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Introduction

Lays is owned by PepsiCo and is a brand of potato chips with a number of varieties and
flavors. Lays was officially launched in Pakistan on September 17, 2012 (Facebook official
page). Lays is part of PepsiCo Inc. PepsiCo Inc. was created in 1965 through the merger of the
Pepsi-Cola Company and Frito-Lay Inc. As the worlds second biggest food and beverage firm,
PepsiCo ensures that its mission statement and vision statement are aligned with its current
business condition. This condition highlights the diversification of the company in terms of its
product mix and markets.

We make the best snacks on earth for more than 80 years. Every now and then, we like to look
back on our roots and savor the moments and milestones that have shaped our company over the
years (Fritolay.com).

In this report, emphasis will be placed on the manufacturing of the potato chips of lays Pakistan.
It does not only analyze the manufacturing process of the chips in detail but also critically
evaluates the function and efficiency of each step in the process. It will be identifying bottle
necks and critical times. At the end of the report recommendations are given based on the
analyses.

Vision
PepsiCos vision statement is
To deliver top-tier financial performance over the long term by integrating sustainability into
our business strategy, leaving a positive imprint on society and the environment.
Analysis of the vision statement

PepsiCo adds that this vision statement is built on the idea of Performance with Purpose.
Based on these considerations, PepsiCos vision statement has the following main points:
1. Top financial performance
2. Sustainability
3. Corporate social responsibility
But it lacks few major components of a vision statement in which the company states its
employees, customer, future direction and technology. At the top the company must state, What

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it wants to be? i.e. draw a futuristic direction for the company. An effective vision statement
must include how devoted the company is or will be towards the customer. It also mentions its
concern for the employees. One important factor is the incorporation of technology in the
operations of the company.

Mission
PepsiCos mission statement is
To provide consumers around the world with delicious, affordable, convenient and
complementary foods and beverages from wholesome breakfasts to healthy and fun daytime
snacks and beverages to evening treats.
Analysis of Mission Statement

An effective mission statement has to tell What the company is? Lays mission statement tells
that very clearly. It mentions exactly what the company makes which is wholesome breakfast,
snacks and beverages. It also states what the company stands for which is providing delicious,
affordable, convenient and complimentary food items around the world. In conjunction with the
mission statement, PepsiCo also states, We are committed to investing in our people, our
company and the communities where we operate to help position the company for long-term,
sustainable growth. The main points of PepsiCos mission statement are as follows:
1. Consumers around the world
2. Fun products
3. Delicious
4. Healthy
5. Affordable
6. Convenience
7. Daytime and evening
Lays is justifying these statements by incorporating with the local needs of the customers. For
example; Lays introduced flavors such as lays dahi bhalay and lays mint chutni to fulfill the
promise of being delicious all around the world by incorporating the local taste requirements of
the country. It has also made the product fun with the help of its unique marketing tools. For
example; Lays Pakistan started the marketing campaign #passasmile with the help of changing
the design of the packaging. It was one of the longest give away campaigns in Pakistan. It was

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not only fun it was also generating volumn because the person who snaps a photograph with Lays
smile pack can become millionaire and on lucky draw can get Audi A3. Lays also reinforces to be
affordable because the range of products start from Rs. 10 only.

Stock keeping Units


Lays Pakistan currently has 48 SKUs that are differentiated on the bases of size and flavor. All
these are made in the same plant. Following flavors are currently being made by Lays Pakistan.

Flavors

Barbecue
Masala
French Cheese
Salted
Tomato Tangy
Mint chutni
Dahi bhalay
Yogurt and herb

All these flavors are made in following sizes.

Sizes

8 grams pack
14 grams pack
28 grams pack
40 grams pack
54 grams pack
70 grams pack

The Plant
Lays Pakistan has manufacturing plant in Sundar Industrial Estate (SIE). It is next to Nahla
nearly 45KM from the centre of Lahore, Punjab. The management is proud of the state of the art
machinery and says that it can compete in best plants of the world. The management of the plant
is exceptionally authoritarian towards the security and maintenance of the plant and equipment.

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Process Flow
The manufacturing Lays potato chips follows a continuous process flow which means that the
material i.e. potatoes are continuously in motions and are undergoing different processes. The
process flow for manufacturing Lays chips consists of 11 steps from the point the potatoes are
brought from the farm to the point they are packaged. During all these steps, the labor of about
11 personal are manually checking the work in process and sending the deplorable WIP in
wastage. Following are the steps involved in the process and are discussed in detail. The figure 1
shows the process flow in the plant.

Testing

The sample potatoes are tested before accepting them from the farmer. The procurement
department conducts a lab test to ensure the starch content in the potato just right and to ensure
the quality of potatoes. The potatoes are randomly selected from the large quantity for the lab
test. The potatoes are also examined for green edges, fungus and blemishes. Sometimes the
whole lot is rejected and sometimes the bad potatoes are removed and the rest are brought to the
plant to be made into chips. The potatoes then go either directly for processing or for storage
when in excess.

Storage

They are stored in the warehouse and on plant as well. The on plant potatoes are stored for a
shorter period of time and are put into production when required. The potatoes in the warehouse
are stored for a longer period for the time when good potatoes are not available. The fresh and
better quality potatoes are available from December to March so they are stocked in the
warehouse at 27oC in order to maintain their starch content. Most of the good potatoes are
received from Dipalpur, Okara district in Punjab. When stored potatoes are used the wastage
increases.

The setup time i.e the machines starting, blades changing, seasoning changing and cleaning time
is 120 minutes. There is a shift of 8 hours whereas machine runs continuously 24 hours. The
machines are only changed when the seasoning is needed to be changed or in order to shift from
lays to wavy. There are a total of 3 shifts in a day.

Unloading (A)

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After the potatoes are tested they are directly unloaded onto the conveyor belt. The potatoes
move along the conveyor belt to the various stages of manufacturing as shown in figure 1. The
conveyer belts are powered by gentle vibrations to keep breakage to a minimum.

Sorting (B)

After unloading, the potatoes are sorted according to their size. The big and small potatoes are
separated on the conveyor belt.

Washing (C)

The potatoes are washed after being sorted to remove the dirt off them. They are also washed to
remove all sorts of impurities like dirt and soil that has been carried forward.

Devoter and Destoner (D)

After washing, the potatoes are passed through a devoter to remove any fungal potatoes. Then
the potatoes are passed through a destoner to remove any hard potatoes. The hard potatoes are
removed because they are difficult to peel and do not produce good quality chips. Both the
devoter and destoner operate on a specific benchmark for the according to perfect density of
potatoes. After this step only good potatoes move forward.

Peeling (E)

The potatoes then move to the automatic conveyor belt for peeling. At the Lays plant there are 5
to 7 peelers. Potatoes are peeled in batches, and the peeling time is adjusted according to variety
of chips produced. The undersized potatoes are discarded whereas the oversized potatoes are cut
into half. The undersized potatoes are discarded whereas the oversized potatoes are cut into half.

Slicing (F)

The potatoes then pass through a revolving presser that cuts them into paper thin slices. Straight
blades produce regular chips like Lays whereas rippled blades produce ridged potato chips like
Wavy. The slicing is manually checked to remove any defected chips and labor is there to
remove defected chips.

Washing (G)

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After slicing, the potatoes are washed a second time as they move towards the steamer. At this
stage the rotten potatoes lay at the bottom of the washer whereas the perfect ones float forward
towards the steamer.

Steaming (H)

Before frying the excess water content is removed from the chips by moving them through the
streamer.

Till here the process takes 40 minutes.

Frying (I)

They fryer is 15 feet long and it takes about 3 minutes to fry the chips. The base chip produced
here has no flavor.

Scanner (J)

In this phase any defected chips that are produced as a result of frying are removed. While
moving on the conveyor belt towards the scanner any excess oil that is present is also removed. It
is estimated to take 1 minute.

Seasoning (K)

At this stage only those chips are present which are to be packaged. It is estimated that it takes
about 1 minute.

Packaging (L)
The chips are conveyed to the packaging machine. The chips are packed according to their pre-
set weight through a Hopper. The bags flow down the roll and are manually packed into cartons.
The labor picks the packets and puts them into the carton. This step involves 15 people. It has a
manual stacking system. It takes about 5 minutes.

Wastage
The potatoes that are defected and are removed from the process they are also used. Their starch
is extracted and is sold to textile mills. It is also used as animal feed. The current waste is 2-
2.5%, but it can vary according to the quantity of stored and fresh potatoes. Smaller bags of 8

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and 14 grams lead to more wastage whereas larger ones result in less wastage so production
department favors large packs but they do not result in operational efficiency.

Machines
Two machines are used in the plant namely PC50 and PC32. PC-50 is used to add 3 flavors at a
time. It has 9 partitions. With this 120 bags are produced per minute. Its capacity is making 5000
pounds of chips per hour. Whereas PC-32 adds 2 flavors at a time. It has 8 partitions and can
produce 80 bags per minute. Its capacity is producing 3200 pounds of chips per hour. The
random line capacity of PC-32 as mentioned by Mr. Bilal is 1750 kg/hour.

The total capacity of the plant is 8200 pounds per hour.

The demand of the chips also vary according to different flavors and those in higher demand are
produced in a larger quantity. To manufacture Wavy only the blades of the machine are changed.

Quality Control

Quality control is the main concern at Lays and quality is checked at all points throughout the
process flow not only through machines but manual labor is also present at all points through the
process. 11 personal are manually checking the work in process and sending the deplorable WIP
in wastage.

From the point potatoes are bought till they are packages, the defected potatoes are removed at
all points. First through lab test when the potatoes are tested, then when they are sorted. After
that bad potatoes are removed in the destoning process. The slicing is manually checked by labor
and the defected potatoes are removed. After frying, the burnt potatoes are removed in the
scanning process.

Taste samples are also made from each batch of the manufacturing process, to check for taste and
flavor. Breakage of potatoes is also prevented. The height through which the chips falls from
conveyor belt to fryer has been decreased to prevent breakage.

Inventory Management
Recently, the company has installed the RFID system. It use to work of FIFO (first in first out),
because the potatoes are perishable and cannot be stored for a longer period of time. Same is

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used for the packaging because they need to maintain shelf life of the product. As mentioned
before, best potatoes are available from December to March, so potatoes are stored in these
months to use later.

Demand Dynamics
The demand for Masala chips is greater than any other. 150,000 tons of Masala chips are made
weekly. The demand is determined according to the flavor of lays. There is a weekly demand
change that occurs due to which the production capacity changes every week. The production
capacity is 155 tonnes.

Challenges
One dilemma the production department is facing is that there is a growing demand for 8 grams
and 10 grams chips pack, but the production department says that operational efficiency cannot
be achieved through this and if these are produced more the costs are high. The sales department
demands more of these packs due to high demand in the market.

The bottleneck of the process i.e fryer is also slowing the process and limiting the volumes to be
produced. It also results in making the second washing to be buffer for fryer as the potatoes are
kept idle intentionally. The second bottleneck in the process is packaging as it takes 5 minutes
which is longest.

When stored potatoes are used thick skins are peeled off so the wastage increased. Better and
new seeds cannot be given to farmers because there is no patent law introduced in Pakistan.

CAPACITY CALCULATIONS:
TASKS CYCLE TIME EST. CAPACITY EST. CAPACITY
(MINS) (LBS/HOUR) UTILIZATION (%)
A (UNLOADING) 0.5 3400 87.17%
B (SORTING) 10 3350 85.89%
C (WASHING) 12 3345 85.76%
D (DESTONER) 6 3330 85.38%
E (PEELING) 6 3300 84.6%
F (SLICING) 2.5 3298 84.5%
G (WASHING) 2 3295 84.4%
H (STEAMING) 4 3290 84.25%
I (FRYING) 3 3285 84.21%
J (SCANNER) 8 3255 84.1%
K (SEASONING) 4 3250 84%

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L (PACKING) 7 3200 83.8%

BOTTLENECK REMOVAL:
Current number of fryer is one, in continuous production line, and it takes about 3 mins
to fry.
ADD a FRYER.
By adding a small new fryer, having a capacity of about 700 lbs. frying parallel they can
produce more chips in an hour as they previous processes are down streamed due to over
production capacity to pile up the chips at the frying end.
Capacity is enhanced when cycle time of task I is reduced to 1.5 mins.
Capacity Utilization is measured in terms of production output and is calculated as
Actual Output
100
Potential Output

NEW CAPACITY CALCULATIONS:


Tasks Cycle Time EST. Capacity EST. Capacity Utilization
(Mins) (lbs/hour) (%)
A (unloading) 0.5 4000 102%
B (sorting) 10 3985 102%
C (washing) 12 3970 101.7%
D (DE stoner) 6 3950 101.2%
E (peeling) 6 3920 100.5%
F (slicing) 2.5 3910 100.2%
G (washing) 2 3910 100.2%
H (steaming) 4 3900 100%
I (frying) 1.5 3850 98.7%
J (scanner) 8 3845 98.65%
K (seasoning) 4 3830 98.56%
L (packing) 7 3815 98.1%

CPM NETWORK FOR PRODUCTION OF TABLET MEDICINES:

Activities Designation Immediate Time


Predecessor (Mins)
A (unloading) A - 0.5
B (sorting) B A 10
C (washing) C B 12

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D (DE stoner) D C 6
E (peeling) E D 6
F (slicing) F E 2.5
G (washing) G F 2
H (steaming) H G 4
I (frying) I H 1.5
J (scanner) J I 8
K (seasoning) K J 4
L (packing) L K 7

CPM DIAGRAM DEPICTING THE PRECEDENCE


RELATIONSHIPS:

Other than the major area of Production Process there are other specified areas in operations
management of Frito Lays as well and are, marketing department, customer-complaint handling,
supply chain network, inventory control, quality control department, research and development
department, sales department and human resource department.

Conclusion

Recommendations

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Appendix

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