FRITO LAY INDUSTRIES INVENTORY
Inventory might be the root of all evil but it is truly a necessary evil companies have to make do with. It is a big potential for waste but can also be the best thing that can happen to a company when done right. Inventory in Frito Lay basically includes; raw materials which according to the video is corn, oil, water and potatoes, supporting activities which are; the industrial management team and the customer finished products which are the snacks made of corn or potatoes.
Like most managers, those of Frito Lay do not like to relay on a heavy inventory because it costs both money and space. In theory I think that the managers of Frito Lay would use cycle stock as their inventory strategy. This is because raw materials will only be replenished when the inventory is low. They would also prefer cycle stock because most of their raw materials are perishable and could easily go bad fast such as the potatoes and corn or they have an expiry date and can’t be stored long enough for example the cooking oil. They would prefer this sort of inventory because it is active and their suppliers keep replenishing their raw materials through rail just when they need them.
A problem would arise however, on the customers side if the demand is in excess and they probably also need safety stock but only for the finished products because they have a longer life span. Safety stock would ensure that they are prepared for the worst, a high demand on the customers’ side so that the firm does not frustrate grocery owners who are the main distributors of Frito Lay products. Using the two inventories but at different times in the production arena could be their saving grace, each side you look. This is based on two general truths; the cost and value of inventory increases down the chain and the flexibility of inventory decreases as materials move down the chain. Frito Lay snacks have a greater value than the raw materials and would therefore cost more in inventory because they need suitable equipment and space to store them properly. Processing adds to this cost as the value of the products are improved to the preferred consumer end products.
Inventory will also be affected by transport and packaging. Frito Lay snacks need to be properly packed to reduce chances of breaking up during storage. No customer wants powdered snacks, they want crunchy! The inventory also has to make pick up and transportation easy.
Production mishaps could occur in any company and Frito Lay is no exception if proper care and maintenance are not minded. It is one of the biggest chip producers in the world meaning that it requires a lot of equipment to run smoothly. A failure to do that at any level creates trouble. Its team uses unique IP addresses to communicate; a slight failure in communication may result in machine breakdown. Its warehouse uses technology such as cranes for lifting and automated ground vehicles to move stacks from one place to another. If for any reason including poor maintenance they break down, it will slow down the process that needs to be flawless. A mishap affects the whole general direction because it will affect timing, quantities, oversight, planning and scheduling. Great automation and technology are the driving force in production today and as such, having a great team like the industrial maintenance mechanics of Frito Lay is a great plus. I also love the fact that they are offering mentorship for the upcoming mechanics.