FAST FOOD INDUSTRY

By:Abhinav khanduja Aayush sharma Nalini katiyar Mohit rathi Kriti singh Keshav kishore 208 209 215 220 236 261

OBJECTIVE
To study the operations and supply chain management of Mc Donalds and Dominos.

Flow of the presentation

Introduction. Mc Donald industry. Logistics of Mc donalds. Dominos. Logistics of Dominos. Recommadations. Conclusions. Refrences.

FAST FOOD INDUSTRY

Worlds largest growing food type. Industrial growth is 40% a year. The organized pizza market in India is worth about Rs.675 crore. Foreign investments are worth Rs.3600 million (1/4th total investment in this sector) McDonalds India is the market leader in this industry.

MAJOR PLAYERS

McDonalds History
It started as a drive-in-restaurant in the late 1940s. In 1966, McDonalds was listed on the New York Stock Exchange. In June 1967, McDonalds opened its first restaurant outside U.S in Canada. In 1996, McDonalds entered India in a joint venture. McDonalds now has a network of over 160 restaurants across the country

McDonalds System the Worlds Best QSR experience

World Market Leader in the QSR area (Quick Service Restaurant) Franchise System (75%) System employees: 1.6 million Customers Per Day: 58 million Corporate Strategy:
QSC&V: Quality, Service, Cleanliness and Value Plan To Win -> Successful business revitalization

PRODUCTS
Vegetarian Menu

Non-Veg Menu

McCafe

Desserts

McDonalds SUPPLY CHAIN

McDonalds Supply chain is based on the three-legged stool concept : Company Franchisees Suppliers Logistics
100 sales items in the restaurant 400 SKUs in the warehouse 200 restaurants per DC (~180 DCs globally) Delivery frequency: ~3/wk, higher in urban areas 2-3 stops per route Exclusive distributors (3PL) Strong quality focus (Cold Chain, HACCP, QIP)

McDonalds 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 seeds Drip-irrigation technology Refrigerated transportation system

SUPPLIERS
1. Dynamix Dairy Industries (Supplier of Cheese)

Fully automatic international standard processing facility. Network of milk collection centres equipped with bulk coolers. Dedicated quality program. Dedicated R&D centre

2. Trikaya Agriculture (Supplier of Iceberg Lettuce)

Specialized nursery with a team of agricultural experts Drip and sprinkler irrigation in raised farm beds with fertilizer mixing plant. The pack house, pre-cooling and cold room are located at the farms itself to ensure no delay.

3) Vista Processed Foods Pvt. Ltd. (Supplier of Chicken and Vegetable products)

World class infrastructure and support services.

Separate processing lines for chicken and vegetable foods. Hi-tech refrigeration plants for manufacture of frozen food at temperatures as low as -35C.

DISTRIBUTION
Radhakrishna Foodland Ltd.

Specialized in providing services

procurement quality inspection storage inventory management deliveries data collection recording and reporting

Dry and cold storage facility Transportation trucks maintained at 22 C Implemented ERP software.

OUTSOURCING THE INGREDIENTS

ITEM Cheese Dehydrated onions Iceberg lettuce PLACE Dynamix Dairy Industries Ltd., Pune Jain Foods, Jalgaon Trikaya Agriculture, Pune

Chicken patty
Veg. Patty, Veg. Nuggets, Pies Chicken (dressed) Buns Eggless mayonnaise Sesame seeds

Vista Foods, Taloja

Kitran Foods, Taloja Riverdale, Talegaon Cremica Industries, Phillaur Quaker Cremica Pvt. Ltd., Phillaur Ghaziabad

Fish fillet patties

Vegetable for the patties Mutton and Mutton Patties

Amalgam Foods Ltd., Kochi.

Finns Frozen Foods, Nasik and Jain Foods, Jalgaon Al Kabeer, Hyderabad

Quality Inspection Programme (QIP) carried out in the Cold Chain system. Hazard Analysis Critical Control Point (HACCP) Based on HACCP guidelines, control points and critical control points for all McDonald's major food processing plants and restaurants in India have been identified.

SUPPLY CHAIN INTEGRATION

Contd

Mc Donalds India sources its ingredients from local suppliers who are an integral part of the cold chain.

Refrigerated trucks with multi-temperature facility divided into 3 zonesfreezer,chiller, and ambient to ferry product demanding varying temperatures from supplier location to the distribution centre.

Reference: National Retail Federat -Case Study

Contd

Distribution centre is also divided into multi-temperature zones , as are the trucks for storing products. With freezer at 0 degree F to 33 degree F , chiller at 33 degree F to 40 degree F, and room temperature.

Reference: National Retail Federat -Case Study

Restaurants have in built cold storage units subdivided into same aforesaid zones freezer, chiller ,and National Retail Federat Reference: -Case Study ambient.

38 suppliers across the country

Food /nonfood: Frozen , chilled & any dry goods

Food /nonfood: Frozen , chilled & any dry goods

Procurement logistic

Warehousing & packaging

Distribution logistics

Consumer/outlets

C Donalds Supply Chain

(160 restaurants across the country)

Supply of ingredients:
Sesame seeds Ghaziabad, UP
Special vegetarian sauce (Eggless) Quaker Cremica, Phillaur,Punjab Batter & Breading Cremica Industries , Ludhiana ,Punjab

Buns Shah & sons, Khopoli ,MH & Cremica Industries, Noida Iceberg lettuce Trikaya Agriculture , Talegaon MH Meena Agritech ,Delhi Ferrocoa Farm, Dehradoon

Vegetable Patty (Made from fresh Peas, Carrots,Green beans, Potatoes and Rice) Kiltran foods, Taloja MH

Reference: mcdonaldsindia.com

LESSONS:
Look before you leap. (Mc Donalds did an extensive research before venturing into this nation for more than 4 years and put in 450 crores plus during those times, to develop its supply chain) In Rome , do as Romans do! Mc Donalds customized its products to Indian taste-buds, also to connect to the public, avoided pork and beef products. In addition the processing lines for vegetable and non-vegetable products are kept separate. Principle of mutual need: If one can assure ones vendor that both are interdependent on each other, the trust must carry the relationship. In other words-You must allow market forces and not binding agreements to determine just who the constituents of your supply chain will be.

BACKGROUND NOTE
In the late 1950s, Dominick De Varti (Varti) owned a small pizza store named DomiNicks Pizza on the Eastern Michigan University campus in Ypsilanti, Michigan. In 1960, two brothers who were students of the University of Michigan Thomas S. Monaghan (Thomas) and James S. Monaghan bought that store.

Thomas decided to change the name of his first store, DomiNicks Pizza, and one of his employees suggested the name Dominos Pizza (Dominos).

OVERVIEW
Founded in 1965 by Tom Monaghan. Second-largest Pizza chain in the United States. about 8,500 corporate and franchised stores in 55 countries. Domino's Pizza outlet in India opened in 1996. Close to 274 outlets in 55 cities of India. 70 percent of its revenue comes from home delivery service & around 30 percent is over-the-counter sales.

DOMINOS INDIA
In early 2000, Pawan Bhatia, the former CEO of Dominos Pizza India (Dominos) was a man in a hurry. He had frantically reworked the pizza chain's India strategy. Bhatia planned to open 150 new outlets by the end of 2002 covering 23 cities(Tier-I),including Bhubaneshwar (Orissa) and Jamshedpur (Bihar).

As part of its expansion plans Domino's revamped its entire supply chain operations, from sourcing raw materials to shipping them for processing at a central location to delivering it to the customer's.

CORPORATE STRATEGY
Exceptional people on a mission to be the best pizza delivery company in the world! "
'Think global and act local Fun, happiness and convenience

PRODUCTS
Pizzas Pastas Breadsticks Cheese Dips Beverages Chocolava

OPERATIONS
Indian operations are ranked number one for the past 3 years. Delivers an average of 1 million pizzas per day. Over the last 2 years, they opened stores in 15 new cities. The company operates in three segments: 1. Domestic stores 2. Domestic supply chain 3. International

1. Domestic Stores
uses its company-owned stores as a testing ground for new products and technologies which may then be passed onto franchisees. generates income from companyowned stores in the form of store profits. 2. Domestic Supply Chain Vertically integrated supply system automatic delivery of raw materials cuts out a lot of the "back of-store" activities. Helps in keeping down food costs.

3. International
consists of 3,469 franchised stores outside the United States. operates six supply chain centers which manufacture dough and distribute food and supplies. International segment accounts for about 41% of Domino's store sales worldwide.

DOMINOS SUPPLY CHAIN

1. Procurement of raw materials

Raw materials like wheat, baby corn, tomatoes and spices are got, out of which wheat was bought in from jalandhar and then sent to the commissaries in refrigerated trucks. 4 commissaries (Regional Centralized Facilities) 1. Delhi 2. Bangalore 3. Kolkata 4. Mumbai

2. Distribution
Pizza dough processed from the wheat is then sent to the retail outlets again in refrigerated trucks.

Logistics requirement for sending frozen foods, at a temperature of 18C and of refrigerated trucks in which food is sent at a temperature range of between 1 to 4C.

3. Retail Outlets
1. Regular stores 2. Super stores : High traffic, More counters 3. Express stores : those where people were expected to walk in and order rather than ask for home delivery.

SUPPLY CHAIN DIAGRAM

WHEAT RETAIL OUTLET

DOUGH

REFRIGERATED TRUCK

WAREHOUSE

Outsourcing the Ingredients

ITEM PLACE

Wheat
Cheese Tomatoes Spice Baby Corn Exotic Vegetables Pepperoni Jalapeno

Jalandhar (Punjab)
Karnal, Haryana Bhubaneshwar, Orissa South India Nepal Sri Lanka Australia Spain

ISSUES
Dominos were in 16 cities so the level of complexity is bit high for them.They cant go for centralized system. The retail outlets had to use up the processed dough within three days of delivery. Need of call center.

THE PIZZA HOTLINE

In April 2000, Dominos introduced a common toll-free number in all the 16 cities it operated, which had been branded as the Hunger Helpline

It worked seemed simple: each time a customer called, his location was identified and the order was transferred to the nearest Dominos outlet, which then took on the task of delivering the order 30 minutes.

LAYOUT PLAN

PRODUCT OFFERINGS
Pizzas
Pastas Breadsticks

Cheese Dips
Beverages (tie-up with Coca Cola) Choco Lava Cake Chicken Wings

PRODUCTION

Dough Table

Pizza Base prepared Cheese blend applied

Makeline

Seasoning Topping

Oven

470 Fahrenheit Capacity of 5 pizzas at a time

1-2 minutes

1 minute

5-6 minutes

Turnout is 1 pizza per minute Meets the current demand requirements Bottleneck is oven

RAW MATERIALS AND PROCUREMENTS

4 commissaries (Regional Centralized Facilities) across India: Raw materials like wheat brought in from Jalandhar and sent to commissaries via refrigerated trucks Tomato, Capsicum and Onion purchased locally
Delhi Bangalore(caters to 90 outlets across South Zone) Kolkata Mumbai

DISTRIBUTION

Dough balls processed from wheat are sent to retail outlets in refrigerated trucks

HUB AND SPOKE MODEL with commissaries as hubs

Frozen food sent at 18 deg Celsius

LOGISTICS
WHEAT (JALANDHAR) SUPPLIERS (Toppings & Seasonings) RETAIL OUTLET

DOUGH

COMMISSARY

REFRIGERATED TRUCK

INVENTORY MANAGEMENT
ITEM SHELF LIFE

Dough ball
Mexican Wrap Base Cheese Dip Seasoning and Toppings Onion, Tomato, Capsicum

5 days
3-4 days 4-5 days 4-5 days 5 days

Cheese Blend

4-5 days

CONTD
Mini Cold Storage at Outlet (Walk In) Maintain approximately 4 days of inventory Trucks from commissaries replenish inventory every 4 days Inventory levels are monitored centrally via POS data using Intura Vision installed in every outlet Two POS per outlet (Telephonic sales and In Store Sales)

OPERATIONAL STRATEGY
Hub and Spoke Distribution

Hubs at 4 commissaries

Delayed Differentiatio n

Tomato, Capsicum, Onion etc. purchased locally

To cater to sudden variability's in demand To try to get volumes up during lean times

IST (Inter Store Transfer)

Sales Incentives

QUALITY INITIATIVES
SCIP (Store Continuous Improvement Plan)
Sales Training

FTD (Friday Training Day) HTR (Handle The Rush) Rubber Gloves.

CUSTOMER SERVICE

Making improvement through team work and employee empowerment

Continuous improvement at its base

Belief that all meaningful ideas are good and must be implemented

Everyone is expected to give suggestions on regular basis

Award System(Tokens, Scores)

ISSUES

RECOMMENDATIONS
COMPETITION

ISSUES

RECOMMENDATIONS
COMPETITION

Local manufacture of dough balls to reduce wastage

Usage of deep freezer as in other stores

Appointing a marketing professional at local level

Authority to introduce offers for short period For a better market study and introduce new products suited to local preferences

Inter Store Transfer

Dominos Should have a big store in Bangalore.

ISSUES

RECOMMENDATIONS
COMPETITION

Pizza Hut is the competitor to the Dominos Pizza

CONCLUSION
Fast Food industry in India is growing at a fast rate. From the study done among the 3 fast food services McDonalds, Dominos and Pizza hut, we can clearly come to the conclusion that McD with its superior supply chain management (cold chain) is able to balance between its quality and cost. The setting up of cold chain has enabled it to cut down on its operational wastage.

REFRENCES
www.mcdonadlsindia.in www.dominos.co.in www.supplychain.org www.wikipedia.org www.inboundlogistics.com www.books.google.co.in www.advancesupplychain.com www.distributionchain.com