SUKKUR BEVERGAES PVT LTD

(PEPSI)
Group members:
 Amjad Mehmood
 Ali raza
 Zainab Jawaid

Submitted to: Sir Dr Naveed Ahmed Wassan

Subject: Production and Operation

Management

Contents
Introduction...............................................................................................................................................2
Interviewee.................................................................................................................................................2
ACKNOWLEDGEMENT........................................................................................................................3
Questions and Answers.............................................................................................................................3
Design of goods and service..................................................................................................................3
Managing Quality..................................................................................................................................6
Forecasting.............................................................................................................................................7
Supply chain Management....................................................................................................................9
Inventory management.......................................................................................................................11
Layout Strategy...................................................................................................................................13
Analysis....................................................................................................................................................15
Recommendations...................................................................................................................................16
Conclusion................................................................................................................................................17
References................................................................................................................................................17
Introduction
Sukkur beverages was a franchise of Pepsi Co Inc. which was a carbonate soft drink manufacture
company. And dominated the market for long time. The target market of Pepsi co Company is
youth. Pepsi Company in Pakistan contain more than 16 products (soda, water, chip and juice).
Sukkur beverages was developed on September 1974. It was launched as a private limited
company and prime introduction of carbonated soft drinks in the Interior Sindh
Region and Bordering South region of Punjab. In the beginning, it was known as a
bottling plant of coca cola Company later it was shifted into Sukkkur Beverages
limited and was a successful business with experience of more Than 30 years.
Sukkur beverages limited company’s goal is to offer high quality soft drink of Pepsi
CO to customers. And maintain high sales volume and growth in interior Sindh and
south region of Punjab and predominated in rural areas. It was an agro base
economy and mega industries. Sukkur Beverages Company have a large market
share of 74 % within Pakistan (franchise area).

Interviewee
We conducted an interview from Iftikhar Ahmed, an operational manager of Sukkur beverages
limited. Previously work on coca cola Company in Srilanka as an operation. He has an
experienced of 15 to 16 year in beverages company but recently join sukkur beverages limited 5
month ago .he worked as an operational plant manager along with production manager. His main
duty and responsibility was to controlled and look after all the production and operational
budgets of sukkur beverages limited. He gave good response to our questions.

ACKNOWLEDGEMENT
First of all we are thankful to Almighty ALLAH for giving us much cooperation and
supporting parents who has given us this opportunity to study here. I would like to thanks Dr.
Naveed Wasaan for giving us the confidence and opportunity to prove ourselves with motivation.
And we also thankful Mr. Hassan Production manager Sukkur Beverages who gave us valuable
time from his busy schedule and for his kindness, due to the interview get enhancement in our
knowledge to provide us detailed version data about Sukkur beverages to complete this Project
Sukkur Beverages document compiled by Ali Raza , Amjad Mehmood, and Zainab Jawed
Memon and this file is valuable for us for incoming batches and fore the sukkur beverages where
sukkur beverages lacking an good improve their self this is the evaluation file of sukkur
beverages file

Questions and Answers

Design of goods and service

1. There are some product strategy options that usually support competitive advantage
for example differentiation, low cost, and rapid response so what particular strategy
you implement for your products? Why that one particularly?

Answer: Sukkur beverages uses normally mix of product strategy but mostly they implement the
differentiation and rapid response product strategy. As the manager said sukkur beverages do not
have as such particular product strategy but keeping the core values and mission of Pepsi brand
sukkur beverages many times go for differentiation and rapid response strategy nut not always.
Secondly implementation product strategy of sukkur beverages depends on situation, depends on
conditions for instances customer need which means customer want something new product that
is entirely different for example Pepsi launched different flavors of its one the famous beverages
DEW so it was differentiation strategy, then competitor some time make Pepsi evoke to give
quick response because customer also wants product from Pepsi quickly so at that sukkur
beverages adopt rapid response strategy. So in all from manager’s point of view Pepsi product
strategy varies with situation but mostly they prefer differentiation and rapid response product
strategy because it complied with core values and mission.

2. When your company decide to launch any new product what steps you initiate
means how you start development of new product (product development stages) and
who has leading role in development mean which department or particular people
who plays critical role in development?
Answer: Sukkur beverages has main objectives in this kind of strategic decision area that is to
match the product with customer wants. As manager said when we usually think to introduce
new product we looks up certain things which include, will the product will be match with
customer’s preference, company also see organization capacity and company also see market
demand. Manager said there are certain situational time when see there is strong need to launch
new product for instance when competitor mostly local brands are continually introducing new
product although company has loyal customer but despite of loyalty local brands chase our
customer so in responds to competitors company see its mandatory to launch new product, then
company see life cycle of different products so by analyzing the life cycle company came up to
know there is need to launch new product. Manager said in order to know these thing
management of company conduct market based research and development and innovation. For
example some time company conduct research about current trends such as to know lifestyle of
customer, these results of these are used in making future decisions for new product. When
company decide to launch new product it goes for almost all steps of product development
including concept, feasibility, customer requirement, product specification, then most important
test market and introduction to market and then last evaluation. Manager said no single person is
responsible for this product development but mix of department took active part for example:
R&D, production department, HR department and teams are established that evaluate success of
new product ultimately.

3. When companies design any product they may normally face the some issues for
example value analysis that we have to produce product economically means within
limited budget, product should be met environmental standards and technological
issues in designing the product what your companies face the issues while designing
the particular product?

Answer: Almost everyone company in their particular industry face issues related to designing of
product while designing its products, so as sukkur beverages also face some sort issue when they
design any product some issue which they face includes: product architecture which suggest how
will the shape of product it requires extensive time and efforts, then adapting technology for
particular product if requires, then cost issues usually Pepsi set up standard cost if cost gets
exceed from the standard it cause a big problem so producing product economically is big
concern for them than some other issue are also there. As manager said when there is R&D either
it can for product or it can be for market or it can be for operations so when there is R&D some
bad faces commonly arises so these problems are considered as part of designing process, then
he said main thing is to select best direction so by which we can achieve our target so cope up
with this issue Pepsi choose best possible direction by taking suggestions from experts, usually
the process of R&D are same for every product but experts that include PhD people and doctor
people their mental approach are behind the product’s formula that used in making the product,
then choosing best ingredients is big problem but Pepsi cope up this with best possible strategy
by getting advice from its experts team.

4. When you think that there is strong need to design new product because u may
sometime feel that some of products are nor running well in market?

Answer: There are several things are there which sukkur beverages consider when they thing
there is strong need of designing new product. As manager said Pepsi mostly see at two aspect
when they realize strong need of designing new product, firstly they see their competitor mean
what is current position of competitors how much competitor is active, is competitors are going
above if they are going above to us then Pepsi usually realize there is significant need to design
new product, secondly Pepsi looks up at market demand for example if consumers are
extensively demanding for new product Pepsi then realize there is strong need to launch new
product.

5. Components that you use in making your products, would you make component by
yourself or you purchase from other place?

Answer: Almost all Companies normally take different major decision regarding the designing
the product one of the decision that companies have to take make or buy decision which means
either company will make ingredients by themselves or they will make it purchase. Pepsi also
take this decision critically of make or buy. As manager said Pepsi mostly make it purchase of
components that will be used in product, but also approximately 5% of component are prepared
within company accordingly to the product that they called in house development. Purchasing of
components occur form local markets i.e. carbonated water, national market i.e. bottles from
Punjab and also from international market i.e. some chemicals.
Managing Quality
6. Which ways you use for improving quality can lead to reduced costs?

Answer: Based on the sum of the reasons, Sukkur beverages applied economies of scale to
reduce costs. First, to divide Pepsi's functional departmentalization, "specialization and division
of labor" is used. Such as Management Board, Marketing and Finance. In the order hand, a
manager will run his unique market for a general manager of the market report Sukkur beverages
uses the best technology and efficient software and six sigma strategy use that’s why the produce
bulk quantity production of beverages products along with maintain quality that’s why in result
cost reduction and maintain quality.

7. These are 10 determinants of service quality that how many you are taking from
these all and what extent?

Answers: According to the Sukkur beverages techniques to retain the all stakeholder from these
determinants Customer Loyalty because increase in profitability, and Growth Value increases
because of Customer Satisfaction, productivity leads Value Employee Loyalty, Drives Loyalty
Internal Quality Drives Employee Satisfaction

8. These are seven tools of TQM. How you use it in your Pepsi cola company and what
is the impact on product?

Answers: Sukkur Beverage’s explain briefly how we manage Total quality management through
this because TQM crystal clear that highly qualitative products distinct from others and gain
competitive advantage in the market place and the main important is market share gain or loss
through the quality issue.

Quality is important due to following reason:

1 Cost and market share

2 Product liability
3 International Implication

4 Company Reputation

9. Where are you using frequently inspection and which methods used?

Answer: Sukkur beverages follow these steps to Quality Control by the help of Inspection.

Testing of Raw material (Carbon dioxide, Treated water, Sugar Concentrate)

Syrup Testing, Finished Products testing, internal audit, External Audit

After the delivery, before the delivery, in assembly, and during the production we frequently
inspection from initial stage to final stage.

10. Quality data and reporting is positively related to supplier quality management?

These question accordingly syllabus but we asked in applied way on the interview time so
consider as we have information to ask in applied way to the interviewer

Forecasting

11. Organization use three major types of forecast in planning future operation which
are Economic forecast (predicting inflation, money supplies), Technological forecast
(predicting rate of technological progress) and Demand forecast (product or service
sale forecast) in your opinion which one is most important for your company?

Answer: All three types of forecast are important for SBL Company. Sukkur Beverages
Company used all these type of forecast for future planning. First, Company do forecast plan
before the coming year for economic forecast like they forecast increase and decreasing inflation
rates of raw material according to this they came on contract with suppliers it help them to
reduce and analysis cost. Secondly On the daily and monthly basic they do demand forecast
focus on local demand of customers. it gave them competitive advantage of responses .final
technology forecast that much take time they use spend so much time on this more than two
years to change technology of plant. They more focus on demand forecast to grip customers.
 12. There are two types of methods for forecasting, Qualitative (incorporate personal
experience, judgment, emotions in decision making for forecast) and Quantitative
(using mathematical modeling to forecast) which one you use and why you use this?

Answer: SBL mostly use quantitative forecast method, mainly for forecast sale, require
inventory, and demand for new product, required raw material, trend analysis, environment
analysis. And sometime depend on condition they also used qualitative method but as their
suppliers and other stakeholders are far so it create some difficulties so that's why they more used
qualitative.

13. If your company used Quantitative then which types of this method you use the
most (last value, trend analysis, seasonal factors, average method , regression and
weight average) if other than this then briefly explain your techniques forecast?

Answer: They mostly used seasonal factor. And other type of methods that they used, they didn’t
shared with us they just said we used different methods for different city. “Different method for
Sukkur and different for Lahore as”.as all city have different conditions. They don’t give clear
answer.

14. Did your company believe in traditional forecast system which involves several steps
example determine use, item, time horizon, model, gather data for forecast after this
then forecast and implement?

Answer: Yes, they followed whole process of forecast but there have some change steps in their
process but overall was same like first they determine what to forecast ?(inventory, sales volume
or demand other )for suppose they want to forecast next year sale first, they determine this then
secondly ,they check what items (resources ) sales data etc. Needed for forecasting. Third they
set time horizon of each activity they performed. Forth collect and gather data of previous
months or year select method and technique base on condition than forecast the sale for next
year.
 15. For your particular company, do forecasting have strategic important in the supply
chain management area and how briefly explain if possible?

Answer :Yes, forecast have so much importance on whole supply chain management process but
some of the main for supply chain are required inventory forecast and sale forecast. If require
inventory of Pepsi co bottle didn’t forecast then supplier can deliver more or less inventory of
Pepsi bottle to Sukkot beverages company. Then company face shortage or surplus problem or if
sale for next year didn’t forecast before coming year then this will also create some problem for
company.

Supply chain Management

16. Some companies do Vertical Integration (purchase some backward Integration

(suppliers) or forward integration (distributors, retailers) did your company use this
technique for market growth if do then share?

Answer: SBL use this vertical Integration technique. SBL purchase some loyal suppliers and
distributors .Our suppliers are not from sukkur they are from over all Pakistan. But we have so
many distributors from sukkur, khairpur and other from near city. We also have agreement from
so many suppliers and distributors for less than or equal to five years. In Sukkot our vertical
forward integration (distributors) are Royal taj, Sindhiri, KFC, Pizza town other retailers.

17. Briefly share your company Order fulfillment (raw material, manufacture,
distributors and final customer) process?

Answer: company use raw material which involve (carbonate Water, sugar, flavoring, a additive,
emulsion) used in soft drinks and other for bottles (glass, silica and aluminum). Outsource raw
material (different size of cap metal and plastic both, plastic and glass bottles, with label, other
outsource water in water scare areas.)Some material manufacture in company other import from
suppliers. After manufacture all the product inspect, then store in the warehouse and according to
order distributes. Two types of distributors direct(direct customers) and indirect (local retailers
and whole sellers).some time all the fulfillment process occur with forecast in season all the
process done with forecast (push model ) and sometime just in time techniques applicable in
non-season(pull model)base on agreement ,contract order take place.

18. How many distributors do you have in sukkur not exactly? Also tell us about your
Suppliers

Answer: Company have so many direct and indirect distributors in sukkur more than 50% as
other soft drink like coca cola have less market share in sukkur. Mostly all the retailers sell
Pepsi, dew and 7up in sukkur .Sukkur beverage limited have highest market share in sukkur.
Almost all soft drinks, hotels, fast food outlet, local shops offers soft Drinks SBL.if we talk about
SBL suppliers so they have few suppliers with long term relationships. SBL suppliers are very
loyal and very committed .In Pakistan the main suppliers are from Karachi and Islamabad.

19. Many companies’ faces issues and challenges in supply chain, did your company
faced challenges and issues in supply chain then share if there are not confidential?

Answer: Like other companies, SBL also faces some challenges with supplies, distributor,
inventory, market demand, sometime raw material (water scarcity), distribution strategies. Few
example are first, some time we face shortage of inventory due to understated forecast in
seasonal months. Some time we manufacturer more than order so in this case we face surplus
inventory. Second, water shortage in sukkur create so many problem for us as water is the main
raw material for us. In this case we outsource other from kpk. Third, market demand fluctuation
due to this SBL face problem of loss of customer this create pressure on research and
development department. Last, many supplies and distribution problem

20. Share your company Logistics and distribution system (truck, railway, and
seaport)?

Answer: When it’s come to logistics system SBL effort to deliver safe goods. logistic system
depend on distance ,if shorter distance like regional distance we used our own trucks( Khairpur ,
Rohri and others ) we have different categories of trucks for delivery . And for long distance
outside country for suppliers, we used seaports transportation (shipping). SBL did use railway
for logistic.

Inventory management
Inventory management of Pepsi focus on automation. Pepsi have some core objective in this
inventory management area of operation management which includes adequateness, appropriate
scheduling and cost minimization, Pepsi usually archive these goals through computerized
monitoring inventory, so then inventory manger takes decision by having data through this
system.

21. There are some type’s inventory that almost all firms maintain at least one of them
which includes raw material inventory, WIP Inventory, and finished goods
inventory. So what types of inventory usually your company maintain?

Answer: Inventory is an idle stock of physical goods that includes economic value and which is
kept by companies in different shapes in their custody which awaits for packaging, processing,
transformation, use or sale in a future point of time. So companies maintain certain type of
inventories depends on their types of business. Pepsi mostly maintain raw material and finished
goods inventory because of nature of products. As manager said we have different inventory in
our company including vehicles, fridges, infrastructure, raw material and finished goods,
manager said company maintain basically two types of major inventory primary and secondary.
Primary are those which company purchase from market i.e. raw material and secondary are
those which company kept in warehouse as finished goods, so these two together make final
inventory for company and then particular are dispatched for respective purpose i.e. for
manufacturing or for sale.

22. Your company already keep inventory in advance or on the basis of demand you
keep and in what amount and who is main accountable to maintain inventory?
Answer: Pepsi normally do not keep inventory in advance. As manager said we keep our raw
inventory according to strategy, as company mostly use their experience for some years so
according to that they know what will be particular demand of market in particular season or
time so by analyzing this company maintain inventory accordingly, and by keeping in mind a
progress of 5% to 10% company do planning of inventory.

23. Did you cycle count (counting inventory on specific date) of your inventory that you
particularly keep and how often do you cycle count your inventory?

Answer: Pepsi regularly do cycle count which means they periodically make count of particular
inventory on regular basis. As manager said our company make cycle count hourly on daily basis
through different technological system for example barcode tracking system, according to if we
are doing cycle count and we come to know that 1000 of particular product are present then
according to that we give order of bottle cap or label order. Manager said ultimate purpose of
cycle count we do is to make company informed about inventory problems, make company
informed by inventory need etc.

24. Is your company often faces inventory shrinkage i.e. damage and theft of inventory,
so how much it cost your company and how you control it so that this cost must be
minimize?

Answer: Pepsi not often but some time face inventory problems such some time damage of
inventory occurs, sometime theft or some time unexpected situation can arise which also cause
big inventory problem. As manager said our company some time face inventory issue but we
keep 5% tolerance for this kind of loss which we can bear this 5% is our benchmark that we have
set up for inventory shrinkage, if it gets exceed then serious analyses company do to know the
root causes and take corrective actions, manager said shrinkage can be because of operation
negligence, transport negligence and vendor negligence, these damage inventory are disposed of
or returned back to vendor if there is vendor negligence.

25. Is there any inventory that you consistently run out of? If yes then can tells us
reason behind this?
Answer: Pepsi efficiently maintain its inventory system so any type of inventory in company do
not consistently runs out. As manager said very rarely or never our inventory runs out because
company have some preplanned strategy, usually by analyzing market demand Company
purchases inventory but despite of this company set 5% to 10% tolerance so if any problem
occurs regarding running out any inventory this 5% to 10% tolerance support the whole system.

Layout Strategy
26. These are types of layout and examples of their typical objectives include: according
to the layout type which are Pepsi Cola Company incorporate and what is the
consequences on production and cost?

Answer: Sukkur beverages important expectation or outcome from layout strategy is cost
reduction and ample amount of production within given time of project to meet the demand of
market and efficiency and effectiveness also achieved this layout strategies apply following units
and their specific goals given due use the variety of layout strategies these layout strategies
applies on the administration department , production department and shipping department ,
exercise department purchase department, inventory store department, sales marketing
department.

1. Office layout : Locate workers requiring frequent contact close to one another.

2. Retail layout : Expose customers to high-margin items.

3. Warehouse layout : Balance low-cost storage with low-cost material handling.

4. Fixed-position layout : Move material to the limited storage areas around the site.

5. Process-oriented layout : Manage varied material flow for each product.

6. Work-cell layout : Identify a product family, build teams, and cross-train team members.

7. Product-oriented layout : Equalize the task time at each workstation.

27. How would you measure the “efficiency” of this layout? When you are
implementing the layout strategy in the company?
In this strategic area of decision-making, efficient movement of people, materials and
information is the operations management concern. In the case of Sukkur beverages, spaces are
designed with efficiency and productivity in mind. For example, the layout design in the
production facilities of Sukkur Beverages is centered on the principles of assembly line
production and total quality management (TQM).

28. What the maximum number is of produced the beverages product per hour that can
be handled by the present configuration of the process?

Answer: Sukkur beverages analysis the driven demand according to the market than the
configuration and as per assembly line used by Sukkur beverages used which speedy movement
as per hour 500 bottles crossed from one assembly line but the multiple assembly line preset here
we forecast and configuration according to market and environment factors

29. Layout strategy is different from product to product or not [like Pepsi string and
marinda etc.]

Answer: Layout strategy is different form product to product according to size of the product 500
250

1000 ml products so we create easiest way to separate and achieve efficiency effectiveness. But
layout strategies we implant due to cost effective and more products can produces within limited
time and meet the demand of the market.

30. Which trends influencing mostly in your Pepsi cola layout strategies?

Answer: Sukkur Beverages asses the fluctuation of external as well as internal changes occur and
basically different trend is coming which directly as well as indirectly effect the production or
layout strategy of the production because we have seasonality product fluctuation are common
so we have proactive in this situation to forecast the future changes and we before treat them
early test and environment , packaging ,labeling, and other thing should consider according to
consumer preferences and which directly affect the layout strategy.
Analysis
As Pepsi globally considered as 2nd largest beverages company after coca cola, but Pepsi has
always gave a very tough time to its competitor through their different strategies so that is the
reason they are consistently catching customer from competitor. So after all of this Pepsi also
face certain crucial problems or which can be called as lacking for company, firstly some issues
related to designing of products are serious that should be covered in strategic way, the major
issue in this area they are not assured about their product strategy that should integrate into their
every product which will ultimately always maintain loyalty for customer in long-term, so
choosing this type of strategy must requires highly expertise people so they must have to ensure
this, then for product development they don’t hire or give responsibilities to some highly skilled
people but rather than they involve almost all departments with mix of skilled and unskilled
employees, so this must be overcome by Pepsi to get more and more efficiency, then issue
related to compliance of certain standard are not visible in the company like environmental
standards, safety standards etc. but recently they have worked out to set standards and make
update of standards, so company is continually putting extensive efforts to sort out all related
issues.

Then inventory management is one the critical that every company put great efforts to manage
more and more effectively, so same in the case of Pepsi they relentlessly workout to effectively
and efficiently manage inventory but despite of their huge efforts there are some issue that they
face related to inventory management, one issue that everyone company normally face is
inventory shrinkage but Pepsi company has brilliantly manage this issue by making standard of
tolerance up to 5% to 10%, then cycle count they usually do hourly on daily basis this should be
done once in daily basis because with hourly basis it requires cost of counting because particular
labors are hired for this and then some other miscellaneous cost can incurred. Then inventory
running out problem is very well managed by company by doing pre planning on regular basis,
as normally most of companies face inventory running out problem on regular basis which push
them in to very problematic situation. All in it can be analyzed that company has very well
undertake its inventory management system effectively which ultimately increases their
efficiency in company’s performance.

Sukkur Beverages Limited used economic, demand and technological forecast for future
operation plans. They more focus on demand forecast “responsive strategy” in order to increase
customer. SBL mostly use quantitative forecast method.in quantitative method they used
seasonal forecast different for different cities .this answer was not clear. Their answer could be
we used average forecast for next year sales. Or some other. SBL follow typical method for
forecasting. Forecasting of supply chain management is essential for their company.
SBL do vertical integration with few supplies and many distributors. They outsource some raw
material of both bottle and soft drink manufacture. And other material are manufacture in SBL.
Company forecast for seasonal month and used just in time for no seasonal month. In sukkur
SBL have large market share more than 50% many food business offers SBL drinks. SBL have
also distribution outside sukkur in Pushchair, Bohrium and other near cities. SBL faces
challenges supply chain some are water scarcity, inventory management, and market demand.
For logistic SBL mostly deliver well in their own trucks if small distance.

Recommendations
As an operation management students there are several recommendation that company should
implement to boost up their performance more and more, so these recommendations includes:
In area of designing of product, the Pepsi have to follow all product development stages which
will ultimately ensure effectiveness of all aspect of product, then company should overcome
issues that they face in designing product through implementing suitable strategy like they
should set up benchmarks, they can make certain standards for product etc. and by hiring skilled
labor, company should have to select best product strategy which support their vision and
mission rather than implementing is depend on condition so they must select appropriate one.
Then in area of inventory management, they are doing best but they should take further effective
steps like adopting update technology for cycle counting so they don’t need to hire or make
responsible any person but it should be automated, then cycle count should not be on hourly
basis if there is person who do this it should be once in a day because to save time and effort.,
lastly inventory shrinkage should be minimize as much as possible for them to do by taking
certain steps such as they can train people who are responsible for it or some other steps they can
take.
Forecasting is another important and strategic area which must be undertake in serious way. So
initially forecasting should not be done only by last value method but there should do with some
other methods also such average method, exponential method etc.
In quality managing area they should undertake some mix of approaches which cam assist them
to improve their quality such as benchmark, employee empowerment, using tools etc.
In area of supply chain their goal should be to make effective chain which can work hard for
company to improve efficiency, Pepsi should take expert advice when they go to choose their
new supply chain partner.

Conclusion
Ultimately, it could be argued that the methods of total quality management systems,
Forecasting, Inventory management, supply chain, a layout strategy are anchored in the
processes of improving quality services and reduction of cost and improve the efficient system in
all areas of the company. Good overall quality management systems and all these broad term
help so that’s why we have the ability to predict customer expectations. When fully explored, the
mechanisms and structures of the total quality mechanism and all the previous mechanism
discussed are aimed at the process of achieving a wholly. A positive and effective workforce,
high-quality products and satisfied customers are the total sum of the total quality management
system.

References
https://sukkurbeverages.net/our-mission/

http://www.sukkurbeveragespvtltd.enic.pk/

https://www.slideshare.net/ataulhassnain/pepsi-35233723