Read the case description below, watch the 2 videos in this module that accompany the case.
Frito-Lay, the mutual-billion-dollar snack food giant, produces billions of pounds of product every year at its dozens of U.S. and Canadian plants. From the farming of potatoes-in Florida, North Carolina, and Michigan-to factory and to retail stores, the ingredients and final product of Lay’s chips, for example, are inspected at least 11 times: in the field, before unloading at the plant, after washing and peeling, at the sizing station, at the fryer, after seasoning when bagged (for weight), at carton filling, in the warehouse, and as they are placed on the store shelf by Frito-Lay personnel. Similar inspections take place for its other famous products, including Cheetos, Fritos, Ruffles, and Tostitos.
In addition to these employee inspections, the firm uses proprietary vision systems to look for defective potato chips. Chips are pulled off the high-speed line and checked twice if the vision system senses them to be too brown.
The company follows the very strict standards of the American Institute of Baking (AIB), standards that are much tougher than those of the U.S Food and Drug Administration. Two unannounced AIB site visits per year keep Frito-Lay’s plant on their toes. Scores, consistently in the “excellent” range, are posted, and every employee knows exactly how the plant is doing.
There are two key metrics in Frito-Lay’s continuous improvement quality program: (1) total customer complaints (measured on a complaints per million bag basis and (2) hourly or daily statistical process control scores (for oil, moisture, seasoning, and salt content, for chip thickness, for fryer temperature, and for weight).
In the Florida plant, Angela McCormack, who holds engineering and MBA degrees, oversees a 15-member quality assurance staff. They watch all aspects of quality, including training employees on the factory floor, monitoring automated processing equipment, and developing and updating statistical process control (SPC) charts. The upper and lower control limits for one check point, salt content in Lay’s chip, are 2.22% (UCL) and 1.98% (LCL), respectively. To see exactly how the limits are created using SPC, watch the Frito Lay Control Charts video in the Module below that accompanies this case.
In the Excel document (below in this Module) you are going to:
A. Create a new set of UCL and LCL measurements based on the below sample data and using the provided population parameter for standard deviation.
B. Write a paragraph to Angela explaining whether or not the new salination process (from which we obtained the sample data) is delivering a new set of UCL/LCL measurements that is within the specifications set by the current set of control limits. In other words, does the new set of UCL/LCL measurement exceed the prior limits (meaning it is unacceptable) or equals or is less than the current specifications?
C. Using the sample data build an SPC chart similar to the one contained in the second video in the Module below.
D. Answer the other two critical thinking questions about Frito Lay’s chosen distribution method and quality demands.
Discussion Questions (to be answered in the Excel Spreadsheet)
1. Angela is now going to evaluate a new salt process delivery system and wants to know if the upper and lower control limits at 3 standard deviations for the new system will meet the upper and lower controls specifications currently used (2.22 and 1.98). The population standard deviation is s = .07 and each sample is n=4.
The data (in percent) from the initial trial samples are:
Provide your findings to Angela (This should be done as a memo-type paragraph describing your method of researching the request and your results).
Follow-up Critical Thinking Questions:
2. What are the advantages and disadvantages of Frito-Lay drivers stocking their customers’ shelves?
3. Why is quality a critical function at Frito-Lay?