OPERATIONS MANAGEMENT PROJECT REPORT

MMS A (2011-2013)
GROUP MEMBERS ELZA GEORGE (08)

GIRIJA HULI (09)

YOGESH PRABHU(26)

SINDHU SUNDARESH (36)

ANKIT SHAH(47) SANSKRUTI JAISWAL(48)

RENUKA SHARMA (51)

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Performance with Purpose

UNNATI THAKKAR (59)

TABLE OF CONTENTS
1.INTRODUCTION....................................................................................3 2.PEPSICO LEADERSHIP...........................................................................7 3.ENVIRONMENTAL MANAGEMENT............................................................8 4.FUNCTIONAL GROUPS.........................................................................11 5.PRODUCTIONAL STRATEGY..................................................................12 6.PLANT AND MACHINERY......................................................................14 7.PLANNING AND SCHEDULING...............................................................17 8.MATERIAL MANAGEMENT....................................................................20 9.QUALITY MANAGEMENT......................................................................24 10.VALUE ENGINEERING........................................................................26 11.BIBLIOGRAPHY.................................................................................28

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1. INTRODUCTION
ABOUT PEPSICO PepsiCo is a world leader in convenient snacks, foods and beverages with revenues of more than $60 billion and over 285,000 employees. It is a FMCG company. Their brands are available worldwide through a variety of go-to-market systems, including direct store delivery (DSD), broker-warehouse, and food service and vending. PepsiCo, Inc. is founded by Donald M. Kendall, President and Chief Executive Officer of PepsiCola and Herman W. Lay, Chairman and Chief Executive Officer of Frito-Lay, through the merger of the two companies. Pepsi-Cola was created in the late 1890s by Caleb Bradham, a New Bern, N.C. pharmacist. Frito-Lay, Inc. was formed by the 1961 merger of the Frito Company, founded by Elmer Doolin in 1932, and the H. W. Lay Company, founded by Herman W.Lay, also in 1932. Expanding on a global scale and growing in volume & product mix it crossed the profits of $1 billion in 1990. It went online in the year 1995. Since its establishment PepsiCo has always expanded its operations into diverse products and across different locations of the world. It has done so by acquiring & merging with companies to establish itself in the new region. PepsiCos USP has always been its distribution network, marketing and branding strategies adopted by the company by understanding the local culture. Major products of the company are:

Pepsi-Cola Company - Pepsi-Cola (formulated in 1898), Diet Pepsi (1964) and Mountain Dew (introduced by Tip Corporation in 1948). Pepsi has been bringing fun and refreshment to consumers for over 100 years. It constituted around 13 billion units of retail sales in the year 2010. Frito-Lay, Inc. - Fritos brand corn chips (created by Elmer Doolin in 1932), Lay's brand potato chips (created by Herman W. Lay in 1938), Cheetos brand cheese flavored snacks (1948), Ruffles brand potato chips (1958) and Rold Gold brand pretzels (acquired 1961). Employing over 48,000 people and bringing in over $11 billion of business, Frito-Lay invigorates PepsiCo's portfolio of products with plenty of good food and 'good fun'. Mountain Dew launches its first campaign "Yahoo Mountain Dew ... it'll tickle your innards. Fruit Juices Tropicana (1947), the strongest name in juices, extends the PepsiCo portfolio of brands with plenty of nutritious, high-quality flavors. It was founded by Anthony Rossi as a Florida fruit packaging business was acquired by PepsiCo including the Dole Juice Business in 1998. Quaker Brand PepsiCo merged with Quaker Oats Company in 2001. Quaker's powerpacked line of popular brands expands our portfolio with a wide range of healthy food choices. Quaker brands have been around for over a century. They are symbols of quality,
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great taste, and nutrition. Holding No.1 positions in their respective categories are favorites such as Quaker Oats, Quaker Rice Cakes, Chewy Granola Bars and Rice-A-Roni. Gatorade Brands - Available in over 80 countries, Gatorade's line of performance drinks adds over 40 years of rehydration and sports nutrition research to the PepsiCo portfolio. The companies merged in 2001. In 2010, Gatorade introduced the G Series; a new line of products from Gatorade that go beyond hydration to provide fuel, fluid and nutrients before, during and after the game.

GLOBAL PRESENCE PepsiCo is present in nearly 200 countries across the globe. Awards

First presentation of the international, Donald M. Kendall Bottler-of-the-Year Award in 1980. PepsiCo is named to the 'Best Companies for Multi Cultural Women' list by Working Mother magazine in 2009. PepsiCo products make 'Best Foods for Women' list in Women's Health magazine in 2009 Sabritas and PepsiCo Mexico Beverages receive three Effie 'Top Marketing Campaign' awards PepsiCo U.K. and Ireland were named as one of the 'Top 50 Places Where Women Want To Work' by The Times, PepsiCo ranks among top companies on Corporate Social Responsibility Index by the Boston College Center for Corporate Citizenship PepsiCo named to Ethisphere's 'Most Ethical Companies' for 2009 PepsiCo is listed in the top 20 'Ideal Employer MBA Ranking' in Fortune magazine PepsiCo China beverage group named 'Supplier of the Year' by Wal-Mart China

PEPSICO INDIA PepsiCo entered India in 1989 and in a short period of 20 years has grown into the largest and one of the fastest growing food & beverage business in the country. PepsiCo Indias growth has been guided by PepsiCos global vision of Performance with Purpose. Large investor: PepsiCo is one of the largest US multinational investors in India with an investment of over $1 billion, PepsiCo India provides direct and indirect employment to over 1,50,000 people across the country. Its beverage and snack food business is supported by 36 beverage bottling plants, (13 company and 23 franchisee owned) and three state-of-the-art food plants. PepsiCo Indias diverse portfolio includes iconic brands like Pepsi, Lays, Kurkure,
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Tropicana 100%, Gatorade, Quaker and young but immensely popular and fast growing brands such as Nimbooz and Aliva. No.1 food & beverage business in India: PepsiCo India has not only grown to become the countrys largest food and beverage business but has also become a powerful and consistent driver of PepsiCos global growth. Model partnership with over 22,000 farmers: PepsiCo has pioneered and established a model of partnership with farmers and now works with over 22,000 happy farmers across ten states. More than 45% of these are small and marginal farmers with a land holding of one acre or less. PepsiCo Indias farming program has improved their livelihoods and incomes by providing assured buy back of their produce at pre-agreed prices thus insulating them from open market price fluctuations. PepsiCo provides 360 degree support to the farmer through quality seeds, extension services, disease control packages, bank loans, weather insurance, and latest technological practices. Global leader in water conservation: In 2009, PepsiCo India achieved a significant milestone, by becoming the first business in the PepsiCo system to achieve Positive Water Balance (PWB).

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Plant Locations Divisions PepsiCo reports its operations results as follows, by six segments: PepsiCo Americas Beverages (PAB) Frito-Lay North America (FLNA) Quaker Foods North America (QFNA) Latin America Foods (LAF) Europe Asia, Middle East & Africa

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2.PEPSICO LEADERSHIP

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3.ENVIRONMENTAL MEASUREMENT
PepsiCo Indias employees are driven by the companys global commitment to sustainable growth, Performance with Purpose (PWP), which works on four planks:

Replenishing water, Partnering with farmers, Converting waste to wealth and Nurturing healthy kids.

REPLENISHING WATER In 2009, PepsiCo India achieved a significant milestone, by becoming the first business in the PepsiCo global system to achieve Positive Water Balance (PWB), a fact validated by Deloitte Consulting. Their goal is to conserve, replenish and thus offset the water used in our manufacturing process through community water recharge projects and water conservation projects in agriculture.In 2009, the company achieved a significant milestone: Positive Water Balance.

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Through various initiatives of recharging and replenishing water, it was able to give back to the community more water than it consumed in its manufacturing processes. In 2010, PepsiCo has further increased the amount of water saved and is now water positive by 4.3 billion liter, a fact verified by Deloitte Touche Tohmatsu India Pvt Ltd.

PARTNERING WITH FARMERS Their journey began with successful introduction of a high-yielding variety of tomato, and went on to help paddy farmers increase their crop. Today their ventures into crop diversification and the farming of high-quality potatoes and other edibles have transformed the lives of thousands of Indian farmers. They plan to strengthen farmer connect from 21,000 in 2009 to 50,000 by 2012. They have partnered with State Bank of India to get soft loans to all our contact farmers, thus reducing their cost of cultivation and saving them from the clutches of moneylenders CONVERTING WASTE TO WEALTH A unique with NGO, pioneer segregate waste waste,
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incomegenerating partnership leading environmental Exnora a in waste management. Households their biodegradable from their recyclable and the
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programme recycles 85 percent of household garbage. Bio-degradable waste is converted into organic manure through the process of vermi-culture. This project provides livelihood to more than 500 community members. NURTURING HEALTHY KIDS The project catalyzes community-based interventions to deliver integrated health and nutrition solutions to children under 5, young mothers and pregnant and lactating women. Save the Children works with community health educators to provide families important information about health, nutrition, water, sanitation and hygiene.Invested $4.4mn during 200911 in the Save the Children project WORK MEASUREMENT: In 2009, we announced 12 new goals and commitments to achieve Talent Sustainability. Their commitments include enabling our associates to thrive in a diverse, inclusive culture; providing a safe and empowering workplace; providing opportunities that strengthen our associates' skills and capabilities; and contributing to better living standards in the communities. CULTURE

Enable our people to thrive by providing a supportive and empowering workplace Ensure high levels of employee engagement and satisfaction Encourage our employees to lead healthier lives by offering workplace wellness programs. Ensure a safe workplace Support ethical and legal compliance through annual training in our Code of Conduct

CAREER Provide opportunities that strengthen our employees' skills and capabilities to drive sustainable growth. Create a work environment in which employees know that their skills, talents and interests can fully develop. Conduct training for employees from the frontline to senior management

COMMUNITY
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Contribute to better living standards in the communities we serve. Create local jobs by expanding operations in developing countries. Support education through PepsiCo Foundation grants.

4.FUNCTIONAL GROUPS
The various functional departments in the Organization are: MARKETING DEPARTMENT The Marketing Department looks after the Customer Order and Processing. Salman Amin- Executive Vice President and Chief Marketing Officer, PepsiCo PRODUCTION AND PLANNING DEPARTMENT

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Production planning, Inspection of production, Preventive maintenance & Breakdown maintenance are the various functions of this department. Rich Beck- Senior Vice President, Global Supply Chain Operations, PepsiCo PERSONNEL DEPARTMENT This department deals with Training and Staffing of personnel.

Julie Hamp- Senior Vice President, Consumer Relations & Chief Communications Officer, PepsiCo Cynthia M. Trudell- Executive Vice President, Human Resources and Chief Personnel Officer, PepsiCo

PURCHASE DEPARTMENT The job of the Purchase Department is to select and evaluate the various suppliers of raw materials, buyout items, etc. Thus, the job of the purchase department is to select the right vendor for buyouts and the correct supplier of raw materials based on the Quality, Rate, time for procurement, etc.

Grace Puma- Senior Vice President & Chief Procurement Officer, PepsiCo

DESIGN DEPARTMENT This Department looks after the procedure of Design and Development of the job which is being produced.

Dr. Mehmood Khan- Chief Scientific Officer, PepsiCo,Chief Executive Officer, Global Nutrition Group

5.PRODUCTION STRATEGY
The system starts with the finest ingredients available kola nuts, vanilla beans, flavor oils, citrus, sweeteners and the purest waters we can distill. Then we add the best technology and all the care we can muster to blend our ingredients.

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And during the 100-plus years we've been making soft drinks, we've also created our own exacting production and quality standards, monitored with constant testing to guarantee quality and consistency in our products. Finally, we have our own local distribution system. It's designed to make sure that the Pepsi you open at home is as fresh and delicious as it was when we sealed it at our plant. And it serves every city and town in the United States. Complicated? For sure. And expensive, too. But there's no other way we can be certain that Pepsi-Cola products you buy are the highest quality, best value products we can make. Now, here's what all of those steps look like: Flavor concentrates are shipped from special Pepsi-Cola manufacturing plants in heavy-duty, airtight containers. Liquid sweeteners are transported in special tanker trucks. All ingredients and food products are stored in clean, sanitary areas, and items requiring refrigeration are kept in temperature-controlled areas. The bottles and cans that will eventually be filled with Pepsi are manufactured elsewhere, and shipped to Pepsi plants wrapped and sealed for protection. Labels, cartons, caps, the carbon dioxide used to carbonate soft drinks and other supplies are also produced for Pepsi by other companies. On arrival, everything is subject to careful inspection to make certain all of the ingredients and materials meet high Pepsi standards. Special equipment is used to uncase and depalletize incoming shipments of bottles and cans. Cans are by far the most popular package with consumers because they're lightweight and easy to store. Though bulky, the cartons and pallets on which the empty packages arrive are also relatively light in weight, so it's easy for the machines to automatically remove the cans from their shipping containers at high speed. The machines then transfer the individual packages to a conveyor belt. Once on the belt, cans are part of an enclosed, controlled environment that keeps them sanitary and helps ensure quality throughout the filling process. They travel rapidly through a printer that applies a production code to each can. Then they're automatically turned upside down, and rinsed thoroughly with filtered water before proceeding directly to the filler. Water is a key ingredient in all soft drinks. Pepsi-Cola takes special care to purify the water it uses a procedure that involves careful treatment, filtration and purification. Pepsi standards are precise and closely monitored at every step of the process. The result of this kind of painstaking attention to detail is that the water used in Pepsi-Cola and all of our beverages is among the purest available anywhere.
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Pepsi-Cola flavor concentrate is carefully combined with sweeteners and other ingredients in large stainless steel mixing tanks. Quality control audits performed by specially trained technicians are a critical part of the manufacturing sequence for each batch, and are typical of the attention to detail that's necessary if the highest possible quality standards are to be maintained. Cleanliness is also vital, so all internal and external surfaces of the production system, including syrup lines, proportioning, cooling and carbonating equipment, are meticulously sanitized. In the last step of the manufacturing process, as the now-rinsed cans reach the filler, they're reinverted, immediately filled and the lid is applied at an average speed of 1,200 cans per minute. The filler is where the syrups from the mixing tanks are combined with the purified water from the filtration process. The liquid is then carbonated. This carbonation process gives soft drinks the special sparkle fizzy bubbles that adds to their quality of refreshment. All Pepsi cans and bottles are imprinted with a freshness date, which is a date code that tells you your soft drink is fresh. A final quality check ensures that the package is properly filled, sealed and labeled. As products leave the manufacturing line, they're combined into a variety of packages six- or 12-packs, 24- or 30-can cases or cases of individual two-liter bottles. The finished packages are stacked on shipping pallets and moved to temporary holding areas or to a central warehouse for shipping. The storage is purely temporary, since freshness is an important part of delivering the best possible product to our consumers. Some of our products will be quickly transported by large trucks to outlying districts and towns. Most, however, are loaded into Pepsi-Cola delivery trucks you see calling on food stores in your own neighborhood. Other trucks deliver Pepsi-Cola syrup to restaurants and fountains. To make sure there's always enough Pepsi for everyone who wants one, our trucks are on the road every single day. Many individual stores actually receive deliveries several times per week a big reason why the Pepsi products you buy and use are always fresh and great tasting.

6.PLANT AND MACHINERY

PEPSICO BOTTLING PLANT Pepsi Bottling Group constructed a new bottle production and distribution centre in the city of Las Vegas in Nevada, US. The construction commenced in 2007 and was completed in 2008. The plant has been owned by PepsiCo since the acquisition of Pepsi Bottling Group in February 2010.

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The $100m facility is located near the north east corner of Rainbow Boulevard and Sunset Road, adjacent to the 215 Beltway. It has a design and layout similar to PepsiCo's Wytheville bottling plant which was opened in 2004. The Las Vegas plant has two buildings with a total floor area of 387,400ft. One of the buildings serves as a warehouse and distribution space, and the other as a production unit. The plant is custom built and manufactures small-PET bottles in three production lines. It also has a dedicated water line, 167,000gal under effluent tank and a fountain bag-in-box line. The facility will receive business and tax incentives of $4.5m for a period of ten years from the Nevada Commission on Economic Development (NCED), a state agency providing financial support and assistance t o communities to become self reliant. The new facility is believed to have created 34 full-time jobs with benefits.

CONTRACTORS INVOLVED IN PEPSICO'S PROJECT The plant was design-built by Lexington-based Gray Constructions who have been involved in the other Pepsi projects as well. The Las Vegas plant is supposed to be the largest project undertaken by Gray Construction. Cox Kliewer of Virginia is the main architect of the plant. They were the architects for PepsiCo's Wytheville Bottle facility as well. Denver-based company Conception to Reality was the design, procurement and management contractor of the processing equipment.

CONSTRUCTION OF THE NEW BOTTLE PRODUCTION AND DISTRIBUTION CENTRE The new bottling and distribution centre is built on 35.2 acres of land. The construction involved excavation of more than 200,000 cubic yards of caliche rock. The conventional steel structure is built of load-bearing insulated and textured concrete pre-cast walls and Forma wall metal panels.

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BENEFITS OF THE NEW PLANT PepsiCo already enjoys more than 60% of the beverage market share in the Las Vegas. The site was chosen as it provides unique business opportunities to the company. The city of Las Vegas has grown tremendously in terms of population and is also a global destination for tourists. Adding to PepsiCo's advantages is the abundant supply of water which is required in the bottle manufacturing process. To further increase its market share in Las Vegas, Pepsi Bottling Group signed exclusive fountain, can and bottle soft drink supply contracts with Riviera, the Grand Canal Shoppes at the Venetian, the Fremont Street Experience and the Hooters Hotel and Casino. THE WYTHEVILLE FACILITY The Wytheville production facility is the first greenfield facility built by Pepsi Bottling Group in over a decade. The plant manufactured 30 million cases in its first year. Spacious interiors of the plant facilitate ease of work flow and maintenance. The layout is designed to optimize the product and traffic flow. All the factory wiring comes from a single source, which allows for single point of control. This centralized control system allows the workers to monitor and address operational problems quickly. The production building has four production lines with a 19-bay configuration. The state-of-the art, fully automated syrup room and CIP system was built by Cortez. The Graphic Packaging fridgemate machine, a ring-carrier applier, Torque cap test system and Kisters shrink wrapper provide adequate flexibility and secondary packaging options. The floor of the warehouse building is designed for multilevel racking system to facilitate expanded warehouse capabilities.

The Wytheville plant won the 'Plant of the Year' award in its second year of operations by Beverage Worls for its innovative design that provided operational excellence.

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INDIA Features Headquartered at Gurgaon, Haryana. Currently, PepsiCo has 36 soft drinks plants- 13 are company owned & 23 Franchisee owned Three state-of-the-art food plants. Plants at New Delhi, Faridabad, West Bengal First state of the artplant in Chano, Sangpur district of Punjab. Soft drinks from all over the world are tested. U.P. Gujrat, West Bengal, Karnataka, Maharashtra & Tamil nadu Bihar, Assam & A.P franchisee plants

Advantages Cheaper Land Rate Presence of many vendors for buyout materials in the vicinity Outsourcing facilities also in the neighbourhood.

Disadvantages Suppliers of raw materials.

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7.PLANNING AND SCHEDULING

PRODUCTION PLANNING AND CONTROL Production planning is usually done at the following three horizon levels.

Long Term (Capacity Planning) Medium Term (Aggregate Planning) Short Term (Operational Planning) Diagrammatic representation production planning overview is given below.

Production planning components with time horizon and Unit of Measure is given below for better understanding. The explanation is given below the diagram.

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Long Term (Capacity Planning) Upto 5 Years ahead or more Capital Intensive in nature This deals with Strategic and business issue. In the long term we deal with those issue which help us to create demand for our products and generating sufficient revenue for the company. Reflect in process choice and equipment selection. Since selection of equipment and facilities require lot of investment and decision is irreversible, one should pay utmost care keeping in mind customer requirements.

Medium Term (Aggregate Planning) How demand can be met from existing facilities and resources. Here we are trying to utilizing our existing resources (manpower, machine, facilities etc) to satisfy the market demand Short Term (operational Planning) In short term we monitoring the production activities on day to day basis and compare the output against the plan and take corrective action. Master Production Schedule (MPS) Is a statement of how many finished items are to be produced and when they are to be produced. Material Requirement Planning (MRP) System that uses net demand from the MPS and explodes it using the bill of materials (BOM). Items (SKU or Stock Keeping Unit) The final products delivered to the downstream customers. The downstream customer is the one who intend to consume or use the product for personal use. Product Families Group of items that share a common manufacturing setup cost. In other words those items that have similar production requirements. AT PEPSICO Long term capacity Planning - Marketing does the yearly forecast at Product group like Pepsi and Miranda (not SKU level) and country (India) level for next 5 to 10 years based on expected yearly product growth rate. This aggregated yearly plan quantities are compared against the existing capacity planning in terms of facility, manpower, current production rate etc. If the existing capacity is not sufficient to meet long term (5 to 10 years) expected sales volume growth then the management will go for increasing the existing capacity by increasing manpower, deploying additional machines, having more shift in the plant. Even this does not meet the long term yearly demand then the management may feel like to go for additional plant which is capital
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incentive or looking for third party manufacture to produce their products under their brand name and sell it in the market. The reason for Long term capacity planning to meet increasing demand for existing products and also to launch new products in future to generate more revenue for the company. Medium term Aggregate Planning - Marketing does the monthly Rolling Forecast at SKU and Distribution centre level, for one year. One should note that one year is rolling period and not calendar year. For example if marketing is forecast during July09, one year period means July09 to June10 which is called rolling forecast. The SKUs of Pepsi and Miranda are 100ml bottle, 200 ml can, Pet bottle size of 500ml, 1 liter and 2 liters. Sales & Marketing and customers are concerned about pack wise product. But production department aggregate the quantity /Net demand of all sizes pertaining to particular product ( Pepsi and Miranda separately) at country (India) level and arrive total quantity required to manufacture that particular product on monthly basis. If the monthly production rate is less than expected demand rate then the company will go for overtime, hiring more temporary workers etc. Due to unavoidable circumstances if the company is not able to increase the production capacity then the current production rate will be treated as expected demand rate. This process is termed as Aggregate Planning. Short Term Planning (MPS & MRP) - Once the Aggregate planning quantity at Product family and country level is decided for a month then this quantity is disaggregated in to SKU and Distribution level as the plant need to produce products as per selling units. Now the production unit can sent the entire demand quantity in single lot to distribution centre. But the logistics team require the part quantities against the demand to be dispatched to distribution centers on different date in order to utilize the warehouse space and manpower efficiently. Hence the part quantity and schedule receipt date at distribution centre will be worked out and agreed upon by demand and supply planners. This process is called Master Production Schedule (MPS). Now the Production unit is having the quantity to be produced and date of production as per distribution center requirement from MPS. But the product Pepsi drink require certain ingredients (raw materials) at certain quantity. The Pepsi company will be having BOM (Bill Of Materials) for each SKU. BOM will contain all raw materials and packing items the quantity required to produce one unit. According to BOM details the raw materials quantity are calculated and then purchase orders are placed to the suppliers based on lead time. Lead time is the time taken by the supplier to produce and deliver the raw materials to the Pepsi plant against the order date. This explosion from finished goods to the raw materials is called Material Requirement Plan (MRP).

8.MATERIAL MANAGEMENT
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Material requirements planning (MRP) is a production planning and inventory control system used to manage manufacturing processes. Most MRP systems are software-based, while it is possible to conduct MRP by hand as well. An MRP system is intended to simultaneously meet three objectives:

Ensure materials are available for production and products are available for delivery to customers. Maintain the lowest possible material and product levels in store Plan manufacturing activities, delivery schedules and purchasing activities. INVENTORY CONTROL The formal management of the timing and quantities of goods to be ordered and stocked by an organization in order that demand can always be satisfied without excess expenditure. From the of the in a repair and (MRO) is to material plant and other the right right place time. an operational perspective, primary goal materials management organization maintenance, operations environment provide unflinching support to maintenance production. In words, have parts at the at the right

Assuring supply can easily be achieved by stocking the shelves with every imaginable spare part in such enormous quantities that almost any combination of required materials is in stock at any given time. Unfortunately, nothing in life is free. Materials cost money and take up plenty of space, and very few materials managers have access to unlimited funds. Finance and plant management are responsible for making sure that purchasing budgets are monitored and controlled, and inventory investment levels are optimized. Uncontrolled spending leads to bloated inventory, which in turn often results in mandated investment reductions. But managing inventory is not as easy as just setting the objective and then
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expecting it to happen all by itself. Nor is it simply a matter of cutting off funding or randomly eliminating parts from the storeroom. These may have the desired effect on investment, but what about service and, more importantly, the potential impact in terms of lost production? This leaves materials management in the difficult predicament of having to concurrently maintain adequate levels of material supply while also prudently managing the company's resources. To effectively support maintenance and production, it is critical to have the required parts available when needed. Finance and plant management will generally support the purchase of materials necessary to keep plant equipment running in order to maintain production levels. However, "available" doesn't have to mean "on the shelf," and "when needed" doesn't necessarily imply "right away." There is a point at which both service and investment are optimized so that they become mutually achievable objectives. Effective inventory management requires an understanding of the fundamental material management principles, data and work processes that impact material supply and contribute to the total cost of the MRO operation. It also involves the establishment of realistic and measurable goals, along with disciplined approaches for achieving them. Most importantly, it requires a commitment of time from knowledgeable individuals to make informed, intelligent and often difficult decisions. The blueprint for success is Integrated Inventory Management. This methodology provides a vehicle that helps arrive at the right decisions about what to buy, when to buy it, what to keep in stock and what to eliminate. It provides a disciplined process that effectively controls storeroom investment and associated inventory costs while maintaining an acceptable level of service. In most established markets around the world, soft drinks rank first among manufactured beverages, surpassing even milk and coffee in per capita consumption. With product demand continuing to increase, soft drink manufacturers have shifted to faster, more automated machinery. However, as production lines become faster and more complex, many plants are struggling to keep maintenance costs in check. This was precisely the problem that managers at Pepsi Bottling Groups facility battled for several years. Pepsi Bottling Group is the worlds largest manufacturer, seller and distributor of Pepsi-Cola beverages. With annual sales of nearly $11 billion, the companys fastest growing segment is noncarbonated beverages, including the number one brand of bottled water in the U.S., Aquafina, as well as Tropicana juice drinks and Lipton Ice Tea. As part of a 24/7 production operation, the companys Detroit plant ships about 27 million cases per year. Production at the plant begins as empty bottles are unloaded from trucks via conveyor and transported to a depalletizer. From there, they are, rinsed, dried and sent to a filling machine (filler speeds at the plant vary based on bottle size, ranging from 350 to 1,000 bottles per minute). The bottles leave the fillers and make their way to a packaging machine, and then to a palletizer. Each pallet is wrapped for distribution and moved to the warehouse for shipping.

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While controllers and software are the brains behind any production operation, sensors play a critical role as the eyes and ears. The plant uses a variety of sensors to monitor bottles as they travel through the sequence of steps and to manage the flow to the individual stations. Line sensors match the speed of the conveyor (controlled by variable speed drives) to the precise spacing needed for accomplishing each production step. However, these sensors became a significant issue for the plant over the years. Like many high-volume manufacturing plants, Pepsis primary focus is on quality and productivity, with less attention given to issues like parts inventory and technology migration. As a result, the companys inventory of sensors swelled over the years to include more than 120 different varieties. Many of these included multiple styles of the same product stocked under different brands. A similar problem was developing with its drives inventory, which had grown to over 50 different part numbers. The wide variety of sensors made it progressively more complex and time-consuming to replace a faulty device. Despite its fast, high-performance machinery, the increasingly lengthy and more frequent downtime was beginning to impact the companys ability to meet its productivity goals. In addition, operating costs were on the rise due to the excess spares inventory. Because of the extensive number of sensors we had in inventory, including multiple styles and brands, simply finding the right replacement could result in an hour of downtime, said Tony Yanora, maintenance manager, Pepsi Bottling Group. We had a lot of specialized sensors that we didnt really need which increased our inventory costs and made it a nightmare for our technicians to make repairs if we even had the right parts in stock. A more strategic approach to maintenance was necessary, as even the smallest of delays could cost the plant thousands of dollars in lost production and overtime. Knowing that effective parts management and fast, reliable equipment repair lies at the heart of efficient manufacturing, the company explored ways to get its inventory and maintenance processes under tighter control. Thats when it decided to turn to Rockwell Automation for help. USE OF SOFTWARE PROGRAMS PepsiCo Inc. has selected SAP's full mySAP Business Suite to streamline its distribution and delivery processes, improve planning and forecasting, and give better visibility to its global supply chain. PepsiCo, which manufactures, distributes and markets Frito-Lay snacks, Pepsi-Cola beverages, Gatorade sports drinks, Tropicana juices and Quaker foods, is aiming to better link its supply chain and inventory data with its customer data. Pongr engineers excel in image-recognition technology. Pongr's computer vision platform is being used by Pepsi to power a fan photo-scanning contest to promote Simon Cowell's THE X FACTOR.

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Nearly 300 million cases of Pepsi product are being branded with THE X FACTOR promotion, an opportunity to win 56 grand prizes of trips to Los Angeles to see the show broadcast live.

Software Costs
We capitalize certain computer software and software development costs incurred in connection with developing or obtaining computer software for internal use when both the preliminary project stage is completed and it is probable that the software will be used as intended. Capitalized software costs include only

External direct costs of materials and services utilized in developing or obtaining computer software Compensation and related benefits for employees who are directly associated with the software project Interest costs incurred while developing internal-use computer software. Capitalized software costs are included in property, plant and equipment on our balance sheet and amortized on a straight-line basis when placed into service over the estimated useful lives of the software, which is approximately five to ten years. Software amortization totaled $119 million in 2009, $58 million in 2008 and $30 million in 2007. Net capitalized software and development costs were $1.1 billion as of December 26, 2009 and $940 million as of December 27, 2008.

QUALITY MANAGEMENT
The term Quality management has a specific meaning within many business sectors. This specific definition, which does not aim to assure 'good quality' by the more general definition being considered to have four main components: quality planning, quality control, quality assurance and quality improvement. Quality management is focused not only on product/service quality, but also the means to achieve it. Quality management therefore uses quality assurance and control of processes as well as products to achieve more consistent quality. PepsiCo are the worlds second-largest food and beverage business. Their brands which include Quaker Oats, Tropicana, Gatorade, Frito-Lay and Pepsi are household names that stand for
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superior quality and great taste throughout the world. As a global company, they also have strong regional brands such as Walkers in the U.K., Gamesa and Sabritas in Mexico, Amacoco in Brazil, Lebedyansky in Russia, Alvalle in Spain and Smiths in Australia. Goals & Commitments: In 2009, they announced 11 ambitious global goals and commitments to help improve the wellbeing of people in both developed and developing countries. They are focusing work on the products we make and on key policies and partnerships to help address global nutrition challenges. Products: Provide more food and beverage choices made with wholesome ingredients that contribute to healthier eating and drinking. Increase the amount of whole grains, fruits, vegetables, nuts, seeds and low-fat dairy in our global product portfolio. Reduce the average amount of sodium per serving in key global food brands, in key countries, by 25 percent by 2015, with a 2006 baseline. Reduce the average amount of saturated fat per serving in key global food brands, in key countries, by 15 percent by 2020, with a 2006 baseline. Reduce the average amount of added sugar per serving in key global beverage brands, in key countries, by 25 percent by 2020, with a 2006 baseline.

Marketplace: Encourage people to make informed choices and live healthier. Display calorie count and key nutrients on our food and beverage packaging by 2012. Advertise to children under 12 only products that meet our global science-based nutrition standards. Eliminate the direct sale of full-sugar soft drinks to primary and secondary schools around the globe by 2012. Increase the range of foods and beverages that offer solutions for managing calories, like portion sizes. Community: Actively work with global and local partners to help address global nutrition challenges. Invest in our business and research and development to expand our offerings of more affordable, nutritionally relevant products for underserved and lower-income communities. Expand PepsiCo Foundation and PepsiCo Contributions initiatives to promote healthier communities, including enhancing diet and physical activity programs. Integrate our policies and actions on human health, agriculture and the environment to ensure they support each other.
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VALUE ENGINEERING
PEPSI BEVERAGE CO. INSTALLS ROBOTIC PALLETIZERS AND WAREHOUSE AUTOMATION SYSTEMS AT TAMPA PLANT Pepsi Beverages Co. (PBC) has recently installed an automated storage and retrieval system (AS/RS) and warehouse control system (WCS) at its plant in Tampa, FL. The WCS handles two storage/retrieval machines of the AS/RS, conveying systems for pallets and cases, five robots for layer picking/palletizing, pallet squaring stations, stretch wrapping, print-and-apply labeling and the integration of the WCS to PBC's existing enterprise resource planning and warehouse management system (ERP/WMS). The systems, from Westfalia Technologies Inc., help PBC meet its commitment to the environment and to the "reduce waste" principles of Six Sigma. Compared to a conventional warehouse, the multiple deep design of Westfalia's Go Green with High Density AS/RS design has major financial benefits as storage space is maximized, which translates into reduced building construction costs, lower sustainable operating costs (reduced energy, labor and product waste costs), as well as
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increased inventory accuracy through Westfalia's Savanna.NET WCS. An addition to the existing facility, this new compact warehouse uses only 30 percent of the footprint of a conventional facility, thereby having less impact on the environment, too. The flexible, high density AS/RS meets PBC's need for maximum storage, high throughput, buffers for handling peak production from its bottling plant, and aids in preparing various types of pallets to ship to customers. Savanna.NET WCS manages and controls all products flows throughout the facility from receiving to order fulfillment. It is a complex system as PBC requires full layer and mixed layer palletizing to have "store ready" pallets loaded onto its straight and bay trucks. "Automated order fulfillment at the case and layer level is clearly the direction many of our clients are heading. Our focus of integrating reserve storage and automated replenishment delivers fully integrated solutions for the beverage industry, combining automation of deep reserve and order selection," says Dan Labell, president of Westfalia Technologies Inc. From the bottling lines, palletized products are delivered to the AS/RS for storage. As pallets are needed for order selection, they are placed by the SRMs into pick and build positions, and transferred via Westfalia's TC1500 Single Transfer Car with Satellite into a buffer zone serviced by a Kuka Linear Gantry. Known as the High Speed Layer Pick (HSLP) system, the gantry picks single SKU layers at the rate of 3,000 cases per hour using two robotic layer grippers suspended from an overhead gantry. Two additional robotic gantry grippers are used to remove and replenish the empty pallets.

Another component of the automated system is the Mixed Layer Pick (MXLP) system, which through manual Pick-to-Light case picking, automated material handling conveyors and robotic palletizing form and build layers of mixed SKU by like package type cases, at a rate of 2,000/hr. These HSLP and MXLP rates are more than five times the manual pick rates of PBC's traditional warehouses. Kuka Systems' unique layer forming software is used to build the layers, and all product movements and robot missions are tracked and managed by Savanna.NET WCS. "The cooperation with Westfalia has been key to the success of this project. They are a company we can trust and they always have their partners and their customers' best interests in mind when executing a project. From the robustness of the equipment to the flexibility of the software the Westfalia products are reliable," says Aaron Corcoran, director of logistics at Kuka Systems NA. The Pepsi Beverage Co., based in Somers, NY, is the largest manufacturer, seller and distributor of
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Pepsi beverages, with more than 100 plants worldwide and 545 distribution centers. Among the brands they handle are Pepsi, Aquafina, Aqua Minerale, Tropicana, Lipton Iced Tea, Starbucks Frappuccino, Dole juices, Mountain Dew, Sierra Mist and the SoBe line of beverages.

11. BIBLIOGRAPHY

http://www.pepsico.com/ http://www.packagingdigest.com/article/517601Pepsi_Beverage_Co_installs_robotic_palletizers_and_warehouse_automation_systems_at_ Tampa_plant.php http://www.articlesnatch.com/Article/The-Importance-Of-Planning-In-Business/583763 http://smallbusiness.chron.com/importance-planning-scheduling-5131.html http://www.reliableplant.com/Read/20149/pepsi-improves-equipment-reliability,-cutsspare-parts-inventory www.beverage-digest.com/pdf/Pepsi_System_TOC.pdf http://searchsap.techtarget.com/news/969439/SAP-Pepsis-software-for-a-new-generation PepsiCo Annual Report 2010
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