Box 2.2. The Frito-Lay Information System

If an executive at Frito-Lay headquarters near Dallas wants to know how his company's products are faring on supermarket shelves in Boston, or the price of a corn futures contract at the Chicago Board of Trade, or the fuel efficiency of the company's delivery fleet, that information is instantly available. In fact, current information on virtually every aspect of the snack food maker's operations—manufacturing, purchasing, warehousing, distribution, marketing, sales, management, and research—is easily retrieved with the company's information system and presented in the level of detail desired.

Widely cited as a model of an effective corporate information system, Frito-Lay's computer network has established itself as the company's most important strategic and competitive tool. Executives say it is a requirement for business survival in the 1990s.

A national company competing against local and regional snack food manufacturers for shelf and display space in more than 400,000 stores, the subsidiary of Pepsico Inc. has used its comprehensive intelligence to transform itself into a "micromarketer" that enjoys the economies of scale that accrue to a multibillion-dollar enterprise.

"We learned how to handle the volume, we learned how to handle the speed over the years," explained Charles S. Feld, Frito-Lay's vice president for management information systems. ''But what has happened to us is, our marketplace has gotten very complex. Boston is now very different from Chicago, very different from California; supermarkets are different from convenience stores; and products are differentiated by flavors and bag sizes. The world is no longer one size or one color of jeans. Everybody wants diversity. So we have had to figure out a way to leverage our size and prowess in the marketplace and still be able to compete on a very targeted basis."

The company's 10,000-person sales force provides the information that is key to Frito-Lay's nimble performance in local markets. Equipped with handheld computers, a sales person keys in orders during sales calls and furnishes customers with a printout, an on-the-spot sales receipt with tax, discounts, and promotions included. At the end of each day, the sales force electronically transmits sales, orders, and other information to the headquarter's mainframe computer. The next morning, the sales people link up again with the mainframe to receive the day's routing and scheduling information.

With the daily-updated information from the field, the company can track performance in precise detail, down to the sales movement of an individual product in a single store. As a result, managers say they know more about local marketing conditions than their competitors do, and they can devise sales strategies accordingly.

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