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Operations Management Project: A Study of Dominos Pizza

Operations Management Project: A Study of Dominos Pizza

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This report highlights key areas for operational improvement at a franchise of Domino’s pizza. These improvements have been suggested based on in­store visits, data gathering and interviews with employees and managers. The improvements will allow the store to increase customer satisfaction and reduce production and delivery times inline with Domino’s’ core values.
Buy and download instantly to read the full operations management report for a Domino's Store.

This report highlights key areas for operational improvement at a franchise of Domino’s pizza. These improvements have been suggested based on in­store visits, data gathering and interviews with employees and managers. The improvements will allow the store to increase customer satisfaction and reduce production and delivery times inline with Domino’s’ core values.

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Operations Management

UPDATED VERSION
A GRADED PAPER
A Study Of Domino’s Pizza
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1. Executive Summary
This report highlights key areas for operational improvement at the Bath franchise of
Domino’s pizza. These improvements have been suggested based on in-store visits, data
gathering and interviews with employees and managers. The improvements will allow the
store to increase customer satisfaction and reduce production and delivery times inline
with Domino’s’ core values.
The research was carried out to answer specific questions posed by the manager of the
store. These were:
● How can the store reduce the production time of pizzas during peaks in demand (eg
Tuesdays at 6pm-9pm)?
● In what ways can domino’s integrate technology to more accurately and efficiently
deliver pizzas to its customers?
● How can bottlenecks be reduced in the production line in order to increase
production and make the working environment less stressful during peak times.
Two in-store visits were made; at both times of average and high demand. It was
concluded that although the operation was generally highly efficient, there were areas for
improvement, such as:
● Equip all delivery drivers with GPS devices, ensuring accurate deliveries and the
ability for managers to track delivery times and identify inefficiencies. Currently GPS
devices are not universally used.
● Introduce an automatic buzzer alerting kitchen staff when the oven is ready to be
loaded with a new pizza.
● Making slight changes to the store layout to increase the process flow of pizzas
through the kitchen. This will also have a side benefit of reducing delivery times.
These suggestions were further evaluated based on approximate cost and benefit.
2. Introduction
This report analyses the operational processes of the Domino’s franchise in Bath, namely
those from the point of customer order to delivery of the product. This report is the
conclusion of team research, in-store observations, interviews with employees, personal
experience and the application of theory and frameworks.
The report initially outlines the strategic objectives of Domino’s PLC and determines how
operational performance in the Bath store can enable the realisation of these objectives.
Subsequently, following thorough observations of the process and interviews with the
manager and employees, a detailed analysis of the operational design and efficiency was
undertaken which employed multiple theoretical concepts, including a Product-Process
Matrix, the Four Vs and process flow diagrams.
This analysis enables relevant and effective recommendations to be made with a view to
enabling Domino’s operations to better meet the company’s core objectives and help
further expand its business.
3 Overview of the Domino’s
We felt that, before undertaking the observations and analysis of the operation itself, it was
vitally important to understand Domino’s Pizza as a business. This would enable us to
better appreciate how the operation sets out to achieve the business’ fundamental
objectives and hence more effectively analyse and suggest improvements.
3.1 Organisational Structure
Figure 1: The organisational structure of Domino’s Pizza LLC
With over 10,000 stores worldwide, Domino’s Pizza is one of the most recognised pizza
delivery companies in the world (Domino’s plc, 2013). Rapid expansion from the three
original stores in the US has been achieved through a franchise model, and at present
more than 770 stores (sub-franchises) are run by the UK master franchise (DPG) .
Through innovation, rapid growth and strong brand recognition, Domino’s has positioned
itself as a market leader in the food delivery market. Their core competencies have
changed over time and have allowed it to become a trusted and profitable business.
3.2 Core Objectives
The company’s vision is “To be Number 1 in Pizza” (Domino’s, 2013). In order to achieve
this, its core competencies and corporate objectives are based around:
● Providing excellent service
● Creating great quality pizzas
● Being perceived as better than the competition
● Being socially responsible within its community and fair to it’s employees and
suppliers
With this in mind, high quality operations are vital to the success of Domino’s as a
business. For example, providing excellent service to customers is impossible without an
efficient and dynamic process to produce and deliver the product. Similarly, proficient
operations are imperative in the consistent production of great quality pizzas. Moreover, to
be perceived as better than the competition requires at least the achievement of the two
aforementioned points (Rao, 2010).
We spoke with the manager of the Bath store, and he specifically asked us to focus on
analysing how the following points:
● Identify and reduce bottlenecks along the production line
● Identify areas for improvement in reducing the production time of pizzas during peak
hours (Tuesdays 6pm-9pm)
● Evaluate the possibility of using technology to increase delivery accuracy and
reduce production time
3.3 Core Competencies and Source of Competitive Advantage
Domino’s creates products and services for customers who require reasonably priced high
quality food, delivered hot and quickly, with a service that is dependable and consistent.
Domino’s is renowned for operational innovation. It was the first ever company to use the
internet as a method of taking and processing orders, and in more recent years has
utilised mobile apps to allow customers to order their food and track, in real time, the
preparation and cooking process of the food. Consistently monitoring and improving their
operations efficiency has allowed the competitive advantage of their core competencies to
remain a significant factor in the market. The use of their Operational Strategy, along with
the Company Vision, has ensured that Domino’s maintains its reputation for reliability and
consistency - allowing them to standout in the market. By focussing on takeaway rather
than the restaurant/takeaway hybrid model, Domino’s has a strong competitive advantage,
which requires efficient operations to be maintained and successful.
3.4 In Store Operations Strategy
Domino’s 2010 Annual Report states that, in order to provide high quality food and service
to its customers, it currently focusses on:
● Strategic store locations. Often stores are located outside of the city’s CBD,
however close enough to residential areas to minimise delivery times.
● Minimising operational costs and lag time by improving the efficiency of processes
(such as order taking, preparation, boxing and delivery) in store.
● Production orientated store layout to facilitate efficient production of food
preparation and service to customers.
● The effective use of the Domino’s PULSE point of sale system.
● A focused menu designed to minimise order variation and order errors in the
preparation and order taking processes.
Figure 2 - Domino’s PULSE-linked Pizza Tracker shown in store
3.5 In Store Operations Strategy
In order to provide high quality food and service to its customers, Domino’s currently
focusses on:
● Strategic store locations. Often stores are located outside of the city’s CBD,
however close enough to residential areas to minimise delivery times.
● Minimising operational costs by improving efficiency and processes in store.
● Production orientated store layout to facilitate efficient production of food
preparation and service to customers.
● Efficient operational processes such as order taking, preparation, boxing and
delivery.
● The effective and global use of the Domino’s PULSE point of sale system.
● A focused menu designed to minimise order variation and order errors in the
preparation and order taking processes.
4. Analysis of the Operation
We observed Domino's’ operations over the course of two site visits. Through our
observations we have analysed several aspects of the operation, and related them to
numerous operations management models. We have analysed Domino's’ process design
in relation to the ‘Product-Process Matrix’ and followed with a ‘4 V’s’ breakdown analysis
of the processes. On both visits to the site we observed how crucial the specific store
layout was to the efficiency of the operation, and dealing with fluctuating demands of the
products. It was also evident to us how the production process has been designed to be
streamlined to enable Domino’s’ to produce its products in a highly efficient way.
4.1 Process Design
It is crucial for Domino’s to understand its output and the process type required to produce
this output when designing its operations. For example, it must understand whether it is
producing more of a tailored service or an identical, mass produced output; it must also
identify the type of process required (for example batch or continuous). The
Product-Process matrix (below) from Harvard Professors Hayes and Wheelwright allows
an effective analysis of where Domino’s falls in relation to the above criteria. We have
placed the Domino’s logo where we believe their operations to be on the matrix.
Figure 3 - Product-Process Matrix (Slack et al., 2009)
It is apparent that the firm’s output is a mix of both product and service. It not only needs to
create the pizza product, it must also deliver it on time and in excellent condition as the
customer buys into this service. However, upon discussion with us, the manager told us he
believes the company falls into the lower boundary of ‘Service Shop’, as the service is
crucial to its competitive advantage, yet the pizzas themselves are very similar in the terms
of their manufacture and almost constitute a mass produced output.
In terms of the process type, Domino’s has chosen to use the assembly line approach to
create its pizza, producing high volume and narrow variety in terms of the essential process
structure required to make the pizzas. Making the pizza base and putting toppings on
means the process tasks are very uniform and repetitive in comparison to batch
processes. Although different toppings must be applied, the process of applying these
different toppings is identical; hence the operation design does not need to be greatly
tailored to accommodate this. The adoption of the mass process also indicates that the
process flow of Domino’s is reasonably continuous during the peak hours. The division of
labour combined with the ability of staff to perform the full variety of skills increases the
process’ flexibility during these peak times and also means that it can be changed more
towards a batch process if necessary. It can be argued that there are elements of batch
process within it.
We consider Domino’s to be on the natural line of fit with regards the type of operation
selected and the process to volume variety. Its operations are efficient with enough
flexibility to maximise its performance.
4.2 Characteristics of Operational Processes (The Four Vs)
In order to differentiate and do in depth analysis into the different operations Domino’s
undertake, we have utilised the ‘4 V’s‘ in our analysis.
Volume: Domino’s creates products at high volume. The Bath store for example will sell
over 300 pizzas on a Tuesday evening, it’s busiest time of the week. The high volume
justifies having large, open plan and modern kitchens with well trained staff.
Variation in demand: The order volume changes over the week, with the busiest times
being between 6pm-9pm. Spikes in demand also occur on Saturday evenings. When
Domino’s sponsored Britain's Got Talent in ITV, demand for pizzas were up one third on a
usual Saturday evening (Scotsman.com, 2008).
Variety: The customer has the option to chose a pizza base, size, recipe and any extra
toppings. Customers have the choice to customise their pizza, so the store needs to be
flexible in it’s production process.
Visibility: Much of the production process is exposed to the customer. This includes order
taking, pizza making, and boxing of the pizzas. Visibility is only limited to customers
collecting in store, however the online tracking function allows customers an insight into the
process as well.
Given the need to produce consistently high quality pizzas, Domino’s uses the assembly
line approach while maintaining a manufacturing like batch flow process which gives them
flexibility in producing the pizzas. The assembly line approach isolates a specific task to
each employee, allowing each employee to become skilled in that job, e.g. rolling out pizza
bases, which increases overall efficiency and enables a greater output at peak times
(Bukchin and Rubinovitz, 2001). Moreover, the assembly line approach allows the manager
to easily spot inefficiencies in the line, which makes creating a solution both quicker and
easier. Below illustrates the defined stages of the production process from order to
delivery.
Figure 5 - Stages of production in the “make-line”
4.3 Production Process
Having observed the production process at the Domino’s store, it can be seen that the
process is highly structured, organised and streamlined.
Step 1: The order is placed by the customer either through phone, online or collection.
Collection and phone orders are manually entered by the employee on the desk into a
touch screen point of sale system developed by domino’s called PULSE. This system
improves operating efficiencies by providing corporate management with marketing and
sales data which reduces corporate and administrative expenses. This system improves
accuracy and makes the ordering process easier and faster for staff (Reuters, 2013). The
data reporting capabilities are user friendly and allow store management to focus on
operations and customer satisfaction.
When the order is taken, a label is automatically printed and affixed onto the appropriate
sized box behind the counter. The box is then ready for the cooked pizza in step 5.
Figure 6: Taking customer orders using PULSE POS system.
Step 2: The customer’s order is displayed on a screen to the employees in the kitchen.
The pizza base, if not already rolled out and waiting, is made and passed to the next
employee on the assembly line. The dough arrives at the store already made and in dough
balls, shown below.
Figure 7: Pre-made dough ready to be made into bases
Step 3: The dough is passed on to two employees who add sauce, cheese and toppings.
Toppings are added based on the customer’s order displayed on the screen where the
employees are working.
Figure 8: Adding topping to the bases
Step 3: The dough is passed on to two employees who add sauce, cheese and toppings.
Toppings are added based on the customer’s order displayed on the screen where the
employees are working.
Step 4: The pizza is placed in the oven which has a maximum capacity of 15 pizzas. The
oven has a built in conveyor which means each pizza is cooked for exactly the correct
amount of time and means employees do not have to supervise the oven area. Moreover, it
allows for maximum efficiency as fresh pizzas can be automatically placed into the oven.
Step 5: A final employee takes the cooked pizza and places it in the already labeled box.
The delivery driver is notified and the delivery is made.
Below illustrates a process map from taking the customer’s order to delivery, including the
time it takes to complete each stage of the process. Creating a process map allows each
activity to be systematically challenged in order to improve the process.
Figure 9: Process map of the operation
Having observed the processes, a more detailed process flow chart was made, shown
below. This includes both the time taken to complete each process and the distance the
product (pizza) must travel to the next process. It was observed that the kitchen layout
greatly minimised the transport time. This was due to each process being close in
proximity and ordered so that each stage of the process was next to each other. Having
analysed the process flow chart, we were able to make suggestions to reduce the number
of steps taken and/or the time of each stage in the process.
Figure 10 : Process flow chart for the operation
4.4 Store Layout
Domino’s has confined each individual step in the operation to a part the store. Each
process is strategically placed to minimise bottlenecks and to reduce lag time in the
production process.
The layout of the Bath store (below) has been designed to cope with the fluctuating
demand of orders throughout the week. At peak times, up to eight employees can work
across key stages of the production process, and at lower demand levels as few as four
employees are required. It was observed that as demand for pizzas fluctuated, employees
were able to work at different stages of production wherever they were needed most to
reduce any lag time as much as possible in the production process.
Figure 11: Domino’s Bath store layout
4.5 Areas for improvement
4.5.1 Process improvements
Having observed the store on two occasions and speaking with employees, we found a
common issue was that the production line is uneven; often pizza bases were not made at
the same rate as the rest of the line was moving causing delays in the line. Secondly, since
the production process is not automated, variations in individual performance can result in
an further delays.
These issues were observed during the store's busiest time, on Tuesday evening between
6-9pm. As demand peaked at 115 pizzas an hour, the capacity and speed of the oven
could not keep up with the rate of production of pizzas in the kitchen. Without space to
store pizzas waiting to be placed in the oven, employees were forced to slow their rate of
production. To solve this issue, we recommend to increase the availability of clear
workspace in order to store completed pizzas waiting to be placed into the oven.
From analysis illustrated with the process flow charts, there are periods the oven has
capacity for a pizza(s), however employees are not aware of this and have to manually
monitor the oven’s capacity. In one instance, we observed three pizzas waiting to be
placed into the free oven for over 1.5 minutes. This caused unnecessary delays in the
production line.
We recommend two solutions. At peak times, such as tuesday evenings, a dedicated
employee should automatically load pizzas into the oven to maximise the oven’s capacity.
While this is the optimal solution, it may not be economically viable to hire another
employee.
Alternatively, the oven should be fitted with a buzzer alerting the kitchen staff when a pizza
can be loaded into the oven. An employee, preferably one working on the nearby ‘toppings’
table can place the pizza in the oven. This solution is most useful during low and average
demand periods when an employee can split their responsibility between two jobs.
Another concern was that many of the delivery drivers were not equipped with a GPS
navigation system. This resulted in delivery drivers using their own local knowledge to
make deliveries, which caused delays in delivery times. It is therefore advised that delivery
directions are automatically sent to a GPS device in the delivery cars to minimise delivery
times and reduce errors in delivery. These devices can also monitor in real time the
delivery times for each driver, allowing the manager to assess the individual efficiencies of
each driver, set targets and address inefficiency as they occur. These devices may have a
high initial cost, however will reduce errors and customer complaints.
4.5.2 Store Layout Improvements
While the store layout maximises efficiency by reducing the time it takes for the pizzas to
flow through the process, the oven in the centre can make working conditions hot.
Employees complained of hot and stressful working conditions at peak times when the
kitchen became quite full with other employees, resulting in a slower rate of production.
We suggest to move the oven to the rear left of the store, next to the pizza topping process.
The pizza boxing area should also be moved to the rear of the store, next to the oven, to
minimise the distance the cooked pizza has to be transferred. This solution also means
that delivery drivers can collect pizzas to be delivered by entering through the back office,
rather than the main entrance, which currently requires them to walk around to the front of
the store. This therefore would reduce delivery times as well.
Conclusion
Domino’s has clearly analysed it’s in-store operations to best achieve its core objectives of
excellent customer service, fast delivery and high quality pizzas. Our observations,
interviews with employees and knowledge of theories and frameworks has allowed us to
make several suggestions to further optimise these operations. Moreover, we have
successfully highlighted areas for improvement consistent with the specifications given by
the manager of the store.
Through its franchise model, Domino’s has been successful in creating a standardised
store layout for its UK stores. Our observations have shown that this layout is highly
successful and works well during average times of the week, however our suggestions will
help the Bath store to further increase efficiencies, especially during peak times of
demand.
Bibliography
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[Accessed: 10.3.2013]
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