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Faculty of Business and Law

Operations Management- PGBM03


"Operations Management & strategies at Dominos
Pizza"
Intake: October, 2013.
Module Leader: Dr. Tie Xu
Submitted by: Adnan ul Haque. (139071579)
January 21, 2014
WORD COUNT: 3296

Table of contents
INTRODUCTION.......................................................................................................................... 04
OPERATIONS MANAGEMENT & OPERATION STRATEGY.......................................................... 04
CORPORATE VISION AND MISSION........................................................................................... 05
GLOBAL STRATEGIC OBJECTIVES.......................................................................................... 06
ORDER QUALIFIERS & ORDER WINNERS................................................................................... 06
THE CORE COMPETENCIES OF DOMINOS.................................................................................. 07
THE VALUE CHAIN...................................................................................................................... 09
PRODUCT VALUE CHAIN............................................................................................................ 09
STORE LEVEL- OPERATIONS STRATEGY IMPLICATIONS............................................................ 11
PRODUCT & SERVICE DESIGN.................................................................................................... 12
PRODUCT LIFE CYCLE................................................................................................................. 13
RE-DESIGNING PRODUCT.......................................................................................................... 14
PRODUCT/ SERVICE MIX OPERATIONS CHALLENGE................................................................. 15
PROCESS DESIGN....................................................................................................................... 15
THE CONVERSION/ TRANSFORMATION PROCESS.................................................................... 15
TRANSFORMATION & CONVERSION PROCESS IN TERMS OF 4Vs............................................ 16
THE PRODUCTION PROCESS...................................................................................................... 17
DEMAND FORCASTING.............................................................................................................. 18
SUPPLY CHAIN MANAGEMENT................................................................................................. 19
QUALITY MANAGEMENT........................................................................................................... 20
QUALITY ASSURANCE & QUALITY CONTROL............................................................................ 20
INNOVATION AND IMPROVEMENTS......................................................................................... 21
CONCLUSION & RECOMMENDATIONS..................................................................................... 22
REFERENCES.............................................................................................................................. 23

List of Tables
Table # 1 Through customer feedback "Product Re-designed" 14

List of Figures
Figure # 01 Dominos franchise model structure in UK 04
Figure # 02 Domino's Values 05
Figure # 03 Order Winner & Order Qualifiers 06
Figure # 04 Core Competencies 07
Figure # 05 Customer Value Chain: Dominos 08
Figure # 06 Product Value Chain 09
Figure # 07 Performance Prioritizing Curve 10
Figure # 08 Dominos Polar diagram of Performance indicators 11
Figure # 09 Dominos Evolution PLC model 12
Figure # 10 New Product Development (NPD) 13
Figure # 11 Product Service range 15
Figure # 12 The Conversion Process 16
Figure # 13 Assembly line: Volume Variety Mix 17
Figure # 14 Dominos production process 18
Figure # 15 Dominos Chase demand strategy 19
Figure # 16 Supply Chain Model 20
Figure # 17 Innovation 21


INTRODUCTION:
Dominos is a business regarded as leading Pizza Delivery company (Dominos, 2008). The
Company has an operation model and inimitable business that enable it to be a leader in fast
food industry. Dominos Pizza has effectively expanded from three outlets in the US to 9,350
stores in service in seventy countries since its creation in early 1960s (Abilla, 2010). The head
quarter is in Michigan state, USA whereas in UK is operation and franchise model all over the
overseas market. The raw material is supplied to master franchise (UK) and quality is enforced
by maintaining overall control on the products and services being delivered (Dominos, 2008).
OPERATIONS MANAGEMENT & OPERATION STRATEGY:
Operations management has been defined by Raturi & Evans (2005) as development, design,
maintenance of system, and process which convert the raw material, labor, and technology, in
to finished goods and services that satisfy the needs of consumers. According to Garvin (1992)
define, "the operations and manufacturing competitiveness are examined through operations
strategy" whereas, Slack and Lewis (2011) elaborates operation strategy as the whole method
of choices that forms the long-term competences and abilities of any type of process,
operations and their input towards overall strategy, by means of resources of operations and
requirements of the market. Operations strategy has been understood by many to be distinct
from operations strategy.

Figure 1: Dominos franchise model structure in UK.

Domino Pizza
LLC (Michigan)
Sub Franchises
(Overseas Unit)
Sub Franchises
(Overseas Unit)
Sub Franchises
(Overseas Unit)
Master
Franchise (UK)
V
A
L
U
E
S
Figure 2: Domino's values

CORPORATE VISION AND MISSION:
According to Lawfer (2004), "well implemented mission enable the company to attract
employees, investors, and consumers to gain from organisational loyalty" (P. 198). The mission
statement of Domino's is "Having more fun while selling more Pizza" (Domino's Corporate,
2012). The Vision is to be "number one in pizza as well people" (Domino's Corporate, 2012).



GLOBAL STRATEGIC OBJECTIVES:
From the Domino's Annual report, (2012), it is derived that the vision statement is achieved
through following strategic objectives:

I. Competitive international growth as main target.
II. Competitive menu expansion through 24 hours deliver model.
III. New innovations through company owned stores.
IV. Focusing on knowledge management strategy to penetrate local market through
master franchises.


Treat People
as you'd like
to be trated
Think big and
grow
Set the bar
high, train,
never stop
learning
Measure,
managegee,
and share
what is
important
ORDER QUALIFIERS & ORDER WINNERS:
To meet selling quality standards, the basic standard for products are "order qualifiers" and
when consumers are won by making them purchase the product, than it is "Order winners".
The criterions of Domino's order qualifiers and order winning are explained in figure below.

Figure 3: Order Winner & Order Qualifiers
Dominos becomes order qualifiers to the consumers due to convenience which is durability and
flexibility in its operations. Its taste, which means the quality and variety it offers to the
targeted audience. The service delivery is quick and prompt which indicate that operations are
speedy. Moreover in comparison to its competitor Pizza hut, it is cheap means low price so the
cost is another performance indicator that dominos mix in its operational strategies to make it
order qualifier. Considering order winners standards of Dominos, it is evident that the quality is
a consistent everywhere which means there is no change in the quality standards. Moreover,
the delivery to clients are in time which means that speed is a constant factor that has helped it
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
in earning orders. Furthermore, the operations are flexible and highly dependable one.
Customers heavily rely on the services that it will be in time and highly standardized. There is a
huge variety of products available which indicate towards flexibility again in the operations.
Based on the notion of different types of consumers like different taste so stores keep high
variety which help them in winning orders in the market.
THE CORE COMPETENCIES OF DOMINOS:
The core competencies of Dominos has enable it to be order winners and order qualifiers. It
strengthen its position in pizza food industry in home and take away criteria.

Figure 4: Core Competencies

THE VALUE CHAIN:
Domino design and develop its product after considering consumer's needs. The take away
outlets, high variety at a reasonable price with quality suiting local palette are consumer's need
driving the whole value chain. In entire value chain, prime focus of dominos has been on
Dominos
Competitive
advantage -
Global leader in
Pizza take away
/ home delivery
Unique Supply
chain model :
Better quality &
consistency
Leaner
Stores :
Better
operating
margins
Leaner Stores :
Better operating
margins
Unique
GLOBAL
model:
Allows
flexibility
at the
regional
level
consumers needs and resulted in strengthening its market position (Tripathy, 2011; and Bach
2013). High variety in taste, flexibility in operations, qualified staff to facilitate customers, and
lean stores are driven from global operational model and strong value chain (Tripathy, 2011;
and Bach 2013). Domino has used technology at its best to promote itself and improve
customer's experiences. For instance, strong distribution from television and online tracking of
orders from internet. The needs and demands of customers are met by Dominos through
combining operational strategy with the company level strategy that has also improved its
performance by making it more dependable and flexible.

Figure 5 Customer Value Chain: Dominos

PRODUCT VALUE CHAIN:
Value-adding collective activities of Domino's operations are based on Porters model. According
to Tripathy, (2011) "For external customers, products and services are produced via process
involving five main activities that are essential for business. The proper transformation of
resources are established through these supporting value-adding activities. For example,
technology usage increase accuracy as text message order is placed is convenient to customer
as well Domino and accurate order is placed. Together, all value adding activities forms
Domino's business process" (cited from Bach, 2013).

Figure 6 Product Value Chain
STORE LEVEL- OPERATIONS STRATEGY IMPLICATIONS:
Provision of excellent quality services to customer is prime focus of Domino's operations
strategies (Dominos Annual Report, 2012):
1. Improving process and efficiencies at stores to reduce operating expenditure.
2. Prompt services to customers through strategic store locations, resulting in maximization of
profit.
3. Stores with prompt and efficient production for customer via production oriented store
designs.
4. From order placement to preparation, cooking, packing, and delivering efficiently to
complete operational process.
5. Via Dominos PULSE point-of-sales system adaptability in operations, becoming cost effective,
and easy accessibility to financial and marketing data.
6. Attractive and focused menus for customers while reducing errors in orders.
7. A store audit program for assessing stores performance in meeting needs of customers.
In order to priorities its operational strategies, Slack Model of Performance Prioritizing is
considered, on the criterion of order-winning.
A. Surplus zone As compared to competitors, high investments are made in promotional
strategies by Dominos to attract customers as various discount coupons are offered. Though
such schemes attracts customers but leads to lower brand image. For this reason, cost cutting
should be done by Dominos in parts that will have no negative impact on sales.
B. Suitable zone "30-minutes luxury" has built strong image as in this segment, Dominos is
ahead of rivals as fitting balance is created by Dominos in market.
Figure 7 Performance Prioritizing Curve
C. Progress zone To be order winners, Dominos has to work on improving its quality and
customer preferences should be taken in account. For instance, Pizza Hut produces less calories
pizza for conscious customers. Somehow, Dominos shall also create emotional connection for
customers.
D. Critical zone There is need to improve present process design for prompt delivery.
Especially in the peak hours, staff, equipments, and space should be available to assure and
satisfy customers.

Figure 8 Dominos Polar diagram of Performance indicators

PRODUCT & SERVICE DESIGN:
In pizza delivery services, Dominos stands as the pioneer. Additional items like wings, garlic
bread, chicken bites etc are offered along with Pizza as core product (Horovitz, 2009). The
flexibility in operations is a key that enable it to deliver customize pizza to customers with other
additional items including soft drinks of wide range choices. Considering the product design,
Dominos is competing with 14th street pizza to deliver on prompt basis in Karachi's high-class
area Defence. Modular components are combined together to meet the individual needs of
consumers. The product is universally same and services too, as same quality is delivered in 30
minutes. Convenience and cost are two main targets that Dominos consider in product and
service design. The success and performance of Dominos is elaborated through product life
cycle.
PRODUCT LIFE CYCLE:
Introduction phase - Dominos in 1960 started making pizza and gradually moved to UK and
other countries.
Concept Development phase - When local franchise took over, the online ordering emerged
replacing traditional methods.
Production phase - In 2009, sales declined despite for two decades the concept of obtainable
pizza. The decline was due to change in consumer's taste.
Service - Domino changed its menus up to 80% as crunch cakes and oven-backed sandwiches
are brought in stores. The highly used technique in redesign services was "30-minute delivery"
and "pizza-tracker" along with new iPhone applications were used to enhance its services.
Withdrawal This is where Dominos realized that customers need fresh menus so it redesign
its core product.

Figure 9 Dominos Evolution PLC model
RE-DESIGNING PRODUCT:
Dominos admitted publically as Russell Weiner said. "it's time we change our taste as
consumers don't like it anymore", so the core product was re-designed (Peterson, 2012). The
open customer feedback showed that people disliked the taste and it was poor quality, as
publically admitted by Dominos (Charlene, 2011). Moreover, customer feedback was use to
change approaches and alter operational strategies. The recipes were reconfigured in re-
designing process as experimentations were done through mixing cheese, crust, sauces, etc.
This re-designing was done through customer involvement as the results were basically
influenced by consumers. Re-designing enable it to compete with Pizza hut and Papa Jones
(Hoovers, 2013). Customer feedback was main reason for the redesigning of product that
improved its sales.

Figure 10 New Product Development (NPD)

Table 1 Through customer feedback "Product Re-designed"

PRODUCT/ SERVICE MIX OPERATIONS CHALLENGE:
Dominos main dominance has been in United States as there are not corporate stores.
Moreover, a shocking video of two domino's employees violating health standard codes on
YouTube add more to the problem as one employee had criminal background decreased sales
more (Clifford, 2009). To deal with these types of issues, company has to make hiring process
more effective and inflexible code of ethics shall be implemented. Furthermore, the strategy of
30 minutes delivery guarantee was initially introduced but cancelled due to increase in
accidents. A women being killed by Domino's driver is case to support the statement (Alder,
1993). This is a service challenge company faced, to ensure customers are attracted, the
concept was reintroduced as "gift" to consumers (UPS - Dominos, 2012).



PROCESS DESIGN:
Product Service range
In the product-service range, it has a unique entity, comprising of both packaging as well
services to serve foundation for product.


Figure 11 Product Service range

THE CONVERSION/ TRANSFORMATION PROCESS:
In the entire value chain, customers are present as visible and invisible conversions take place.
A concept of Open Kitchen and new design for customers to wait and experience while order is
placed are part of marketing intelligence that is used in operational strategies at Dominos (Alfs,
2013
Product Based supported by a
service package - The Product
(Pizza) not only needs to be
manufactured acurately, it
needs to be delivered to the
end customer within a
specified amount of time and
in optimal conditions
Service Based with product
element - The Customer buys
into a service which delivers
an end product in the form of
a Pizza

Figure 12 The Conversion Process

TRANSFORMATION & CONVERSION PROCESS IN TERMS OF 4Vs:
At Dominos, simultaneously large volume is produced at low cost:
Volume: High volume Trained staff following same standard procedures produces in massive
quantity as it is efficient way to produce through special equipment leading to continuous
operations (Sykes and Crawford, 2012, P. 3).
Variety: The customers have a choice to select their own topping or vise versa, even more
ingredients and items are available at stores (Sykes and Crawford, 2012, P. 3). Moreover, it is
evident that Dominos has redesigned operational strategies on the basis of customer feedback
which explains high variety at stores.
Variation in demand: According to Tripathy (2011), Dominos has low demand in day time but
demand variation is high at lunch and dinner time.
Degree of visibility: As per Tripathy (2011), in the production process, open kitchen when
customer comes for take away are highly visible but delivery at door step, the visibility of
production process is low (Cited from Bach, 2013).

Figure 13 Assembly line: Volume Variety Mix
In the assembly line pizza production process, Dominos has high flexibility at batch processing.
Batch manufacturing process is used by Dominos to have consistency as well flexibility in the
Kitchen assembly line processing. Domino calls "make line" to its assembly line. This make line
methodology also facilitate Dominos to produce higher volume in rush and peak hours.

THE PRODUCTION PROCESS:
Domino's production process is structured, from placement of order to customer's accepting it.
Firstly, the order is placed through ealk0in, internet, or phone. After that order is placed in
PULSE system to increase functioning efficiency. The order pop up on screen. Then, member of
assembly line pick order and applies ingredient. In the make line, another team member add
topping and place it in oven. Then, third member remove it from oven and place it in box. It is
ready for delivery and last step is dispatched and handed to awaiting customers (Guinness,
2012.

Figure 14 Dominos production process



DEMAND FORCASTING:
"In order to forecast demand planning and inventory management, "prescient" distribution
planning is undertaken. Through this forecasting, demands are being matched by Dominos. This
also facilitates in increasing the overall supply chain efficiency in lean operations. Moreover, it
enable firms to check the inventory stock distribution time, as it optimizes the orders on the
basis of distribution centre, as by undertaking minimum quantity material required for
Order
Placement
Assembly Line
Cooking
Packing
Sales-
Delivery/collection
production. The entire forecasting and inventory management is done through ERP- Enterprise
Resource Planning" (Tripathy, 2011).


Figure 15 Dominos Chase demand strategy

SUPPLY CHAIN MANAGEMENT:
According to Tripathy (2011), "Make-to-Stock approach is considered by Dominos in its supply
chain management" (P. 32). Lean production is supported by the supply chain, on the basis of
Just-in-Time (JIT) and inventory management. According to Kannan & Tan (2005), the operation
function's efficiencies are improved by means of JIT and supply chain management (SCM). At
Dominos, through this approach supplies are made to master franchises which gives certain
advantages, such as consistent quality is maintained through centralized sourcing, and enable
Dominos to use effectively the buying power to reduce the cost doe to fluctuation in the prices.
But, stores at times faces an issue of over stock of dough, packing boxes, etc exceeding the
regular demand.

Figure 16 Supply Chain Model

QUALITY MANAGEMENT:
Ahargrave (2003), explains that quality product and brand image is being maintained by the
Dominos, though pizza is stereotyped as "unhygienic" food. Though, the sales declined heavily
after the You Tube video about employees of Dominos doing unethical things with Pizza at
work.

QUALITY ASSURANCE & QUALITY CONTROL:
"The agreement is done with suppliers by Dominos regarding the supply of food ingredients
and packaging. All the details are written in black and white with specifications. This pact is an
approval of procedures and moreover, high quality check is made by food technologist to
ensure the safety, legality, and consistency. There is also a food audit program that ensure food
safety is maintained. The samples as well deliveries are analyzed and checked by ensuring
quality checks as well the consumer's feedback is also taken to maintain quality assurance"
(Tripathy, 2011, P. 35). Furthermore, Joseph (2013) states that Dominos has focused on quality
and services that has increased its revenue by 6% in UK. Despite this, still it lacks the quality
food standards in the service deliverance in the other regions.
INNOVATION AND IMPROVEMENTS:
According to Riley, (2010), the product as well the process of Dominos has continuously evolved
with innovations in last 50 years to ensure quality and efficiency is maintained. (a) Paradigm
Innovation (b) Position Innovation (c) Process Innovation and (d) Product innovation are four
major areas of focus for Dominos.

Figure 17 Innovation:

Radical innovation is need of company that is explored by Dominos in its supply chain system.
When changes are essential, the supply chain incorporates it. The technique of three
dimensional car top sign is viral marketing, introduced by Dominos is an example of position
innovation. Process innovation at Dominos can be seen in 30-minutes delivery approach
(Goldenberg & Mazursky), and spoodle development for sauces (Tripathy, 2011). Domino's
product innovation is visible in corrugated boxes of pizza so protect it from physical damage,
moisture, and preventing cheese to stick to box, and heat wave bags to keep it hot.
CONCLUSION & RECOMMENDATIONS:
To put it in a nutshell, at present Dominos is in state of change as from the detailed analysis of
the operations at Dominos, it is evident that innovation has been its key approach to make its
operational strategies work in positive and constructive manner. It has the potential to come up
with innovative as well cost effective operational strategies to increase its efficiency in the
operations management. On the basis of 5-performance objectives, it can be said that Dominos
has high speed, dependability, flexibility in operations and has moderate quality while cost is
high but under control so far. It is more of initiator who comes up with new innovation to
compete with rivals as it never take pull-based approach but posses push-based strategies. The
operational strategies have been designed after the customer feedback to ensure that the
operations are done to satisfy the needs of consumers, especially take away customers. The
consumer survey done in 2009 revealed that the quality was not up to standard and it served
the basis for improvement as the company re-designed it's production process according to
customer's taste..
Despite some serious challenges from the competitors, still Dominos is experimenting and
increasing its base products such as shifting from core product pizza towards club sandwiches.
This has further complicated the supply chain for the organisation as the time of cooking has
increased which ultimately indicating that the delivery time extends. The speed and durability
factors of performance are affected by it. Being, in the state of change, the picture is not clear
at present but if the expansions are being managed by the Dominos in effective and efficient
manner then it may provide leverage to strengthen core products by increasing its overall
market share.
The supply chain management is working in right manner but there is a need to have total
quality management that can reduce the wastage and error by ensuring quality is kept first
priority. Furthermore, in assembly line system, Dominos cannot maintain proper balance due
to different activities consumes time differently and it is not automated as uneven flow in the
process occur due to different efficiency level of team members. This is one of the drawback of
make line as in peak times, there can be blockage in production. Moreover, high quality GPRS
navigation systems should be installed in cars and so that on-time delivering in the peak hours
can be made possible due to topographical knowhow as more than 60% of sales of Dominos is
through home deliveries.
There is need of proper inventory management as at time the sock of dough is excessive and
the boxes etc are more than normally required. The Master Franchise should be connected with
the stores to show the exact requirements and ERP should be used by the stores also to keep a
regular check. The stock management areas should be developed and distribution channels
should also be very speedy and effective to deliver the material in time. A stock control tool
such as supply chain optimization tool should be used and inventory optimizing software should
be kept for maintaining the track. Similarly, the quality should be improved by introducing
check sheets and control charts should be used more frequently. To enhance customer loyalty,
emotional connection should be made with the product by training staff to be more friendly
and the environment should encourage the families to visit. It should increase its promotions
on social media, or viral marketing as by emotional intelligence is used in promoting the brand
should be done so that it facilitates the operational activities to progress in right channel.










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