SUPPLY CHAIN

MANAGEMENT OF LAYS
Usman Aslam – 111
Fajar Akhtar – 57
Yusra Rahim – 33
Muntaha Imran -10
 SUPPLY CHAIN MANAGEMENT OF FRITO LAYS
Lays have very strong supply chain network plus distributer and retailer network. Hence one
can find Lays chips in any corner of the country. Supplier, distributer and retails are the
backbone of Lays sales. There is no specific targeted area for Lays as this food is demanded and
favorite of everyone. Worldwide this snack food is highly demanded with high competition.
COMPETITIVE STRATEGIES
It aims to provide,
 High availability
 Sufficient variety
 High quality
 Reasonable Price
 SUPPLY CHAIN STRATEGY

Fajar, Yusra, Muntaha,

Areej, Usman
Pull
Process

Customer order arrives Vmart, Al-Fatah etc.

XYZ
Push
Process
Lays

Potatoes, spices, flavors,

packaging etc. as suppliers
 DECISION PHASES
1. Strategy and Design
The company has to provide and manage transport for the delivery of products as well as the
arrangement of third party services for the procurement of products. The shipping department
of Lays handles orders and the transport department of lays decides the vehicles for safe
delivery. Material planning and sourcing is carried out as well. Sources of supply of raw
material both local and foreign are identified and terms and conditions are negotiated. Frito Lay
uses the latest technology: Computer integrated manufacturing. Its sale staff uses handheld
computers to transmit sales and inventory data back to headquarters so that everyone with
success can find out how many of each product had been sold, were in warehouses, and were
on route delivery.
2. Planning
After Lays set the design of their supply chain, they do the planning which increases their surplus in
supply chain and that’s their goal too. The planning launches and make them set their constraints over
some span of time according to the demand of Lays. Capacity planning is also done at this stage. Sales
forecasting and production planning depends upon the capacity of the organization with respect to
Production. Frito lays carries out sales forecasting for local demand. Planning is carried out on a
monthly, weekly and daily basis for order planning allocation, warehousing, production scheduling
inventory planning and optimization at Frito lays.
3.Operations

Frito Lay plans and schedules the production and delivery of its products. Its raw material includes tons of
potatoes, corn, cheese and many other ingredients, which it buy on a just in time basis from suppliers to
make the product (work in process and finish goods inventory) that are shipped to customers. There is
always less uncertainty about the demand. The operation process includes customer orders in the best
possible manner. Its offers just in time inventory to most of its customers as it restocks shelves frequently
so that many customers carry no inventory at all - it’s all on the shelves. During this Lays allocates
inventory or production orders, set a date (which is always according to the will of customers and they
don’t get disappointed) that an order is to be filled, generate a proper pick lists at a warehouse, allocate to
shipping and set delivery.
 Level of Implied Demand Uncertainty

Predictable supply & uncertain

demand, or uncertain supply &
Predictable supply predictable demand or somewhat Highly uncertain supply
and demand uncertain supply & demand & demand
 Responsiveness Spectrum
Frito Lays focuses its attention on being highly efficient
because of its implied uncertainty which is very low.

Highly Efficient Somewhat Efficient Somewhat Responsive Highly Responsive

Achieving Strategic Fit

Lays
DRIVERS OF
SUPPLY CHAIN
PERFORMANCE
 FACILITY
Lays has established a
dedicated, centralized and a
product-focused production
facility in order to respond
effectively to demand.

Trade-Off
In alignment with the effective supply chain
strategy the facilities have been centralized
geographically to save the facility cost.
 INVENTORY
Relatively substantial finished
FL main business is dependent on goods inventory in the pipeline,
an inventory of raw materials that
01 are semi-perishable and that’s
why they need to keep very low
03 because as finished products leave
the factory to a warehouse, to
distribution channels, and to store
inventory. shelves.

In a process focused plants of

FL, the movement of raw
02 materials to work in process
and to goods ready for sale
take place in a few hours.
 Overall Trade Off..
(Efficient)

Low inventory makes the supply

more efficient to the customers. At
Lays, managers bear low inventory
cost to ensure the quality and
freshness of chips.
 TRANSPORTATION
As lays carry low inventory and its
material flow time is less. So, this
makes Lays to maintain sufficient level
of products on shelves of retail stores
but it increases the transportation
cost.

Trade-Off
The transportation network has been designed with a view to
ensure efficiency and boost the availability of the product. Lays
has a low inventory cost which ultimately increases its
transportation cost.
 PRICING
Company’s value-based prices are the
reflection of its position as a brand
with distinctive features like effortless
accessibility, easy affordability, great
taste and high quality.

Trade-Off
Lays use differential pricing to attract
customers with varying needs and also to
increase its market share.
 INFORMATION SYSTEM
Frito-Lay uses hand-held computers to track
its products sold of shelves and from vending
machines. These notebook size computers
produce a vast quantity of data that flows
into the data center.

Overall Trade-Off
Using the latest information system
helps the lays to improve its efficiency.
 SOURCING

Whereas the reason for

outsourcing certain activities or
processes is often to reduce
costs, the reasons for
insourcing are more numerous.
 Trade-Off
In house sourcing offers
The risk of misunderstanding
companies the opportunity
and noise is greater because
to guide and control the
the project and project owner
entire development
are in different locations.
process.

01 02

04

Cost efficient with insourcing, certain costs

such as intermediary costs are avoided.
Suppliers that use a value-based pricing
method may also be selected.
 Retail Storage with Customer Pick up
Manufacturers

Distributers X Y Z

Retail
Stores
(V Mart) (Al-Fatah) (C Mart) (Rahim Store)

End
user
(Fajar) (Yusra) (Usman)
Service Factor Performance
Response time Response time is minimal as customers are coming to the retail store and
getting the product on the spot. 
Product variety Lower because of the limited space for a particular product available in the
stores.
Product availability It is quite expensive to carry all products in the stores. That’s why
sometimes the product may or may not be available in stores. Usually fast
moving products are available on the stores.
Customer experience Customer experience has been positive as they receive the product with
ease and on time. The retailers are the direct customers as they place an
order to the distributors. There has never been a shortage or a delay for
Lays. Sometimes it may be negative according the availability and services.
Time to market Highest because a proper inventory is needed. Also we need to arrange
distributors to distribute the product in the market.
Order visibility It is trivial for in-store orders because one can physically touch it.
Returnability This model has always been very strong in a sense that unsatisfactory
items can be returned and changed on the spot. This is true for both the
consumers and the retailers.
 Retail Storage with Customer Pick up
Cost Factor Performance
Inventory Lower because of limited space available in stores.
Transportation Higher because distributors are included in this model.
Facilities and handling Higher because of the large shipments and increase in
handling cost at the pickup site for online orders
Information Frito-Lay has organized some of the world’s most
sophisticated information systems, and has incorporated
data-gathering processes and advanced technologies into its
daily practices.
 Final Verdict
Lays have very strong supply chain network plus distributer and
retailer network. Supplier, distributer and retails are the
backbone of Lays sales. Its effective supply chain management
strategy has created value for both its customers and its
business. It has a complete control of its products’ journey from
conception to delivery, implementing systems to reduce errors
and increase inventory efficiency that’s why lays is still at the
highest rank in the world of potato chips.
THANK YOU