The supply chain developed by Domino’s has a series of competitive advantages. First, and foremost, it is necessary to point out the benefits of the centralized purchasing that allows the company maintain the high quality of its products and provide sustainable quick service. Domino’s supplies its stores with 240 products that range from the essential ingredients to the specific equipment (Bell, Andrews, & Shelman, 2013). Thus, the company guarantees that every store meets the corporate standards.
Secondly, Domino’s has worked out an effective location strategy. Its supply chain facilities are allocated in such a manner that suppliers can reach the targeted store within 48 hours maximum. The reasonable area coverage allows the company to perform timely service that is crucial for the food segment as some products have a limited shelf life.
Moreover, Dominos’ delivery procedures elaborately planned in order to eliminate the maximum of back-of-store activities. Thence, most of the deliveries are carried out during the night time so that a store’s operation is not disrupted. The drivers are also responsible for stocking the store’s shelves that lets the staff recognize which products they should use first. Therefore, the Domino’s scrutiny in delivery operations enables the store’s workers to remain fully focused on the service.
Finally, the company employs the latest technologies in order to advance the efficiency of their supply chain system. Domino’s computer system, Pulse, is designed specifically to ensure the consistent connection between customers and stores as well as to help the stores access delivery service. The corporate computer platform assists in maximizing the supply chain operation and enables Domino’s to monitor the flaws and limitations that should be eliminated.
Hence, key advantages of Dominos’ supply chain are centralized purchasing system, efficient region coverage, thoroughly planned delivery and advanced technologies.
The Outcomes of Increased Transparency
The extent of transparency that Domino’s managed to reach is rather impressive. Although the company took significant risks, practice showed that the implemented strategy produced a positive effect on their image and helped to improve the service.
First off, Domino’s decision to increase transparency was not completely voluntary but was, to a large extent, imposed by the accidental popularity of the YouTube video that jeopardized the company’s reputation (Bell, Andrews, & Shelman, 2013). Moreover, the company was receiving negative feedback from customers regarding the taste of their products. Therefore, some alternative solutions were essential. From this perspective, Domino’s management skillfully turned the unpleasant incidents into an advantage.
The solution that the company chose was rather unexpected. It is necessary to admit that letting the public opinion appear in such a crowded place as Times Square is a challenge, taking into account the fact that they did not filter the negative comments. On the one hand, they took the risk of revealing all the drawbacks of the service in front of both their regular and potential clients. On the other hand, they showed people that they were responsible for the quality they provided, and were ready to improve it on request.
It is also critical to note that in the framework of this campaign, Domino’s opened access not only to their services but to the basic stages of production. Thus, customers were welcomed to get acquainted with the nature of ingredients and the operations in the kitchen.
The principal strengths of this measure resided in combining public feedback with the launch of the new pizza tastes. The customers were encouraged to participate in the process of the new products’ creation that made them feel a part of the common activity and compensated the negative attitude.
In addition, objective critics enabled the management indicate most typical drawbacks of the service and eliminate them.
Centralized Supply Chain Model and New Recipes
Domino’s case study showed that centralized supply chain is highly effective from the standpoint of launching new projects. One of the best evidence for this assumption is the company’s successful rolling out new recipes.
The principal benefit of the centralized supply chain system is that all the stores are sure to use the same ingredients and, most importantly, to work with the same equipment. Thus, due to the domestic supply chain the company was confident that the improved recipe will be successfully implemented all around the country as every store was guaranteed to receive the same set of ingredients including the sweet sauce that represented the key innovation (Bell, Andrews, & Shelman, 2013).
Meanwhile, the implementation of the new recipe created additional challenges for the supply chain that could not have been overcome unless it had a centralized structure. As long as the introduction of the new pizza taste coincided with the two busiest occasions in the U.S., the New Year Eve and the Super Bowl, the store received a significant extra charge. The centralized supply chain service enabled the company to provide regular and timely delivery service so that the stores could fill all the orders during this busy period.
It would be reasonable to assume that Domino’s would not be able to cope with these challenges if their stores were poorly connected with the delivery service or purchased goods from different distributors.
Applying Domestic Supply Chain to International Operations
The fact that Domino’s domestic supply chain model shows effective performance seems to be undoubted. In the meantime, its application to the international markets might be rather problematic.
First and foremost, it is necessary to note that some aspects of the centralized model are already implemented in the international operations. Thus, the majority of foreign stores employs corporate computer seems for managing the orders and delivery services (Eastham, Sharples, & Ball, 2007).
The principal difficulty in implementing domestic model into foreign market resides in the franchise conditions that are slightly different for the local and the international parts. Thus, international master franchisees receive more freedom in choosing a supplier of the necessary ingredients. It is determined by the necessity to adapt to the peculiarities of the local market and the impossibility of using US delivery services around the world.
The relevant freedom of the international parts does not imply any risks for the cost-effectiveness of the service. For example, Domino’s supply chain in India was specifically designed for this market. The local managers found a reliable and cheap supplier in Jalandhar that enabled them to maintain both quality service and low prices (Ray, 2010).
Moreover, the menu standards for foreign stores are, likewise, less rigorous than in the home market. Therefore, international franchise allows adding some options to meet the local demands, although a particular set of Domino’s items is obligatory.
In case, one decides to change supply conditions for the international parts, one will, consequently, have to alter the share terms that is rather risky taking into account the fact that there is no guarantee of a successful implementation of the domestic model in the foreign markets.
Reference
Bell, D. E., Andrews, P., & Shelman, M. (2013). Domino’s Pizza. [Lecture]. Boston, Massachusetts: Harvard Business School Publishing.
Eastham, J., Sharples, L., & Ball, S. (2007). Food Supply Chain Management. New York, New York: Routledge.
Ray, R. (2010). Supply Chain Management for Retailing. New Delhi, India: Tata McGraw-Hill Education.