Supply Chain Management Assignment

Domino’s Pizza

Section IM B: GROUP 9

• Amruta Jadhav: 2002100

• Ajinkya Jumde: 2002106
• Nakul Varshney: 2002134
• Kartik Dua: 2002114
• Kanishk Chaudhary:
2002113
 • In 1960, brothers Tom and James Monaghan
purchased Dominick’s pizza store in Ypsilanti,
Overview Michigan which was later renamed to Domino’s.

• Domino’s first International Franchise was

granted in 1983 for a store in Winnipeg,
Manitoba, Cannada.
• Domino’s is the world’s second largest
pizza company and the largest pizza
delivery quick-serve restaurant chain.
• Domino’s uses the franchisee model.
• In US, there are 1150 franchisees that
collectively own and operate 4475 store.
 • Developed a cost-effective business model with low
capital requirement, afocused menu of affordable
pizza and an interior specially designed to support
delivery and carryout
• Average investment $150,000 - $250,000. (Relatively
low in QSR Segment)
Domino’s US • Domino’s franchisee was granted a specified delivery
Franchise radius.
• Delivery radius based on ability to delivery in 10
Structure minutes or less.
• The franchisee agreement is for 10 years which can
be extend.
• Average franchisee owned 3-4 stores.
• Stores were small, approximately 1,200 to 1,500 sq.
ft.
 • A Master franchisee is granted with exclusive
rights for a country.
• The master franchisee can sub-franchise the
brand.
Domino’s • Brand protection through safety audits and
International enforcement of a supplier approval process.
• Allowed for special toppings and pizza
Franchise designed to meet local tastes and food
customs.
Model • Master franchise terms last for 10-20 years.
• In 2011, 45% of Domino’s
international stores were operated by 4
master franchisees.
Innovations

Belt Driven Pizza: Which had one temperature setting and a

conveyor belt that moved items through the oven resulting in
consistent and effortless baking.

Spoodle:
Cross between spoon and ladle to help reduce the time it took to
sauce the pizza

The Make Line Station:

Assembly line for pizza to support speedy pizza making
Innovations

Pizza Screens:
Replaced wooden and stainless-steel pizza cooking trays with pizza
screens that allowed for more even baking.

Corrugated Cardboard pizza box:

To make sure the pizza arrived hot for the customers

Heat Wave Electrical deliver bag:

To keep pizza hot during Transit
 1. Facilities
•Supply chain consist of 19 facilities: 16 were regional
dough manufacturing and supply chain centers, an
Equipment and supply distribution centre, a Fresh
produce facility and a pressed product plant.

2. Inventory
Domino’s US •Raw materials consist of more than 240 individual
Supply Chain products. Some of the them (dough) are produced
according to forecast. Others are stored in the
System warehouse and are being replenished from time to
time.

3. Transportation
•Domino’s use 200 leased tractor-trailers to supply
the raw materials to the various stores. Usually
delivered in the night to minimize disruptions and to
ensure on-time delivery.
 4. Information
The company uses Pulse POS Computer system,
which includes a forecasting software that allowed
store managers and owners to track.

Domino’s US 5. Sourcing
The purchasing is centralized. It is sourced from
Supply Chain authorized dealers and Farmers. Dough

System manufacturing is vertically integrated.

6. Pricing
Similar to other Pizza companies. The price is almost
same in most of the companies. Uses various tools to
reduce the cost so as to increase profit.
Domino’s International Supply Chain
Stakeholders involved
 Flow of supply chain

Stores placed the orders for supplies via Pulse by 5 p.m.

SCCs manufactured at 5 a.m. using internal forecast

Domino’s fleet of 200 leased tractor-trailers were loaded and

rolled out of SCCs between 9 p.m. and 10 p.m.

Deliveries were made in middle of the night to minimize

disruptions to store operations
 • Uncertainty regarding the raw material prices like
that of corn, wheat etc.
• Surveys show that taste of Domino’s Pizza was not
good.
• Diners opted for less expensive frozen offerings
instead of pizza due to recession.
Major Problems
• Managing the increasing variety of ingredients and
faced by the packaging.
company • Threat to its brand reputation due to a video posted
in YouTube about the unsanitary preparation
method.
• Rise in global commodity prices like wheat, dairy
products, chicken etc.
• US pizza market was highly competitive.
 • Selling and Shipping a Pizza Store in a box.
• The Supply chain eliminated many back-of-store
activities that the competitors managers undertake.
• The most important person in Dominos is the store
manager
• This system allowed them to focus on the quality
1) How does Dominos Supply and consistency of menu item and customer service.
Chain Services Model support • The store owners could even buy capital items like
ovens, coolers, pizza preparation areas, counters
its brand and its overall and fixtures, signage and other large equipment.
strategy? • Inventory: 2500 SKUs- Supply everything needed to
set-up, open and operate a Dominos Location.
• 50% if EBITDA is shared with the franchises based on
volume of ordering.
• Success is evident in the fact that 99% of franchisees
use the Dominos supply chain services model inspite
of being given the option of using their own
suppliers.
 • Standardization of Supply
• Focus of the Store Managers only on the Store Operations
• All back-end work ( including delivery ) is done during off-
store operational hours.
• Handling the excess demand spikes during the Superbowl
weekends and other important sales spikes during the year
is done at the World Resource Centre and all franchisees
2) Does Dominos Supply can benefit.- Centralized Master forecasting in addition to
Chain Model Provide a the forecast by each Franchise.
competitive advantage • Examples of Support that gives competitive advantage
during periods of rapid inflation in the commodities
and how? market:
• Dominoes worked with its poultry suppliers to determine
the best time to purchase feed
• It worked with its cheese supplier to find the most
opportune time to lock in the Dairy contract.
• This reduced the cost suppliers charged Dominos thereby
reducing the cost passed on to the franchisees.
 • The fact the Dominos had the best customer service level and that
it was able to tide over the surge in the commodities market is
testament to the fact that the supply chain is extremely efficient as
well as responsive.

• It is stated that when they launched an ad campaign that coincided

3) Do you see any major with the News Years holiday and the Super Bowl they were
Flaws in Dominos stretched on all fresh ingredients, especially those that had long
current supply chain cure times ( Eg: Pepperoni)
services model? How
• They were able to manage all the orders however to handle such
might you change or large orders in the future they would need to increase their
make improvements? processing capacity at the SCCs.

• In Addition to this they would also need to check the possibility of

partnering with suppliers who would possibly have a lesser curing
time for the Pepperoni, taking into consideration the taste changes
and other factors that could cause customer dissatisfaction.
 •Both good and bad comments were displayed without any censoring.
This restored trust after the video was leaked online.

•This kind of transparency was needed as the brand and all franchises
4) Has Dominos would be hit incase remedial measures were not taken.
gone too far with
transparency? •It gives people an opportunity to indirectly get their name displayed
at Times Square- We all know that many people are LONELY( inspite of
how glorious their social media pages are) and this was a great
marketing gimmick that would inadvertently increase sales. This in
addition to the fact that the brand image was being restored.
 •With the Success of the US model the brand would benefit if the supply
chain is expanded globally.
•However, the tastes and other market dynamics differ widely indifferent
markets.
•The existing Franchisees have done well in the international markets but
to bring in the same kind of structure that the US market has the
expansion of the Supply chain Model needed to be done in a controlled
5) Should Dominoes manner and after consulting the existing franchisees in the international
markets as to the viability if the model.
Attempt to expand •If expansion needs to be done it should Start with the Mexico Markets
its supply chain as it is closer to the US and expansion would be easier given the fact that
internationally? the KT and primary set up can be done on a personal basis with little
investment in transportation cost whilst leveraging the proximity to the
US markets.
•Following this the expansion can be done in the UK market as it is the
largest international market for Dominos.
•Following this the expansion can be done in the Australian, Indian and
South Korean Markets as these are the other large international markets
for Dominos outside the UK and Mexico Markets.
Thank You