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ASSIGNMENT - 1 OF RETAIL MANAGEMENT

TOPIC ON

DOMINOS INDIA LOGISTIC MANAGEMENT

Submitted by:- Group 3Name Registration No. Roll No

Karma Tenzin 10908543

ABSTRACT

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The case gives an overview of Domino's revamped supply chain operations in India. Itdiscusses the various benefits of the new logistics model and discusses the reasons forthe same. The benefit of low costs achieved through the new model was passed on tothe customers in the form of lower prices. The case also compares Domino's newsupply chain model with McDonald's supply chain model.

HISTORY/ BACKGROUNDDomino's Pizza originated as a small pizza store owned by Dominick Di Varti at theMichigan University campus in the US under the name 'DomiNick's Pizza. In 1960, thepizza store was bought by two brothers, Thomas S. Monaghan (Tom) and James S.Monaghan (James) who were students at the University. The pizza business did welland by 1965, Thomas was able to open two more stores in the town that is Pizza Kingand Pizza from the Prop. Within a year, Varti opened a pizza store in a neighborhoodtown with the same name, DomiNick's Pizza. Thomas decided to change the name ofhis first store, DomiNick's Pizza, and one of his employees suggested the nameDomino's Pizza (Domino's). The advantage of this name Thomas felt was that it would

be listed after DomiNick in the directory.

INITIAL PROBLEM FACED BY COMPANY

When its headquarter and commissary were destroyed by fire.

When it was sued by Amstar (the parent company of domino sugar for tradeinfringement).

Competition from Pizza hut and Little Caesar due to not changed of traditionalmenu (hand-tossed-pizza).

Dominos also faced tough competition from Pizza hut in home delivery segment. Dominos sale has drastically reduced in 1989 due to competition in the market.

SOLUTION ADOPTED BY THE COMPANY To compete with the competitors it has expand the product line (Pan Pizza and

Crunchy Thin Crust Pizza).

They gave 90% of franchisee agreement to US people who had worked as diverwith them).

The company also gave ownership to qualified people after completing a trainingcourse.

They had developed dough trays, corrugated pizza box and insulated bags fordelivering pizza.

HOW DOMINOS ENTER INDIA.

Dominos enter India in the year 1996 through a franchise agreement with Vam BhartiCorporation in Delhi. In early 2000, Pawan Bhatia, the CEO of Domino's Pizza Indiawas a man in a hurry. Ever since Bhatia took over as the CEO of Domino's in November1999, he had been frantically reworking the pizza chain's India strategy. He wasplanning to open 150 new outlets by the end of 2002 covering 23 cities, includingBhubaneshwar (Orissa) and Jamshedpur.

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DOMINOS LOGISTIC MODELAs 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 todelivering it to the customer's. Initially, Domino's had a simple model. It had three selfcontained commissaries in New Delhi, Mumbai and Bangalore which bought their own

wheat, tomatoes and other ingredients, processed them, and then delivered them inrefrigerated trucks to each outlet. However, volumes were expected to increase whenDomino's planned to open new outlets. Therefore, the existing model had to berevamped. Bhatia said, its crucial to build a low-cost supply chain operation whichtakes costs out of the system and in turn gives us greater pricing flexibility in themarketplace. Analysts felt that Domino's had to rethink its supply chain operationbecause it was the biggest area of costs. Since 75% of Domino's customers orderedeither from office or home, it did not have to lease large plots of land in prime locationsto attract traffic. Instead, it needed an efficiently managed call centre to bring betterreturns.

RAW MATERIAL PURCHASING STRATEGYRaw materials are purchase from different places depending upon the quality and theprice of the materials. The company goes for the good quality with lower price in orderto sell the pizza at lower price. Thus in early 2000, Domino's came out with its ownlogistics model. It began at the point Domino's purchased wheat for making the pizzadough. Domino's first decided the procurement strategy for its key raw materials, wheat,baby corn, tomatoes and spices.

Wheat from Jalandhar wholesale market. Cheese from Karnal (Chandigarh).

Corn from Nepal (40% cheaper than India).

Vegetables from Sir Lanka.

Tomato from Bhubaneswar. Spices from South India.

DELIVERY STRATEGYThe pizza dough is prepared in commissaries

Transport by refrigerated truck

Deliver to retail outlet

Collect the raw material

Back to Commissaries

MARKETING STRATEGYAs the business was focused on the menu limited and consisted only of pizzas and afew side dishes, the stores were small and inexpensive to build. Running a Domino's

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unit did not require expensive infrastructure or large stores. Domino's philosophy restedon two principles that are limited menu and delivering hot and fresh pizzas within half-an-hour. Following are the marketing strategy followed the company.

Lower its price by saving through logistic model

Company also target large corporate office, railway station, cinema halls and

university. Classified its outlets into super stores, express stores and regular stores.

Extend its operation to other countries like Nepal, Sir Lanka and Bangladesh.

The concept of home delivery within 30 minutes if not compensate with Rs. 30%off for delay in delivery.

Company focused on delivering high quality pizza in a timely manner. One of the components of this model was the franchise system, which Domino's

considered critical for its success. Employees of Domino's who had worked at the stores as general manager for at

least one year were eligible to become internal franchisees.

RECOMMENDATIONFollowing are the recommendation made by our groups in order to improve theproducts and services to attract more customers.

The company should also focus to supply or get order during the marriageceremony celebration.

The company should also focus on youth by providing the pizza as per theirdemand.

Pizza should be made as per the region need because people of different placeswill have different taste and preferences.

CONCLUSION

To conclude we would say that the company is doing its best to operate throughoutIndian city. As part of its expansion plans the company restore its entire supply chainoperations, from sourcing raw materials to shipping them for processing at a centrallocation to delivering it to the final consumers. The company also reduces its price ofPizza in India by following a good purchasing strategy. So we can say that the companyis growing at very fast rate.

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