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Frito Lay The Backhaul Decision Case Solution

Solution Id Length Case Author Case Publisher
2675 1756 Words (7 Pages) John E.P. Morrison Harvard Business School : 688104
This solution includes: A Word File A Word File

Frito Lay offers six core and specialty products which make up its product mix. In the market for salty snacks, Frito Lay is up against three major sorts of rivals: national, regional, and private label. The specialty of Frito Lay is that it employs its own fleet to distribute its products to shops rather than relying on any outside service providers, giving them complete control over how their products are delivered and how they are sold to consumers. Their manufacturing facilities were divided into three categories, and the procurement of raw materials was a centralized function. In order to assist its logistical operations, Frito Lay uses a range of information systems, including CADEC and VSP. Due to the company's usage of its own fleet, delivery costs were somewhat higher, and a backhaul proposal was made to address this. The proposal suggested using the company's personal fleet to deliver items for other businesses along the route immediately after delivery and return.

Following questions are answered in this case study solution

  1. Evaluate the design and operation of Frito-Lay's logistics network?

  2. Do you support the backhaul proposal? Why or why not?

  3. As Ed Kugler, prepare a marketing plan for Frito-Lay's proposed backhaul services. In particular, what customers or market segments would you target?

  4. Should senior management at Frito-Lay approve the backhaul proposal? If so, how should the backhaul program be implemented? If not, how should Frito-Lay address its rising distribution costs?

Case Analysis for Frito Lay The Backhaul Decision Case Solution

1. Evaluate the design and operation of Frito-Lay's logistics network?

Coordinating the movement of commodities from one location to another is known as logistics. Coordination will also include their receipt, storage, and distribution of commodities. Frito-logistics Lay's department has set as its primary goal the timely and cost-effective shipment of the company's finest product to the best location in the greatest quantity. The logistics system is complex, spanning over 6 different regions. Each zone's management team was in charge of its own supply chain, and there was little cooperation across zones. Primarily, they relied on its own private fleet of vehicles, with help from third-party suppliers for less service-sensitive deliveries like those made between plants. Their on-time delivery performance was an impressive 99.1 percent. With the help of the CADEC system and their own personal vehicles, fleet drivers are able to optimize efficiency and give exceptional service to their clients. Regulatory reporting is bolstered by the CADEC system. From the driver's point of view, it keeps tabs on how long it takes to go between major destinations. Great flexibility is provided by a combination of automatic information collecting and driver keying, and the resulting reports are reliable and provide consistent data. 

The chauffeurs of the company's fleet act as the face of the business and its ears and eyes on the road. In terms of distribution, Frito-Lay looks to be quite effective. It's a cornerstone of the company's success. With its own fleet of vehicles, the firm can guarantee a steady flow of goods to its customers. Due to the short product life cycle and the high disposable nature of most goods, Frito-Lay is able to maintain a smooth supply chain via the use of its logistics network and, in particular, its own fleet of vehicles. Logistics objectives are linked to those of the Frito-Lay corporation. Back haul service might be another source of revenue and profit for Frito-Lay thanks to the company's own fleet. Upgrading the VSP infrastructure is hence likely necessary. It's an outdated system that uses an equally dated algorithm to figure out where to go. By switching from VSP, the company can improve its routes, which will result in saving of money in the process.

2. Do you support the backhaul proposal? Why or why not?

I do not support the backhaul proposal at all. Firstly, the company lacks the experience to offer its services to other companies. Surely, they transport their own products to different retail outlets, but they will have to cater to the varying needs of their customers who might want to enjoy the backhaul services of Frito Lay. Catering to such special needs will require relevant experience and training. This training will then increase the overall costs of Frito Lay, and if the delivery staff fails to provide a good service, this mishap will deteriorate the brand image of Frito Lay.

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