developed and tested in market by promotional activities like distributing product free of cost. Mostly Lahore is selected as test city and product is launched in Lahore and its response is checked and feedback from customer is evaluated.

Product Launch
After all the testing and making necessary adjustments to taste and nutrition value, product is launched.

VALUE CHAIN AND PROCESSES

It is defined as chain of value creating activities. Micheal porter identified a set of interrelated generic activities common to vide range of firms. The resulting model is known as value chain and is depicted below

Inbound Logistics

Operation

Outbound Logistics

Marketing & Sales

Service

Inbound Logistics
Major raw materials of Nestle orange juices are different pulps of orange which they import from Germany and France. Nestle company get their other raw material from local market in Pakistan. Nestle juices raw material include ingredients such as fresh fruit, nectar of mango, apple, and pineapple, orange. Nestle imported all machinery and formulas, which is advantage of Nestle company.

Operation
Production Process
Process is any part of an organization that takes inputs and transforms them into output of greater value. Fruit Juice production procedures involved in fruit drinks manufacturing depends on type of juice unit is going to make. For purpose of this- feasibility, Nestle propose 4% token juice drink of citrus fruit (Orange), Mango and pineapple. The type of process that Nestle uses is make-to-stock as it produces standardized products. The process is multistage as few stages are similar for all juices and few are different.

Process Type
The process for Nestle Juices is continuous flow process as juice, which is liquid, flows through the production process.

Push or Pull strategy

Nestle follows push strategy as they make product, which are standardized and then push them in to market.

Fruit Juice- Production Process flow

Production of fruit juice is standardized process and initial processes for all fruits will be similar, as will be the last stage of juice pasteurization section and packaging, although differences in handling juice composition arise in certain cases due to the nature of the fruit and percentage of vitamin involved. Basically preparation of juices involves the following steps: Boiling of Fruit Storage in Tank Ingredients mixing Juice Preparation Juice storage Tank Filling and Packaging Cooling and storage Below is the flow chart and brief description of the various processes involved in fruit juice production are outlined

Fruit Juice Production Process

Fruits boiled in the boiler and shifted to the plate heat exchanger. Then it is stored in the storage tank. Then supplied to the mixing tank in the desired quantity while in mixing tanks; any additives to the mixture is made at this stage before it is pumped to syrup storage tank. Blended juiced is then pumped through pasteurizer; where it is heated to 90 C to inactivate enzymes and living organism. After pasteurization the juice passes through final filtration, before lauding it into juice tank. Juice from the tank is ready for packaging.

Packaging and Labeling

The juice is the packed in the quantities demanded by the market. Consumer packs as like 200ml and 1000ml tetra pack and then labeled as Nestle Juices. Then the final product is stored in cool dry store.

Process Flow Chart:

Raw Material

Reject Production

NO

YES

Storage

Boiler

Juices Mixing Tank Preservatives

Plate Heat Exchanger Juices Mixing Tank

Storage and Shipping

Syrup Storage Tank

Pasteurizers

Bulk Transport

Juice Storage Tank

Bottled/ Packaged/ Labeled

Finished Product in cold storage

Retailer

Wholesaler

Transport

Outbound Logistics
In Nestle Company the activities that include in outbound logistics are, They establish their sale and distributive offices in big cities like Karachi, Lahore, Islamabad, Faisalabad, Gujranwala etc. and also hire suitable distributors on agreed profit margins. Who buy product from Nestle office of the cities and try to distribute to each retailers and shop keeper in the cities and rural areas.

Services
Company established the customer center in each office in a major city and also given toll free number as a help line number. This means that if customer feels any problem then they can contact through their help line.

Marketing and Sale

Nestle company launch their sale promotion scheme after six months. Their last sale promotion was for retail shop that put nestle juices billboard on their shop or sale reception table. They could win attractive prizes in this promotional activity. By this operation they can save all the advertisement expenses which they have to pay to the retailer or owner of the shop. Nestle Company use advertisement channels when company has to launch new brand. So company prefers to use Geo, ARY one world, PTV Home, 1 vision and newspaper. They contract with the advertisement channels for 1 to 2 months repeat 2 or 3 times a day. They hire suitable distributors in a country at agreed profit margins who bought juices in bulk form from the distributive channels and then sell to the retailer who finally sale to the end consumers. Nestle company has efficient market management whos main objecti ves for marketing their product are. Strong customer relationship Identify need of customer like new taste new, fruit items Maintain market leadership by maintaining the pure quality Provide juices which are fit for human body Stop brand selling and dont reduce quality Quality is Nestls guarantee

Process Analysis Cycle time

In a repetitive process the average time between the completions of successive units is called cyclic time. For Nestle 90 min is batch preparation time. 60 min is the process time and 75 min packing time. (Batch of 15000 Liters).

Bottleneck
The limiting factor or the constraint in the process is called bottleneck. In Nestle juices Batch making is the bottle neck. What should be the size of batch? Another bottleneck is mixing plant. It takes the largest amount of time.

Efficiency
It is the ratio of actual output of a process relative to some standard input. Packing machine at 100 % efficiency produces 7000 packs in 1 hour. At Nestle the packing machine efficiency is 95%.

Run time
It is the time required to produce a batch of parts. This is calculated by multiplying the time required to produce each unit by the batch size. If the machine produces 7000 packs in 60 mins, then it takes 0.514 sec to produce one pack. So the batch will be completed in 3855 secs, if packed on two similar machines. This will make in total 15000 packs.

Setup time
It is the time required to prepare a machine to make a particular item. For Nestle Juices, 3.5 hrs. is the setup time. (Sum of CIP and sterilization processes)

Operation time
It is the sum of the setup time and run time for a batch of parts that are run on a machine. For Nestle it is 210 + 75 = 285 min

Through put time

It includes the time that the unit spends actually being worked on together with the time spent waiting in a queue. For Nestle Juices it is 90 mins (Batch making time) + 60 mins ( process time) + 75 mins (filling time) = 225 mins

QUALITY MANAGEMENT
Quality assurance (QA) refers to the planned and systematic activities implemented in a quality system so that quality requirements for a product or service will be fulfilled. It is the systematic measurement, comparison with a standard, monitoring of processes and an associated feedback loop that confers error prevention. This can be contrasted with quality control, which is focused on process outputs. Two principles included in QA are: "Fit for purpose", the product should be suitable for the intended purpose; and "Right first time", mistakes should be eliminated. QA includes management of the quality of raw materials, assemblies, products and components, services related to production, and management, production and inspection processes. Following the similar functional steps the Nestle Pakistan has a great focus on the quality of its products. To ensure the consistency of its Juice and to get it free from any foreign contamination HACCP is applied at the plant. HACCP is a system which comes under the food safety programme and in this system such points or process steps in the system are determined which can lead to the deterioration of the product quality. Once these steps are finalized then the controls are applied on these steps. Similarly controls are applied from End to end product process i.e. form receipt of raw materials to the finished goods. All the Raw materials are checked before being given to production and their conformance with the agreed specifications with suppliers are verified. Similarly the function of QC is also to check in line parameters of product manufacturing process. In juice plant the sugar percentage and brix is checked and after that taste testing is also done by a panel of people which is certified by the company. Similarly this QA function also gets involved in the start of the project to do the design HACCP of the equipment so that the equipment being procured is well worth and is not prone to any of the potential problems regarding food safety.

Fig: PROCESS APPROACH TO MANAGEMENT FOR QUALITY & PRODUCTIVITY

SUPPLY CHAIN MANAGEMENT

Nestl Pakistan's supply chain makes sure that Nestl products are available, no matter where you are in Pakistan. We integrate processes from the farm to markets, and ensure products are delivered to you at the right time, the right cost and in the right quantities. In the first quarter of 2006 alone, we delivered an astonishing 136 million kg of Nestl products in Pakistan. Supply chain was established as a separate department in 2001. Since then, we've achieved a number of milestones, including a cold-chain in 2002, centralized demand and supply planning in 2003, and implementation of GLOBE in 2005. Our mission is to: Optimize and consolidate resources and processes for a low- cost but efficient execution Develop and manage simplified and effective supply network to achieve a high level of service Create a continuous improvement culture driven by performance measures and reward Nestle has own fleet of trucks and through them they distribute to retailers and wholesalers. But their own fleets of truck, they have also faced problems, because their expertise are not in distribution.

RECOMMENDATIONS
According to the analysis we did nestle only have few problem otherwise company is doing their best in the industry so far. They have attained the highest market share for their brands. The only problem they can face is from limited Distribution Channel and the bottleneck of mixer. Nestls problem can be eliminated by strategically thinking &implementing some strategies which can be effective in terms of both profit& growth. Solutions to the problems which have been discussed before is that, they should go joint ventures with their distributors cut short their own tensions &make others to their job as Pepsi co. have Riaz bottlers for their distribution which eventually gave them an edge. So if they go forward integration then they might be able to have more market share & demand for the product can be increased & more market can be taped. They can increase throughput of the mixer by having an added mixing plant.