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Dominos LLC
Prepared by Group 8
Achyut Gandham
Anuj Wilson
Biranchi Tripathy
Sudarshan Garg
Wisallaya Thaithammayanon
Zafar Shah
Table of Contents
2 Operations Strategy...............................................................................................5
2.1 Introduction...............................................................................................................5
3.1 Introduction.............................................................................................................13
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4.4.1 Process.. 24
4.5.1 Process25
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7.1 Introduction.............................................................................................................31
8.1 Introduction.............................................................................................................34
10 References ............................................................................................................36
1 Executive Summary
This report has been prepared to analyse the processes and strategies such as
control of operations systems, design and planning of Dominos LLC. Theoretical
frameworks have been applied to evaluate the companys operational strategy in
terms of it product and service offering. While the report considers Dominos LLCs
overall strategy, it also focuses on the daily operations of Dominos DPG franchises.
Particular focus has been placed on the daily operations processes of the Dominos
store located on Alexandra Parade in Glasgow, UK. The report is a result of team
research, case study analysis, a store visit, interviews and insights from Dominos
existing employees, application of theoretical concepts, models and prior experience.
The study evaluates how Dominos has been able to position itself as a leader in its
market segment and analyses the strengths and weakness in the companys existing
strategy. Upon dissecting various aspects of the companys processes, it provides an
appreciation of the companys efforts to continuously evolve in the changing market
conditions by incorporating new product design and being innovative to stay at par
with its competition.
Finally, upon identifying the areas of improvement in the companys existing strategy,
the report proposes changes and recommendations that can be incorporated in order
to further ensure operational efficiency thereby maximizing profits and increasing its
value offering.
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2 Operations Strategy
2.1 Introduction
Dominos is one the leading pizza delivery companies globally. The Company has a
unique business and operation model and is a pioneer in the fast food industry. Since
1960, Dominos Pizza has successfully expanded from three outlets in the US to
9,350 stores operating in seventy countries. Dominos operation in the UK and
overseas uses the franchise model. The parent company, Dominos Pizza LLC is
head quartered in Michigan, USA. It maintains overall control on the sourcing and
supplying of raw materials to the master franchises and enforces quality of the service
and products sold.
Figure 1 show the structure of the Dominos franchise model in the UK.
Dominos Pizza
LLC
Master Franchise
Sub- Sub-
Sub-Franchisees
Franchisees Franchisees
A clear corporate vision ensures that the company and its franchises can work
towards meeting common goals thereby increasing its business in a potentially
virtuous cycle. Figure 2 show the graphical representation of the Dominos Vision. The
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overall global vision translates into specifics at a country level in a seamless manner
so that the overall strategic vision is kept in mind at all times.
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Unique Supply
chain model :
Better quality
& consistency
Focussed on Unique
Dominos Competitive GLOBAL
the core
competency advantage - Global model: Allows
of delivery leader in Pizza take flexibility at
away / home delivery the regional
level
Leaner Stores
: Better
operating
margins
Dominos has focused on these key customer needs throughout the value chain, and
has not allowed any digressions in this area unlike other competitors who have
evolved a mixed model of full service restaurants and takeaway outlets, or a hybrid
combination of both. This has diluted their strengths in the segment Dominos focuses
on - Takeaway / Home delivery. Its global operational model allows for lean stores,
well-trained staff and flexibility at a country level to customise menus to suit customer
tastes. Operational requirements have prompted the use of technology to make the
customer experience more enriching, it has a history of firsts they were the first to
use TV as a distribution channel, an online tracking system that allows customers to
track the pizza order and a proprietary point of sale system. A combination of the
Company level strategy and the Operational Strategy has resulted in Dominos having
a reputation for reliability and consistent pizza quality) these strategies have
ensured that Dominos continues to meet its customer needs.
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Customer Need :
Dependable takeaway
restaurant : Hot Food
delivered reliably
Operational Strategy :
Global Strategy : Innovative use of
Franchise model, Lean technology to ease the
Stores, Investment in transaction, Well
Staff, Robust quality trained staff with local
control knowledge
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2. From a global perspective, it ranks 12th among all the top food chains in world.
Other snacks joints and coffee shops are a long way ahead. Figure 8 shows that
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Dominos needs to implement some new strategies in order to rank itself higher
relative with other food chains.
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It is useful to analyse the companys product performance and use it to evaluate how
successful the product has been, this sets the stage for Dominos product redesign.
Idea Generation phase - The concept of pizza had been around for a while and
was adopted by Dominos in the 1960s. It started from USA and then established
its stores in UK and other parts of the world, which were controlled by the USA
headquarters.
Concept Development phase - The concept of pizza took a concrete hold in the
market. Local franchisees took over the existing stores in UK. There was a
paradigm shift as the online ordering and interactive TV ordering replaced the
traditional methods. This period witnesses a substantial rise in sales.
Production phase - The existing pizza phenomena continued for two decades
until there was a sudden decline in sales in 2009. "The fact is, we love our pizza,
but as times change, so do consumer tastes," said Russell Weiner, Domino's
Chief Marketing Officer.
Service -There was nearly 80% change in existing menu. New items like oven-
baked sandwiches and crunch cakes were introduced to the stores. The 30-
minute delivery doctrine was highly stressed upon. Also, Dominos launched new
iPhone apps and the pizza-tracker to maximize its services.
Withdrawal Since the new consumers needed freshness in Dominos menu.
The company addressed this decline in sale by analyzing its failed product and
re-designing its core product. Figure 11 below show the breakdown of product
life cycle at Dominos.
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Customer as user Product Blind taste test to ensure taste and quality
testing compared to competitor.
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4 Process Design
4.1 Product Service Continuum
Dominos as an entity is rather unique in that it straddles both the product based supported
by a service package and Service based with a product element in the Product-Service
continuum.
Dominos is also in a unique position when it comes to the product they manufacture:
Volume: High volume the overall volume justifies modern kitchens and trained staff who
operate the kitchen and the front desk.
Variety: While the overall products are standard (pizzas), the customers might, based on their
own preferences ask for certain toppings to be added or removed which means the system
needs to cope and be flexible.
Variation in demand: The order volume peaks during lunch and dinner times. Alternatively,
there are periods in the day where the demand is low.
Degree of visibility: This varies from very high to low, given the open kitchen format that
Dominos has adopted, a customer choosing the takeaway format has full visibility of the
production process while a customer choosing the home delivery option has no visibility until
such time the product reaches his doorstep.
Dominos has chosen a unique Product / Service mix that reflect in the production line method
the company follows.
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Given that the pizzas and other items need to be prepared with a high degree of consistency,
Dominos has chosen to use the assembly line approach to produce its pizzas, while at the
same time they have retained the flexibility of a batch flow process. Essentially, the production
process at a Dominos kitchen utilizes the consistency and efficiencies that comes from using an
assembly line approach while retaining the flexibility that comes from adopting a batch type
manufacturing process. It is useful to note that using the assembly line approach also gives a
Dominos outlet the flexibility to meet higher volumes during peak hours. Dominos calls the
assembly line the make line.
Step 1: The customer initiates the order. It could be through the phone, internet or a walk-in to
the restaurant.
Step 2: The Dominos representative takes the order and enters it into the Dominos PULSE
system (a proprietary system that streamlines the order taking process).
The PULSE system increases efficiencies at a store level. The key functions of this system are:
(a) Touch screen ordering: Improves order taking accuracy and efficiency especially
during busy periods.
(b) Delivery driver routing system: Improves delivery efficiency.
(c) Improved MIS capabilities.
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Step 3: The order displayed on the screen on the assembly line along with the customers
specifications.
Step 4: One of the team members in the assembly line picks up the work order, prepares the
dough and applies the sauce and cheese accordingly.
Step 5: In the next step of the make line another team member add the appropriate type /
amount of toppings, and then places it into the oven.
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Step 6: After the allotted baking time, a third member of staff removes the pizza from the oven,
and places it in a box (which has the order type & number displayed to ensure accuracy of
delivery). The pizza is then ready for delivery.
Step 7: The pizza box is put into a hot-bag and is dispatched through a delivery driver or
handed out for collection by the waiting customer.
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The following figures further illustrate various aspects of Dominos operations. Figure
below establishes the entire value chain until delivery.
Pizza
Personal
Small
Medium Personal
Large Box
Side Orders Small
Chicken Box
Phone
Strips Placed Medium
Order Web Assembly
Chicken Cooking in Packing Box Sales Delivery
Placed Collecti Line
Dunkers Oven Large Collection
on
Potato Box
Wedges Side
Chicken Orders
Wings Boxes
Drinks
Ice-
creams
Master Franchise Dough production, ingredients and equipment purchasing and supply,
training, operations, IT, marketing, PR, finance, HR, property, franchise
Support Services sales, leasing, transport, warehousing and administration.
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Dominos adopts a process dominated store layout wherein common processes are
clubbed together as the product moves between stations. The integrated floor plan at most
Dominos stores facilitate the movement of products and team members between stations
to manage capacity during peak hours and minimize bottlenecks.
The store layout is designed to cope with the average peak hour movement of goods and
people. The storage area is setup to stock the ingredients for three days. The layout
design enables the optimal use of space and equipment thereby enhancing the skills and
efficiency of the team members, it also allows them to adapt to different level of production.
Dominos also ensures that the health and safety norms are adhered to in order to maintain
safe working conditions for the staff. The standardization of the surface materials for the
interiors across all its stores in UK provides a comfortable environment for the staff and the
customer and enforces the brand image.
A typical Dominos store layout includes the following: Reception, Assembly Line, Oven
Packing area, Office, Cold Storage, and Washing Area. Figure 22 shows the typical layout
of the Dominos Store.
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Cold Storage
Office
Oven Assembly
Line
The above two reasons tend to cause inefficiencies in the make line and results in
bottlenecks, especially during peak hours in the evenings.
Another major concern facing the local Glasgow franchise is that the drivers are not
equipped a GPS based navigation system, efficient on-time deliveries are primarily
dependent on the topographical knowledge of the individual drivers and once again, it is
left to an individuals capabilities to ensure on time deliveries, which account for 70% of the
total sales.
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It is understood that the given the limited space only one oven with two conveyor belts can
be accommodated. This creates a serious bottleneck when the conveyor belts of the oven
fail or if the oven breaks down. Primary investigation suggests that during peak hours the
demand is significantly higher than the capacity of the oven resulting in severe delay in
service times.
Additionally, there is no dedicated parking for the delivery driver in the proximity of the
store. This results in illegal parking in the loading areas in front of the store and the Co-op
Parking. This creates serious hazardous conditions for the drivers and other road users in
the proximity for the store with series legal implications.
The oven needs to be re-located to make it safer for the team members to work in the
area. This is especially important from health and safety point of view during busy hours.
The parking for the dominos delivery drivers should be clearly marked. The drivers must be
restricted from using the loading area to eliminate the potential hazardous conditions.
Given these changes to the store structure, and operational aspects, we believe that the
store can create a healthier, more efficient atmosphere within the store, and drive up
efficiencies across the value chain.
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The prescient-planning suite monitors inventory and determines when a distribution centre
needs a product. It optimizes the orders by looking at the minimum material required for
each product, based on the existing inventory levels at the distribution centre.
The planning suite receives requests from its retail stores through the companys
PeopleSoft Enterprise Resource Planning (ERP) system; it aggregates these requests to
establish replenishment requirements. It also considers any constraints such as dollar
amount per purchase order the next order is then based on the prior order.
marketing department that is likely to influence the new promotion. Based on this data, it
provides recommendations for promotion adjustments.
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Paradigm Innovation
Position Innovation
Process Innovation
Product innovation
As shown in the Figure 25 below, each of these are at times a combination of Market
based, Eureka and Resource Based sources of innovation. Each area is examined in detail
below.
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put, the need for a new more effective innovation approaches to save cost and time
resulted in this strategy.
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This entity supplies to all the master franchises effectively giving the company a few key
advantages:
(1) With a centralized buying department, the company is able to leverage its buying
power, and is able to negotiate the best costs for its purchases. This also ensures
purchases on a scale which makes suppliers want to tie into the Dominos supply
chain services. For instance Coca-Cola is integrated into Dominos supply chain
network, and is seen more as a partner rather than a supplier; this was made
possible because centrally Dominos has agreed to only sell Coca-Cola products at
all its outlets around the world.
(2) Consistency and Quality of products across the board- Since the sourcing is
centralized, this ensures consistent quality of food products used, and similar
machines / kitchen equipment that make training easy for staff.
(3) Economies of scale: Dominos is also able to use its large buying power to hedge
better costs when commodity prices fluctuate, it also gives it a better bargaining
power with suppliers.
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Farmers Producers
Dominos Commissaries
C C C C C C
(4)
Even at a master franchisee level, Dominos has been able to standardise and centralise
the supply chain services. Taking the UKs supply chain as an example, we look at the
country level supply chain works:
(1) All the raw materials and food stuffs (dough, ingredients) are prepared at a central
commissary in the UK located at Milton Keynes.
(2) The commissary, then supplies to distribution centers which are located in Milton
Keynes, Penrith and Nass.
(3) The distribution centers then supply to the individual stores once in 3 days (to
ensure a JIT philosophy) it could be on a more need basis, and this is tracked by
the PULSE system which keeps track of stocks at an individual store level.
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8 Quality Management
8.1 Introduction
Quality of products and service is very essential to for Dominos to maintain its brand image
and reputation as a company that serves quality products; this becomes even more critical
considering the fact that pizza is often stereotyped as an unhealthy food.
Dominos Pizza Group has a documented Supplier Approval Procedure in place. Dominos
is in agreement with all suppliers of food ingredients and packaging to a detailed product
specification for the products supplied. This is reviewed by a Food Technologist to ensure
that the product is safe, legal and consistently of high quality.
Dominos ensures that all food products are risk assessed and their production is either
audited by Food Technologist or is certified to the BRC Global Standard for Food Safety. A
database of Dominos approved products and suppliers is maintained. Suppliers are
continually assessed in various ways. Quality checks carried out on delivery, samples sent
for analysis or feedback received from stores or consumers.
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As a company, Dominos has in the past shown resilience and an ability to innovate in the
face of competition, but this has been more push-based rather then pull-based. Dominos
has shown the ability to innovate but it has been more as a catch-up and not as a more
intuitive customer led change. The reworking of the recipe in the US market in 2009 was a
brilliant test case in a company reacting to change, and Dominos had to do this because it
was losing market share to other competitors, and there was consistent negative feedback
from US customers on the poor quality of its pizzas.
Dominos needs to drive changes more intuitive and customer led, rather than use one
successful operating model in an unchanged manner, it needs to make adjustments to it
when needed rather than just go in for one overall revamp.
In response to a potential threat from other fast food companies Dominos is expanding its
product base - the Dominos Sub sandwich is an example of Dominos moving away from its
core-value proposition. This has some potential drawbacks such as complicating the
supply chain networks, potentially increasing cooking times and thereby increasing service
delivery times. If Dominos manages this expansion well, then it can add to its product
offerings while leveraging its core strengths, which might increase its market share.
A big threat for Dominos is that it is a service entity but it has adopted a product
manufacturing approach. The companys key focus areas have always been to deliver
pizza on time. Over time, Dominos has not been focusing on its service aspect, and in a
increasingly customer centric world it is critical that Dominos improves its hiring / training
practices and deliver world class customer service along with the best in class product that
it currently offers.
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10 References
1. Charlene Li, Harvard Business Review: The Art of Admitting Failure, 2011
http://blogs.hbr.org/cs/2011/03/the_art_of_admitting_failure.html
3. Geoff Riley, Dominos Pizza - Growth & Strategy (Part 2) - Innovation, Service
and Smart, Operations, 2010
http://tutor2u.net/blog/index.php/business-studies/comments/dominos-pizza-
growth-strategy-part-2-innovation-service-and-smart-operation/
4. Dominos Corporate profile
http://phx.corporate-ir.net/phoenix.zhtml?c=135383&p=irol-homeprofile
7. Stephanie Clifford, The New York Times, Video Prank at Dominos Taints
Brand, 2009
http://www.nytimes.com/2009/04/16/business/media/16dominos.html
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