Bryan Robichaud
Professor Desmarais
POM 465
October 8, 2013
Frito-Lay: The Backhaul Decision
Frito-Lay was the largest manufacturer of salty snacks in the United States. With 27,000
employees and sales of $2.053billion in 1982, it was the only full-line salty snack
manufacturer distributing its product nationwide. Before the Motor Carrier Act of 1980,
companies with private trucking fleets are generally prohibited from selling transportation
services to other companies. Deregulation of the trucking industry in 1980 allowed private
operators to provide transport services for hire. In 1983, as part of efforts to offset the
increased costs of distribution, Frito-Lay considering selling your miles on other bands
transports companies. Frito-Lay, management should consider the potential revenue from
these services ensures possible degradation of service for sales of Frito-Lay. If the proposal
is approved by the transport, marketing plan for transport services should be developed.
(Hammond)
Frito-Lay has a great company and a great way of taking care of things such as its logistics
network. Frito-Lay logistics defined its mission “to deliver the right product, to the right
place, at the right time, in the right amount, in a cost-effective manner.” The logistics role
was to provide a bridge between manufacturing sales, distributing the product from plants
and regional warehouses to sales distribution centers and bins. Logistics’ responsibility for
finished goods ended at sales distribution centers and bins.
There are changes taking place both in the environment in which Frito-Lay operates
externally and within the company itself internally. The changes that took place in the
environment in which Frito-Lay operates externally are the growth in the salty snack
market, costs rising, and a decrease in industry growth. These are three big changes in
external environment of the company. Costs are rising due to the huge growth in the salty
snack market. There is such a high demand for salty snacks that Frito-Lay is spending
more money to make more money. The Internal changes that take place in Frito-Lay are
the rising costs, the backhaul proposal and the use of Frito-Lay’s private fleet and
third-party carriers. Again, these are three huge changes in the internal part of the
company. The biggest change of all and main point of this case is the backhaul proposal,
which consists of many pros and cons.
When talking about the backhaul proposal there are only two ways to look at the situation,
you love it or you hate it. The pros of the backhaul proposal consist of helping other
