The Journey From Line Efficiency The Journey From Line Efficiency

To Enterprise IntegrationTo Enterprise Integration

To SustainabilityTo Sustainability

Company Facts

Company Overview

• Enterprise consists of PepsiCo Americas Beverages, PepsiCo Americas Foods & PepsiCo International

• More than 185,000 employees around the world

• More than 50 company-owned manufacturing locations in North America

• 2008 revenues of more than $43 billion.

Key Dates

1965 PepsiCo Corporation founded through the merger of Pepsi-Cola and Frito Lay

1983 Quaker Oats acquires Stokely-VanCamp Inc. (Gatorade)

1998 PepsiCo acquires Tropicana

2001 PepsiCo merges with the Quaker Oats Company

Products

2008 Scorecard

Financial Information

PepsiCo Estimated Worldwide Retail Sales : $107 BillionPepsiCo Estimated Worldwide Retail Sales : $107 Billion

Impact on Manufacturing

The Challenge

Business Climate

• Continued double digit growth in the Gatorade / Propel businesses • Pressure to maintain dominant market share • Increasing number of SKU’s• Capacity shortfalls• Increasing Customer Service pressure

• Need to drive efficiency to world class levels to maximize asset utilization• Line availability critical during the Gatorade “season”

Impact on the Organization

• Design and implement a standardized problem solving and continuous improvement capability across all plants for all employees.

• Limited resources to effectively manage the data required to support the new capability• Implement a set of data collection and analytical tools to support the emerging continuous improvement culture in manufacturing.

Barriers to Success

Business Process Barriers

• Excessive redundant data entry

• Training in new productivity and problem-

solving techniques

• Identifying leadership resources

• Institutionalizing the team process

Technical Barriers

• Inconsistent data

• Lack of data visibility across the organization

• Inconsistent reporting

• Inconsistent interpretation of metric definition

• Analytical tools did not support team process

• Difficult to manage technical infrastructure –

no standardization

• Varying degrees of automated data collection

• Inconsistent interpretation of line and

machine events by legacy

• Multiple plant-owned applications

Initiatives that were being impacted by these barriers

• Innovation• Customer Service• High Performance Work Systems• Continuous Improvement – Total Productive Manufacturing (TPM)• Technical standardization across plants

Solving the Problem

• A team was chartered and formed to develop requirements for a tool to address the business process and manufacturing issues. The team consisted of Manufacturing, Process Improvement, & IT professionals

• Target solution providers were identified (including in house development)

• Requirements developed and RFI’s were sent to a variety of solution providers

• Evaluation criteria developed and solution reviews were conducted

• Decision was made to proceed with a proof of concept project utilizing the SAP Manufacturing Integration and Intelligence (SAP MII) application

Why SAP MII?

• Highly configurable

• Web enabled

• Approach & technology allows us to leverage existing infrastructure

• Flexible to meet future business needs and technologies

• Scalable / Extendible / Supportable

• High degree of usability for end-users

• Java based technology meets PepsiCo standard

• Strong customer base

• Highly regarded by AMR, ARC, & Gartner

Integration and Intelligence (SAP MII) application

Proof of Concept Goals

Validate Functionality and Capabilities of the SAP MII application

• Operator Interface

• Reports to Support Total Productive Manufacturing Business Process

• Manufacturing Performance Metrics (True Efficiency, MTBF, MTTR, Availability, etc.)

• Interface to Advanced Simulation and Loss Analysis Tools

• Ease of Configuration; Flexibility; Adaptability to a Variety of Data Sources

• Ability to Quickly Re-Apply Toolset to Other Manufacturing Sites

Proof of Concept Validation

• Ability to Quickly Re-Apply Toolset to Other Manufacturing Sites

Understand Infrastructure Requirements

• Cost to build

• Skill sets required

• Resources required

Gain knowledge to develop detailed Project Costs, Rollout Plans &Support Plans

Proof of Concept Approach

• PepsiCo and technology resources familiar with SAP MII to jointly develop the pilot LEDS application & reporting

• Using Rapid Application Development techniques, develop and deploy a LEDS pilot in 30 days

• Joint development of detailed LEDS design specification

• Training of PepsiCo developers on SAP MII

• Pilot lines to be chosen on the basis of business priorities • Pilot lines to be chosen on the basis of business priorities

• Implement pilot application on initial line at first plant

• Deploy application to remaining pilot lines

• Deploy application to controlled group of division users

• Develop on-going support model

• Joint development of PepsiCo wide roll-out plan for 2005 and 2006

Data Collection Performance Charting

Problem Solving Tools

AnalysisDrill Down

The Results

• Proof of concept project was successful !!!

• Decision was made to move forward with the LEDS based on SAP MII

• LEDS Team was formed

• Formal training was provided

• Hardware and software configurations • Hardware and software configurations supported as PepsiCo standard

• Additional LEDS functions identified and implemented

• Currently rolling out to all Gatorade manufacturing locations

• PepsiCo Team is self sufficient in the development & re-application of new functionality.

In 2006, Management Chartered A Mission To MARS …

A Change in Direction, A New Mission

A Mission To MARS …

MARS Strategic Intent

Why did we do MARS?

• Risk mitigation prior to deployment of SAP software– Collect and edit actual material usage data, manually or from process control equipment, Eliminate or minimize redundant entry.

• Shop floor capability to gather data in a relatively paper less system

• Advanced standardized QA capability developed for material lot management and traceability

• Factory floor reporting and analysis that is flexible and easier to develop, outside the SAP software environment. Focus on productivity tools for Line Workers and Supervisors.

• Develop work practices and training far ahead of the deployment of SAP software. Mitigate project • Develop work practices and training far ahead of the deployment of SAP software. Mitigate project risk by proactively managing change on the shop floor

• Automated “push” of Material Master & BOMs in SAP software to plant databases.

• Automated Receiving

• Batch Deck Management

• Manual and Automated Data Collection Of Material Usage

• Production Confirmation Transactions – From the shop floor directly to SAP software

• Lot Management & Product Genealogy

Capabilities Developed & Deployed

• Material and Labor Efficiency Reporting

• End of Shift Performance Reporting

Lessons Learned

Organizational Change Management

• Sponsorship from the top down- Direction has to be unanimous and fervent. Must be aligned with all other corporate initiatives.

• Advisory Boards- Made of Internal and External partners.

• Rigorous Work Process Designs- Intimate understanding of work processes. Standardization is key. Critical for enterprise implementation.

• Training- Leverage as many methods of communication as possible.

• Train the Trainer Program

• Written Operating Guides and One Point • Written Operating Guides and One Point Lessons (OPL)

• Checks for Understanding

• Standing Web training sessions

• Leverage Subject Matter Experts and Change/Deployment Leaders as the constant voice of the plant

• Analysis of Acceptance and Adoption- This is critical for achieving business and process gains. ex. Scorecards and Check Lists

• Consider the long run-

“It’s Not a Sprint, It’s a Marathon”.

Keys to Success

• Training – Self sufficient development team has developed the internal capability to create new functionality and quickly re-apply their learnings. Without formal training this wouldn’t have happened.

• Follow Technical Standards – All IT components are deployed by PepsiCo’s technical support teams according to their accepted standards. Plug it in and it works !

• Develop Engineering Standards for data collection methods and adhere to them – religiously !

• Communication – Structured, frequent, honest communication to our business partners and technical support teams is critical to ensure that timelines are met and expectations are fulfilled.

• Scope Containment – Maintain a “laser-like” focus on delivering against scope,

Lessons Learned

• Scope Containment – Maintain a “laser-like” focus on delivering against scope, objectives, and timelines. Project Management.

How to Fail

• Fall short on any one of the above and there will be problems.

• Implement the technology before the business processes are in place and people are trained. Do this and you will continually be re-working the technology.

Current Status

• LEDS functionality rolled out to all Gatorade plants and 2 Foods plants.

• MARS functionality rolled out to all Gatorade and Foods plants in North America (17 total facilities).

• Over 5,000 total users.

• Identical Software & Hardware footprint across all sites support plant operations on a 24 x 7 basis with system availability of over 99 %.

• Technical team : 2 Development Engineers, 2 Support Engineers

• Business team : 3 Deployment Leaders (responsible for training users, sustaining business process • Business team : 3 Deployment Leaders (responsible for training users, sustaining business process health, and scrubbing requirements)

Quaker Foods and Gatorade MES

• Support High Performance Work Teams

• Continue Shop Floor Integration

• Supervisor Scorecarding

• Cross Plant, Comparative Metrics

What’s Next?

Continue the journey to manufacturing efficiency:

System & Business Process Sustainability!!System & Business Process Sustainability!!

Thanks for listeningThanks for listening!!

Any questions ?Any questions ?