Maintenance Drives Profits at Frito-Lay
Frito-Lay, the multi-billion-dollar subsidiary of food and bever- age giant PepsiCo, maintains 36 plants in the U.S. and Canada. These facilities produce dozen of snacks, including the well- known Lay’s, Fritos, Cheetos, Doritos, Ruffles, and Tostitos brands, each of which sells over $1 billion per year.
Frito-Lay plants produce in the high-volume, low-variety process model common to commercial baked goods, steel, glass, and beer industries. In this environment, preventive maintenance of equipment takes a major role by avoiding costly downtime. Tom Rao, vice president for Florida operations, estimates that each 1% of downtime has a negative annual profit impact of $200,000. He is proud of the 11, unscheduled downtime his plant is able to reach—well below 2 the 2% that is considered the “world-class” benchmark. This excel- lent performance is possible because the maintenance department takes an active role in setting the parameters for preventive main- tenance. This is done with weekly input to the production schedule.
Maintenance policy impacts energy use as well. The Florida plant’s technical manager, Jim Wentzel, states, “By reducing pro- duction interruptions, we create an opportunity to bring energy and utility use under control. Equipment maintenance and a solid production schedule are keys to utility efficiency. With every pro- duction interruption, there is substantial waste.”
As a part of its total productive maintenance (TPM) program,* Frito-Lay empowers employees with what it calls the “Run Right” system. Run Right teaches employees to “identify and do.” This means each shift is responsible for identifying problems and making the necessary corrections, when possible. This is accomplished through (1) a “power walk” at the beginning of the shift to ensure that equipment and process settings are performing to standard, (2) mid-shift and post-shift reviews of standards and performance, and (3) posting of any issues on a large whiteboard in the shift office. Items remain on the whiteboard until corrected, which is seldom more than a shift or two.
With good manpower scheduling and tight labor control to hold down variable costs, making time for training is challeng- ing. But supervisors, including the plant manager, are available to fill in on the production line when that is necessary to free an employee for training.
The 30 maintenance personnel hired to cover 24>7 operations at the Florida plant all come with multi-craft skills (e.g., welding, electrical, plumbing). “Multi-craft maintenance personnel are harder to find and cost more,” says Wentzel, “but they more than pay for themselves.”
Discussion Questions (Provide different answers from online and from the textbook solutions)
1. What might be done to help take Frito-Lay to the next level of outstanding maintenance? Consider factors such as sophisti- cated software.