CASCADING - New Case
Success through managing safety, quality, customer service and cost
Walkers is the UK's biggest crisp manufacturer. The business operates the world's largest snack factory at Bursom Road, Leicester. Walkers had a humble origin; Mr Henry Walker started out as a butcher in the 1880s, and created a successful business in Leicester and Mansfield. By the 1940s, World War II had seen the introduction of strict meat rationing and by 10am shops had sold out. The business was working at only half capacity and so diversifying the business had to take place. In 1948, Walkers began manufacturing potato crisps.
Walkers is now a subsidiary of the worldwide PepsiCo group, which is a multi-branded New York based corporation. The business operates in almost 200 countries with 153,000 staff and has operated in the snack foods market since 1966. It has its own budget and is in charge of its own costs. This case study looks at the factors that make the Walkers plant a success so that it can add to group profits. It operates to achieve a balance in four key areas i.e. safety, quality, customer service and cost.
By managing these, the factory intends to meet the needs of all customers, as well as its own.
Safety
Safety in the workplace is vital. Worldwide, there are 270 million workplace accidents a year. There is one workplace death every 15 seconds. Walkers is fully aware that factories are dangerous places. They contain machinery, sharp instruments, slippery floors and a great deal of noise. This means that there are many risks to staff. Walkers therefore regard safety as its highest priority and have a particular goal regarding safety. It believes that workers should walk into its factory fit and well and leave it the same way.
It therefore does all it can to ensure safety. Managers assess risks. Processes are then designed to reduce risk. Safe working practices are always a priority. If a problem happens, production will stop to put it right. This happens even if it means not reaching targets, or letting customers down.
Quality, in the eye of the consumer, means that a product must provide the benefits required by the consumer when it was purchased. If all the features and benefits satisfy the consumer, a quality product has been bought. It is consumers, therefore, who define this.
Walkers maintains a comprehensive approach to quality known as TQM (total quality management). There is a 'quality chain' involved with potato crisps. From the first basic ingredient (the potato) through to all of the procedures involved in creating a single crisp, processes are there to 'assure' quality. This is 'quality assurance' - doing things that are most likely to build quality into a product.
Walkers' approach to quality involves looking at the whole supply chain, starting with the farmers who grow the potatoes. The company supplies the seeds to ensure quality - only the very best potatoes go to make crisps. The farmers' payment is measured against a quality scale, as the best potatoes with lower water content earn more. Quality assurance requires that a supplier offers only the finest raw materials. Walkers specifies the exact potato it needs and deals only with the best suppliers. The company policy is to trust suppliers and not to inspect every delivery.
Customer services
Walkers has two types of customer:
- Head Office is its main internal customer. Head Office collects information to which the plant must respond.
- Retail outlets and consumers are external. Walkers aims to keep both happy. It aims to supply retail outlets with 98.5% of their order within 24 hours. It makes sure that there are many varieties for customers to choose from. This creates a need to manage stock efficiently.
Cost
Each Walkers plant acts as a profit centre. This means that it has its own budget. It manages its own costs. Walkers produces 11 million packs per day. This means even a tiny saving adds up to a lot. Everyone therefore tries to find ways to reduce costs. Good quality also keeps costs down, as there is very little waste. Walkers uses flow production. Materials arrive as needed - 'just-in-time'. This keeps costs down by making sure that a lot of stock is not being held.
Discussion Questions
Discuss the relevance of factors like safety, quality, customer service, and cost and also show how they contributed towards Walkers efficiency.
