case analysis

DOMINO’S INDIALOGISTIC

MANAGEMENT

PRESENTED BY:-

SHEEL PRIYA KUMARIROLL NO. - 0906247011

ABSTRACT• The case gives an overview of Domino's

revamped supply chain operations in India.

• It discusses the various benefits of the new logistics model and discusses the reasons for the revamp.

• The benefit of low costs achieved through the new model was passed on to the customers in the form of lower prices.

• The case also compares Domino's new supply chain model with McDonald's supply chain model.

INTRODUCTION TO THE CASE

• Pawan Bhatia became CEO of Domino’s Pizza India in Nov 1999.

• Started reworking on pizza chain’s India strategy.

• Planning to open 150 new outlets by the end of 2002 covering 23 cities including Bhubaneswar.

• In late 1999, Indocean Chase, the private equity fund bought a 25% stake in Domino's operations in India from Domino's franchise in India.

• Domino's planned to go in for an initial public offering (IPO) in the next two years.

• Indocean Chase advised Domino's to go beyond its 16 outlets in Delhi to exploit the potential in the pizza delivery business.

• Analysts felt that Domino's had to rethink its supply chain operation because it was the biggest area of costs.

• Since 75% of Domino's customers ordered either from office or home, it did not have to lease large plots of land in prime locations to attract traffic.

• Instead, it needed an efficiently managed call centre to bring better returns.

Analysis of the Domino’s supply chain and its comparison with McDonald's supply chain model.

DOMINO’S PLAN

• Domino's revamped its entire supply chain operations:-

from sourcing raw materials to shipping themfor processingat a central location todelivering it to the customer.

• It had three self-contained commissaries in New Delhi, Mumbai and Bangalore which:-

bought their own wheat ,tomatoes & other ingredients, processed them, thendelivered them in refrigerated trucks to each outlet.

McDONALD’S PLAN

• McDonald’s took 4 years and around Rs 450 crores to set up the food supply chain even before opening its 1st restaurant.

• McD India has pioneered the cold chain management system.

• They provided assistance in the:-

Selection of high quality ingredients Drip-irrigation technologyRefrigerated transportation styleFully automatic international standard processing facility.Network of milk collection centre equipped with bulk coolers.

• Analysts felt that Domino's took a cue from McDonald's supply chain model.

• They opined that the level of complexity in McDonald's system in India was not as high as that of Domino's.

• McDonald's operations are not as spread out as Domino’s.

• They are in four cities while Domino’s in 16. Centralizing wouldn't work on such a geographical scale."

DOMINO’S LOGISTIC MODEL

•In early 2000, Domino's came out with its own logistics model.

•Domino's purchased wheat for making the pizza dough.

•Domino's first decided the procurement strategy for its key raw materials: wheat, baby corn, tomatoes and spices.

• Wheat was cheapest in Jalandhar's (Punjab) wholesale markets.

• Domino's refrigerated trucks got the wheat back to the commissary in Delhi.

• Commissary processed the wheat and prepared the pizza dough.

• The pizza dough and other items prepared in commissaries were then sent to the retail outlets again in refrigerated trucks.

• The temperature inside the truck was fixed based on the distance between the retail outlets and the commissaries.

• This was to set the dough at a particular level when it reached the outlets.

• The retail outlets had to use up the processed dough within three days of delivery.

• If they failed to do so for some reason the entire quantity was discarded.

• To get to Jalandhar, the trucks had to pass Chandigarh,Domino's opened an outlet there.

• The cost of entry was low because there was no additional costs incurred on transportation of products.

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