SUPPLY CHAIN TO ENHANCE CUSTOMER VALUE

GROUP 1:
HARISH.P HAEMANANTH.R RAHUL KRISHNA.K TRUPTHI.S.VADANA VIDYA.T

Supply chain management

y The sequence of organizations - their facilities, functions, and

activities - that are involved in producing and delivering a product or service. y Supply chain represents a value delivery system starting from raw materials to final product. y Supply chain involves procuring the right inputs , converting them efficiently into finished products and dispatching them to final destination.

Elements of Supply Chain Management

Element
Customers Forecasting Design Processing Inventory Purchasing Suppliers Location Logistics

Typical Issues
Determining what customers want Predicting quantity and timing of demand Incorporating customer wants, mfg., and time Controlling quality, scheduling work Meeting demand while managing inventory costs Evaluating suppliers and supporting operations Monitoring supplier quality, delivery, and relations Determining location of facilities Deciding how to best move and store materials

Flows in a Supply Chain

Material Flow

Converter Supplier Source Supplier Distributor

Retailer

Converter Distributor End-User

Consumers

Value-Added Services Funds/Demand Flow Information Flow Reuse/Maintenance/After Sales Service Flow

Dominos
y Dominos Pizza is the second largest franchised pizza chain in the y

y y y y

U.S.A. Dominos entered India in 1996 through a franchise agreement with Delhi based industrial VAM BHARTIYA CORP establishing 16 outlets in Delhi. By 2002 dominos had around 150 outlets covering over 20 major cities in India. When dominos entered India the concept of home delivery was still in its nascent stages. It came with a strategy of 30 min delivery system within the time of order. This home delivery proposition worked its way into Indian mindsets as it offered compensation of 30 on price tag if there was a delay.

Dominos supply chain model

Initial model:
y initially dominos had a simple mode comprising of three self contained

commissaries in new Delhi, Bangalore, Mumbai which brought their own wheat, tomatoes and other ingredients, processed then and delivered them in refrigerated trucks to each outlet. y With the increase in its operations across India the existing model of dominos has to be revamped. y It also realized that efficient and effective supply chain would help it significantly to reduce costs

Revamped model
y Dominos follows vertically integrated supply system i.e automatic

delivery of raw materials cuts out a lot of the "back of-store" activities.

Cost effective procurement:

it procured raw materials from places where it could reduce its costs and gain excellent quality value proposition. Example: it brought wheat from jalandhar and baby corn from Nepal(where it is 40% cheaper than India).

Converting logistics problems into business:

y Excellent fleet management for optimum resource

utilization:
Dominos opened outlet in every potential market , which fell in route

between the commissary and places where it procured raw materials. It helped them to reduce transportation costs and cheaper procurement and economies of scale.

y Understanding agro climatic zone crop

specialization practices:
It identified specialty crops in each region and then entrusted commissary in that region to process that specialty crops.

y Developing the cold chain logistics:

It used 25 refrigerated trucks to transport its raw material. It also transported products of other companies in same route. It helped dominos to gain profit in logistics centre.

SWOT ANALYSIS OF DOMINOS

STRENGTHS:
Dominos Pizza Inc. strong brand equity gives it a competitive advantage over other industry players. y The intelligent marketing strategy of heavy advertising is a key strength to make its brand image retained and differentiated in the minds of its customers. y Dominos Pizza Inc. efficient and effective supply chain management enables it maintain its goodwill and promises. Its extensive distribution channels add to its plus points. y In the global era of e-commerce and online shopping it has enabled to keep pace with the technology by offering online menus, click order placement services etc.
y

WEAKNESS
1.High fat and high calorie food not good for health conscious people 2.Franchise management. 3. High staff turnover due to lack of training and development

Opportunities
y There are favourable market expansion opportunities for Dominos

Pizza Inc in India and China where currently it have very few franchises moreover new product development by introducing new products in the current menu are a step that can be taken.
y Especially introduction of new flavour additives and pizza toppings that

are region specific can be a good stride for Dominos.

y The distribution network should be further strengthened so as to

ensure market penetration in the existing markets at maximum optimum levels.

Threats
y The major threat to Dominos Pizza Inc., like all other fast food

restaurants, is the increasing consumer awareness about the he harmful health implications associated with high calorie fast food items. y The researches in the health sector about the fast food products being saturated with fats, oil, sugars and sodium etc pose a threat to Dominos. In addition to this there are other researches showing the potential harmful effects associated with the artificial additives, flavours and preservatives added to these fast foods. y Intensive competition and franchise management which vary with currency fluctuations pose a threat to the company.

Recommendations for creating an Effective Supply Chain

1. Develop strategic objectives and tactics 2. Integrate and coordinate activities in the internal supply chain 3. Coordinate activities with suppliers with customers 4. Coordinate planning and execution across the supply chain 5. Form strategic partnerships

Mc Donald's
McDonald's was started as a drive-in restaurant by two brothers, Richard and Maurice McDonald in California, US in the year 1937. By mid-1950s, the restaurant's revenues had reached $350,000. Ray Kroc, distributor for milkshake machines, expressed interest in the business, and he finalized a deal for franchising with the McDonald brothers in 1954. He established a franchising company, the McDonald System Inc. and appointed franchisees.

 In 1961, he bought out the McDonald brothers' share for $2.7 million and changed the name of the company to McDonald's Corporation. In 1965, McDonald's went public In 1996 Mc Donald's came to India. Two separate operations in Northern & Western India. Partners and their management teams trained extensively in Indonesia & the U.S. Approximately 75% of the menu available in McDonalds in India is Indianized and specifically designed to woo Indian customers. The McDonald's philosophy of QSC&V is the guiding force behind its service to the customers.

BUSSINESS MODEL
McDonalds operations is a unique business model comprised of the Company, our suppliers and franchisees (also called owner/operators). Often referred to as a three-legged stool, all three parts of this business model are essential to McDonalds success around the world.

McDonalds Supply Chain

McDonalds has a dedicated supply chain in India and sources 99% of its products from within the country. The company has strong backward integration right up to the farm level. McDonald's has extremely good logistics system in India. It has some systematic procedures 1.quality assurance 2.demand based delivery 3.centralized ware housing 4.cold chain maintenance

Relationship between McDonalds and its suppliers

Trikaya Agriculture: Supplier of Iceberg Lettuce Vista Processed Foods Pvt. Ltd: Supplier of Chicken and Vegetable
range of products (including Fruit Pies)

Dynamix Diary: Supplier of Cheese Amrita Food: Supplier of long life UHT Milk and Milk Products for Frozen Desserts Radhakrishna Foodland: Distribution Centres and cold storages. Completely dedicated distribution and supply chain.

Relationship between McDonalds and its suppliers

Trikaya Agriculture Vista Processed Foods Pvt. Ltd Dynamix Diary Amrita Food Supplier of Iceberg Lettuce Supplier of Chicken and Vegetable range of products (including Fruit Pies) Supplier of Cheese Supplier of long life UHT Milk and Milk Products for Frozen Desserts Distribution Centres and cold storages.

Radhakrishna Foodland

SWOT ANALYSIS OF MCDONALDS

STRENGTHS:
Quality measures through supply chain management. Encourage new ideas from within Big Mac Egg McMuffin. Large available amounts of capital for future restaurants due to holding a limited number of corporate owned restaurants. Economies of scale

WEAKNESS
Weak product development Poor relationships with franchisees Fluctuations in profit (which has been improved in 2008 after the franchising of many corporate owned restaurants)

OPPURTUNITIES:
International expansion through continued franchise opportunities. Only serving 1% of the worlds population Growth in the beverage industry (by 2011 - $71.4 billion in sales with 70.8% being coffee drinks) Introduction of local offerings (i.e. Tech Burger with special condiments and toppings)

THREATS
Mature industry Strength of competition More health-conscious consumers Changing demographics Fluctuation of foreign exchange rates Increasing commodity and fuel prices

Effective supply chain lead to strategic competitive advantage for Mc Donald's

Lower inventories Higher productivity Greater agility. Shorter lead times Higher profits Greater customer loyalty Integrates separate organizations into a cohesive operating system

Key changes which have made supply chain management a critical function:
1. Improve operations 2. Manage increasing levels of outsourcing 3. Reduce transportation costs 4. Combat competitive pressures 5. Manage increasing globalization 6. Address challenges posed by increasing importance of e-commerce 7. Tackle uncertainties in complex and dynamic supply chains 8. Manage inventories

conclusion
y Effective supply chain management represents the shift in

focus of business organizations to get the benefits of low operating costs, product availability & customer satisfaction. y Supply chain systems configure value for those that organize the networks. Value is the additional revenue over and above the costs of building the network.

THAN Q