Operations Management Assignment Dominos PDF

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Operations_Management_Assignment_Dominos. Operations and Supply Chain Management (OSCM) includes a broad area that covers both manufacturing and service industries....

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Operations Management Assignment Dominos LLC

Prepared by Group 8 Achyut Gandham Anuj Wilson Biranchi Tripathy Sudarshan Garg Wisallaya Thaithammayanon Zafar Shah

MBA Challum 2011/12 9th December 2011 Word Count – 5,970

Operations Management Assignment

Table of Contents Table of Contents .............................................................................................................i 1

Executive Summary ...............................................................................................4

2

Operations Strategy...............................................................................................5

2.1

Introduction...............................................................................................................5

2.2

Corporate Vision ......................................................................................................5

2.3

Global Strategic objectives ......................................................................................6

2.4

Order qualifiers, Order winners ................................................................................6

2.5

The Core Competencies of Dominos ......................................................................6

2.6

The Value Chain ......................................................................................................7

2.7

Product value chain .................................................................................................8

2.8

Operations Strategy Implications (Store Level) .......................................................9

2.9

Competitor Analysis ...............................................................................................10

Figure 7 Dominos versus its Competitors (UK) ..............................................................10 3

Product & Service Design ...................................................................................13

3.1

Introduction.............................................................................................................13

3.2

Product Life Cycle ..................................................................................................13

3.3

Failed Product and Product Re-design: ................................................................14

3.4

Operations Challenge of the Product/Service Mix ................................................16

4

Process Design ....................................................................................................17

4.1

Product Service Continuum ...................................................................................17

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4.2

The Conversion Process........................................................................................17

4.3

The Production Process.........................................................................................19 4.3.1 Store Layout…………………………………………………………………….. 23

4.4

Suggested Areas of Improvement .........................................................................24 4.4.1 Process ………………………………………………………………………….. 24 4.4.2 Store and Production Layout………………………………………………….. 25

4.5

Proposed Improvements ........................................................................................25 4.5.1 Process……………………………………………………………………………25 4.5.2 Store Layout…………………………………………………………………….. 25

5

Planning and Control...........................................................................................26

5.1

Goldratt‟s Theory of Constraints (TOC) applied to Dominos: ...............................26

5.2

Demand Forecasting..............................................................................................27

5.3

Promotions Planning ..............................................................................................27

6

Innovation and Improvements............................................................................29

6.1

Paradigm Innovation ..............................................................................................29 6.1.1 Radical innovation: Need pull…………………………………………………..29

6.2

Position Innovation.................................................................................................30 6.2.1 Radical innovation: Eureka moment…………………………………………..30

6.3

Process Innovation ................................................................................................30 6.3.1 Radical innovation: Need Pull & Eureka moment……………………………30 6.3.2 Incremental innovation: Need Pull……………………………………………. 30

6.4

Product Innovation .................................................................................................30 6.4.1 Radical innovation: Eureka moment…………………………………………..30

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6.4.2 Incremental innovation: Need pull: Knowledge push………………………..30 7

Supply Chain Management .................................................................................31

7.1

Introduction.............................................................................................................31

7.2

Dominos Supply Chain ..........................................................................................31

7.3

Critic and recommendations ..................................................................................33

8

Quality Management ............................................................................................34

8.1

Introduction.............................................................................................................34

8.2

Quality Assurance and Quality Control..................................................................34

8.3

Critic and recommendations ..................................................................................34

9

Conclusion and Recommendations ..................................................................35

10

References ............................................................................................................36

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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 company‟s operational strategy in terms of it product and service offering. While the report considers Dominos LLC‟s 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 company‟s existing strategy. Upon dissecting various aspects of the company‟s processes, it provides an appreciation of the company‟s 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 company‟s 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

SubFranchisees

SubFranchisees

Sub-Franchisees

Figure 1: Domino's Franchise Model: UK

2.2 Corporate Vision The Dominos Corporate Vision statement focuses on the following key areas:    

Being better than the competition. Ensuring a quality product. Providing excellent service. Creating lasting relationships with its employees and the communities within which it operates.

Passionate about

Passionate about Quality

winning Passionate about Service

Passionate about relationships

Figure 2 Corporate Vision: Dominos

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 © Challum Group 8

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Operations Management Assignment

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. 2.3 Global Strategic objectives Strategic objectives adhere to the company‟s vision statement, Dominos‟ key strategic objectives are:     

Targeted international growth – competitors. Menu expansion, vary price points, 24 hour delivery model – competitors. Use Company owned stores in the US and Australia as a test bed for new innovations – IT Strategy. Increase investment in training and auditing of stores to provide a consistent service and good quality of products – Human Resource Strategy. Allow master franchisees to apply their knowledge of the local market and cuisines – Knowledge Management Strategy.

2.4 Order qualifiers, Order winners Order qualifiers are the basic criteria the product meets to quality for selling. Order winners are the criteria that win the customers when it comes to purchasing. Figure 3 shows the order qualifiers and order winning criteria‟s for Dominos.

Order Qualifiers for a customer ordering take away : Convenient : Tasty : Quick : Cheap

Potential Order losers : Inconsistent taste : Delay in delivery : Poor quality of food : Pricing at a premium

Order Winners for Dominos : Core competency on Delivery : Consistent quality : Delivered with no delays : Wide variety on menu : Tasty

Figure 3 Order Winner and Order Qualifiers: Dominos

2.5 The Core Competencies of Dominos Dominos‟ core competencies have evolved over time. Their unique sets of strengths have helped the Company dominate the pizza food service industry, and a leader in the home delivery / take away.

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Unique Supply chain model : Better quality & consistency

Focussed on the core competency of delivery

Dominos Competitive advantage - Global leader in Pizza take away / home delivery

Unique GLOBAL model: Allows flexibility at the regional level

Leaner Stores : Better operating margins

Figure 4 Core Competencies: Dominos

2.6 The Value Chain It is important to consider how a customer need drives Dominos to create the product. The customer need that drives the entire value chain is the need for a dependable take away restaurant, reasonably priced hot quality food and variety that suits the local palette. 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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Process Flow & Infrastructure : Seamless from the customers point of view, centrally located stores

Custom Dependab restauran delivere

Global Franchise Stores, In Staff, Ro co

Operational Strategy : Innovative use of technology to ease the transaction, Well trained staff with local knowledge

Figure 5 Customer Value Chain: Dominos

2.7 Product value chain Figure 6 illustrates Porters model, which depicts Dominos‟ operations as a collection of value-adding activities. The five primary activities are processes that are mainly concerned with the production of the products and services to the external customers. These are necessary to the business processes. The activities indicated as support activities are activities that are vital for the development of the appropriate transforming resources. These can be looked as value adding activities, for instance incorporating the use of technology such as being able to place orders by text message add to the convenience Dominos provides and increases the accuracy of order. All these constitute the business processes of the organization.

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Figure 6 Product Value Chain: Dominos

2.8 Operations Strategy Implications (Store Level) Dominos operations strategy mainly focuses on the providing high service quality to the customer: 1. Minimize operations cost: To minimize the operating cost by improving the efficiencies and process at the stores. 2. Strategic store locations to facilitate the delivery service: To leverage the strategic location of the store in order to facilitate quick service to the customer and maximize the revenue. 3. Production oriented store designs: To utilize the production oriented store design in order to facilitate efficient production and quick service to the customer. 4. Efficient order taking, production and delivery: To execute an efficient operational process that includes order taking, pizza preparation, cooking, boxing and delivery. 5. Use of Domino‟s PULSE point-of-sale system: Use of Dominos PULSE system to improve operating efficiencies, provide corporate management with easy access to financial and marketing data and reduce time consumption and expenses. 6. Product and process innovations: To promote an innovative culture that increases both quality and efficiency. 7. A focused menu: To maintain a focused menu that is designed to present an attractive quality offering to customers, while minimizing order errors, and expediting the order taking and food preparation processes. 8. A comprehensive store operations evaluation program: To utilize a comprehensive store audit program to ensure that stores are meeting both as the expectations of the customers.

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2.9

Competitor Analysis

Brand Shares of Chained 100% HD/TA 80 70 60 50 40 30 20 10 0

Figure 7 Dominos versus its Competitors (UK)

1. Dominos DPG is the leading player in home-delivery and take-away food services in the UK region (Figure 7). It has the highest market share when compared to other food outlets such as Yum! and Papa John‟s over the last five years. This is a huge contribution in sales due to the fact that no other pizza companies offer delivery as fast as Dominos (Order-qualifying criteria).

Figure 8: Dominos versus its Competitors (Global)

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.

Figure 9 Performance Prioritizing Curve

The Slack Model of Performance Prioritizing (Figure 9) would help Dominos in prioritizing its operational strategies based on the order-winning criteria and the current issues it faces in relation to the competition. A. Excess zone – Dominos invests in promotional strategy to a greater extent as compared to other food chain outlets. It offers many discount coupons to attract customers. Discount offers do help to some extent in attracting customers but too many discount and promotions tend to lower the brand image. So Dominos need to cut down some expenses in that section which will not affect its sales. B. Appropriate zone – Dominos has got an excellent unmatched home delivery service through which it stays ahead of its rivals. The ‟30-minute luxury‟ of Dominos has given the brand a strong image among the customers. This gives Dominos a clear balance between its competitors and customers. C. Improve zone – Dominos need to improve its product quality in order to maintain reputed. It needs to emphasize on the pizza quality and prioritizing all aspects that relate to the customer. For example, Pizza Hut specifies the calories consumption in each pizza as illustrated in Figure 10. This reflects the brand concern for the customer. So Dominos should also initiate some measures which would foster the „emotional connection‟ to its customers .

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Figure 10 Comparison to competition

D. Urgent action zone – In order to increase the service to customers, Dominos should ensure speedy delivery of pizzas to customers. For this, Dominos need to work on its existing process design. There should be enough space and staff for service and extra machines to handle any machinery failure during peak periods.

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3 Product & Service Design 3.1 Introduction Dominos has positioned and established itself as the pioneer in the...