I. Introduction

A. Background of the Study

Having limited information about operations management, this study

would just include the basic knowledge we learned and how is the knowledge

being applied in the real world. This study would enable us to understand the

usefulness of the course in businesses especially in the production of goods

and/or the rendering of services.

B. Objectives of the Study

1. To apply the lessons we learned inside the classroom and to know how

are these information used in real businesses

2. To learn more things about Operations Management which are not

included in the lessons we’ve already discussed

3. To enable us analyze, evaluate, and solve management problems which

are concerned with the operations function

4. To know how a company implements its strategies for cost minimization

to achieve maximum profit

5. To know how the company adjusts its operations given economic, legal,

financial, and other constraints which could affect production

C. Scope and Limitations of the Study

Pepsi Cola Products Philippines, Incorporated (PCPPI) is well known

internationally for offering drinking beverages which are of the best value for

every drinking occasion. They had a lot of plants situated here in the Philippines,

since the company is too big for us to study its whole operating processes; we

limited our scope to the plant situated in San Jose, San Miguel, Iloilo.

The company is also offering different beverage products which also have

different features. But not all of these are available for production in that plant;

therefore, we are limited to those products available for production.

Our group is also limited to our objectives and the requirements needed

for this paper since we can’t create a very complex study due to time constraints.

As students, we are limited only to the knowledge we acquired in taking up this

course.

D. Methodology

II. Company Background

A. Company History and Evolution

PepsiCo which is an international company has made its way and become

one of the most successful business companies in food and beverage market in

the worldwide. It was ranked as the world’s second largest business which offers

wholesome products to its different consumers in over 200 countries, including

the Philippines.

The company originated during 1896 in New Berlin, North Carolina, USA

as a drug store with its founder Caleb Davis Bradham, a pharmacist, who wanted

to create a fountain drink that was tasty and nutritious. The drugstore happens

to be a place for socialization of the clients wherein Bradham would offer its

latest soda fountain. The store also featured a kind of primitive jukebox, where a

nickel would entertain the listener from the latest violin or piano selections.

Over time, one of his recipes became known as Brad's Drink. In 1898, it

was sold in the market and a member of the press who tasted it declared that

the drink "has sparkle and just enough acidity to make it pleasant." That same

year, Bradham joined hands with some partners to sell Brad's Drink to other

drugstores and renamed it Pepsi-Cola.

It is believed that Pepsi was derived from pepsin, an enzyme that aids

digestion. However, it is not because Pepsi-Cola contained pepsin, but because it

was believed that the beverage likewise aided the digestive process. Contrary to

the implication of the word cola, the original formulation of Pepsi-Cola did not

contain the kola nut, only a refreshing cola taste, which many believed

revitalized them whenever they are tired.

At the close of World War II, John Clarkin, a native of Minnesota, USA

came with the American forces and introduced Pepsi-Cola to the Philippines. He

became president and the first general manager of Pepsi-Cola Bottling Company

of the Philippine Islands Ltd. upon acquiring a franchise to bottle Pepsi in the

Philippines on October 16, 1946.

For the first one year, Pepsi was imported from the U.S. until the first

bottling plant was put up in Quezon City in 1947. In 1957 PepsiCo

International took over Pepsi’s operation in the country when Clarkin decided to

return to the U.S. and Pepsi became a branch of the New York PCI Office and its

name was changed to Pepsi Co Inc. (Philippine Branch) in1983. Under PCI’s

administration, Pepsi dominated the market with a share of more than 60%. The

success of Pepsi was due to an aggressive marketing program dubbed “Have a

Pepsi Day” and the launching of Mountain Dew.

In 1985, Pepsi Philippines became a Filipino corporation when the Escaler

led Pepsi-Cola Distributors of the Philippines Inc. and acquired its franchising and

bottling rights. In 1989, premier beverages which was led by Luis Lorenzo Sr. and

the AFP-RSBS, assumed majority ownership of the firm, and gave it a new name:

Pepsi Cola Products Philippines Inc. (PCPPI). Under the Lorenzo's, PCPPI

introduced the plastic returnable bottle which is the first of its kind in the

industry and produced its first house brand in Premier bottled water.

In April 1997, the Lorenzo group invited Guoco Holdings (Philippines) Inc.,

a Hongkong-based holdings firm, to infuse the needed capital into PCPPI. As the

majority owners, Guoco has not only brought in fresh capital but also installed a

seasoned management team. Under this new leadership, PCPPI's sales volume

has been on the rise.

2002 is an important milestone in PCPPI’s history since it is the year when

PCPPI registered dramatic business growth and made a turnaround. In 2004, the

company introduced non-carbonated beverage to the market transforming itself

into a total beverage company. PCPPI was named as the Best Bottler of the Year

for Asia by PepsiCo Inc. during 2006 and in 2008 PCPPI had successfully launched

its initial public offering.

Currently, it has 14 plant distributed all through out in the region. Plants

in Luzon includes Muntinlupa Plant ( Tunasan, muntinlupa City); Central Luzon

Operations ( Sindalan, San Francisco, Pampanga); Cagayan Valley Operations

( Turingan St., Dubinan East, Santisgo City, Isabela); North Luzon Operations

( udiao, Rosario, La Union); Modern Trade Operations (United St. Corner, West

Capitol drive, Capitolyo, Pasig); Southern Tagalog Region operations (Fusion St.

LISP1, Brgy. Dierzmo, Cabuyao, Laguna) ; and Naga Plant (Conception Grande,

Naga City). Plants in Mindanao are Cagayan de Oro Plant (Tin-ao, Cagayan de Oro

city); Davao Plant

( Dumoy, toril, davao City ); and Zamboanga Plant ( Mercedes,

Zamboanga City) with a total of three plants. Four plants are located in Visayas

which includes Cebu Plant ( Minglanilla, Cebu); Tanauan Plant ( Sto. Niño,

Tanauan, Leyte); Bacolod Plant ( Bata Subd., Mandalagan, baciolod City); and

Iloilo Plant (San Jose, San Miguel, Iloilo).

We say that almost in every city, there is an existing Pepsi Plant which

produce and cater the needs of its customers. These constructed plants are

based according on the research made by the company. They plan it very well to

minimize cost while dominating the market.

Among the cities here in region six, they are able to determine that Iloilo

serve as the regional center of the Western Visayas, and the center of the Iloilo-

Guimaras Metropolitan Area. So there are plenty of opportunities at stake for

the company to dominate the market in Western Visayas if they are able to put

up a plant in Iloilo. However, choosing a site for the plant to materialize is never

been easy. They would be confronted with different problems and strict

regulations if they put the plant at the heart of the city. So, they decided to find

another place and found a vacant lot at Brgy. San Jose, San Miguel, Iloilo.

The Iloilo Plant which is the subject of our study covers the whole Panay

and Palawan Operation. It is the most accessible place since the place offers a

good location. There is an ample supply of water in the area which gives the

assurance for a continuous productivity of the plant. The place is far from the

city proper so there is no rules and regulation to hold back the production

process. The plant management insures to maintain the good condition of their

facilities and safeguard the quality of water that they are using. They are also

improving their facilities and this 2009, a new assembly line was installed to

increase the production and counter the high demand especially during the peak

season.

B. Organizational Structure

1. Organizational Chart

2. Functions and Responsibilities of Personnel

The company exhibits a functional organizational structure in its plant

level. The general manager is the head of the plant. The four functions are the

following: Sales Department, Administrative, Manufacturing Department, and

Human Resource Department. The Sales Department is headed by a Sales

Manager who delegates tasks to the sales force. They are responsible for

product deliveries and marketing. The Administrative Department is headed by a

Finance Manager who delegates duties to his respective staff. They are the ones

in charge of the accounts of customers, suppliers, and third parties. The

Manufacturing Department is headed by the Operations Manager. Under him is

the Productions Manager who heads the sub-department, Productions. They

also have their respective staff. They are responsible for the manufacturing and

production of the beverage products. The Human Resource (HR) Department is

headed by an HR Manager. He also has his respective staff. They are the ones in

charge of hiring and laying off employees.

3. Qualifications of Personnel

Most of the employees with higher positions are young.

4. Salary Scale of Personnel

Salary bracket for the respective employees are not given.

III. Description of the Company’s Operations

A. Designing the System

1. Product and service Design

The company, as a whole, has been well known in investing on

carbonated soft drinks, cola and non-cola. Now, it is entering into another field

of producing non-carbonated drinks which is complementary with their goal of

producing healthier products. Its product design is developed on its main office,

which would be possibly outside the country, and the newly developed products

are just launched here on the country. The beverage products that are currently

produced on the country are the following:

As to the plant located on San Miguel, Iloilo City, it is only limited on

producing a certain number of products which are the following:

 

7UP

Think Clear.

For those who enjoy spontaneity and life's simple pleasures, the refreshing taste of this clear lemon-lime drink is perfect for you.

Available in: 7oz Returnable Glass Bottle 12oz Returnable Glass Bottle 1Liter Returnable Glass Bottle

 

 

Pepsi

Sarap ng may Pagpipilian.

Explore and discover more with Pepsi, because life offers so many possibilities. The drink of choice for people who seek out new experiences, who never let go of their love of life. Get inspired and live MORE.

Available in: 8oz Returnable Glass Bottle 12oz Returnable Glass Bottle 1Liter Returnable Glass Bottle

 

Mountain Dew

Feel the Rush. Do the Dew.

Embrace adventure and outrageous fun with Mountain Dew. Dew offers exhilaration like no other with it's great citrus taste. Dare to be energized and excited with this thirst quenching drink!

Available in: 12oz Returnable Glass Bottle 750mL Returnable Glass Bottle 1Liter Returnable Glass Bottle

 

STING

Ang Bagong Sarap ng Energy

Sting is the number one energy drink in Vietnam. It expanded to Malaysia, Thailand and the Philippines in 2007. As is becoming common with other energy drinks, it contains caffeine, taurine and ginseng. What sets it apart from other brands however is it's uniquely great taste and great value.

Available in: Gold Blast 240mL Returnable Glass

Bottle Strawberry 240mL Returnable Glass

Bottle Lime 240mL Returnable Glass Bottle

  

Mirinda

Ang Tindi!

Enjoy the mouth watering, fruity taste of Mirinda. It opens up a world of imagination, with vibrant colors to stimulate your senses. Discover a fizzy fruit explosion in your mouth!

Available in:

8oz Returnable Glass Bottle 12oz Returnable Glass Bottle

In maintaining the products’ quality, there are processes in the

production wherein each product is checked or at least sampled so as to ensure

that the company’s standards on the merchandise are being met. Incorrect

Carbon Dioxide levels are caused by wrong temperature and pressure on the

machines while incorrect levels of brix which is controlled by the DBC (Dilator,

Blender, and Carbo-cooler) is caused by the wrong amount of sugar in the

formulation. The purpose of Carbon Dioxide as the ingredient in the product is

that it serves a preservative, it adds taste to the product and it gives

effervescence. These two are being checked by sampling every thirty minutes.

This is to make sure that the taste of each product is at the standard. There

would be a problem on fill height if the content of the fluid inside the bottle is

wrong and on the bottle crown if it was place on the bottle incorrectly. These

two would be checked by a manual inspector.

In relation to each product’s quality, defective products produced aren’t

unavoidable and this is estimated to be 0.8% per day of its production. All

products which are defective would be dumped or thrown away since it doesn’t

meet the quality requirements because of the altered taste or wrong packaging.

The average daily defects are 6 pallets for every type of bottle:

o 12 oz – 1 pallet is equal to 36 cases, each case contains 24 bottles (5 184

bottles)

o 8 oz – 1 pallet is equal to 56 cases, each case contains 24 bottles (8 064

bottles)

o 1L – 1 pallet is equal to 32 cases, each case contains 12 bottles (2 304

bottles)

Although the percentage of defect is small compared to its total

production, the number of products being dumped is relatively large. In

connection to this, the company doesn’t have the proper guidelines in waste

management.

Guaranteeing the quality of products is very significant to the

manufacturing, maintaining the company’s equipment would be another aspect

which is also needed to be assessed. Maintenance on the company’s equipment

is being scheduled depending on its type as follows:

o Preventive Maintenance – daily (1-2 hrs per machine) and weekly

(checking and servicing of spare parts

o Corrective Maintenance – replacing or correcting worn-out gears (as

needed as possible)

o Emergency Maintenance – finish the work which is needed for the day;

and depends on the level of emergency

Aside from these, shutdown maintenance is being conducted every

Sunday.

Employees are also required to adhere to certain company policies which

are considered as the standard operating procedures of quality control in the

company which is called as the General Manufacturing Practices.

The company was also looking for people who have technological skills

which could improve the marketing, advertising and communication strategies to

higher levels. Since, there is fast change on technology nowadays; the company

needs people with these skills so as to cope up with these changes.

2. Process Selection

3. Forecasting

4. Capacity Planning for Products and Services

In thinking of the products being produced, the capacity of the plant has

to be considered. There is an estimated amount of 20 000 cases being produced

every day, they maintain a safety stock of 70 000 cases and they make sure that

they can produce more than the forecasted requirement so as there would be no

shortages. Although they are overproducing, the plant have experienced stock

outs during peak months. The capacity of its warehouse, on the other hand,

would be 110 000 cases wherein products being produced by batch are labeled

by the date of production. The capacity of Carbon Dioxide tank is estimated to be

25MT.

Only one product is being produced in one day; Pepsi is produced twice a

week and the product which is produced largely would be Mountain Dew.

The Iloilo plant has increased its production capacity so as to provide its

customers the products they demand as early as possible. It recently completed

a new product line which would allow the plant to produce non-carbonated

drinks in the future. This product line is also expected to double the capacity of

the plant’s production.

While producing, there are several factors which greatly affect

manufacturing and one of these would be the Raw Materials to be used. The

company usually asks for the raw materials on the main office of the company if

it is needed to be reordered. However, if the raw materials being delivered won’t

arrive on time then the plant would ask for raw materials needed from the other

plants nearest to it (Cebu, Negros). The next constraints would be included in the

processes in the production which are the Bottle Washer Process and Filling

Process. Also, breakdowns would be another limitation for the plant which could

be caused by the lack of preventive maintenance or no corrective maintenance

for the machines. A failure could be an operational failure which is commonly

occurring or a mechanical failure which is a serious breakdown on machines and

equipments.

5. Facility Layout

6. Design of Work Systems

The factory is composed of two assembly lines. All processes in the

production are machine-conducted except for the hands-on or manual

inspections done by an inspector before and after bottling and canning. (There is

only one bottle inspector in a production line.) Aside from inspection, other jobs

done by the workforce are the maintenance and supervision. There are three (3)

supervisors who oversee the processes in the production. Moreover, there are

personnel in charge of the utilities and maintenance. In addition, there are

around twenty (20) employees in a line. For normal production, there is only one

line for each assembly line. One line means that there are two (2) shifts in

twenty-four (24) hours. For higher demands, there are three lines: two lines for

the larger assembly line and one for the smaller one. Two lines in an assembly

mean that there are three (3) shifts in twenty-four (24) hours.

Specialization and division of labour in the production applies only to

maintenance workers and supervisors since other jobs and processes are

automated. Facilities and equipment in the production are discussed in detail

under the Facilities Layout and Process Analysis.

No job enlargement, job rotation, and job enrichment is applied since the

jobs of the employees are fixed. What is assigned in a worker or in asset of

workers is what he or they work/s on. Shifts on jobs are 9AM-5PM and 5PM-

1AM applicable to both the workers and supervisors. Maintenance workers are

only called upon during their scheduled work hours or any time if there are

emergency situations which are prioritized by the department. Under the

current supervision, production is scheduled Monday, Wednesday, Friday (MWF)

or Tuesday, Thursday, Saturday (TThS). The workers are given the schedule.

Some workers in the production are working full-time while others part-

time. (Employees working in the offices are necessarily full-time workers.) Part-

time workers are hired from an agency. They undergo certain trainings before

being employed in the department. Compensation is time-based. If there is no

production, there is no pay. (Reasons for cessation of production will be

discussed later in detail.) Regular number of hours worked is eight (8) hours. The

management does not allow overtime. Production is very important, but it is

necessary that workers should have break times.

For the working conditions, the management makes sure that the

environment is humane and is conducive for work. The temperature maintained

in the workplace, specifically in the production area, is 20°-35°C temperature.

Lights used in the manufacturing area contain metal halides and consume 40

watts. Metal halides operate under high pressure and temperature, and require

special fixtures to operate safely (http://en.wikipedia.org). Metal halide lights are

therefore low power consumers and are best suited for the manufacturing area

because of its litheness. Workers are confined in a noisy area; therefore they

use ear plugs to prevent ear defects due to noise exposure. Minor accidents that

occur are usually caused by the broken bottles. There are instances wherein a

worker would step on them, etc. One minor disorder that was observed within

the factory is the presence of scattered water on the floor. This was found near

the mixing and filler tank in the filler area. This is due to water evaporation since

the tank has a very low temperature attributable to refrigeration. The supervisor

has mentioned that the utilities personnel in-charge of this do not perform his

duties well. This only means that there is no strict discipline among the workers.

The utilities include the equipment, ventilation (condenser, fan) to

condition air to the environment, air system, boiler, generators (in case of non-

power supply), and refrigerator. An hour break is required to be taken because

there are times when a worker cannot have slack time due to high demand in

production which is the priority.

If there is a machine breakdown, usually production stops. The most

critical and crucial machine breakdown that occurred has stopped the

production for three (3) days. Causes are bottle washer and filling equipments’

failure to function properly. Production failure has two types. First is

Operational. This includes usual ones such as readjustment of the machines’

gears. Second is Mechanical. This type is taken into account seriously. This

includes abnormal incidents and quality control problems. One serious injury

that occurred is when a mechanical worker who fixes the machine cut his finger

while lubricating the gears. The said incident occurred while the worker does his

job while the machine he works at is operating. (Workers such as electricians

have insurance.) There are two main reasons for machine breakdown. First is the

lack of preventive maintenance. Maintenance workers are hired outside the

company (outsourcing). Preventive actions should usually be performed daily

such as lubrication. It takes one to two hours in rotation daily. This focuses on

one machine or area only. Weekly checking and servicing of spare parts are also

considered as preventive measures. Comments from mechanics such the need

for machine work out, need of some lubrication or proper lubrication, and faded

paint are taken into consideration. Another ground for machine breakdown is

that no corrective actions are being taken. Corrective actions include tile fixing,

shafting, gears welding, fabricating, and replacing spare parts. However, apart

from this, there is an emergency maintenance which is performed on critical

times. Production is highly prioritized by the company, so any actions considered

to be contributing to it are considered.

7. Location Planning and Analysis

This illustration shows the location of the PCPPI and the roads connecting to it.

The plant in San Miguel is the only PCPPI plant in Panay. Being situated in

a town away from the city, it has both the advantages and disadvantages. There

are factors that permitted the company to establish the plant in the town. The

main reason is the abundance of water resource. Water is a main component of

the product. Therefore, it essential for them to have a constant source of it. The

plant obtains water in the dug deep well within its boundaries. With its

profusion, the requirement for production is sufficed.

In addition, the location is suitable for deliveries to different customers.

There are roads connecting to Southern Iloilo to Antique, to Northern Iloilo to

Capiz and Aklan, and to Iloilo City for transportation to Palawan customers.

Moreover, the area is not prone to flooding and any other fortuitous

events. More importantly, it acquiesced with the law stating that no plant should

be set up in a city.

However, advantages can be recognized: transportation is difficult. The

main mode of transportation in the town is through the use of public utility

jeepneys. So as to suffice the need for efficient product distribution, the

company contacts with third parties. The company rents trucks together with a

driver each truck instead of buying their own trucks for delivery.

8. Human Resources

For the HR management, the focus of this topic would be on employees.

In light with this, incentives are offered to those who observe the Code of

Conduct of the organization termed Good Manufacturing Practice (GMP). GMP is

part of the standard operating procedure (SOP). This includes following the

requirements such as wearing a complete uniform and hairnet while in the

production area.

The company practices a progressive discipline process. An organization’s

most important assets are its workers. To motivate them, the company offers

annual incentives. For the manufacturing or production department, incentives

are based on the performance of the workers while commissions are offered to

the sales department. In addition, service recognition is practiced by giving

loyalty awards for those who have serves the organization for at least twenty-

five (25) years.

To further improve employees’ skills, selected ones undergo leadership

and management training. Those who are selected are the potential leaders of

the company. Moreover, informal organizations exist such as Bukluran. It

promotes camaraderie and teamwork among members of the organization

across different functions and levels. Activities such as Sportsfest, Christmas

party, and plant summit helps bond the relationship of the employees. To

enlighten the workers, a mass is held every 1st Friday of the month. A single

priest conducts the service. Authorization on behalf of employees from higher

position gives special treatment to the workers when in other companies. Like

other organizations, Pepsi-Cola Co. also has unions. People from this informal

group are regular workers of the company.

Three compensation systems are employed: Time-based, Knowledge-

based, and Management Pay Systems. For the production workers, time-based is

applied. Regular number of hours worked is eight (8) hours. Overtime is not

allowed since there is shifting. For the officers and staff, knowledge-based pay

system is applied. Selected employees who are chosen to undergo training

sessions receive higher compensation compared to those who do not. Moreover,

if a particular department performs well on the tasks assigned, bonuses are

offered to employees under it.

B. Operating the System

1. Supply Chain Management

Talking about the products Pepsi Cola Products Philippines Incorporated

has been producing for the past years, we should consider the flow of raw

materials from the suppliers to the end users, the consumers.

Pepsi Cola Products Philippine Incorporated Iloilo Plant gets their supplies

of raw materials in PCPPI Main office located in Muntinlupa City. The main office

in return gets their raw materials in the PepsiCo international office located in

USA. Actually, the only raw material which is from the PepsiCo international is

the concentrate used in mixing the beverage. This is because the concentrate is

the most important raw material. Like any other manufacturing companies,

PepsiCo has a secret ingredient which only them knows. This is the very reason

why they only have one supplier of concentrate. Other raw materials include

carbon dioxide and water. There is no need to get the carbon dioxide from

PepsiCo international because the Philippines are abundant of it. Also, there is

plenty of water in the area where the plant is located. They get the water from

the deep well and it undergoes processing in the water treatment plant.

The concentrate is being transported from the PepsiCo international to

the PCPPI main office through cargo planes. In this case, there will be easy and

fast delivery of concentrate. In addition, PCPPI transport these raw materials,

concentrate and carbon dioxide, to PCPPI Iloilo plant by cargo ships and large

truck containers. The large truck container is not owned by the company but is

owned by the cargo ships. After reaching to the plant, they empty and transfer

the truck through the use of big hose which connects to the tank. The tank is

where they store the carbon dioxide.

PCPPI request for raw materials in the main office good for one week.

The products they produced are based on the forecasted data they made every

week. There are times when they run out of raw materials or there is shortage.

In this case, they request for raw materials in the nearby PCPPI plant located in

Cebu and Bacolod City so that there will be fast delivery and there is no delay in

the production. As an advantage, they can lower the cost of transportation when

they get the materials from the nearby plant.

The raw materials undergo processing to produce the final product.

These raw materials enter the plant for processing. In the plant it undergoes

procedures before the final output.

PCPPI outsource some of their employees. These employees include the

inspectors, janitors, and other low positioned employees from different

agencies. Also, the bottles they use in the final product are outsourced from a

different company. They do not have their own bottle manufacturing plant which

is the reason why they get the bottles from a different company. Moreover, they

can lower the cost of production when they outsource than when they produce

their own bottles.

After the production of the beverages, wherein they produce 20 000

cases per day, they store the final product ready for delivery in their warehouse

which can store a maximum of 110 000 cases.

PCPPI delivers their product to the distribution outlets or directly to the

stores. These distribution outlets are the ones responsible for selling the

products both to the end users or other stores and in the case of small stores,

they are responsible for selling the products to the end users which are the

consumers.

PCPPI also delivers their products not only in the island of Panay but also

in Palawan wherein they are the main source of Pepsi products.

They have an estimated number of 300 distributing outlets in the

province of Iloilo. In order to deliver the products to these outlets, they use

delivery trucks to transport the products. The delivery trucks they use are owned

by the company. There are also those who have a contract with the company,

they are the contractors. These contractors directly pick up the products in the

plant. They are the ones who provide for transportation. They go to the plant in

big and small trucks depending on the number of cases of Pepsi products they

can get. In addition, they also provide their own drivers for the truck. The

company does not take responsibility for any damaged products during

transportation. The contractors are the ones responsible for the damaged that

they have done. The contractor’s truck has an estimated maximum capacity of

300 cases.

After the production, the products stored in the warehouse will now be

distributed to different distributing outlets. In distribution, there are different

procedures they follow in order to come up with smooth flow of delivery of the

products. Not only that, they also have loyal customers who are continually

purchasing their product because of the way they deliver their products or

because they follow a smooth flow of delivery and because of the incentives

they give to their customers. The procedures include the booking, delivery and

money collection.

The first step is booking wherein the customer made their orders. The

salesman is the one in charge in booking. The salesman gets the number of cases

and the product the customer is going to order. After the booking is the

preparation where in they prepare the orders of the customers for delivery of

the product. The plant has a total of ten (10) salesmen, who are in charge of the

booking and collection of money. They are assigned in different areas not only in

Iloilo but also in other provinces like Aklan, Capiz, Antique, and Palawan. Usually,

it takes 48 hours before the delivery of the product to the customer. After 48

hours of waiting, the product is now delivered to the customer. For easy delivery

and booking, there is a scheduled planning of distribution in the different

territories. Each delivery truck has a capacity of 150 cases. It is the job of the

delivery truck to deliver the products to every customer who has booked their

orders to the salesman. The delivery truck driver is not allowed to collect money.

Also, they are responsible for the product in the duration of the delivery. There

are times when during the duration of the delivery bottles are broken and

damaged. In this case, the delivery truck driver will hold responsible to those

bottles broken and damaged. This means that they are going to pay for it. After

the delivery is the payment or the collection of money. This is done by the

salesmen who also do the booking.

Like any other companies, PCPPI also gives incentives to their loyal

customers who keep on purchasing their products. They provide refrigerators to

their customers, which serves as incentives when they purchase a minimum of

100 cases of their products monthly. The refrigerators are not owned by the

store. They get it when the customer stops on purchasing their products or

change their product to their competitor’s product.

During the process of distribution, common problems arise. Some of

these problems are wrong delivery, out of stock and wrong booking. There are

also cases when there is late delivery due to out of stock. A problem of out of

stock arises during peak season and when there is a shortage. They solve these

problems by simply rebooking and delivery to the intended person. In cases

when there are stock shortages, the customers have to wait for the delivery of

their orders. There are also cases when the customers have not given the exact

number of empty bottles so they just ask for deposits for the lacking bottles.

When there are expired products, it can be returned provided that there is a

recommendation from the manager, if there is none, it is considered sold. The

return of expired products is an impossible case because it takes two (2) years,

from the date of manufacture, for it to expire. In cases where not all of the

bottles are returned, the customer should deposit for unreturned bottles.

2. Inventory Management

The inventory level of PCPPI Iloilo plant varies depending on the months.

During peak seasons, in April, September, November and December, the

inventory level is high compared to other months wherein inventory is in the

average. This is probably because in summer, the weather is hot and people

need cold beverages to drink at this time. Also, in Ber months Christmas in

approaching and parties are everywhere.

They depend on the forecasted data to know the kind of product and

number of cases they will produce. They forecast weekly to know the future

demands of the consumers of the product. Forecasted data really helped them

determine the kind of beverage they will produce. The raw materials they

request in the PCPPI main office located in Muntinlupa City is independent of the

forecasted data. This means that they have a fixed amount of raw materials that

they request weekly.

PCPPI produces Pepsi products daily. They usually over produce so that

there will be no shortage. They think that if they will produce the exact amount

forecasted, there is a tendency that there will be a shortage and if there is

shortage they will produce again which is inconvenient for the customers who

are booking for orders. Also, when there is shortage they will produce again

which makes the production cost higher.

They use first-in-first-out (FIFO) inventory system so that stocks in the

warehouse will not stay there in a long period of time and expire. Pepsi products

usually expire two years after production of the product. As for now, there are

no reported products that have expired in their warehouse. If there is

overproduction, product produced by batch is tagged (product date). This will

allow them to identify the products that have been produced first so that it will

be delivered first.

Usually, production focuses more on the most saleable products. In this

case, mountain dew is the most marketable product. They produce mountain

dew most of the time and they produce Pepsi often.

3. Aggregate Planning

4. Resource Planning

IV. Problems/Issues

Every organization, large, medium or small encounters certain problems

that may limit or hinder the production process or the total development of the

company. It is very important to determine what causes these problems and

have some preliminary solution to counter its effect. The Iloilo Plant of Pepsi Cola

Products Philippines Inc. (PCPPI), located at Brgy. San Jose, San Miguel, Iloilo has

encounter some problems but with continues effort in preventing and

safeguarding the overall system, made them one of the most successful business

entity in the place.

However, problems still co-exist in our lives as well as in the organization.

We can’t totally escape it but we can always prevent it from causing more

problems. During our visit in the plant, our group noticed that there are paddles

of water around the refrigeration and mixing processes which could cause

accidents. There are two janitors hired by the plant to ensure clean and safety

surroundings however, they cannot clean the place every time it is needed. The

management do not impose a strict compliance on the protocols and supervisors

are not strict on disciplining employees. Employees should then be trained

properly and reminded of the GMP that should be followed. The best solution

would be the strict implementation of the rules and supervisors should be

stricter with regards to this.

We also found out that some of their employees are not monitored

properly on their work if they are following the rules imposed by the

organization. which greatly affect their safety. An interviewee told the group that

one of the mechanical workers who fixed the machine touched the moving gear

and cut his finger while lubricating it. Though the operator has the knowledge

regarding the safety hazards associated with all of the process materials, he did

not observe proper procedure like having a glove for protection while inspecting.

The operator must be thoroughly familiar with the potential safety and

environmental hazards associated with in the plant. He must understand the

process and have a mental picture of how the machine is structured and how it

operates. If only the employee is observing proper guidance, this accident should

have been minimized and prevented. Safety considerations should be associated

with in the process.

It was learned in the interview that there are no standards or rules

concerning on the waste management of the plant. The wasted products are just

being thrown in certain area within the plant or in a vacant lot outside the plant

factory and leave it there. Nothing is being done with this residue. These may

not contain harmful bacteria that may damage the environment but it may

contaminate the water that they are using since they get their water in deep

wells. Securing safety water for the production process must be strictly

monitored and observed. The company should conduct a study regarding the

wastes out of production if chemicals on these wastes can be used as alternative

source of energy or these wastes have other uses for the company when it is

processed.

Eight percent (0.8%) total defects generated in the total production

system was discovered. Although that is already a very low percentage of the

total production, the actual number of wasted products is relatively high without

salvage value. All of the defective units are considered as a total loss by the

company. To further reduce such defects, the management should conduct

preventive maintenance and corrective maintenance more often.

Moreover, the company do not adapt an environment friendly process in

manufacturing. They do not have strategic plan in replenishing its fresh water

consumption. Water is their primary component to make their products

however; they do not have a system to improve their water efficiency usage per

unit of production. The practice of conserving water is not adapted very well in

their day to day operations. They do not have a state of the art water filtration

and purification system intended to be used for recycling and reusing water.

During production, huge amounts of water are being used and processed but

only a fraction of it was given back or returned to the environment. They have no

positive water balance in their operation despite the fact that the location of the

plant offers a good supply of water. They lack facilities like new machine

designed for that purpose. It is essential that they treat water as one of their

limited resources. New equipment or process must be adapted to treat waste

water which could reduce water consumption or which could be returned back

to the environment.

Lastly, we have observed that the plant is not very critical on its energy

consumption. They have no plans on finding alternative sources of energy and

not very strict on implementing its energy conservation measures in their

production process. Although they have little consumption on the lights they are

using, consumption of equipments is still large. To address this issue, the

company should find new sources of energy or find new ways in reducing energy

consumption.

V. Conclusion and Recommendation

VI. References

VII. Appendices