Contents

DOMINOS - INTRODUCTION................................................................................................
BUSINESS MODEL................................................................................................................
SUPPLY CHAIN LOGISTICS....................................................................................................
MARKET SHARE...................................................................................................................
Revenue..............................................................................................................................
BUSINESS UNITS..................................................................................................................
CENTRALIZED OPERATIONS OF DOMINOS DISTRIBUTION CHANNEL....................................
Managing Quick Inventory Turnover................................................................................
Concept of Staggered Receiving.....................................................................................
Maintaining Full Truck Load.............................................................................................
Outbound Planning..........................................................................................................
APPLYING LEAN SUPPLY CHAIN STRATEGIES........................................................................
EARLIER DECENTRALISED MODEL OF DOMINOS INDIA........................................................
THE SUPPLY CHAIN..............................................................................................................
DOMINOS DISTRIBUTION CHANNELS................................................................................
ENABLERS OF DOMINOS SUPPLY CHAIN...........................................................................
COMPARISON OF DOMINOS & McDONALDS INDIA SUPPLY CHAIN....................................
FUTURE CHALLENGES AND RECOMMENDATIONS..............................................................
REFERENCES.....................................................................................................................
APPENDIX: SUPPLY CHAIN FOR DOMINOS PIZZA...............................................................

DOMINOS - INTRODUCTION
Domino's Pizza, Inc. is an international pizza delivery corporation headquartered in Ann
Arbor, Michigan, United States. Founded in 1960, Domino's is the second-largest pizza
chain in the United States. Domino's currently has nearly 10,000 corporate and franchisee
stores in 60 international markets and all 50 U.S. states. Domino's Pizza was sold to Bain
Capital in 1998 and went public in 2004. Domino's menu features pizza, pasta, oven-baked
sandwiches, wings, boneless chicken, salads, breadsticks, cheese sticks, and a variety of
dessert items.

Founded in 1960 by Tom Monaghan

Second largest Pizza chain in US

Around 10000 corporate and franchised stores across 60 nations

The India chapter of Dominos began in the year 1996 when the company set up its first
outlet here. Jubilant Food Works Limited, a Jubilant Bhartia Group company holds the
Master Franchise rights for India, Nepal, Sri Lanka and Bangladesh

BUSINESS MODEL
Franchisees are the cornerstone of business model of Dominos. Its 90% of 4900 stores in
US are franchisee driven whereas the same ratio is 100% for the 5100 stores internationally.
Franchisees are not allowed to pursue other commercial interests. They have a very focused
and efficient operating model comprising of delivery and carry-out.
Let us now take a look at the domestic (US) & international mode of operations

Domestic

1. Company owned stores

-

These stores provide income for products, operational & technological testing.

2. Distribution Profits
-

Ensure quality & consistency

Leverages purchasing power

Allows stores to focus on sales & customer service

International

1. Master Franchise Model

-

A master franchise can sub-franchise or directly run stores

Similar store model as US with modified menus

2. World Resource Centre

-

Takes care of all the administrative resources for the worldwide system of stores from
marketing, accounting to quality

SUPPLY CHAIN LOGISTICS

Logistics is all about managing the flow of materials & information from source to customer.
Generally a huge gap exists between the best practice & the average performers. This gap
can be bridged by
EDI Electronic Data Interchange: It involves communicating the information effectively to
the supplier & order processing can be undertaken simultaneously.
JIT Logistics Just in time Logistics: Under this, it delivers straight to retailers, thus
eliminating the goods-inward receiving process

The concept of integrated logistics is already taking foothold.

For the success of the supply chain processes, there are some qualifiers and some winners.
Qualifiers will be:

Cost (purchase price or cost of ownership)

Quality (ability of the product to meet the consumer expectation)

Lead time (how much the customer has to wait to get the product)

Service Level (how consistently is the lead time target being met)

Stock Turns (how many times a stock is turned in a given period)

For Dominos the major winner will be Lead Time.

MARKET SHARE

Revenue
There are primarily two major sources of revenue of Dominos:

70 % from home deliveries

30 % from OTC sale

BUSINESS UNITS
Dominos Business Units can be classified into three major categories:

Domestic Stores (US-based)

4900 Franchised Stores

457 company owned stores

Domestic Supply Chain

17 Dough Manufacturing and Supply Chain Facilities

One Equipment and Supply Facility

International

4126 Franchised Stores

Currently no-company owned store

Six Dough Manufacturing and Supply Chain Facilities

CENTRALIZED OPERATIONS OF DOMINOS DISTRIBUTION

CHANNEL
Dominos has a huge chain of Store Outlets all over the world. It runs a network of more than
8,400 stores all over the world with over 5,200 in the USA itself. In the recent 5 years it has
also opened a large number of outlets in emerging markets like India.
Servicing these stores with a 24-hour order fulfilment guarantee, so consumers can have
fast and reliable delivery service, is a complex task handled by the distribution division of
Dominos Pizza. The division operates 17 distribution centres that supply all domestic U.S.
stores, 90 percent of which are owned by independent franchisees. The Company applies a
similar model for operations in other Countries as well.
Dominos took a major step in supply chain efficiency in 2002 when it centralized inventory
management operations at its Ann Arbor, Mich., headquarters. Rather than have each DC
manage its own supply chain sourcing and planning, the centralized operation allowed the
company to:
Standardize sourcing, planning, inventory management and replenishment
across the national network.

Application of the prescient distribution planning suite

Just nine planners are able to run the entire distribution operation using software from
Prescient Applied Intelligence, a provider of supply chain commerce solutions.
The Prescient distribution planning suite that Dominos uses includes modules for
inventory and demand planning, optimized order management and advanced timephase replenishment. The demand planning piece handles forecasting and promotion
planning.

Managing Quick Inventory Turnover

The Distribution Centres of Dominos which provide supplies to the store outlets are quite
small. Having smaller DCs has helped the company save infrastructure costs.
However the challenges are

1. To cater to the large demand of the store outlets with limited space in the DC.
2. To provide fresh supplies each day to ensure that end consumers get fresh pizzas
Therefore, the answer lies in having High Velocity as the Dominos management puts it. Its
about attaining a faster inventory turnover which:
Reduces inventory costs
Helps company provide fresh supplies to the stores each day (24 hr cycle time)
Helps company to be able to manage supplies with limited space in the DC. This also
helps in reducing the infrastructure costs in maintenance of DC.
So, each DC holds about seven days of inventory that is turned at least three
times during a month and 40 times during a year.

Concept of Staggered Receiving

With the help of Prescients development and support team, Dominos created a solution
called the matched receipts to demand module to accommodate the inbound
constraints. Before, Prescient would schedule the five weekly truckloads of frozen meat
toppings to arrive and load up in one day. But on the next day warehouse labour might have
had little to do. But with the new optimized order logic, Dominos could load one truck per
day optimized for the most efficient delivery.
This way, truckloads contain the amount of product a distribution centre will use in
one or two daysnot a week. Similarly, other ingredients and supplies such as pizza
boxes can ship daily instead of weeklyalthough the forecasts are still made on a weekly
basis.
Trucks with smaller quantities operate multiple items, multiple times. The staggered ordering
system allows balancing inbound receipts with outbound retail store requirements.

This matched receipts to demand module helps maximize the overall supply chain
efficiency.

Monitoring Inventory and Real Time Demand

The Prescient planning suite monitors inventory and determines when a DC needs
product. It optimizes orders by looking at the minimum requirements for each product
based on inventory levels at the DCs and on days of supply to meet the minimum
requirements that Dominos has established.

The planning system receives demand signals from the retail stores through the
companys PeopleSoft enterprise resource planning system and aggregates these demand
signals to establish replenishment requirements. It also considers any constraints such as

dollar amount per purchase order. The next staged order will consider what was placed on
the prior order and go through the same process.

Maintaining Full Truck Load

While Dominos needs to stagger shipments, inbound trucks must be fully loaded to
control freight spend. The system knows the weight and dimensions for each product as
well as the volume and weight restrictions of the trucks. Optimization logic builds fully
loaded trucks of all the product need for that delivery. The overriding constraint for the
planning system is to never run out of product at the DCs.

As planners become more confident in their new model they can reduce distribution centers
safety stocksand cut corporate costs with no risk of running out.

Outbound Planning
Central Planning receives daily orders from the stores via a point-of-sale system or by
phone. The Prescient system creates suggested orders for the outbound trucks, and sends
the data back into the ERP system for execution at the DC. Store orders are filled every
night at each DC-this is done to maintain an Order cycle is of 24 hours.

The deliveries are made during the following day when store activity is not at the peak.
Dominos also guarantees its franchise stores first-time delivery accuracy so that the
franchisees are able to meet the end consumers demand of chosen pizzas and keep them
satisfied.

APPLYING LEAN SUPPLY CHAIN STRATEGIES

Creating a lean supply was critical for Dominos to reduce waste and inventory and increase
yield. As Dominos raw materials are perishable it is important to ensure availability of raw
materials without wastage of raw materials.

Each outlet needs around 60 raw materials. The useful shelf life varies widely. Both dough
and vegetables should be consumed within days; cheese within weeks, tinned sauces may
last months. With just 60 items, manual stock taking is also possible and is undertaken every

evening & information is fed into PC. To aid sudden spurt in demand, facility exists to make
urgent collection by sending a van to commissary or other nearby outlets.
In order to ensure full utilization of trucks, Dominos Pizza has taken various steps.
For Example, Jalandhar is place where Dominos Pizza gets the best quality wheat at lowest
price. Thus, from Jalandhar, wheat is transported to the nearest Commissary Delhi where
dough is prepared from the wheat from Jalandhar. Instead of returning the empty truck from
Delhi to Jalandhar, Dominos found that on the way Chandigarh comes with a cosmopolitan
population and is hence a potential market for Dominos products. Thus, Dominos opened
an outlet in Chandigarh. Cost of entry was extremely low as there was a very low additional
cost incurred in transportation of products. Dominos opened outlets in every potential
market that fell between commissary and its prime sourcing base. Similar policy was
followed in Karnal where best quality cheese was procured.
Superior demand forecasting and long-lasting relationships have also allowed Dominos to
keep inventory and purchasing costs low. Dominos maintains supplier relationships by being
one of the largest domestic volume purchasers of pizza-related products such as flour,
cheese, sauce and pizza boxes, which allows the company to maximize leverage with its
suppliers. Dominos also uses a combination of single-source and multi-source procurement
strategies. Each supply category is evaluated along a number of criteria including value of
purchasing leverage, consistency of quality and reliability of supply to determine the
appropriate number of suppliers.

Results after Lean Application

Source: Dominos Pizza

EARLIER DECENTRALISED MODEL OF DOMINOS INDIA

Self-contained commissaries
Outlet
Customer

The earlier model of Dominos was a decentralised one. The company had three selfcontained commissaries in the three major cities of Delhi, Bangalore and Mumbai. Each of
these three centres procured raw materials such as wheat and vegetables on its own and
produced the dough for pizzas. This dough along with other ingredients was then
transported to the nearby outlets using a hub and spoke model. The outlets then carried out
home deliveries to customers or served them in-store.The problem with this model was that
it didnt allow for the expansion of outlets and a number of activities were being duplicated.
It was felt that to support the future growth of the franchise within India; it was necessary to
adopt a more flexible and efficient logistics model.

THE SUPPLY CHAIN

The supply chain of Dominos mainly consist of

The fast food outlets

Domino distribution business

Ingredient suppliers

Domestic Stores uses its company-owned stores as a testing ground for new products and
technologies which may then be passed onto franchisees. They generate income from
company-owned stores in the form of store profits. Domestic Supply Chain is vertically
integrated supply system automatic delivery of raw materials cuts out a lot of the back ofstore activities. Procurement of 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. They have 4 commissaries (Regional Centralized Facilities):

Delhi

Bangalore

Kolkata

Mumbai

These centres ensure a timely delivery of raw materials and helps maintain consistency in
quality. Dominos has centralised its purchasing, sourcing, warehousing and distribution of
raw materials, as well as the production of dough at its commissaries; this reduces the
storage space required at the store level, thus minimizing store operating costs. Because of
its centralised sourcing, Dominos is able to leverage and monitor strong supplier

relationships to achieve the cost benefits of scale and to ensure compliance with its rigorous
quality standards.
Dominos has a requirement for a cold supply chain because it transports frozen foods,
which have to be sent at a temperature of minus 18 degree Celsius. It also makes use of
refrigerated trucks in which food is sent at a temperature range of between 1 to 4 degrees
Celsius. In addition to the movement to and from each commissary, there are intercommissary movements that are regularly required. In the North, approximately fifteen
deliveries a month are made to stores in the NCR and approximately ten deliveries a month
to outstation stores, which are in excess of hundred in total.

SUPPLIERS
Dominos has documented Supplier approval procedure. Suppliers of food ingredients and
packaging agree to a detailed product specification for the products they supply. This is
reviewed by the Food Technologist to ensure the product is safe, legal and of consistently
high quality. All food products are risk assessed and their production is either audited by the
Food Technologist or is certified to the BRC Global Standard for Food Safety. A database of
Dominos approved products and suppliers is maintained. Quality checks are carried out on
delivery, samples sent for analysis or feedback received from stores or consumer. Suppliers
are continually assessed in various ways.

DOMINOS DISTRIBUTION CHANNELS

Dominos manufacturing and distribution centres are generally located within a one-day
delivery radius of the stores they serve. Dominos has currently four, planning to add one
more distribution centre. They act as a warehouse. Supply is on a regular milk round basis.
They have private fleets of trucks and act as supply and support channel for the outlets.
There is provision for best store equipment and are responsible for delivery of fresh, ready to
use ingredients, Installation and Individual store management.
Retail Outlets consist of regular stores, Super stores and Express stores: those where
people were expected to walk in and order rather than ask for home delivery.