Video Tip: Inventory at Frito-Lay

If you cover the subject of Inventory Control (Ch.12), you may want to show the (8 min.) video, “Managing Inventory at Frito-Lay”. There aren’t too many more interesting products that students can relate to than potato chips…and this video goes from the farm to the truck to the plant to the truck to the store…in showing the production process. What makes it really exciting is that the whole journey often takes less than one day! We follow the inventory from the time the potatoes (12 semi-trailers full each day, at 50,000 pounds of potatoes per trailer) are loaded at a farm near each plant,  unloaded, washed , sliced, seasoned, baked, bagged, boxed, loaded for delivery, shipped to supermarkets, and put on a shelf. It’s a real eye-opener to see how fresh the product at the store can be.

It’s also important for students to see that there are 4 types of inventory at Frito-Lay (and, of course, at other firms): raw materials (the potatoes, seasonings, packaging material, etc.), work-in-process, finished chips in a bag, and MRO. This may be an unusual product, in that a major raw material decays quickly, but the importance of inventory turns, W-I-P levels,  and smooth production flow are all illustrated in this company’s excellent inventory management.

Jay and I really enjoyed filming this Frito-Lay series (our most recent featured company) and you will see why when you view the closing scene, filmed in my driveway. The company lent us a truck to use for the day and loaded it with hundreds of bags of chips of all brands. At the end of the day of filming our closing comments, we assumed we had to not only return the truck, but the massive quantity of chips as well.  But we got to keep them! Since Jay couldn’t carry many back to Texas, we Renders ate chips for months….a big exception to my wife’s organic/healthy food house rules.