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Knowledge Management Project work on Application of ERP systems at Dominos Pizza Inc.

Submitted By :
Saurabh Naskar (A29) Priyankar Basu (A34) MBA (M&S)- 2011-2013 Section A

Introduction: Domino's Pizza, Inc. is an international pizza delivery corporation headquartered in Ann Arbor, Michigan, United States of America. Founded in 1960, Domino's is the second-largest pizza chain in the United States and has over 9,000 corporate and franchised stores in 60 countries and all 50 U.S. states. Domino's Pizza was sold to Bain Capital in 1998 and went public in 2004. The menu features both vegetarian and meat pizzas, chicken wings and boneless chicken, potato wedges, garlic breads and a variety of dessert items including cookies and waffles, Ben & Jerry's ice cream and a variety of soft drinks including Coca-Cola, Fanta, and Sprite. Domino's has restaurants in all of the world's major cities such as New York, Mumbai, London and Chicago. In 1960, Tom Monaghan and his brother, James, purchased DomiNick's, a small pizza store in Ypsilanti, Michigan near Eastern Michigan University. The deal was secured by a US$75 down payment and the brothers borrowed $900 to pay for the store. Eight months later, James traded his half of the business to Tom for a used Volkswagen Beetle. As sole owner of the company, Monaghan renamed the business Domino's Pizza, Inc. in 1965. In 1967, the first Domino's Pizza franchise store opened in Ypsilanti. The company logo was originally planned to add a new dot with the addition of every new store, but this idea quickly faded as Domino's experienced rapid growth. The three dots represent the stores that were open at the time (1969). By 1978, the franchise opened its 200th store. International Expansion: On May 12, 1983, Domino's opened its first international store, in Winnipeg, Manitoba, Canada. That same year, Domino's opened its 1,000th store overall, and by 1995 Domino's had 1,000 international locations. In 1997, Domino's opened its 1,500th international location, opening seven stores in one day across five continents. Sale of company In 1998, after 38 years of ownership, Domino's Pizza founder Tom Monaghan announced his retirement and sold 93 percent of the company to Bain Capital, Inc. for about $1 billion and ceased being involved in day-today operations of the company. A year later, the company named David A. Brandon Chairman and Chief Executive Officer. The Company Today: In 2004, after 44 years as a privately held company, an employee of Domino's Pizza rang the opening bell at the New York Stock Exchange and the company began trading common stock on the NYSE under the ticker symbol "DPZ". Industry trade publication Pizza Today magazine named Domino's Pizza "Chain of the Year" in 2003, 2010, and 2011. In a simultaneous celebration in 2006, Domino's opened its 5,000th U.S. store in Huntley, Illinois, and its 3,000th international store in Panama City, making 8,000 total stores for the system.

Also that year, the Domino's Pizza store in Tallaght, Dublin, Ireland, became the first in Domino's history to hit a turnover of $3 million (2.35 million) per year. As of September 2006, it has 8,238 stores which totaled US$1.4 billion in gross income. In 2007, Domino's introduced its Veterans, Delivering the Dream franchising programs and also rolled out its online and mobile ordering sites. In 2008, Domino's introduced the Pizza Tracker, an online application that allows customers to view the status of their order in a simulated "real time" progress bar. In addition, the first Domino's with a dining room opened in Stephenville, Texas, giving the customers the option to either eat in or take their pizza home. Since 2005, the voice of Domino's Pizza's US phone ordering service 1-800-DOMINOS has been Kevin Railsback. In a 2009 survey of consumer taste preferences among national chains by Brand Keys, Domino's was last tied with Chuck E. Cheese's. In December that year, Domino's announced plans to entirely reinvent its pizza. It began a self-flogging ad campaign in which consumers were filmed criticizing the pizza's quality and chefs were shown developing the new product. The new pizza was introduced that same month, and the following year, Domino's 50th anniversary, the company acquired Kevin Smith as its new CEO and experienced a historic 14.3% quarterly gain. While admitted not to endure, the success was described by Doyle as one of the largest quarterly same-store sales jumps ever recorded by a major fast-food chain. Problems faced by the company: The company since its incorporation was based on a manual data entry computer systems and gave a guarantee of delivering products, thus as orders came from large number of customers they were not able to manage their business processes efficiently. The problem came as they used to queue the respective orders in their kitchen thus two types of orders came 1. POS sales (Point of Sales) 2. Online orders (Home Deliveries) Thus employees had to be present on POS as well as another server which receives orders from online customers. Therefore order queuing became a huge problem, which in turn reduced their efficiency thus it took more time to make pizzas and Dominos could not deliver the pizzas within 30 minutes. It was a huge problem for the management and it needed to be soughted out. IT tool used by Dominos was: The IT tool used by Dominos Pizza was ERP system (Enterprise Resource Planning). Enterprise resource planning (ERP) systems integrate internal and external management information across an entire organization, embracing finance/accounting, manufacturing, sales and service, customer relationship management, etc. ERP systems automate this activity with an integrated software application. Their purpose is to facilitate the flow of information between all business functions inside the boundaries of the organization and manage the connections to outside stakeholders. ERP systems can run on a variety of computer hardware and network configurations, typically employing a database as a repository for information.

ERP (Enterprise Resource Planning) systems typically include the following characteristics: An integrated system that operates in real time (or next to real time), without relying on periodic updates. 2. A common database, which supports all applications. 3. A consistent look and feel throughout each module. 4. Installation of the system without elaborate application/data integration by the Information Technology (IT) department.

Components of an ERP system are:

1. 2. 3. 4. 5. 6. 7.

Transactional data e-dashboard (metering of key processes) Business intelligence Customizable reporting Search Document management Work flow management

Outcomes from the implementation: The results were amazing for the company, what it did was it integrated their internal server to their online server based on e-commerce model.
1. 2. 3. 4. 5. 6. 7. 8. 9. 10.

The main problem was routed out and now they had order queuing protocols which combined both POS sales as well as online orders. Even the status of any order, delivery boy status, previous sales, etc can be easily be accessed by the help of this software. It also gave managers to predict future sales and inventory requirement. Data redundancy reduced to nil. Paper work reduced. Supported streamline flow of processes and work flows. Uniformity all across the organization. Sharing of data between one or more outlets became possible, so if one outlet fails to deliver in time another can do so within the next specified time. A central server also helped them to maintain databases for frequent customers and provide them with customer delights if or when required. It can also provide planning techniques to managers based on past sales and records.

Thus, proved a huge success for the company and led to business process optimization. But there are some disadvantages to this software, which can be stated as, 1. 2. 3. 4. 5. Very expensive tool and costly to install. If wrongly installed it can harm the company in many ways. Need for high accuracy. Need for sharing of data. Need for good networking architecture.