Question

Frito-Lay's Quality-Controlled Potato Chips

Video Case

Frito-Lay, the multi-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 plants 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 checkpoint, salt content in Lay’s chips, are 2.22% and 1.98%, respectively. To see exactly how these limits are created using SPC, watch the video that accompanies this case.

Discussion Questions

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 control specifications noted earlier.

The data (in percents) from the initial trial samples are:

• Sample 1: 1.98, 2.11, 2.15, 2.06
• Sample 2: 1.99, 2.0, 2.08, 1.99
• Sample 3: 2.20, 2.10. 2.20, 2.05
• Sample 4: 2.18, 2.01, 2.23, 1.98
• Sample 5: 2.01, 2.08, 2.14, 2.16

Provide the report to Angela.

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?

Answer 1

1)

The upper and lower control limits for one check point, salt content in Lay's chip, are 2.22% and 1.98%, respectively.
					x bar
Sample 1:	1.98	2.11	2.15	2.06	2.08
Sample 2:	1.99	2	2.08	1.99	2.02
Sample 3:	2.2	2.1	2.2	2.05	2.14
Sample 4:	2.18	2.01	2.23	1.98	2.10
Sample 5:	2.01	2.08	2.14	2.16	2.10
				Mean	2.09
population standard deviation is s =	0.07
for 3 sigma deviation:
UCL = mean + 3*s			2.30	>2.22%
LCL = mean - 3s			1.88	<1.98%
Hence, the UCL and LCL do not meet the upper and lower control specification noted in the case.

2. If drivers are responsible for stocking their customer shelves, a complete storage and transportation process between unloading the truck and stocking on shelves is eliminated. It saves the storage space, time and cost for the customers, and allows Frito Lay to have a display of their products the way they envision on their customer’s shelves.

The disadvantage of using drivers for stocking customer’s shelves is the need for additional skilled drivers and vigorous training of them to ensure they stock the shelves in the manner desired. This is an added cost for Frito Lay.   

3. Quality is a critical function at Frito Lay, as it allows them to maintain consistency of taste in their products while ensuring customer satisfaction and prolonged shelf lives of their products.