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PepsiCo's Frito Lay Supply chain

Frito-Lay is the snack food division of PepsiCo and the largest supplier of potato and corn chips in the
world, currently holding 40% of the market share globally, and selling its products in 120 countries.
Strength
Frito-Lay is succeeding against a multitude of competitors in a fierce, yet slow-growth industry, selling
approximately 4-5 billion packages of snacks per year.
In order to achieve this, the company has learned how to masterfully create, innovate and manage all
aspects of its supply chain using high -tech IT systems that allow it greater control over its production
processes and distribution network.
Supply chain

in USA:

Supplier Base: Frito-Lay's supplier network for potato chip production has fewer than 100 individual

suppliers.
Strategy Used:

Several years ago, Frito-Lay approached its potato suppliers to seek those farmers
willing to concentrate on cultivating a limited number of potato varieties, with a focus on
producing the most appealing taste and quality potato chip for the consumer.
Frito-Lay then offered these farmers long-term contracts, which made it easier for the
farmers to get financing and for Frito-Lay to achieve more efficient, profitable economies
of scale in other areas of the value chain.
It is noteworthy to mention that steps like these that insure a stable supply of raw material
are important to a company who purchases 2.3 billion pounds of potatoes and 775 million
pounds of corn annually.

From supplier to retailer

Frito-Lay traditionally relied upon its in-house fleet of trucks to transport products from its
plants to its 1,900 warehouses or 200 distribution centers.
However, as the company expanded, operations managers realized that it was not
economical to produce every product at every plant, and thus began specializing at
particular locations.
On the other hand, logistics became increasingly difficult and distances grew longer, and
thus, Frito-Lay learned to exploit the benefits of truck carrier services, employing Menlo
Logistics to handle route planning. Menlo was able to reduce the carrier base by so%
and negotiate nationwide discounts with other carriers.

Retailers

The last stop involved is the 400,000 stores across the nation that carries Frito-Lay's snack
food products. The company utilizes their own technological systems to show stores how
reallocating shelf space, for example, can produce larger profits.
Retailers are also provided with Frito-Lay's "Profit-Vision Program", which allows retailers
to analyse their sales and compare it to national performance statistics.

At the same time, Frito-Lay benefits from the program because it convinces retailers to
allocate more shelf-space to their products.

Pepsi Tropicana Supply Chain


Of the four principal Distribution Centres (DC) in the U.S. the Jersey City, N.J. DC is responsible for the
supply of Tropicana juices in all states in the Northeast U.S., and all Canadian provinces. Jersey City
houses a unit load capacity Automated Storage and Retrieval System (ASRS) that is fully integrated into
an Automated Warehouse System (AWS). The centre handles chilled premium orange juices, and
blended juices from concentrate as well as shelf stable juice products from either Florida or local copackers. Products vary according to package size, and juice type and style, giving rise to approximately
200 Stock Keeping Units (SKU), each facing random demand from customers. Juices arrive already
palletized and variously pre-packaged, and are unloaded according to demand, and moved into the ASRS
area.
The Jersey City Distribution Centre (DC) of Tropicana is responsible for the supply of Tropicana juices in
all states in the Northeast U.S., and all Canadian provinces. Premium orange juice from Florida
represents approximately 65% of the shipments, and has an approximate shelf life of 65 days. The Jersey
City DC receives five Tropicana Unit trains from the production facility in Florida weekly. Each train has
approximately 45 refrigerated cars. Juices arrive already palletized and pre-packaged in paperboard
containers and plastic and glass bottles. Two types of unloading procedures are currently in practice:
cross-docking and warehousing. Cross docking normally is used for customers receiving a single product
types or transfers to a smaller distribution centre in Whitestone, NY. Each train usually contains 8 to 10
railcars that can accommodate cross-dock delivery.

Toyota
Supply-chain management at Toyota is an element of companys operations strategy which is thoroughly
based on the Toyota Production System (TPS). It was developed in the 1940s by Shigeo Shingo and
Taiichi Ohno. As Toyotas success gained world-wide coverage, at was followed by interest by other
companies in TPS, the principles of which is expressed by the term of lean manufacturing
Toyota Supplier Partnering Hierarchy: mutual understanding and trust, interlocking structures, control
systems, compatible capabilities, information sharing, joint improvement activities, and Kaizen and
learning.JIT system a system that organizes the resources information flows and decision rules that
enable a firm to realise the benefits of JIT principles. The elements of just-in-time system are being proactive in exposing problems, pull production based in Kanban, Total Quality Management, elimination of
waste, reducing inventory through involving suppliers in planning process, continuous improvement,
improving machinery and focusing on co-operation.
According to Kanban each part travels with a card. New stock will only be required when that part has
been used; the card is removed, using signals to re-stock this part. Kanban is well integrated in Toyotas
production system, because in Toyota there are limited number of parts with stable demand for them.
Also, product mix is low and exchanges are infrequent.

Capacity planning in any company is part of a supply-chain management for that specific company.
Toyotas way to capacity planning is that it strives to eliminate inventory. In achieving this objective Toyota
relies heavily in pull system. Generally, the main objective is continuous improvement.
Another operational excellence pioneered in Toyota and later adopted by other companies worldwide is a
Lean Concept. Lean philosophy aims to achieve are the elimination of all waste, superior customer care,
and Lean is based on pull system where the elimination of waste seen as a primary objective. Just in time
inventory management allows a company to gain a competitive edge by not having to have a large
amount of inventory in their warehouses, but only to order parts when they are actually needed. According
to just in time philosophy new material will be produced only when old stock of that material has finished.
Toyotas seven major types of non-value-adding waste in business and manufacturing are overproduction,
waiting, unnecessary transport or conveyance, over-processing or incorrect processing, excess inventory,
unnecessary movement, defects and unused employee creativity.
In todays highly competitive global marketplace companies are forced to seek opportunities to create
competitive edge for them not only to broaden their share of market, but also to survive at all. Supply
chain management is an aspect for any business to be looked at properly in order to identify ways to
improve it. Improvement in supply chain management can reduce costs for a company and increase the
efficiency and requires a strategic approach to be implemented towards it.
Toyota Motor Corporation is currently one of the model companies worldwide in many aspects of
conducting a successful business practice, including supply chain management. They principles of Just in
time, Kanban, lean manufacturing, Kaizen and others provides competitive edge for Toyota and provide
efficiency in many business functions along with supply chain management. Other companies willing to
increase their productive efficiency need to look at these principles above, and if the need arises,
implement them into their own business practices. It needs to be done, of course, taking into account the
current culture within organization and the level of knowledge and qualification of employees. Therefore,
some of the principles practiced by Toyota can be adopted by other companies with some adjustments.

Amazon :

Amazons corporate mission says it for the most part: We seek to be Earths most customer-centric
company for four primary customer sets: consumers, sellers, enterprises, and content creators. Three
out of their four constituencies are non-consumer. Unlike other retailers, Amazon has been investing
very heavily in the back-end logistics and fulfillment technology (Kiva Systems, warehouses totaling
almost 50 million sqft) in addition to their intense focus on enterprise technologies (AWS, Amazon Web
Services now hosting SAP) and consumer devices (Kindle) and technology (IVONA). But almost
everybody thinks of Amazon as a retailer and keeps comparing them to other retailers. Is that fair?

There is no doubt that Amazon started as a retailer sans the stores in the then new and emerging world
of online retail. There is also no doubt that retailers are their most obvious competition and they do
have a lot of common business objectives. Amazon single handedly has hastened the speed and extent
of change that we now take for granted in retailing. They pioneered the concepts of customer reviews,
you-might-also-like, people-who-bought-this-also-bought, low prices, fast fulfillment and delivery
including their newest same-day delivery efforts, delivery boxes to avoid missed carrier
appointments, subscribe-and-save, hassle-free returns, Amazon prime bundling 2-day shipping with
host of other services like media streaming and book-lending, and digital books and devices like Kindle.
The list goes on and these are only some of their consumer-facing innovations.
But Amazon has also been big on innovations on the back-end which in turn enable these consumerfacing innovations like investing in warehousing facilities closest to their biggest customer hubs,
technology platforms built for e-commerce including hardware systems like Kiva, hosting thousands of
store-fronts that collectively provide millions of products: Amazon Marketplace definitely the largest
under a single brand-umbrella, fulfillment by Amazon, checkout by Amazon, Kindle Publishing, and
programs like Amazon Affiliates.
The fact is that Amazon today is first and foremost the largest retailing platform hosting thousands of
stores enabled through Amazon services than simply an online retailer. But how does that make Amazon
a faux retailer?
Retail has three core pillars: Merchandising, Stores, and Logistics. One of the biggest focus and risk
areas for a retailer is merchandising: Deciding what to sell. By enabling thousands of small merchants
(who are not Amazon employees) Amazon has practically sub-contracted the biggest retail function and
with it a large part of the risk associated with unwanted merchandise!
Stores and logistics are the other two retailing pillars. Being an online retailer, Amazon obviously does
not have to worry about the stores. That leaves Logistics: Once again, rather than limiting to create
conventional logistics infrastructure of a typical retailer, Amazon developed a logistics services
platform complete with technology, hardware, and operations management that gives them the
advantage of scale as they manage receiving and fulfillment services for thousands of merchants, as
well as enables them to create a large warehouse-network to enable most optimal shipping for their
own merchandise.
Then comes their AWS (Amazon Web Services) or their cloud as it is better known. Once again, Amazon
was among the pioneers to develop the cloud services for enterprises and quietly announced hosting
SAP in their 4th quarter press release, AWS announced that SAP Business Suite is now certified to run
on the AWS cloud platform. Enterprises running SAP Business Suite can now leverage the on-demand,
pay as you go AWS platform to support thousands of concurrent users in production without making
costly capital expenditures for their underlying infrastructure. AWS also announced that SAP HANA,
SAPs in-memory database and platform, is certified to run on AWS and is available for purchase via AWS
Marketplace. GIGAOM estimates that AWS is now over 1.5 billion dollars business for Amazon. Granted
they may not be making money on it yet (not big money, anyway), but the potential upside of having
the worlds best-known ERP available on AWS is huge.
Finally, there is Kindle: Now evolved into a tablet and competing with other tablets more often than
the e-readers. Amazon recently bought IVONA that powers the Text-to-Speech, Voice Guide and
Explore by Touch features on Kindle Fire tablets. What might that indicate? That Amazon will likely
continue to enhance their foray into tablets (or consumer devices) at least in the short-term!
With such a un-conventional portfolio, what type of company does Amazon make? Definitely no
conventional label works. However, there are two broad themes that emerge:

1. Technology: This has always been their strong point and Amazon has never been shy about
putting it to use. Their seller-platform, logistics services, AWS, and tablets all point to their
single strength: Ability to understand, create/develop, and exploit technology unlike any other
company we have seen so far.
2. Logistics: This has emerged as an Amazon strength for the last few years, but their unique way
of developing it into a commercial platform is amazing. Suddenly, all the mom-and-pop shops
out there can provide you with world-class ordering experience including shipping and tracking
and they only have to worry about what to sell. What a way to unleash commerce and
entrepreneurship!

DELL

Dell's direct selling model traces its origins to Michael's idea of selling computers
directly to the consumer eliminating the need for middlemen and distributors.
Michael believed that by selling PCs directly to the consumers, the company would
be able to better understand the needs of its customers. The first computer that the
company introduced in 1985 - Turbo PC, was advertised in computer magazines and
sold directly to customers. Dell also began employing computer literate sales
personnel, who guided consumers in their choice of systems. Each system was
assembled according to the preferences of the customers. This option helped
customers to get computers at a price lower than other brands.
Role of Dell's Suppliers

In order to manage its operations with low inventory levels, Dell collaborated closely
with its suppliers. The company's procurement decisions were based on four criteria
- quality, cost, delivery and technology. Suppliers were selected on the basis of cost
(given a weightage of 30%) and quality, service and flexibility (with a weightage of
70%).

Balancing Demand and Supply


Dell maintained a database to track the purchasing patterns of corporate customers
and their budget cycles, in order to forecast demand. It also maintained a similar
database for individual customers in order to cater to their future requirements for
PCs. Through its forecasting techniques, Dell was able to forecast demand with 75%
accuracy. Thrice a day, the changing demand patterns were communicated to the
major suppliers. In all the countries in which Dell operated it had a direct sales
force, which was directed by the marketing department located at the
headquarters...

Production Process

Dell received orders via the telephone, Internet, e-mail, etc. Orders were received by business
units, which downloaded the orders every 15 minutes. With advancement in technologies, the
choices available for the consumers also widened. Customers could use Dell's website
www.dell.com, to configure their customized computer and place an order for it. Customers
could choose from a variety of products ranging from desktops, notebooks, servers, printers, etc.
The website catered to different segments of customers like individuals, home office customers,
small businesses, medium businesses, large businesses and public sector customers like
Government departments, educational institutions and healthcare institutions...

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