Supply Chain: Domino’s Pizza

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Introduction

Effective supply chains help in providing a competitive advantage to the businesses and assist

in mitigating the risks which are associated with raw materials acquisition and delivery of

final products and services. Through effective supply chain management systems,

organisations are in a better position to reduce their overhead costs, waste, and shipping

delays in an organised manner (DeBenedetti, 2018).

In this regard, the following report is prepared to discuss the concept of the supply chain by

taking a specific example of Domino's pizza. This report provides a brief overview of the

company and highlights the key aspects of the company's supply chain and the challenges

that are faced in its supply chain.

Company Overview

Domino’s, earlier branded as Domino’s Pizza, Inc. was founded in the year 1960 is an

American based restaurant chain. The company is headquartered at Michigan and is one of

the largest pizza sellers in the world in terms of sales (Cision, 2016). The company has a

worldwide customer base and a variety of products which are prepared on the basis of region,

keeping in mind the demands of local customers.

The company has its presence in more than 85 countries and more than 15,000 stores

worldwide. The company has 1,117 stores operating in India, 5,399 stores in the US, and

approximately 965 stores operating in the UK (Domino’s, 2018). Considering the company’s

global sales, more than half of the proportion comes from outside the US. The company has

an employee base of 260,000 employees working worldwide who helps in producing more

than one million pizzas per day.

The concept of Supply Chain

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The supply chain is a system that includes people, organisations, information, activities, and

resources that are involved in moving a service or a product from the suppliers in form of raw

materials to the customers in form of end products.

The supply chain activities include all those tasks which are associated with the

transformation of raw materials into the final product which is available for final

consumption (Ackerman, 2007). In order to ensure that supply chain adds to the success of an

organisation, it is essential that it is carefully planned and designed which is unique for every

product and minimises the company’s costs and optimises its resources.

Organisations these days are ensuring not only effective supply chains for their operations but

also ensuring sustainability in their supply chains. This implies that organisations are

integrating environmentally sound choices in their logistics network so that the threats

pertaining to the environment, waste and other risks are minimised (Farahani, 2011).

Supply Chain of Domino’s

Being one of the leading pizza sellers across the world, the supply chain of Domino's is one

of the key aspects that has helped the company in capturing market share across different

countries. The top management of the company has not only ensured that the company has

key personnel and competencies for performing different tasks but has also ensured that the

supply chain of the company is cost-effective and resourcefully efficient.

Initially, the company had a simple supply chain model where it had self-contained

commissaries located at different locations. These commissaries bought their own raw

materials, which were processed and later delivered to different outlets through refrigerated

trucks. However, with the company’s vision to become the leading pizza seller, it had to

expand its operations in different countries which required revamping of its existing supply

chain.

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The current supply chain of the company is not only economical which takes the cost out of

the supply chain system but would also provide higher pricing flexibility in the market. The

entire supply chain activities of the company can broadly be classified into five stages, which

are discussed as below.

 Plan- This stage is the primary stage where planning for the entire supply chain is

planned and documented (Carter and Liane, 2011). Under this stage, the top

management of the organisation, Domino’s is involved in developing a strategy both

for regional and global levels to determine the manner in which the company’s

offerings would satisfy the demand of its customers. The company's officials ensure

that the activities across all the stages are not only integrated but are also focused on

yielding maximum profits.

Domino’s has developed a set of metrics that clearly defines different activities, key

people, and resources. With the improvisation of the existing supply chain, the focus

of the company during this stage was both- maximisation of the profit and reduction

of the cost at the same time ensuring sustainability of the entire chain.

 Develop and Source- under this stage, the focus of the company is on establishing a

good relationship with its suppliers from which it obtains raw materials for

production. In this phase, the company has identified not only dependable suppliers

from which it acquires raw materials such as wheat, onions, tomatoes and other

products but also has developed strategy concerning their delivery and payment.

The company has opted for both outsourcing and offshoring of its certain activities.

As the company operates in different countries, it offshores its activities within that

country (Domino’s Pizza, 2010). Similarly, instead of outsourcing its key functions,

the company has outsourced its non-core activities in order to minimise its costs and

optimise its resources (Quinn et al., 2001).

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 The main pillars for supplier’s selection for the company include innovation, quality,

and price. The company looks for those suppliers who are innovative in saving time

and cost, ensure quality raw materials, and provide competitive prices. For example,

in India, the company acquires wheat from Jalandhar which offers the cheapest and

quality wheat for its production (ICMRI, 2010).

 Make- This step is concerned with manufacturing the actual product in-house. It

includes employees actually preparing the products (pizzas and other food articles) at

the outlets. The company’s employees ensure that the products are made as per the

specifications given by the customer, concerning the ingredients and designing.

Moreover, the company also focuses on the ensuring the quality, packaging, and

delivery of the product. All the activities that are to be performed are scheduled in the

form of preparation, quality testing, packaging, and preparing it for the delivery. The

company also ensures to maintain a steady production output and employees’

productivity.

 Inventory and Delivery- The delivery stage, consists of both, inbound and outbound

logistics. In this case, the inbound logistics refers to the transportation of raw

materials from suppliers to the company’s outlets, whereas the outbound logistics are

concerned with delivering pizzas to the ultimate consumers.

The raw materials are brought in to the company’s warehouses, where they are stored

and fetched in different manufacturing and delivery outlets. These warehouses are

also the processing hubs where the raw materials are processed and made ready for

the manufacturing process. For example, the wheat is purchased and stored in the

warehouses, where it is also processed to make dough for the pizzas. This dough is

kept in the warehouses which is later on transported to the outlets (ICMRI, 2010).

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 While deciding on the economic quantity that is to be maintained at the warehouse

and outlets, the company takes into consideration various costs associated while

maintaining that inventory, such as handling charges, ordering costs, purchase costs

and others. Similarly, the company also chose warehouses and outlets considering the

costs, demand, location, and demand variability.

The employees of the company are committed to providing safe and excellent

consumer services. The delivery and service team working with the company assures

accurate inbound and outbound logistics.

 Return- There are various ways through which the company ensures the delivery of its

products to end customers. The most common way is through franchising, where it

allows customers to make online purchases or physical purchases. The online

purchases are followed by product delivery by the company's employees. The

company also have return policies if the pizzas are not delivered within the stipulated

time or the product is not found to be satisfactory (Domino’s Pizza Enterprises, 2015).

Challenges faced by the Organisation in its Supply Chain……….500

Recommendations

On the basis of the challenges faced by the company, the following recommendations are

made.

 Due to the rapid technological advancement, it is recommended that the company

leverages the use of data and technology while dealing with the customers

(Bodenhamer, 2017). This would not only enable effective relations with the

consumers but would also save time and efforts. For example, the company can make

use of the data available of the previous orders placed by the customers.

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  It is recommended that the company while communicating its values and culture to

the suppliers, the company should set a code of conduct with them. This would help

in reinstating the significance of sustainability in the supply chain of the company.

Conclusion

The supply chain has become an integral part of ensuring the success of an organisation. It is

a holistic network of different factors that are responsible for the movement of goods from

suppliers to the end customers. Domino’s has adopted an effective supply chain management

system which has ensured that the company’s resources are optimally utilised and the cost is

minimised. However, there are also certain sustainability issues concerning supply chain

which are to be considered in the future operations.

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References

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21st Century Managers. North Attleboro: DC Velocity Books.

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https://www.sdcexec.com/sourcing-procurement/article/12366442/3-steps-to-

improve-supply-chain-sustainability [Accessed on: 13 August 2018].

Carter, C.R. and Liane, E. P. 2011. Sustainable supply chain management: evolution and

future directions. International journal of physical distribution & logistics

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