Masters Theses

Date of Award

12-1997

Degree Type

Thesis

Degree Name

Master of Science

Major

Management Science

Major Professor

Kenneth Gilbert

Committee Members

Melissa Bowers, Kenneth Kirby

Abstract

Over the last half of the twentieth century there has been increased interest in the application of just-in-time, lean, or pull production techniques to many industries which produce nonperishable goods within The United States. More recently, however, companies that produce perishable goods, particularly foodstuffs, have started to apply these techniques to their manufacturing and distribution operations. This study highlights the application of these techniques to the soft drink industry. There is perhaps no better industry suited for such a study. The proliferation of the product line in both package size and flavors in recent years has been exponential in nature and there is every indication it will continue to grow in such a manner. (At one company in the study the number of cases sold between 1980 and 1995 increased from five to 16 million, while the number of stock keeping units increased from 40 to 240.) To further complicate the situation, the market which these bottlers serve is volatile and the margins they earn from it are not getting larger. Bottlers must meet consumers' demands for new products and retailers' demands for more efficient service with low cost products and sophisticated promotions. All of this is occurring while bottlers try to operate with equipment and performance measures that are designed to accommodate none of these objectives. Long gone are the days of two main competitors each selling one similar product to an inexhaustible market.

A new production and distribution scheduling methodology was applied and refined at both companies in this study. The pull production system operated by scheduling production and distribution based on the previous day's route truck loadouts. (Loadouts are the amount of product which is removed from a delivery truck and placed in a retail outlet.) This system replaced one in which production and distribution decisions were scheduled weekly, based on a forecast of future demand. As a result of the new scheduling methodology, inventory at both companies fell dramatically and out- of-stock and out-of-date product were made virtually nonexistent. This was very impressive considering that virtually no changes in operational procedures, except for scheduling methodology, were used.

Predictably, key manufacturing performance measures, which are based largely on mass production assumptions, did not indicate improvement. Among the major concerns were yield loss and number of package and flavor changeovers. Each of these problems, however, could be traced to using equipment for purposes for which it was not designed.

Management at both locations was pleased with the results of the study. All agreed that in the future a production and distribution scheduling system like the one used would become essential because it reduced the amount of inventory, while avoiding stockouts. Most importantly, the study was deemed beneficial because it pointed management in a new direction for investments in capital improvement projects. One facility in the study was so impressed with the new system that it used the results as part of its entry for a company wide quality control award. The facility won the award and continues to use a version of the system introduced in the study.

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