Case $7[$CLO$5][5$ marks$]$

Operations & Supply Chain Management $[$MBA $646]$

Case: Green Manufacturing and Sustainability at Frito$-$Lay

Frito$-$Lay, the multi$-$billion$-$dollar snack food giant, requires vast amounts of water, electricity, natural gas, and fuel to

produce its $41$ well$-$known brands. In keeping with growing environmental concerns, Frito$-$Lay has initiated ambitious

plans to produce environmentally friendly snacks. But even environmentally friendly snacks require resources.

Recognizing the environmental impact, the firm is an aggressive "green manufacturer," with major initiatives in resource

reduction and sustainability. For instance, the company's energy management program includes a variety of elements

designed to engage employees in reducing energy consumption. These elements include scorecards and customized

action plans that empower employees and recognize their achievements. At Frito$-$Lay's factory in Casa Grande,

Arizona, more than $500,000$ pounds of potatoes arrive every day to be washed, sliced, fried, seasoned, and portioned

into bags of Lay's and Ruffles chips. The process consumes enormous amounts of energy and creates vast amounts

of wastewater, starch, and potato peelings. FritoLay plans to take the plant off the power grid and run it almost entirely

on renewable fuels and recycled water. The managers at the Casa Grande plant have also installed skylights in

conference rooms, offices, and a finished goods warehouse to reduce the need for artificial light. More fuel$-$efficient

ovens recapture heat from exhaust stacks. Vacuum hoses that pull moisture from potato slices to recapture the water

and to reduce the amount of heat needed to cook the potato chips are also being used. Frito$-$Lay has also built more

than $50$ acres of solar concentrators behind its Modesto, California, plant to generate solar power. The solar power is

being converted into heat and used to cook Sun Chips. A biomass boiler, which will burn agricultural waste, is also

planned to provide additional renewable fuel. Frito$-$Lay is installing high$-$tech filters that recycle most of the water used

to rinse and wash potatoes. It also recycles corn by$-$products to make Doritos and other snacks; starch is reclaimed

and sold, primarily as animal feed, and leftover sludge is burned to create methane gas to run the plant boiler. There

are benefits besides the potential energy savings. Like many other large corporations, Frito$-$Lay is striving to establish

its green credentials as consumers become more focused on environmental issues. There are marketing opportunities,

too. The company, for example, advertises that its popular Sun Chips snacks are made using solar energy. At Frito$-$

Lay's Florida plant, only $3\mathrm{.}5\%$ of the waste goes to landfills, but that is still $1\mathrm{.}5$ million pounds annually. The goal is zero

waste to landfills. The snack food maker earned its spot in the National Environmental Performance Task Program by

maintaining a sustained environmental compliance record and making new commitments to reduce, reuse, and recycle

at this facility. Substantial resource reductions have been made in the production process, with an energy reduction of

$21\%$ across Frito$-$Lay's $34$ U$.$S$.$ plants. But the continuing battle for resource reduction continues. The company is also

moving toward biodegradable packaging and seasoning bags and cans and bottles. While these multiyear initiatives

are expensive, they have the backing at the highest levels of Frito$-$Lay as well as corporate executives at PepsiCo, the

parent company.

Discussion Questions after watching Video:

What are the sources of pressure on firms such as Frito$-$Lay to reduce their environmental footprint?

Identify the specific techniques that Frito$-$Lay is using to become a "green manufacturer."

Select another company and compare its green policies to those of Frito$-$Lay.