1. PowerPoint Presentation by Charlie Cook The University of West Alabama chapter 14 Copyright © 2009 South-Western/Cengage Learning. All rights reserved. Quality

2. Copyright © 2009 South-Western/Cengage Learning. All rights reserved.14–2 How Frito Lay Came About 1. 1.First, Pepsi-Co was created by Caleb Bradham in the 1890s. 2. 2.Then in the 1930s Elmer Doolin founded the Frito Company and H.W. Lay founded the H.W. Lay Company 3. 3.In 1961, Frito and Lay merged to form Frito-Lay. 4. 4.In 19654, Frito-Lay merged with Pepsi-Co. 5. 5.At that time Pepsi-Co also owned KFC, Taco Bell and Pizza Hut but they sold them off to focus on packaged goods. 6. 6.Then Pepsi-Co acquired Tropicana and Quaker Oats so that now they are the 4 th largest consumer goods company in the world. 7. 7.Today Pepsi-Co has 5 divisions: Pepsi, Frito-Lay, Quaker, Tropicana and Gatorade. 8. 8.Run by CEO Intra Nooyi, one of the few women minorities to run a major US corporation. 9. 9.Frito-Lay is the world’s leading snack food company. One reason they’re successful: consistent quality of product.

3. Copyright © 2009 South-Western/Cengage Learning. All rights reserved.14–3 Exhibit 14–8 ● Inventory Control within the Systems Process Just-in-Time Inventory: An inventory method in which necessary parts and raw materials are delivered shortly before they are needed.

4. Copyright © 2009 South-Western/Cengage Learning. All rights reserved.14–4 Quality Control Quality ControlQuality Control  The process of ensuring that all types of inventory meet standards. Quality AssuranceQuality Assurance  Means “building in” quality; not attempting to “inspect it in.” International Standards Organization (ISO)International Standards Organization (ISO)  Certifies organizations that meet set quality standards (ISO 9000).  Many businesses require their suppliers to also be ISO 9000 certified. Six SigmaSix Sigma  Higher levels of quality at lower costs.  Goal is 3.4 defects or mistakes per million operations.

5. Copyright © 2009 South-Western/Cengage Learning. All rights reserved.14–5 Total Quality Management (TQM) TQM PrinciplesTQM Principles 1. Focus on delivering customer value. 2. Continually improve systems and processes. 3. Focus on managing processes rather than people. 4. Use teams to continually improve. TQM vs. Quality ControlTQM vs. Quality Control  TQM is broader in organizational scope.  Quality is determined by customers’ acceptance, not by internally-set standards.  The focus is on continuous improvement.  Frito-Lay uses TQM so that each product always tastes the same. Packing supplies also important so that products remain fresh.  Frito-Lay is ISO 9000 certified and requires the same of suppliers.

6. Copyright © 2009 South-Western/Cengage Learning. All rights reserved.14–6 Exhibit 14–9 ● Five Rules of Customer Human Relations

7. Copyright © 2009 South-Western/Cengage Learning. All rights reserved.14–7 Exhibit 14–10 ● Statistical Process Control Chart for 16-Ounce Bags of Lay’s Potato Chips Trend