Operation management is a critical part of an organization since it deals with operation processes, hence for daily maintenance as well as management of organization’s resources and processes. It is mainly based on work distribution. Operation management is usually found in all areas of business such as in-service provisioning, procurement, production, enterprise resource management, or back-office administration (Stevenson, 2012). Operation management plays a critical role in the successful running of a given project. Operation management has many benefits. Operation management is mandatory for an organization to manage its day-to-day activities seamlessly. With its support, a business can utilize well its resources such as money, raw material, labor, and other resources. Besides,operationmanagement plays a vital role in enhancing overall productivity (Stevenson, 2012). Operation management focuses on utilizing the existing resources in the best way possible to attain set goals to enhance overall productivity.  It is the heart of every organization since it controls the whole operation. Operation management also deals with issues such as operation, maintenance, and design of the system employed for the production of products.

The operation management theory was introduced in the eighteenth century, and new theories about the concept were put forward to be used in the various organization during the industrial revolution. These new concepts and ideas resulted in the creation of many companies and industries and each of these organizations adopted at least one of the operation management theories to enhance their production. The various sub-theories and methods created as a component of operation management include assembly line, Waltham-Lowell system

One of the organization with a global brand name in terms of quality and taste, PepsiCo due problem in its operation management suffered massive loses. Currently, PepsiCo is the second largest player in the world food and beverage industry(“About the Company”, 2019). PepsicoCo, Inc engages manufacturing, marketing, distribution, as well as sales of snacks, foods, and beverages. It is a food and beverage company with complementary brands portfolios such as Pepsi-Cola, Tropicana, Quaker, Gatorade, and Frito-Lay(“About the Company”, 2019). The company was established in 1965 by Herman W. Lay and Donald M. Kendall, andits headquarter is in Purchase, NY (“About the Company”, 2019).

PepsiCo has grown to become a global number one brand, and this is due to its unique marketing methods and strategic planning.  It implies that for the company to continue performing excellently in the global market, operation management department must always be alert and committed to realizing the company’s goals. Unfortunately, the operation department of Pepsi at some point blundered, and they failed to monitor effectively some of its product line more particularly the Cadbury products. In 2003, one of the leading voluntary agencies in India, the Center for Science and Environment accused Pepsi of manufacturing soft drinks with an unacceptable level of pesticide in India (Centre for Science and Environment (New Delhi, India). 2004). This news turned viral, and this destroyed the company brand name. This form of negligence by the PepsiCo management, India branch, caused the company to suffer substantial financial losses as well losing a considerable number of consumers and the brand reputation was negatively affected (Chhetri& Islam, 2008). Based on the success of the company, the news shocked many, and some of the competitive companies as well as other organization used the incident to re-evaluate and restructure their operation management systems to avoid such incidents as well as penetrate the world market.

An explanation of the processes to be considered in the PepsiCo, Inc. and the process Map

The allegation that PepsiCo soft drinks contained a higher level of pesticide than required caused a public uproar with many protest experience in India. The state banned Pepsi products from being sold, and the sales dropped by nearly 40%(Chhetri& Islam, 2008). The products that had been distributed were recalled, and those in stock were ordered to be destroyed. The incident casts doubt in the existing operation management techniques that were employed by PepsiCo. The episode also acted as a wakeup call for the company to re-evaluate its existing operation management strategies and process. Besides, there was a need to re-structure the quality assurances of all the operation processes and validity of the processes.

PepsiCo has always observed and conformed to the maintenance and improvement of its existing quality processes, and these processes were being employed under strict supervision and monitoring. With the issue emerging, reflecting and re-evaluating the process map was inevitable. The existing processes in the company include:

Soft Drink Manufacturing: at the initial stage, the ingredients for the production of the soft drink, which include sweeteners, kola nuts, flavor oils, and vanilla beans, are made available. Great precaution is taken to ensure that the material used is of high quality and safe for human consumption. In addition, the water to be used in the process must be distilled and free of any impurity.

Transfer of Pepsi to the packaging house: after preparation of the soft drink, it is transferred to the packaging house using containers. The transfer is done with a lot of precaution to prevent in contamination of the soft drink. At this stage, state-of-the-art technology is employed to ensure the quality of the drink as that while manufacturing remains unchanged.

Packaging: During this processing stage, utmost care is vital in ensuring the quality of the soft drink is not diluted. Pepsi can as sealed tightly to prevent any likelihood of leakage. Besides, the caps, cartons, as well as Carbone dioxide used in the soft drink’s carbonation is of required quantity. Utmost care is taken during this process or carbonation to ensure the original quality and taste of the drink is not altered.  Special equipment is in place to uncase PepsiCo cans.

Storage: during the storage process, care is taken to ensure the product is safe and not affected by any contaminants. Rodents and insects should be prevented from walking over the cans as this might cause a wide range of health complications to the consumers. The can are properly packed, and this process is achieved using modern machines which shift as well as store cans before being distributed to stores and retailers.

A brief description of Relevant Operations theories

PepsiCo could deal with the operations issues it faced by employing various operations theories and strategies. Operation theories and studies provide a framework that can be used by the organization to sort out all the emerging operational problems. Two of the theories are as follows:

Total Quality Management

Total Quality Management (TQM) is a comprehensive and highly structured approach to organization management. TQM focuses on the continuous quality improvement of services and products with continuous feedback. Joseph Juran and William E. Deming founded this theory.  The concept emerged in 1954 from Japan Industrial sector (Mahadevan, 2010). From then henceforth the concept has been modified such that nearly all organization can use it to achieve their business goals. The goal of TQM is doing things rights from the start repeatedly (Stevenson, 2012). This will save the organization time and money required to correct faults and failed products as well as a service implementation.

Implementing TQM theory in its operation department will help PepsiCo to ensure that the products they produce of high quality and without any defect. Using TQM principles and structures will enable PepsiCo to regain the trust of investors and consumers. TQM strategies always help the organization to attain its objectives easily and effectively (Carroll et al., 2016). By using TQM to solving the current operation problem the company is facing, the following stages and steps are crucial:

1. Problem identification: PepsiCo has been having challenges with its operation department, and as a result, its products have been often marred with quality issues. To deal with the matter, the company is expected to first identify the main problem and its sources and forward it to the organization top management. This will ensure everyone in the company from bottom to up is aware of the factors and source of the operational problems that resulted in a drop in the reputation of the company brand name. The technique also presents problems in a simple format to allow for a wide range of techniques to be used by the PepsiCo executives to identify and solve the problem.
2. Problem Analysis: problem should be listed is a simple manner for easy analysis of the problems. After this process, measures that should be taken to solve the issue are proposed. This systematic approach to solving problems allows the problem to be broken down into smaller segments for effective solutions.
3. Generation of Ideas: This is critical to solving the underlying problem. For instance, the root source and cause of the problem is first listed, and from the problem, ideas are generated to help solve the issues. Such an approach results in coming up with perfect and informed ideas to assist in effectively addressing the problems and establishing the main root cause.
4. Testing ideas: After generating the ideas, it is important to test them to establish whether the ideas can help solve the problems. Besides, are used at different stages and hence testing them before using them is vital (Render &Heizer, 2008).
5. Implementation of the ideas: Testing idea provides a report in the kind of result that will be achieved when the ideas implemented. Hence, after the pilot study, the outcome is first analyzed to ascertain its validity. If the result is desired, then the idea is implemented. Once the implementation of ideas, the operations program can be tracked to avoid arise of similar issues in the future (Render &Heizer, 2008).
6. Checking the Results: it is the final stage of the TQM technique process. Even though the ideas were tested and proven to be effective, a check at the last stage is crucial to measure the results of the ideas implemented. The result evaluation offers feedback about the effectiveness of the ideas as well as help to establish if the idea can be used in the future (Render &Heizer, 2008).

Ishikawa Theory

According to this theory formulated by Professor Kaoru Ishikawa, quality improvement is a continuous process, which can always be taken a step further. He proposed a cause and effect analysis approach with the help of Ishikawa or fishbone diagram to help solve the emerging within an organization completely, first time around, instead of only address a portion of it as well as having the issues recycles.  Cause and effects analysis offers an organization an effective way of completely solving its problems. This diagram-based method, known as fishbone diagram combines brainstorming and a particular map, to push the company to consider all the possible cause of a problem rather than one or two obvious ones (Carroll et al., 2016).

A fishbone diagram is also known as the Ishikawa diagram or cause, and effect diagram is a tool that can be used to categories possible causes of an issue to help establish its main root causes. As stated above, Professor Kaoru Ishikawa, a quality control expert from Japan invented the concept to help employees and companies to avoid solutions that only address a small part of the bigger problem. The diagram is vital in a brainstorming session in order to focus conversation(Render &Heizer, 2008).

A comparison of the theory with the process in PepsiCo, Inc.

It is evident that TQM and Ishikawa diagram methods provided a detailed idea of the problems that PepsiCo operation management faced. Ishikawa diagram listed various strategies currently used by PepsiCo. According to the theory, the PepsiCo operation department had in place strict measures and policies to ensure the produced products are of high quality and safe. Nevertheless, there still were gaps in the processes, and this resulted in the product fault experienced in the company. The various gaps in the processes, which was well stated in the company’s guidelines as well as quality assurance, were not adhered to include:

• Even though the company employed high tech and highly efficient machines for water purification, the quality of water was questionable. The investigation team set to dig into the matter found that the underground water the company used to make the soft drink was contaminated with pesticide. Even though PepsiCo has most advanced and efficient water purifiers and its quality processes indicated the company use distilled water to make the drinks, this small loophole of failing to taste the groundwater caused the huge losses and suffered a bad reputation. It is apparent that PepsiCo did not adhere to its quality assurance guidelines that require the company to ensure that the source of water being used is not contaminated with any chemical.
• In its work plan, PepsiCo categorically states that itsfactory and the store must be free from all forms of humidity and temperature issues. The company showed a wide range of highly improved canisters as well as stores specifically designed to ensure the soft drink produced is of high quality and free from any possible contamination. However, the company failed to maintain this process rightfully, and it was revealed that the storage room and machines that were being used were not of standard as per their guidelines. This resulted in the soft drink being offered to have different taste and chemical composition based on the humidity and temperature differences. Based on this, chemical reaction was possible in the manufactured drinks facilitating the multiplication of the microbes thus contaminated the soft drink (Render &Heizer, 2008).
• Even though PepsiCo claimed they have in place hygienic as well as special ceils to store the soft drink for a long time awaiting package and delivery, they failed to take right precautions to conform to their claim. It was alleged the company failed to store the manufactured soft drinks into hygienic and cold storages, a factor that led to high temperature and unhygienic condition experienced in the company.
• Even though the company pride in having best and highly trained employees, they failed to offer quality management training to these staff. As a result, non-had knowledge about the fact that temperature variation can affect the quality of the soft drink.

Consideration of how potential changes would improve quality and customer requirements

The impact was massives it caused the company to make a substantial financial loses. PepsiCo before hadbuilt a global brand name and was the top company in the food and beverage industry(Carroll et al., 2016). The allegation that its products contained a high level of pesticides making the drinks unfit for human consumptions resulting in a lot of reactions and measures that adversely affected the company operation. PepsiCo products were banned in major places with the already distributed products being seized and destroyed. In addition, a number of PepsiCo subsidiaries were seized and the drinks already manufactured destroyed. The news went viral, and within a short period, it was a global problem. Most countries across the world stop purchasing PepsiCo products and this resulted in the company losing over 40% of its customers (Carroll et al., 2016). In addition, consumers were alerted about the news, and they avoided the PepsiCo products like a plague. The company destroyed is already well-established reputation, and it lost customer trust. Even now, there are a good number of consumers that have continued to boycott PepsiCo products based on their experience.

The proposed Recommendation to PepsiCo, Inc to deal with its operational issues

Based on the study and analysis of PepsiCo principles that its department of operation management employs the main problems the affected the operation were identified, and a number of recommendations proposed to help the company deal with the issue in an amicable manner.

It is apparent that most of the problems arising in the company were due to employees’ negligence. The screw and staff at the manufacturing were not adequately trained and lacked the skills to avert such faults from happening. As a result, these employees never found it important to maintain the required temperature and pressure during the transportation storage process of the soft drink. They were unaware that even a slight change in pressure and temperature water purification can result in the contamination of the entire process. From this finding, PepsiCo must properly train all its employees before being recruited as part of the operational and manufacturing team.

In addition, PepsiCo should always observe and be aware of the fact that food products require a high level of hygiene to avoid any contamination of the food, which can be a health hazard to the consumers. It is because; any slight negligence by the company is often disastrous for both the company and the consumers. The consumers of the products might develop health complications from consuming such products while the company can have its license being revoked due to incompetence. PepsiCo, therefore, must ensure it is used as the best and high-quality purification and production machines. In addition, the company should purchase high-quality machines that can be used to constantly tests for the presence of microbes in the drink.

The company need to strengthen its quality assurance team and bring in a fresh team with new brilliant ideas. Quality assurance team are entitled to ensure that the product produce is safe, high quality, and fit for human consumption. Hence, the quality assurance team should be the first to notice an issue with the drink before being released to the market (Render&Heizer, 2008).

The management also requires sensitization towards improving the operation department. They must ensure there is constant monitoring of all work processes with the organization and correct any flaws immediately to avoid these preventable blunders. Hence, management should include more levels of quality checks.

Conclusion

It is evident that PepsiCo, Inc, faced multiple problems due to negligence by the employees at the operational department. Besides, the negligence led to other unexpected complications include the company brand having a bad reputation, loss of consumers and huge financial loses. However, the organization can use multiple operational management theories to solve the issue.

Reference List

About the Company. (2019). Retrieved from https://www.pepsico.com/about/about-the-company.

Carroll, A. B., Brown, J. A., &Buchholtz, A. K. (2016). Business & Society: Ethics, Sustainability & Stakeholder Management. Boston: Cengage Learning.

Centre for Science and Environment (New Delhi, India). (2004). A briefing paper on pesticide contamination and food safety: Poison vs nutrition. New Delhi: Centre for Science and Environment.

Chhetri, A. B., & Islam, R. (2008). Inherently-sustainable technology development. New York: Nova Science.

Mahadevan, B. (2010). Operations management: Theory and practice. Upper Saddle River: Pearson.

Render, B., &Heizer, J. (2008). Principles of operations management. Upper Saddle River, N.J: Pearson Prentice Hall.

Stevenson, W. J. (2012). Operations management: Theory and practice. New York, N.Y: McGraw-Hill/Irwin.

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