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Pepsi Operations Management Problems

Paper Type: Free Essay Subject: Business
Wordcount: 3669 words Published: 18th Jun 2018

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Operations management is considered as an important division of study equally in the corporate world in addition to in academics. Reference to academics, operations management, is a central part of in the curriculum of management studies. In the other words, it could be seen as the theoretical base that a particular manager or else an executive desires to deal with the issues of the company are taught in the curriculum. The subject; Operations management is again a key part in an organization or business (Sweet, Franklyn H. 1964, pp 89-90). A full-blown department or section of the organization is allocated to take care of this need of the organization or business. Additionally to this, concern is kept that the issues that the organizations face in the subject of operations department or section is resolved at the earliest, as a result that the production and as well as quality of the products that go out of the company does not obstruct the development and image of the organization or business. Operations management studies the internal working and work process of a company. Indeed it could be said that the planning, producing and making of the products of the organization or business is smoothen by a range of processes of the operations department or section of any organization or business (Sweet, Franklyn H. 1964, pp 89-90). The technical aspects of an organization or business are looked after of by the operations management of that organization. Indeed every single one of organizations and firms has operations management officers and full-blown departments to take care of this aspect of the company. Thus, an organization or business tends to take up the marketing strategies that make an important part of the operations management. Scholars and market analysts are already having conducted bundle of studies and researches in operations management field and have established that the principles and theories of operations management and strategies are well-matched in any organization or business and in any sector (Ackoff, R., Rivett, P. (1963), pp. 45-77).

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In the 18th century, it could be seen the introduction of the operations management theory. Later on also in the entire of Industrial Revolution, a variety of new theories of operations management and other ideals were used. These ideas allow to a huge increase in the business of organizations or businesses and all at once ensure that the a variety of approaches developed as a part of the operations management theories were utilized by the organization. Out of a lot of sub theories and approaches that were made as part of operations management are; “Waltham-Lowell system”, “Assembly line practice”, etc. As well as this, the scientific management and the development of the theories and principles of the operations management systems make certain that these help the organization leads success and flourish (Ackoff and Rivett, 1963).

One of such organization found in the United Kingdom that is one of the well known brands in terms of taste and quality and many more…This organization was suffered huge losses due to miss-management and issues in the “operations management section”. The company is the renowned beverage maker “Pepsi Company”. This is a world renowned name in the field of carbonated beverage industries. Pepsi advanced to be one of the most recent kinds of confectioneries (O ‘Sullivan, N., Wong, P. (1991), pp.139-55). Pepsi Company is today identified as one of the most trusted brands, due to the strategic planning and management and marketing strategies that it has been utilizing since long ago. As a result, it could be said that the operations department of Pepsi Company has to play a key role in the establishment of the Pepsi brand as one of the most adamantine names in this sector. On the other hand, even such a well-defined operations department of Pepsi Company was unable to handle the quality of the Cadbury products (Sweet, Franklyn H. 1964, pp 89-90). There was news in the many of Medias that the Pepsi Cola was contaminated with pesticides. This rumor spread out everywhere in the world like a wildfire. This carelessness by the operations department of Pepsi Company exaggerated the organization in terms of money value and as well as in terms of loss of brand trust and brand name (Peters, T. and Waterman, R. 1982, pp. 12-23). This to be sure came as a distress to the whole nation as nobody has expected that yet the highly trusted brands like Pepsi can have never faced such as issue. All the world was sensitized at this, as this played as a chance for other competitive brands to build solid place in the market and as well as for new brands to panic. Therefore this dilemma of the Pepsi Company and it become more aware of the significant of quality and a better operations management department or section (Sweet, Franklyn H. 1964, pp 89-90).

An brief explanation of the process at issue in the Pepsi group and the process map

Even though the finding of pesticide residuals in the Pepsi Cola was world news and it was in progress being forbidden in most of the places. All stock of Pepsi Cola was in custody. Those in the factories were stopped from coming out of the company (Sweet, Franklyn H. 1964, pp 89-90). This made question for the already on hand operations management procedures that would be utilized and prominent in the Cola industry. This also insisted on the management of Pepsi Cola to consider of the processes which already existed in the company. As well the quality assurances of the processes in addition to the legitimacy of these processes were under issue and evaluated. Pepsi Cola has at all time’s levied importance in the maintenance and updating of the quality processes that were already existing in the organization. The quality processes that were being utilized were under strict monitoring and test out. While this problem relating to the quality of Pepsi Cola came up, after that an indication of the process map started taking shape (Chaffee, 1985). The range of processes that already existed in the organization is given below:

Manufacturing of soft drink: In the beginning the ingredients necessary for making the soft drink are prepared to be available. These ingredients are consisted with vanilla beans, flavor oils, kola nuts and sweeteners. Strict care was paid that these items are best in the quality and that the water utilized in it are distilled and free of all impurities (Chaffee, 1985).

Transferring to the packaging house: subsequent to the soft drink is all set; there are taken to the packaging places in cans (Chaffee, 1985). Special attention is also taken in carrying on these steps, as not any chemicals are mixed with the soft drink. So that the amount of soda in soft drink is not changed. As well as this, the greatest technology is utilized at this stage to make sure that the quality remains unchanged as that are while in manufacturing (Chaffee, 1985).

Packaging: This is the third step that also requires best care of maintaining the quality of the soft drink. It is made sure that the sealing of the Pepsi Cola cans are such that they are air tight and there is not any chance of leakage. As well as this, the cartons, caps and the CO2 used to carbonate soft drinks are in the optimum quantity. Special care is put in carbonating the drink as the actual quality if the soft drink depends on the carbonating. Special equipment and tools are brought in use to take out the cans.

Pepsi Storage: highest care is also put in the storage of the cans. As it was believed that while under the store, the cans were run over by rats and other small insects. This might be caused a variety of diseases to the people. It is ensure that the cans are packaged properly and machines do the shifting and storing of the cans before they are sent to the retailers and stores (Peters and Waterman, 1982)

Analysis of the Problem

It is easy to analysis of the problems, if the problems are listed or displayed in such a manner that they can be easily read, then the can be easily studied (Peters and Waterman, 1982). Therefore, high care would be taken that the analysis of the problems is easy. The various measures that require to be taken to solve the problem. This systematic resolving of problems is very important so that the problems are first broken down in to smaller sections so that their root causes can be traced (Hamel and Prahalad, 1994).

Ideas Generation

Ideas generation is very important to resolve the problem. As an example, the processes that are to be taken for the modification of the problems are first break down and then the ideas are generated as part of the tea or at personal levels that would help in the resolving of the issues. Such thinking is results in cropping up of excellent and effective ideas so that the problems are addressed in a improved way and the root causes of the problems are identified.

Ideas testing

Generation of ideas in important but the process does not end there. After the listing and jotting down of the ideas, they are tested whether the ideas can prove helpful in solving the problems. In addition to that, the stages in which the ideas are to be used also differed and so they should not be implemented without testing the (Peters and Waterman, 1982). Thus, the effectiveness of these ideas is first tested and then depending on the results, they are finally implemented. The testing of ideas is more like a pilot survey that is made because the actual implementation of the ideas. This helps in gauging the effects of the implementation of the ideas in solving the problems beforehand (Hamel and Prahalad, 1994). Without testing of ideas, it is not generally used directly in any organization.

Implementing Ideas

Testing the ideas give an idea of the kind of feedback that will be generated after the ideas are actually implemented. Thus after this pilot study the results is first analyzed and if the results are as desired, the ideas are implemented (Peters, T. and Waterman, R. 1982, pp. 12-23). After the implementation of the ideas, it is clear that the operations program can now be tacked such that the organization does not face similar problems again in future.

Checking the Results

This is the last and the finals stage of the implementation of the TQM techniques. Although the ideas were first tested for their potential results and the implemented, a check is always required at the final stage. Thus, even after the implementation of the ideas to solve the operational problems, a check is required to gauge the results of the implementation of the ideas. After getting the results after implementing the ideas, an assessment or evaluation of the results is done. This gives a feedback of the effectiveness of the ideas and helps decide whether the ideas are needed for the future processes or not.

Fish bone theory

Developing the fish bone theory and the fish bone diagram was done by Kaoru Ishikawa. It is seen that because this theory was developed by her, the theory was also known as Ishikawa diagram. The root of this theory is that problems need to analyze by jotting down the problems on a sheet of paper and then relating it to the cause and the effect (Heskett, 1989). This theory was later in used by various disciplined and branches of academic studied.

The fish bone diagram now forms an important part of management studies and ensures that the problems that an organization faces is first jotted down and then analyzed. This gives the problems a pictorial looks and thus ensures an easy and clear understanding of the problems.

This diagram when seen after the completion gives an impression of being drawn on the model of a fish. In fact the diagram is of the shape of a fish. A spine of the fish is drawn and this the plane in which the problems are written extending towards the outer sides. The problems are jotted along the sides giving an impression that these are the bones of the fish (Peters, and Waterman, 1982). This pictorial representation makes the understanding of the problems easy. In addition, while listing the problems they are started form the grassroots level and decided into various categories. For example, the various categories of the organization that might be responsible for the operation problems cropping up in the organization are decided and then the problems that can be placed in these areas are listed. This gives a clear impression of the problems and when this is presented before the higher management, it become easy for them to link the cause and effect and then work towards solving the problem. In addition to this another important reason because of which the fish bone theory acts as an important tool in the analysis of the operations problems is that it divided the problems into smaller sub sections. This makes the problem seem easy as when a problem is bigger no way to break that down is found. However, when the problems got broken into smaller parts they seem easy. In addition to this, the linking of the problem to the cause an effect also makes the problems easy to identify. Another pertinent reason that recommends the use of the fish bone theory is that it is generally made in a group. Thus it cats as a medium through which various ideas and knowledge of different people are channelized into one single chart (Peters and Waterman, 1982). Thus the chart itself is very informative as the opinion of people from different experiences and history

A comparison of the theory with the actual practice in the Pepsi Company

It was seen that the fish bone diagram and the TQM techniques gave an idea of the various problems that Pepsi faced. In addition to this, the Fish bone diagram also listed the various strategies tat are already part of the Pepsi group. These theories hint that the operational department of Pepsi had taken up strict measures for maintaining the quality of the products of Pepsi. However, it is seen that there still were loop hole in these processes because of which there were issues in the quality of the Pepsi Company. The various loopholes in the processes that were although defined in the guideline and quality assurance of the Pepsi Company but were not followed in practice are given below:

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1. Although various hi tech machines were used for the purification of the water that us being used in the production of Pepsi, there was issues in the quality of the water. When an investigation committee was set up to discuss the reason that led to the finding of pesticides in the packaged cans of Pepsi, it was found put that the ground water was found to be contaminated (Kearney, 1992). Various water purifiers are available in the Pepsi Company and they boost of use of high boiling canisters that free the water. In fact the quality process of Pepsi says that not filtered but distilled water is used for preparing the soft drink. Had this process be really followed in reality Pepsi would have not suffered huge losses and spoiled the name and reputation of the organization. Thus it was seen that purification of water was one miss match where Pepsi did not keep up the quality assurance stages that was streamlines in its work plan (Kearney,1992).

2. It has been defined in the work plan of the organization that the store and the factory where the soft drink has to be manufactured are free from all types of temperature and humidity issues. In fact, the organization showed that various new and improved storage canisters and rooms have been specifically designed so that the soft drink after manufacturing is placed in better stores before they are packaged. However, this process was not maintained properly and it was later inferred that the machines and storage room that were made were not of the required quality. This made the soft drink being alter in their chemical composition in the high temperature differences in various countries. Thus, owing to theism there were chemical reactions and microbes were able to breed in them and thus contaminate this (Kearney, 1992).

3. Although the Pepsi Company says that they have hygienic and special ceils to store the soft drink for long time till they are finally packaged and delivered, they did not take proper measures to make this practically happen. It was seen that after the Pepsi was manufactured they not stored in hygienic and cold storages. This change in temperature and the unhygienic conditions of the theories led to the contamination of Pepsi.

4. Although Pepsi boost of having a very well trained staff, they failed to provide proper quality management training to their staff and employees. Owing to this they were unaware of ensuring that none of the variation in temperature level, etc should be done as it drastically affects the quality of the drinks (Kearney, 1992). The employees and crew of the Pepsi Company being unaware, ignorant and negligent of these issues ended up in contaminating the drink.

Consideration of its impact on quality and/or customer focus

These problems definitely had a greater impact on the organization. Pepsi was a bigger name in the beverage industry and none of the companies were as popular as it is and give it tough competition. However, with the spread of the new of the Pepsi drink containing pesticides, this acted as a major loss to the organization. Pepsi was banned in all colleges and school on the United Kingdom. In addition to this, various factories of Pepsi were seized and the drink that was already prepared was seized. This new also spread in other parts of the world. In fact all countries stopped the selling of the Pepsi. In addition this affect in the business, the customers also got sensitized by this new. They themselves became much aware of the contamination and abstained from drinking this drink (Kearney, 1992). They also barred their friends and children from having this drink. This indeed acted as a great set back to the Pepsi Company and destroyed its business. In addition to that the trust that it had managed to create among the people was lost. Even till date many people avoid drinking the Pepsi products as the shock that they got regarding its contamination is not out of their minds still.


After studying and analyzing the principles in the operational management department of Pepsi co, one of clear of the problems that the organization was facing and the reasons that led to these problems were identified. Thus, the various recommendations that can be given to the Pepsi co group are as follows:

1. It can be inferred that most of the problems that cropped up regarding the quality of the products is due to the negligence of the employees. It was seen that the staff and crew that were part of the manufacturing department were not well trained and well skilled. Owing to this they did not understand the importance of maintaining accurate temperature and pressure. They did nit understand that minor changes in the level of temperature and pressure while purifying the water etc can lead to drastic disasters as it happen in the case of Pepsi. Thus Pepsi must ensure that all their staff is properly trained before they become part of the manufacturing and operational team of the company (Kearney, 1992).

2. The company should also understand that when the product that they are producing are consumable items special care is taken that they are hygienic and do not cause any health hazards. This is because a slight negligence on the part of the company may lead to severe results on the health problem and thus in turn may be disastrous to the life of the company and they may even end up losing their license. Thus, Pepsi should ensure that the machines that they are using in the production and purifying of water should be the best of quality. More and more high quality machines need to be brought to test the presence of microbes and other such organization and at the lowest possible level (Chaffee, 1985).

3. Quality assurance is an important part of the operational management department in Pepsi. This department has to take up the responsibility of ensuring that the products of the organization are best of the quality and that they are passed through various rounds of quality checks such that the products that finally pass out of the organization are best of the quality (Chaffee, 1985).

4. The management also has to be sensitized towards this cause. They have to ensure that the work process of the organization needs to be changed as there are loopholes in the process. And the loop holes are such that they resulted in blunders foe the organization, Thus, the management needs to incorporate more levels of quality checks and ensure that there is strictly monitoring at all levels.


Thus, it is seen that Pepsi faced several problems due to the negligence by the operational management department. In addition to this there were various other problems that led to such huge loss of eh organization (Chaffee, 1985). However with various theories and approaches of the management of the organization, the main problems that the organization faced were identified. In addition to the identification, the methods and theories that need to be used in order to rectify these problems are highlighted. It is through the use of these theories that Pepsi was able to regain its lost trust and business.


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