DOMINOS PROCUREMENT STRATEGY 1

Dominos Procurement Strategy

DOMINOS PROCUREMENT STRATEGY 2

Introduction

The report aims to identify and describe the key product categories that the procurement

department of Dominos has to manage. It researches the supply market of the company and

defies the suppliers. Report assesses the supply market and importance of sourcing items.

Report researches about the supplier selection, evaluation and development practices and

programs. Along with this report considers the supply related issues and opportunities for

company and industry

The operations issue consider dominos sales market identification and descriptions as well as

the key customers of company. it identifies, discusses and evaluates the demand forecasting

techniques used by company. report identifies the collaborative practices across the supply

chain of dominos. It considers one particular practice, discusses the implementations,

challenges and opportunities.

Integration issues such as development of company supply chain, use of nine step framework

for design and assessment of supply chain integration, and expansion of assessment

considering triple-A supply chain are illustrated. Report identifies the key procurement and

supply chain sustainability practices and assesses the sustainability implementation and

integration.

Part A: Supply issues

Key product categories

There are various kinds of veg Pizzas that Dominos manufactures such as Margjerita,

Double-Cheese-Margherita, country-special, farm-house, peppy-Paneer, Mexican-Green-

Wave, Deluxe-Veggie, 5-Pepper, veg-extravaganza, panner-N-Onion, and many other

DOMINOS PROCUREMENT STRATEGY 3

products. similarly company has non veg pizzas, beverages, burger pizza categories where

the procurement department has to procure various products.

Supply market of company

The supply market of company reveals that it has a very important role to play for the

procurement of materials. It consists of those facilities such as making fresh dough and other

food items. Supply chain is engaged in the delivery of food item. Along with this, equipments

and supplies are supplied (Jones, 2015).

Supply chain of India is regarded as the number one supply chain for company. company

here operates in three segments. First is the domestic stores, second is the domestic supply

chain and third is international segment.

The domestics stores of the company work as a testing ground for the new technologies and

products that may be passed to the franchisees. It generates income from the company owned

stores. Domestic supply chain vertically integrates the supply chain. Automatic delivery of

the raw materials and many back of store activities are conducted by the domestic supply

chain. It assists company o keep down the food costs. Distribution of Pizza dough that is

processed from the wheat takes place to the retail outlets through the refrigerated trucks. The

logictics requirement to send the frozen items is at a temperature that below minus 18 degree

centigrade. Refrigerated truck in that food is sent has temparature range between 1 to 4

degree centigrade. The flow of the supply chain is creating wheat, than dough that this dough

is sent to the warehouse. The refrigerated truck carries this dough to retail outlets.

The major suppliers are for India operation show wheat is supplied from Jalandhar, Punjab,

cheese is supplied from Karnal, Haryana, tomatoes are supplied from Bhubaneswar, Orissa,

spice is supplied from south India, baby corn is supplied from Nepal, exotic vegetables are
DOMINOS PROCUREMENT STRATEGY 4

supplied from sri lanka, pepperoni is supplied from Australia and Jalapeno is supplied from

Spain. This supply chain system is based on this premise that wherever the cheaper resources

are available they should be procured and this provides Dominos economies of scale as well.

Supply market and importance of sourcing items

The supply market is crucial for the success of company as company prepares dough from

suppliers. The dough is to be sent to the franchisees of company. The relevance of the supply

market is reflected by this fact that it contributes most for the revenue earning. The supply

chain segment of company contributes 63 percent of total supply chain sales in domestics as

well as in international markets. Importance of supply chain can be well understood by this

fact that all the years from 2010 to 2014, supply chain network has supplied more revenues to

the company than the franchises and company owned stores (Jones, 2015).

Evaluation of suppliers and selection

Supplier selection has become a decisive factor for the companies, it becomes necessary for

companies to source suppliers. There are numerous steps in suppliers choice that should be

followed. In the pre-selection process corporation must decide the procurement needs prior to

sending the quotations to suppliers (King, 2005). After that, probable sources should be

recognized and asked to estimate the price. These quotes must be assessed to pick the best

suppliers. For choosing the suppliers, their price, release of products and services, value and

service must be determined (King, 2005). Their strategic and organization styles must be

measured. This can be measured by visiting to their websites, trade sites and other valuable

information taken out from a variety of sites and from business network. Social sites such as

face book and others are also pertinent sources for determination of suppliers standings in

the markets.
DOMINOS PROCUREMENT STRATEGY 5

The information generated about the suppliers should be authenticated by observing these

factors in to deliberation. There should be no any evident cause for biasness about the

information collected. The information must have addresses and valid phone numbers that

should be authenticated. The information sources must be trustworthy. All these factors must

be kept in to contemplation to authenticate the accessed information legality. The

testimonials should also be checked that are provided. The information collected must

measure the, quality, service, delivery, management style of suppliers, price sufficiently to

discover best suppliers for company.

The selection criterion must think about communicating these evidences as well to the

probable suppliers. The suppliers must be remunerated for improving the quality of products

(Kohnen, 2014) as it provides better products and services for the customers and in turn, it

enhances the representation and brand-value of corporation in market. There is a general

standard quality expected but, if business wants to achieve dominance in the market,

improving the value of raw materials surely helps the company to create better products. By

gratifying the suppliers, company can improve association with suppliers and may make

partnership with them. Suppliers feel belongingness in the direction of company and provide

services at priority basis to company.

The business policy towards suppliers is to practice carrot and stick policy. For the

improvement in quality, organization rewards the suppliers frequently but for poor quality, or

for poor delivery, company punishes the suppliers as well. The punishment is just a symbolic

financial penalty but it helps corporation to tell again suppliers that corporation is not

satisfied with the excellence and service of suppliers.

These factors are well considered by the Dominos and therefore the logistics operation is well

performed. Company has been able to manage cost cutting in the supply of essential products
DOMINOS PROCUREMENT STRATEGY 6

to the franchises. The logistics model that is adopted by the company has served various

benefits to it such as lower transportation cost, economies and scale and cheaper

procurement. It has successfully removed the duplication efforts in procurement and

processing of materials. The old model of the company did not provide greater economies of

scale by adding new outlets but the new model has offered this benefit. According to the

availability of raw materials, Dominos look for those areas where cheaper sources can be

obtained and the same practice is applied in Indian logistics system of company. Specialty

crops of each region are identified by company. Commissary in eastern region buys tomatoes

and processes them. Similarly the northern commissary delivers pizza bases. Dominos has

successfully address the issues of duplication as well as dangers of perish ability by adopting

such a system for company (Shaikh, n.d.). These factors suggest that supply issues are

effectively tackled by Dominos.

Part 2: Operations issues

Supply related issues and opportunities for company and industry

Dominos sales market identification and descriptions as well as the key customers of

company

The sales market of Dominos is spread all over the world. Its system sells more the 500

million pizzas globally. It has currently 5000 stores and it is spread over 80 international

markets (The world leader in Pizza delivery, n.d.).

in united states it has 5371 stores. In India it has 1106 stores. In united kingdom, company

has 947 stores. In Mexico, it has 655 stores. In Australia, it has 623 stores, in turkey, it has

477 stores, in south Korea, it has 433 stores, in Canada, it has 438 stores, in Japan, it has 472
DOMINOS PROCUREMENT STRATEGY 7

stores and in France it has 325 stores. The findings reveals that company has the worldwide

presence.

The market of Dominos show that it targets mainly youth people for eating pizzas as well as

families. Company has segmented the market as class I, class ii and metros as well as small

towns. The age of customers are generally from under age 13 years to 50+. According to age

range such as under 13 years, 13 to 21 years, 21 to 36 years, 35 to 50 years and 50+ years

people, company has introduced various products. dominos pizza generally targets families

that goes out for the dinner once in a week. Company targets the school teenagers because the

spending habits of college people suggest that they spent heavily on non-essential products.

Pizzas are delivered to customers through home delivery option as well. positioning of

company suggest positioning based on uniqueness and tastes and company promotes different

varieties. There are not many operational issues prevalent for company as the findings show

superior performance by company. Its financial performance and expansion of stores are

main evidences that confirm that the operational issues are effectively handled by company.

Demand forecasting method

Food industry generally considers the trend projection method for forecasting. This method

consider that previous trends would be continues to play significant role in demand of

product. The time series analysis is performed and linear trend, exponential trends, and other

trends are identified for sales forecasting (Trend Projection Method, n.d.). the same method is

applied by the Dominos company. along with this, it may uses one number planning for

better coordination. This coordination is reflected by supply chain management, marketing

and sales department predictions and finance department prediction about the profit and

return on assets.
DOMINOS PROCUREMENT STRATEGY 8

Part C: informational issues

Collaborative practices of Dominos for Supply chain

Company has used prescient distribution planning suite for management of inventory and

demand planning. For advanced time phase replenishment it has used this tool. It also assists

company in optimized order management as well as forecasting and promotion planning. One

particular example of collaborative effort is staggered receiving. In this system, company is

able to sort out the issues of lack of supply at right time. This new optimized order logic

allows dominos to pick one truck per day. The prescient planning suite provides instructions

to the inventory department, production department or suppliers by getting feedbacks from

the retail stores. The success that company derives from using the prescient automation

system allows the planners to consider towards strategic decisions. Due to this efficiency,

Dominos is able to provide 24 hour service guarantee (Planning, Sourcing, Replenishment

Are Easy as (Pizza) Pie, 2008).

The findings show that information issues are effectively tackled by company as it has

introduced a system of staggered receiving in USA.

Particular method assessment

One particular method that enhances the supply chain visibility to customers is use of tracker

that shows food preparation and process of delivery to the customers. In that order placement,

food preparation, baking, boxing and packaging and delivery en-route are shown to the

customers (What can Dominos Pizza Teach us About Supply Chain Visibility? 2008). this

fact reflects transparency in supply chain of Dominos.

Part D: Integration Issues

Integration issues and practice of triple a model

DOMINOS PROCUREMENT STRATEGY 9

The integration issues of supply chain activities with other departments are amply considered

by Dominos. It has provided the tools to integrate different activities of supply chain

network and its integration practices are determined by triple A model. triple A model

considers that there should be agility in supply chain system. Great companies are able to

create such supply chain that respond to the unexpected and sudden changes in the marketing

demand. Demand and supply varies greatly in the industries and agile supply chain network

respond in cost effective manner. Dominos has achieved the agility factor in supply chain

network by following these principles to avoid the bullwhip effects. It has improved

connections with suppliers and marketers as well as sales force team to predict the demand

and supply more quickly. It has improved collaboration with the suppliers as the Indian

operation of Dominos indicates. In short term horizon agility assists company to monitor the

demand and supply factor very well that Dominos has achieved fairly well.

The second factor is adaptability that the 3A model refers (Gilmore, 2009). Adaptability has

strategic orientation. Adaptation may be thought but it offers sustainable advantages to the

company. on this scale, companies generally monitor global supply chain economies, do

outsourcing, supply chain impact is well understood and companies make different supply

chains for different market. the analysis of Indian market and American market in this report

suggests that Dominos has achieved the adaptability factor in its supply chain network.

But the third factor that is alignment factor may not be easy to be practice by Dominos.

Alignment factor suggests that all companies involved in supply and production of raw

materials and finished products must be aligned towards the needs of principle company.

Dominos has an upper hand over the suppliers as suppliers generally do not have much

bargaining power against the big brands therefore Dominos to a certain extent achieved the

factor of alignment as well but not completely

DOMINOS PROCUREMENT STRATEGY 10

The Analysis shows that Dominos supply chain network is very effective in terms of

delivering the required efficiency and economies of scale and integration issues are nor

prevalent for Dominos. But the same may not be true in terms of sustainable procurement

policies.

Part E: Sustainability issues

Sustainable procurement policies and performance of Dominos

Sustainable procurement policies consider not only the economic values to the organization

but the environmental and social implications as well. according to the Australian

government procurement guideline, core principle of sustainable procurement is value for

money that considers all important financial and non-financial costs as well as benefits over

the complete life of procurement. Sustainable procurement demands that strategies must not

promote unnecessary consumption, must minimise the environmental impact over the life of

services and goods, must foster innovation and ensure fair and ethical sourcing practices.

The report about the dominos Pizza indicates that Dominos is not involved in ethical

sourcing and procurement of products and services because it has achieves E-label for its

Pizza. There is no concrete policy is established by the Dominos regarding the

environmental initiatives, climate or labour conditions therefore there is a need to have more

transparency in this regard that Dominos currently does not offer. This reflects that key

sustainable procurement policies may not be practiced by company.

Dominos has to take pro active steps to address the sustainability issues that it is currently

facing.
DOMINOS PROCUREMENT STRATEGY 11

References

Kohnen Bill, (2014). How Should Suppliers be Penalized for Late Deliveries or Poor Quality.

Retrieved from

http://www.slideshare.net/wkohnen/how-should-suppliers-be-penalized-for-late-deliveries-or-

poor-quality

What can Dominos Pizza Teach us About Supply Chain Visibility? (2008). Retrieved from

http://blogs.opentext.com/what-can-dominos-pizza-teach-us-about-supply-chain-visibility/

How sustainable is Dominos Pizzas? Retrieved from

https://rankabrand.org/restaurant-chains/Domino%27s+Pizza

Gilmore Dan, (2009). A "Triple-A" Supply Chain. Retrieved from

http://www.scdigest.com/assets/FirstThoughts/09-04-23.php

Forecasting & planning in the Food Industry a recipe to make it light (n.d.). Retrieved from

http://www.eyeon.nl/documenten/whitepapers/eyeon_wp_forecasting_planning_in_the_food

_industry.pdf

Planning, Sourcing, Replenishment Are Easy as (Pizza) Pie, (2008). Retrieved from

http://www.supplychainbrain.com/content/industry-verticals/food-beverage/single-article-

page/article/planning-sourcing-replenishment-are-easy-as-pizza-pie/

Trend projection method (n.d.). Retrieved from

http://businessjargons.com/trend-projection-method.html

Number of Domino's Pizza stores in selected countries worldwide from 2010 to 2016* (n.d.).

Retrieved from

https://www.statista.com/statistics/207130/number-of-dominos-pizza-stores-worldwide-by-

country/

International (n.d.). Retrieved from

https://biz.dominos.com/web/public/international
DOMINOS PROCUREMENT STRATEGY 12

TONY LIM SWEE KING, (2005). The Use Of Internet In Supplier Selection Process And

Managerial Performance In The Northern Region Of Peninsular Malaysia . Retrieved

from

http://eprints.usm.my/25852/1/THE_USE_OF_INTERNET_IN_SUPPLIER_SELECTION_P

ROCESS_AND_MANAGERIAL_PERFORMANCE_IN_THE_NORTHERN_REGI

ON_OF_PENINSULAR_MALAYSIA.pdf

Supply chain camparison McDonalds, Dominos, Pizza Hut, and India. Retrieved from

https://www.scribd.com/doc/25752405/Supply-chain-Comparison-McDonalds-Dominos-

Pizza-Hut-India

Jones Adam, (2015). Dominos Pizza three business segments perform best. (n.d.). Retrieved

from

http://marketrealist.com/2015/03/dominos-pizza-three-business-segments-performs-best/

Shaikh Rumana. Dominos India supply chain case study (n.d.). (n.d.). Retrieved from

https://www.scribd.com/doc/100052531/Dominos-India-Supply-Chain-Case-Study

Veg Pizzas (n.d.). (n.d.). Retrieved from

http://www.dominos.co.in/menu/veg-pizzas