Value Chain Analysis of Frito-Lay

Value Chain Analysis of Frito-Lay - Value Chain Analysis:...

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Value Chain Analysis: Frito-Lays Frito-Lay is the snack food division of Pepsico and the largest supplier of potato and corn chips in the world, currently holding 60% of the market share domestically, 40% globally, and selling its products in 120 countries. Frito-Lay sells eight of the top 10 selling snack chips nation-wide, and as a global player, Frito-Lay is succeeding against a multitude of competitors in a fierce, yet slow-growth industry, selling approximately 4.5 billion packages of snacks per year. In order to achieve this, the company has learned how to masterfully create, innovate and manage all aspects of its supply chain using high-tech IT systems that allow it greater control over its production processes and distribution network. Frito-Lay’s supplier network for potato chip production has fewer than 100 individual suppliers. Several years ago, Frito-Lay approached its potato suppliers to seek those farmers willing to concentrate on cultivating a limited number of potato varieties, with a focus on producing the most appealing taste and quality potato chip for the consumer. Frito-Lay then offered these farmers long-term contracts, which made it easier for the farmers to get financing and for Frito- Lay to achieve more efficient, profitable economies of scale in other areas of the value chain. It is noteworthy to mention that steps like these that insure a stable supply of raw material are important to a company who purchases 2.3 billion pounds of potatoes and 775 million pounds of corn annually. Furthermore, Frito-Lay tracks the logistical movement of products throughout the supply chain,
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This note was uploaded on 12/24/2011 for the course BUSINESS 101 taught by Professor Thanh during the Spring '11 term at RMIT Vietnam.

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Value Chain Analysis of Frito-Lay - Value Chain Analysis:...

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