Report on Pepsi Operations management


Introduction

There are some brands which are known locally and there are some which people know all over the world due to the immense amount of success and popularity they have received over the years. Pepsi has become one of those global giants which have become an integral part of people’s lives. The soft drinks industry, which Pepsi is a very huge part of, is spread across more than 200 countries. Initially, aerated water was used for therapeutic and medicinal purposes for headaches, digestion, and nervous afflictions. That is why, the creators of the world’s first soft drinks were pharmacists. Soft Drinks were appropriately named as soft drinks and not carbonated drinks because the idea was to present an alternative to hard alcoholic drinks which could be consumed by people of all ages together as a family. Soft Drink has now become a multi-billion dollar industry at a global level.
Pepsi was established initially as Pepsi-Cola by the pharmacist Caleb Bradham in the year 1898. The product was sold in a pharmacy in North Carolina. The empire of Pepsi had its humble beginnings as the sales if Pepsi began as a soda fountain in a drugstore. It was named as Pepsi-Cola and in the year 1903, Pepsi-Cola was awarded a patent and in the same year, 7968 gallons of Pepsi-Cola were sold to customers and Caleb decided to begin large scale bottling through plants in Durham and Charlotte through the system of franchise. Due to a robust franchise system, Pepsi was able to grow throughout the United States of America and then all over the world.
Product Selection and Description

The product of choice in this report is Pepsi, the modern form of the soft drink which is calibrated over the years retaining its signature taste. There are also many variants in many countries throughout the world where Pepsi is spread. A steady variant at a global level is diet Pepsi which is a low calorie variant and all over the world there are 11 variants of Pepsi not considering other products of Pepsico Corporation and this fact justifies the importance of Pepsi as a global product (Pepsi, 2015). To further optimize the creation and other supplicant processes is a challenge which can be accomplished with rigorous analysis of the product manufacturing process and observing the basics of logistics management and operations. Pepsi as a product doesn’t have a wide array of contents but the manufacturing process does have its own complexities along with the bottling process (PepsiCo, The Pepsi-Cola Story, 2005).

The ingredients of Pepsi include carbonated water which makes up for the 94% of the total content. The carbon dioxide which is added to Pepsi acts as a preservative for the product and also adds fizz to the drink. Carbon Dioxide is chosen as the gas to be used in the soft drink because it is an inert gas that is also non-toxic and appropriate considering the cost factor. The other primary ingredient that the drink is constituted of is sugar, which takes up 7 to 12% of the total quantity ratio of the soft drink. Sugar is chosen as an ingredient in the drink because the quantity can be changed to modify the taste of the drink and it adds a “mouth feel” to it. Other additives like high fructose corn syrup and sugar are also a part of the ingredient, but there are other additives which are not completely disclosed to the public as they are considered as a trade secret (PepsiCo, 2015). The qualities like the amount of sweetness, level of Ph, and tartness are the determinants of the overall taste of Pepsi. The acids created by the mixture of carbon dioxide add a quality of sharpness to the taste which quenches the feeling of thirst in an individual and improves the quality of the Pepsi. This unique combination of flavors, additives, mouth-feel and the after taste of the drink is what makes Pepsi such a successful product at a global scale.
House of Quality

The process of quality function deployment is widely used by companies for formulating new processes, planning new products or enhancing processes and products to optimize quality. The process of quality function deployment uses matrix structures to examine functions, processes and consumer opinions before planning a new product/service and for analysis. The house of quality matrix has been observed as a popular approach towards quality function deployment. A varieties of issues in the processes can be discovered using this matrix which helps in planning.
Voice of Customers

This segment is helps in defining customer’s needs and preferences in order to optimize the product/service to the taste of the customers. This process seems simple in application but the matrix helps in tuning the perceptions of the producer and the customer. The voice of the customer is the demand and need of the customer which needs to be perfectly understood by the producer.
The needs, demands and perceptions of the customer are to be translated into the product by the producer through specifications of the product. Specifications of the product help in setting customized standards of quality. For getting data regarding specifications, organizations conduct research and surveys. These requirements recognized as critical customer requirements (CCRs) are also to be translated into a technical requirements and further steps regarding what is to done are formulated.
Planning Matrix
The primary aim behind the construction of the planning matrix is to observe that how the competitors are performing in meeting the needs of the customer. The customer ratings inside the matrix are marked according to how well the competitors are meeting with each aspect of demand of the consumer.
Formulating the Interrelationship Matrix
This is the most critical part of the house of quality matrix. This matrix structure is used to derive the strength of interrelationship between the product requirements that the customer has in mind and the effectiveness of the performance measures which are formed to optimize the product. This also helps in observing the strengths and weaknesses of the company in terms of consumer needs.
The technical correlation matrix helps in the area of requirements between both the customers and the producers through the use of symbols on the matrix. The issues are identified in which some can be build oriented, design oriented or unsolvable problems which are physics oriented.

Pepsi Manufacturing Process

The beverage with a few simple ingredients is manufactured through a very complex process. Including the many internal sub-processes, there are two major manufacturing processes in the manufacturing of Pepsi. The first is the manufacturing of the drink and the next big process is the bottling of the drink which gives the final product.
Water Clarification

The initial step of the Pepsi Manufacturing process is to clarify the water through a step by step process as water is the primary ingredient of the drink. The success of Pepsi depends on the quality and refinedness of the water which means the removal of bacteria, suspended materials, organic matter which are the elements that have the potential to change the color and taste of Pepsi. The processes involved in the purification of water include sub-processes like chlorination, filtration, and the coagulation of water. The level of alkaline in the water is to be modified in order to retain the required amount of Ph level for Pepsi.
The clarified water is further filtrated through a sand filter to remove ferric sulphate which is in the form of fine particles. The next step in the process is sterilization of water to annihilate the bacteria and organic matter in the water. This is followed by a process of chlorinating the water through a two hour process. The final step in the filtration process is the passing of the water through the carbon filter which removes the chlorine and other residue.
Adding the Ingredients
The concentrated mixes of the flavor, high fructose corn syrup, and dissolved sugar are mixed and added into an area called the dosing station in a step by step process and the order of the addition of the ingredients relies on the compatibility of the materials with the other elements. There are two types of processes typically used in this phase: one is ultraviolet radiation and the other process is the flash pasteurization which is used when the product is fruit based product. But in case of Pepsi, just radiation is used to sterilize the concentrated syrup which is later going to be added in Pepsi.

Carbonating Pepsi

The semi-finished is then finally carbonated at last to instill the fizz in the drink. The element of temperature control is closely monitored in this stage as the amount of carbon dioxide and the temperature of the drink are closely connected. The product cleared after this stage is the finished product. The other quality and standards check is related to the analysis of the sweeteners in the drink. If the sweeteners aren’t completely broken down and added to the drink, there is a probability of residue in the drink.
In the arena of soft drink manufacturing it is extremely important to analyze each raw material before they are added into the drink through the mixing process.
Bottling

The finished product is further transferred for bottling after quality control procedures which will be explained further. The bottling of Pepsi is done at a very high rate of liquid flow. The containers/bottles in the bottling line are rapidly sealed in an air-tight manner to maintain the fizz of the carbon in the drink.
The next process in the bottling procedure is the sticking of labels on the bottles which is a tak that cannot be done when the liquid inside the bottle is cool as the labels would get detached early on. For being able to do that, Pepsi bottles are sprayed with hot water and then the bottles are labeled after the bottles have dried. The bottles/cans are stacked into a rectangle shaped and they automatically get filled in boxes/cartons/containers and get wrapped with plastic all over them.

Quality Control

As soft drinks are the part of food items, they are many quality check procedures and safety standards installed by companies also led by quality checks and standardization by food associations in every country. The first quality check in Pepsi is applied at the initial stage of water purification. The quality checks have to be applied in various processes because the final output of the production line directly provides covered and labelled bottles that directly go into the customer’s hands. The first quality check of water analyzes the quality of water after the clarification process to determine where the processes have been successful in developing high quality water for Pepsi or not. This quality check by Pepsi helps them maintain the consistency of taste, body of water, color and flavor of Pepsi.
International and local organizations like National Soft Drinks association, FDA, and each and every country has separate organizations which regulate and observe food safety among food item producing companies. Every method of storage needs its own processes to clean. The cans require to go through a process of lacquering in order to keep the cans from getting rusted internally as well as externally. This is necessary because they are made from tin coated steel or aluminum allow (Pepsico, 2015).
Definition of Quality for Pepsi

Pepsi as a beverage has been epitomized over time as a thirst buster filled with taste that soothes a person. It comes in various shapes and sizes like in plastic bottles of 750 ml to 2.5 liters and also in cans. It is also available in open cups in movie theatres. Pepsi has utility everywhere and can be consumed in every occasion and can be taken with food at home and also out in the heat where you especially need it. The defects that can make a user hate the product can be 1) the bottle is not cold enough to enjoy 2) it doesn’t have the required amount of fizz 3) the taste is not consistent 4) there beverage is not pure and has suspended particles inside the drink.
According to the traditional meaning of quality, Pepsi should be able to fulfill the thirst of an individual and satisfy him with a delightful after-taste which has the potential make the user want Pepsi every time he/she is thirsty, they would go for Pepsi.
As Pepsi is already a global giant and the product in focus has billion dollar sales mark, it is an understatement to say that quality is in focus here but there is still room for improvement which can be brought by total quality management (TQM) which emphasizes on covering each and every aspect of production, supply chain to marketing and opens doors for development in the company. As Pepsi has been striving towards offering more variants of Pepsi, Maybe it is time to improve on what has already been created in order to gain excellence in the area (Lakhe & Mohanty, 2010).

Pepsi Supply Chain & Logistics

Pepsi is currently aiming for a sustainable supply chain as the largest threat to the world can come in forms of food shortage crises, failure of the environment to adapt to climate change, problems in agriculture and water supply crisis (Bena, 2013). The items that are need to manufacture are large quantities of water, sweeteners, plastic bottles and caps, chlorine for cleaning, artificial color and other additives. Pepsi’s supply chain starts from the manufacturing plant, extends to the distributors who sell to the retailers, which sell the bottles directly to the customer. The extent problems in local level of the supply chain is that in certain occasions there is more demand of cans at certain outlets and in certain outlets there is a higher demand of plastic bottles. This trend may be volatile which is why Pepsi wants to turn their supply chain sustainable in nature. The areas of priority in supply management for Pepsi is to ensure that there is enough amount of access to water supplies. The greenhouse gas emission reduction is also something Pepsi wants to do for optimizing the fuel and energy usage of its supply chain. The manufacturing plants already utilize solar panels but the trucks and vans which distribute Pepsi throughout the country. The supply chain of Pepsi is efficient in terms of time management and connectivity with the distributors and retailers of Pepsi. To bring sustainability, Pepsi will have to optimize its supply chain further.
Pepsi Advertising

The promotional campaigns as compared to other soft drink companies have always been centered on celebrities which promote Pepsi through the advertisements. There have been huge campaigns featuring celebrities like Britney Spears, Beyoncé, Shakira, Michael Jackson, etc. and other national celebrities in case of other countries. In most cases, along with the timely campaigns, celebrity centric campaigns have helped Pepsi cement its image as a brand and keep its sales consistent (Warc, 2012).
Recommendations

There are 2 recommendations regarding Pepsi which have been included after observation of quality aspects and supply chain goals. Regarding quality, only thing lacking in Pepsi in comparison to Coca Cola is that it isn’t strong enough and pales in comparison due to extra sweetness. No doubts on the fact that Pepsi is still being like by millions, but if such a minor modification is made, it would remove the drawback and attract the customers of the competitor. Another recommendation for supply chain would be to cut back on empty backhauls by improving connectivity among the suppliers and distributors. This would reduce the fuel usage and make the supply chain even more efficient.
Bibliography
Bena, D. (2013, 7). Why is a sustainable supply chain so important to PepsiCo? Retrieved from www.rit.edu: https://www.rit.edu/affiliate/nysp2i/sites/rit.edu.affiliate.nysp2i/files/4a_dan_bena_pepsico_panel_presentation.pdf
Lakhe, R., & Mohanty, R. (2010). Total Quality Management Concepts, Evolution and Acceptability in Developing Economies. International Journal of Quality & Reliability Management, 9-33.
Pepsi. (2015). Brands. Retrieved from www.pepsi.com: http://www.pepsi.com/en-us/d
PepsiCo. (2005). The Pepsi-Cola Story. New Work: PepsiCo.
Pepsico. (2015). Our Products are Safe. Retrieved from www.pepsicoindia.co.in: http://www.pepsicoindia.co.in/media/Press-Releases/release_08_11_06.aspx
PepsiCo. (2015). THE FACTS ABOUT YOUR FAVORITE BEVERAGES – PEPSI. Retrieved from www.pepsicobeveragefacts.com: http://www.pepsicobeveragefacts.com/Home/Product?formula=35005*26*01-01&form=RTD&size=20
Warc. (2012, 10 19). New ad strategy paying off for PepsiCo. Retrieved from www.warc.com: http://www.warc.com/LatestNews/News/New_ad_strategy_paying_off_for_PepsiCo.news?ID=30523

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March 8, 2018

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