Implications for operations management in organizations that operate internationally.

Implications for operations management in organizations that operate internationally.

Operations management refers to the management strategy focused on designing, redesigning and controlling processes or business operations for effective production of goods and or services (McGrath and Bates, 2017). Operations management is a management area whose key aim is to administer business practices that lead to high production efficiency within the organization. An organization’s operations management is very key in enhancing the firm’s profitability in the business venture. The profitability index of any business is a factor to the operational efficiency which is related to operations management practices. Globalized organizations need effective operations management more than the localized ones (McGrath and Bates, 2017). The management of globalized operations is involving because of the various markets dynamics that determine the international business profitability.

The companies chosen to analyze the operations management and its implications to organizations are Coca-Cola Company and Pepsi. The two are beverage companies operating globally and compete to outdo each other in the global markets. Coca-cola, however, has the largest market share of the global beverages market. The aspects of operations management are analyzed include; the respective production processes, customer interaction in those processes and the technologies used in production (Stevenson, 2014). Both coca cola and Pepsi have a well-defined measurement of product quality and excellence. The respective processes for the production of beverages have their quality assessment measures to enhance customer oriented business focus. Coca-Cola and Pepsi companies have inventories and well-defined models of the operations. The two companies also have some areas of concern that need improvement in their operations. Lean processes strategy by the organization impact their culture, efficiency, and success in business (Aljunaidi and Ankrak, 2014).

Pepsi and Coca-Cola each have quality measurement systems in place to ensure the products meet the expected standard in international business. Coca-Cola has a thorough quality control for the respective production processes and all-inclusive quality management systems (Fullerton et al., 2014). Every process in the processing of the beverages is assessed individually to gauge the quality compliance which is key to attaining an all-inclusive product quality. The Coca-Cola Company uses the Kaizen theory and the 5S management systems in its operations and processes. Kaizen theory calls for whole organization responsibility from top management to the supervisors of the respective processes and the workers (Stevenson, 2014). The kaizen theory enables Coca-Cola Company to ensure good housekeeping, waste elimination, and standardization in all processes and operations. The 5S quality management strategy involves the following processes. The first “S” stands for sort through and sort out, the second “S” stands for standardizing and share information (McGrath and Bates, 2017). The third “S” stands for a set in order, the fourth “S” represents sustain the improvement made whereas the last “S” stands for shine and inspect trough cleaning (McGrath and Bates, 2017). Based on the analyzed quality control and management systems, the Coca-Cola Company has complied with the internationally accepted quality compliance.

The PepsiCo has quality control systems that ensure the manufacturing standards required in international business are met. The management system includes a total quality management systems that break down to quality management systems and consequently process quality control. The process quality control ensures that the individual processes of manufacturing the beverages meet the design standard and the, therefore, overall product quality (Bondesson and Liss, 2016). The Pepsi company quality control is implemented in reference to the standards set by PCI. The company ensures testing as from raw materials, intermediate syrup testing and finished product testing. Additionally, the company conducts internal and external product audits to ensure that the products conform to the design standards. PepsiCo is therefore fully committed to quality assurance as Coca-Cola is. The Coca-Cola and PepsiCo use the same inventory control model. The two companies use the Economic order model in purchasing the raw materials, ordering the manufacture of new bottles and other inventories the companies use in their operations (Aljunaidi and Ankrak, 2014). The inventory control method ensures that the companies don’t make orders like materials that require additional cost to keep them like refrigeration and warehousing cost.

Lean processes define the variety of operations that enable an organization to focus all its operations to customer needs which must be achieved at the smallest operational cost possible. The strategy is formulated to ensure ultimate customer satisfaction with the minimum waste of company’s resources. On the other hand, sigma six is the operational methodology focused on reducing the manufacturing defects of a product on six basic deviations scale (Al-Aomar et al., 2017). Sigma six ensures that the organization product deviations from the anticipated maintain the minimum impacts like material wastage cost implication right from the manufacturing phase to the service or product delivery. Both Coca-Cola and PepsiCo have embraced lean processing operation to ensure good product quality to the customer at a lower operational budget (Bondesson and Liss, 2016). Coca-Cola leans towards sigma six by ensuring the following formalities in the processing. The company ensures processing safety, sorting of the processes and conducting the related ones on the same time and location as well as setting the operations in the right order to ensure quality and reduce wastages of the ingredients in the processing (Al-Aomar et al., 2017). The Coca-Cola Company ensures that the established economical and technically viable processing steps are stabilized and run on automated mode for faster production. The company standardizes its products to ensure they reflect the actual product quality for a predetermined price. The latter also ensures the cost of manufacturing the product is economic in engineering terms. The last principle of Coca-Cola sigma six is sustaining (Al-Aomar et al., 2017). The company sustains its manufacturing standards under the established technical procedures to ensure conformance to quality concerns.

The PepsiCo applies several lean operations strategies. Besides the sigma six technical principles as used by Coca-Cola Company, Pepsi uses the OEE and the lean sigma six (Sperber, 2018). The beverage giant has surfaced to compete favorably with Coca-Cola by implementing the best industrial process strategy like the lean sigma six and overall equipment effectiveness (OEE) (Sperber, 2018). The company uses the lean sigma six to detect any defects and establish the individual process resulting in the manufacturer defects. The implementation of sigma six in the company processes has enabled the beverage manufacturer to reduce the loss resulting from substandard products rejection. The lean process strategy by the PepsiCo ensures any defects detected in the sigma six statistical analyses is immediately addressed to reduce the wastage of the manufacturing materials (Sperber, 2018). The overall equipment effectiveness if the product of combining the two monitoring strategies the sigma six and the lean processes.

The implementation of the lean processes, sigma six as well as the OEE impacts the two companies’ culture, efficiency and success in the market (Al-Aomar et al., 2017). A company whose operations are backed by the sigma six develops a manufacturing efficiency and total process accounting for losses in the individual processes. as highlighted, the sigma six uses statistical methods to determine the defects in the end products and the impacts the latter bring in the overall process efficacy. Conformance to the sigma six by both Coca-Cola and PepsiCo ensures that the company operates efficiency within its goal achievement path. Sigma is called for effective monitoring of the processes and everyone in the manufacturing chain is responsible for daily manufacturing and processing accounting that generates reports to be used in the sigma six analysis (Costa et al., 2018). The daily monitoring of the processes brings about individual responsibility culture in the organization. A lean process as well makes the employees concerned about the detected nonconformities and losses in terms of materials, ingredients and the associated financial loses in the manufacturing processes.

Customer interactions for both Pepsi and Coca-Cola Company are limited. As highlighted earlier, the major customer interactions in the processes of beverage industrial preparation are giving feedback which completes a manufacturing loop for both companies. After the products land in the market, consumers use them and some of them give feedback about the quality of the products with respect to customer expectation (Fullerton et al., 2014). The feedback includes positive commentary on the quality of the drinks and packaging. In case the customers complain of substandard quality in the beverages, the companies have to review the individual processes in the quality control and management system and correct the process leading to a defect in the final products. Evidently, there are very few cases of the packaging negative feedback by the customers. The bottle manufacturing assemblies for both companies have been established and managed under automated processes that can make very few defects in the process of manufacturing the bottles. The efficiency and culture born of sigma six and lean processes are very beneficial to both Coca-Cola company and PepsiCo (Costa et al., 2018). The industrial process strategies minimize material wastages. Reduction of material wastage ensures that the company operates economically whereby all the raw materials are converted to their equivalent monetary value without wasting. Lean processes save the processing time and therefore the companies can recover the investment is a comparatively shorter time.

Coca-cola and Pepsi have similar manufacturing process technology. The processes start with preparing the ingredients that include sweeteners, carbon dioxide, water and other materials (Loison et al., 2015). The ingredients are formulated in respective amounts. The ingredients and the vessels are washed and rinsed a step that is followed by mixing or blending of the ingredients together. The blend is ready soda that can be taken if bottling isn’t required. The process continues to filling the respective bottle capacities the company uses and capping the bottles. The capped bottles are labeled and coded for sales (Loison et al., 2015). The coded products are inspected for quality assurance and distributed to the markets. The customer interaction in the Pepsi and Coca-Cola company processing technologies is limited. A customer can only interact with the manufacturing processes by giving a feedback about the quality of the beverage or a proposal to redesigning of product. A proposal for a redesign or quality conformance concerns is implemented prior to the onset of the processing of the beverages. Besides, the raw materials suppliers to the companies are the customers who interact with the initial process of beverage processing. The interaction is in the supply of the ingredients needed for making the beverages. As highlighted, both Coca-Cola and Pepsi companies employ the Economic order model to control the supplies (Loison et al., 2015). The company, therefore, interacts with the raw materials supplier in conformance to the Economic order model and hence cannot take more products that they can economically need regardless of the supply.

References

Al-Aomar, R., Al-Saberi, A., Al-Ameri, M., Al-Wahedi, A., & Eke, K. (2017). Six Sigma Application to Food and Beverage Testing Services. Journal of Engineering and Applied Sciences, 12(4), 819-824.

Aljunaidi, A., & Ankrak, S. (2014). The Application of Lean Principles in the Fast Moving Consumer Goods (FMCG). Journal of Operations and Supply Chain Management, 7(2), 1-25.

Bondesson, P., & Liss, S. (2016). Lean Production & Sustainable Supply Chains in the Fast Moving Consumer Goods Industry.

Costa, L. B. M., Godinho Filho, M., Fredendall, L. D., & Paredes, F. J. G. (2018). Lean, six sigma and lean six sigma in the food industry: A systematic literature review. Trends in Food Science & Technology.

Fullerton, R. R., Kennedy, F. A., & Widener, S. K. (2014). Lean manufacturing and firm performance: The incremental contribution of lean management accounting practices. Journal of Operations Management, 32(7-8), 414-428.

Loison, R., Foch, P., & Boyer, A. (2015). Coke: Quality and Production. Kent: Elsevier Science.

McGrath, J., & Bates, B. (2017). The little book of big management theories…and how to use them.

Sperber, B. (2018). Pepsi Bottler Shares Secrets of OEE, Six Sigma, Lean | Automation World. Retrieved from https://www.automationworld.com/article/food-and-beverage/pepsi-bottler-shares-secrets-oee-six-sigma-lean

Stevenson, W. (2014). Operations management. McGraw-Hill Higher Education.