Shamim & Company (Pvt) Ltd. Pepsi Cola Bottlers - Production & Operations Management


Shamim & Company has completed 29 years of its operations. Operations management functions are being successfully implemented by management. A brief summary of operations management functions studied by this group are described below.

Product Planning:

At present new product decision is taken by the top management. Demand for new product is investigated by production manager- terms of raw material, machinery operations, and quality. Fro this purpose he can get guidance from constructions. Finance department evaluates financial viability. Sample production is conducted. Response from buyer in terms of satisfaction and company’s ability to meet the requirement helps in deciding to produce new product.

Process Design:

In the company process is continuous supply of concentrate is critical but process can be automated. Process is flexible and production on plant can be changed within one hour. Production on plant can be changed within one hour. Production is of large scale and covers a wide area for the distribution of the product.

Facility Design and Layout:

Facility design and physical layout of plant, supporting facilities and building is provided by the parent company that is PEPSI COLA International. Transportation costs with the plant is minimum. Physical layout provides maximum utilization of available space by optimizing costs.

Inventory:

Company is not using the quantitative methods for calculating economic order quantity, reorder point, safety stock and annual inventory cost. The company does not give importance to control inventory cost. Lead time is usually 2 days an in an exceptional case it can be up to 4-5 days. this also one reason that EOQ, ROP, lead time are calculated using qualitative techniques, by estimates of experienced managers.

Martial Requirement Planning:

Company produces beverages and uses Sugar, Carbon Dioxide, Ammonia and concentrate as raw material. Sot drink is a seasonal product. Most of the sale is done during summer season. Concentrate is bought from the franchiser PepsiCo. Sugar is bought directly from the sugar manufacturers of the area. CO2 is prepared within the premises, which is enough for the full capacity of two plants. When during samara 4 plants are in working, CO2 is purchased from the outside suppliers.

Quality.

Quality standard are followed at each and every step. Shamim & CO. has won best quality award for many times by PepsiCo competing all the Asian countries. Quality control labs are fully equipped. Quality controllers are at home in their jobs. That’s why the quality control efforts are recognized by the international management of Pepsi cola. This “serves as motivator for the organization, on no compromise on quality”.

Company Profile:

Pepsi co. is in-fact a corporation listed in the New York Stock Exchange USA. It is the owner of globe products like Pepsi Cola, Team, Marinda etc. Being owner of the products they give the rights of manufactures of its products to different countries. All over the world, the products are standard. If you buy a Pepsi from a remote area like Talamba and from Washington D.C., you will find absolutely same taste and color. Franchisees have to follow these standards; otherwise they have to face penalties from the real owners of the product. In Pakistan there are 10 units of Pepsi cola are working. Each unit has its own license of production. And each unit has its own territory in which it can sell its products. No unit can interfere in the area of other unit.

Brief History:

Shamim and Company was introduced in 1967 as a (Pvt.) Limited company. It started its production in 1968. In the early stages it was famous with the name of 7-up factory. Because 7-up was its first product. The other brands were introduced after 7-up. Pepsi Cola, Marinda and Green Marinda have been different products of Shamim and Co. Since its introduction. At present 7-up, Pepsi Cola and Marinda are being produced.

Company Characteristics:

Shamim & Co. is the biggest soft drink manufacturing unit in Pakistan with its four plants having full capacity of 50,000 crates per day. Company covers area of Southern Punjab including Sahiwal, Mianwali, Rajan Pur, Bahawalnagar and Khan Pur.

Organizational Structure

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Location

Location has important impact on company’s ability to compete and on its exposure to risk from external factors. In a dynamic market the company may expand, add or relocate new facilities.

Location decisions are important due to following reasons.

- Competition.

- Cost.

- Hidden effects.

Factors that effect the location decisions are

- Market related factors.

- Tangible Cost factors.

· Transportation.

· Labor availability and costs.

· Energy availability and costs.

· Water availability and costs.

· Site and construction cost.

· Taxes.

- Intangible Factors.

· Legal regulation.

· Community attitude.

· Expansion potential.

· Living conditions.

Steps in Location Selection are:

- 1) Select the general region, select generally acceptable communities.

- 2) Select appropriate sites within communities.

- 3) Determine method of evaluating community site combination.

- 4) Compare sites and select one.

Shamim and company is located near MDA chowk Multan in province of Punjab. The site of company is not of some strategic value. Because Shamim and Co. covers a large area of Southern Punjab. So there is no importance of site with reference to the other cities of this area. Any way; site of the company is considerable for Multan. As the major proportion of population lives in Cantt. and Down town (city). The site is nears to these both areas. In this way transportation cost to these 2 areas in very less. In this way it can serve it customers effectively and efficiently.

Location Factors:

Market Related Factors:

As the unit is located in Multan which is heart of its selling territory. In this way transportation cost is not high. Mean while its major revenues are collected from Multan and Bahawalpur. In so far Multan is concerned, transportation cost is minimum and Bahawalpur is only 60 miles away from Multan. In this way Multan is the city which can supply the product in all areas of its territory on right time.

Labor Availability:

Cost of labor is very important while setting up a plant. As there were villages in the west of the company when it was inaugurated. So labor was in ample supply at cheaper cost. But now all over the unit there are suburb colonies. But labor supply in still not a problem.

Energy Availability:

As the plan requires a large amount of electricity. Electricity is available at location on similar prices like all other areas of Pakistan.

Water Availability:

As the plant also requires huge amount of water, and at the site under ground water is easily available.

Social Response:

Public opinion is very favorable toward the company. Mean while the organization is not causing any pollution.

Expansion Potential:

In the early days of production, there were expansion potential in unit. So the unit is expand by putting 2 new plants. But at the moment there is no expansion potential.

Departmentalization:

There are six departments in the company, which are

1) production

2) Marketing

3) Finance

4) Sales

5) Shipping administration

6) Personnel.

In each deptt. there is a manger which is responsible for the working of his department to the general manager. A manager has an assistant manager. After Ass. A manager their are Shift Incharge in production and supervisors in sales. They control the activities of operatives.

Product Planning:

Uptill now the company has not produced any product of its own and there is no concept of product planning in future as well, because the management considers it a very theme to introduce a new brand of their own. In the brand like Pepsi Cola and 7-up are selling in the market like hot cakes. Meanwhile the people in Pakistan are reluctant to purchase Pakistan branded beverages and we don’t find any successful domestic brands of soft drinks in Pakistan. That’s why the management does not have any motivation to do product planning.

Shamim and company is a cold drink manufacturing unit that comprises of four plants to produce drinks. Investing in such a unit involves large investment of capital for long period of time, and requires considerations of all types.

Operations Planning

Process Design and Facility Layout

Having done the location selection company design a building, select the appropriate process technology and equipment and arranges it in away so that it has greatest potential to meet the strategic demand of organization. Experience and informed judgment are useful guides to layout decisions. Computer models are available to assist in deicing factory and office layout.

The type of operations to be performed in a facility, influence the facility’s needs and layouts. Equipment involved effects the layout. Facilities must be designed for the efficient operations in the organization.

Layout for Operations:

Facility is designed in numerous ways to support this work to be done within each facility numerous factors must be considered. Amount of available space and its shape. Design objective is very imprint. some of layouts are:

· Retail layout.

· Office layout.

· Distribution and ware house layout.

· Manufacturing layout.

Manufacturing Layouts

Jobshop Layout:

It is also called layout by process, functional layout. Any particular item in the job shop may require a unique sequence to convert the req. material to the desired and item. all people and equipment that perform the same function are grouped together.

Flow Line Layout:

Involved the arrangement of activities in some sort of line along which a service receiver or product process moves. This is called lay out by process. Machines or pieces of assembly equipment are located along the route over which product travel and are arranged in the sequence required by production plan. the path of flow may follow straight line or any other shape.

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Layout By Fixed Position:

Organization choose to bring the necessary people and equipment to the item being produced. Work item does not move from one operation to another. Fixed position layout may be used because the work item is too fragile, too bulky, too heavy to move without complications. Fixed position method necessitates the use of portable equipment.

Many organizations find that no fixed type meets their needs but instead that combination of types work well.

Manufactering Process:

In Shamim & Co. manufactering process is as follows;

Water Extraction:

Raw water is extracted from the sources. It is treated to remove its hardness. Here water is tested in lab to check it harness. If water has some Co3 or Hco3 it is drained and again soft water is used in the preperation of syrup.

Preperation of Syrup:

Syrup is prepared with sugar, concentrate and water. this syurup is heated upto 90 C to get it pasturized. this hot syrup is collled down and stored in the tanks. Here lab testing of syrup is done to check its quality standard.

Production:

Syrup is sent to Carbo Cooler. During flow of syrup from tanks to Carbo Coolers, Ammonia and Carbon Dioxide are mixed in the syrup.

In production process empty is feeded from on side. This emplty is washed and light check is done to see quality of washing.

From Carbo Cooler syrup goes to the Filler. At filler syrup is filled in the empty bottles, and Cap Crown is fixed on the bottols. Here and operater looks after the filling process. He can increase, derease or even stop production speed accordingly.

Filled bottols are tested in lab. by taking samples. Light check is done to check the level of syrup in bottles and chek some solid partieals. The overfilled or underfilled bottols are separated. If some partical is found in some bottlol it is also separated.

After light check bottols passed under a printer and code is printed on the bottoles, with this code the date of manufactering and shift time can be identified.

When all checking process is done the bottlols are cased in the crates.

The whole process of manufactaring is automatic. It required a little supervision. Raw material is put from one side and filled bottles come out of the process.

Support Facilities:

Support facilities are carried out in such a way that the direct operations can function smoothely. support facilities are essential for operations. Some of departments to be considered in layour are

· Inventories, material and suppliers.

· Tool room.

· Inspection and quality control.

· First aid.

· Maintenance.

· Safety and security.

· Clerical and bookkeeping.

· Tube well.

· Airconditioning plant.

· Transformer.

· Equipment for work shop.

· Bailing press.

· Parking facility.

· Canteen.

· Emergency situation analysis.

· Medical facility.

Considerations for inventory layout are considerable.

Inventory Management:

Inventory is very important to many companies because it helps the company respond quickly to customer demand, which is an important element of competitive strategy. Inventories of raw material or partially processed goods can help a company complete the production cycle in a much shorter time then would otherwise be possible. The more affective a company inventory’s system, the better able it is to manage its resources and to compete effectively.

An inventory system is collection of people, equipment and procedures that function to keep account of the quantity of each item in inventory and to determine which item should buy or produce in what quantities and at what time. Some inventory systems require transaction reporting to keep track of every instance in which units are added or taken from the existing inventory at Shamim & Co. can be classified int five categotries.

- General items.

- Part items.

- Electirc items.

- Lubrication items.

- Stationary items.

Issuance of Differant Items:

When production department requires a particular item from inventory, they fill the requisition slip. One copy is kept at the store and a carbon copy is kept by the production deptt.

This slip includes the quantity issued, stock register page number, iteem code, This slip is signed by the production manager. Inventory items are issued on these slip.

Control of Inventory:

At the end of each month, store prepares a monthly consumption report. This report includes the detail of all the inventory items which were consumed by the production deptt. of Shamim & Co. during the month.

In this way the inventory is controlled in the Shamim & Company.

Quality Control

The quality control should

1. Define specific product and service quality level requirements.

2. Determine the relationship of design and process characteristric to output quality and related process requirement.

3. Dewtermine methods, personnel and equipment for measuring quality.

4. Measure and record the quality achieved.

5. Trigger corrective processess when actual quality varies from the acceptable quality.

Specification of quality requirements begins in market research continue as part of the product design activity, and culminates in the quality specification and design subsystem output. That output defineates the specific product or service attribute that effect the quality and must be assured.

The Quality Specification And Design Subsystem

The activities of this subsysten are integral part of the product design activities, its objectives are to be determine that the new design output

1. Will meet the customer need.

2. Will operate under end use conditions.

3. Can be produced or provided given the organizions capabilities.

4. Will function with the specified level of reliability in terms of minimum means time between failure.

5. Will require less than a specified amount of maintenance hours and material costs operating hour.

6. Can be required within a certain time frame.

Quality Assurance:

Quality assurance is the title given to those management activities and systems required to provide assurance that the over all quality controlled task is being carried out. The quality asssurance system is the aggregate quality management system. It interfaces with other general management system performong similar functions relative to the organizations financial personnel facilities and marketing policies

Process Quality Planning & Control Subsystem:

This subsystem concerns the what, where, when, who of quality control during operations. It frequently involves major expenditure for personnel, equipment, inspection and testing activity.

The objectives of this subsystem are to be......

1. Determine the process attribute and characteristic to be measured.

2. Determine the methods of measurement and develope detalied instructions describing the measurement process.

3. Determine, select and train the personnel required to implement the quality control procedures.

4. Measure and record operational quality interms of the number of defects and seriousness of defects and causes of defect.

5. Provide corrective action procedures forout of control situation.

6. Define the dispositions of quality deficiencies.

Personnel :

Briefly, individuals must be selected and trained to caryy out the measuring process. The capability necessary and number of individual required, selected and trained for implementation of measuring procedures. Development of the skills of quality control personnel is a continuous process as products. Processess, the equipments and procedures evolve.

Measurement And Documentation

Product quality must be measured on both quantitative and qualitative basis, and the measurements must be recorder. Quantification of the qualitative aspects occurs whe defects are classified into categories such as critical major, and minor, which were describe earlier. A classification such as this one of the inputs to the organization’s as greater measure of quality.

Product or services that do not meet the desired quality standards generate two types of required corrective actions

1. The disposition of the defective product or service.

2. An analysis of the cause of the defeciencies.

Disposition

Defective products fall in to three categories:

1. Defective units are beyond being reworked and must be scrapped.

2. Defective units can be reworked to meet specification.

3. Defective units can be modified to meet all the functional requirements but still not meet the atandard blueprint specification.

The latter units are approved on a variance basis:

Many organizations establish a material review board, consisting of engineering, manufacturing quality control, marketing and a customer reprentative to review proposed rework of defective parts that are out side the standards of blueprints qualifications. Approval by all the members must be recevied before rework can procede.

Purchase of Raw Material:

Direct raw material for the products include the following items.

i) Sugar

ii) Concentrate

iii) Treated water

iv) Empty bottle

v) Amonia and Carbon Dioxide.

From above items only concentrate is provided by the franchiser. All other raw material is purchased by the company itself.

Sugar Quality Testing:

Purchase of sugar is a critical step in the purchase of raw material. When sugar bags are arrived at the plant that time it has to pass through a strict quality check. In fact sugar quality is very very important in the production of the beverages.

In order to test the quality of sugar first supervisor checks the apparent status of sugar. It should be free of moisture. After that randomly selected sample from sugar bags is sent to labortary for labortary testing. If sample is passed the sugar is stored for further processing. If sample is not passed then the whole lot is sen back to the sugar mill.

Concentrate:

Concentrate is the most important raw material raw material used in the production. As concentrate is supplied by the franchsder from the peant located in industrial zone Hatttar, so there is no question about the quality of concentrate.

Water Treatment Tests:

The company has installed four tubewells to meet the requirement of water. The extracted water is then treated for the use in the final processing. At different staged of treatment tests include:

1 Upper tap tests.

2 Sand filter and carbon purifier test.

3 Water softness test.

For this purpose the company has prepared forms for the record of these tests which are signed by the shift incharge after each shift. If he observed some abnormility he stops supply from one container and provides the required water through other container. The company has two ocntainers for the supply and storage of trated water. The closed containe4r is then sanitated and washed back. The sanitation and washing back of containers is also done at regular basis, after ten days.

Syrup Testing:

After mmixing water, sugar and cocentrateit is treated at 900 C and then it is stored in the tanks. This is called simple syrup. This syrup is tested in the lab. This syrup goes into carbo cooler. Here Ammonia and Carbon Dioxide are mixed in the syrup. This is called finished syrup. The finished syrup is also tested in the lab. If chemist finds any deviation from the standards, the syrup is drained before any further processing.

Finished Bottle Tests

When the bottles are filled at filler, the chemist take sample after every half hour. If any deviation from the standard is found the whole batch is drained before going in market.

A microbiological test is also taken by the chemist after a week of production. If any kind of germs growth is found the stored bottles are declared rejected.

The management of PepsiCo is also concious about quality standards of its products. So the quality inspectors of Pepsi Cola International take sample of different brands from the market, check it in the laboratory and send the results to PepsiCo. In case of any deviation from the standards the management of PepsiCo sends advice or strict warning to the concerend unit according to the degree of severness.

Other Tests

When the empty bottles are processed to clean and rinse a sample is taken to see any possibility of Caustic Soda. Light check is also done to see the presence of any solid particle in it. Moreover when the bottles are purchase they are also checked against the sets standards. The quality of glass, size of neck and size of bottom should be according to the given standards. Sugar which is an important ingredients of syrup, the quality of sugar is also checked when the sugar is recieved at the store from different suppliers. The sample is selected randomly. If the sample is not up to the mark, the other bags are also checked. If any deviation occurs, the shipment is rejected. Meanwhile the surface of bags is also examined to see any external problem with the lot. But there is no particular method of samlping.

Role Of PepsiCo:

PepsiCo is the franchiser of Shamim & Company and it has full responsibility for the quality of Pepsi Cola and other product line. So the franchiser has arranged a system through which they buy some bottles from the market which are produced by the Shamim & Company and it is checked in labortary of New York. This system also shows that the company has been trying to make a rigid quality control system in order to provide better product to its customers.


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