Supply Chain of Pizzahutl

Supply chain management on: Pizza hut

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SUPPLY CHAIN MANAGEMENT

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Supply chain management on: Pizza hut

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Table of Contents Part I: 1. Elaboration of Supply Chain of Pizza hut 2. Pictorial Supply chain of Pizza hut 3. Adjusting supply chain members capabilities 4. Ware house 5. Mode of transportation 6. Head office 7. Pizza hut outlets Part II. - Operations/ Production Part III. - Improvement in Supply chain

- Measures of supply chain performance References

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Supply chain management on: Pizza hut

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Company Overview: The largest national pizza chain, Pizza Hut has over 34,000 locations and has annual sales around $10 billion. Pizza Hut is a YUM! food brand, which means it has a comprehensive sustainability report that the public can access. Pizza Hut is also in the process of exploring green building design and has already incorporated some efficient fixtures in its stores. Pizza Hut offers boxes made with some recycled content. Pizza Hut also offers some natural ingredients in some of its items. Finally, Pizza Hut is beginning to track the impact of its supply chain I.

Brief Elaboration of a complete supply chain network for Pizza

Supply chain of pizza hut starts from the suppliers of pizza hut. There are direct suppliers and indirect suppliers of Pizza hut. Direct suppliers of Pizza hut are three named as: • • •

Pepsi Company Bake parlour company (Buns) Habib oil Mills (First mineral water)

And all other material like Cutlery, meat, vegetables, sauces, and all other material come from their warehouse named as “Commissary”. That material is purchased by Commissary means indirect suppliers of Pizza hut are: •

• •

Meat market (Their owns cattle) Vegetable market Sauce companies

All direct material is demanded on daily basis and the mode of transportation which they used is trucks mostly they are Shezore. On every day end pizza hut manager forecasts the demand of next day and gives the order to the suppliers than next day morning the goods come to the Pizza hut. All indirect material i.e. vegetables, sauces, meat, cutlery and al material is purchased by the ware house named by “Commissary”. The material comes from warehouse by the trucks on every Wednesday. Then Pizza hut takes the orders from its customers who come to pizza hut and also take the orders from the delivery service there is a specialized system in pizza hut which is connected to the delivery orders service so that 1 order list at a time come in the kitchen and at the manager’s table also. Than production of pizza according to order starts and they deliver it with in 45 Iqra University

Supply chain management on: Pizza hut

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minutes at the door of customer and in pizza hut they just take 20 minutes to prepare the pizza and serve it to the customer. They claim that: “If we are unable to serve our customer within 15 minutes than there is no need to pay money to us”

Supply Chain of Pizza hut Direct supplier S1

S2 (Buns) Bake Parlour

Pepsi Company

S3 First water (Habib oil

Daily

Indirect Supplier S4

Dough

Filling Topping

O r d e r s

O r d e r s

W e d n e s d a y

Bake (Cheese

Customer (Pizza Hut)

Delivery Service Iqra University

W e e k l y B a s i s

Sauces Company S5 Meat Market

S6 Mandi (Vegetables)

Commissary (Ware house)

Supply chain management on: Pizza hut

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Adjusting SC Member Capabilities –

Manager audit the Supply chain members capabilities & their partners, to determine consistency with needs of end customers & SC.

–

Pizza hut continually reassess performance with respect to requirements.

–

The best SC performers are more responsive to customer needs, quicker to anticipate changes in the markets, & control costs much better.

Ware house: The fast food chain recounts its transition from early data mining efforts to a project where it recovered the costs of software licensing and started generating revenue. Its ware house is situated in Bahadurabad. From where they have got all the material

except direct one. Its ware house is named as “Commissary”. All management programs are built on a data warehouse of millions of customer records gleaned from point of sale transactions at its restaurants. They know your favourite topping, what you ordered last and whether you like salad with your meat lover's pie. Much of that has to do with data mining, a technology that converts details from customer data into competitive intelligence that companies use to predict trends and behaviours. Pizza Hut uses a product called Teradata Warehouse Miner and after a year using it to better manage direct mail campaigns, the chain and its parent company, Yum Brands (Pizza Hut is one of eight restaurants in the group that includes Kentucky Fried Chicken and Taco Bell) are starting to see results. The chain, which is affiliated with Pepsi Corp., first got into the CRM game by using the more than 10 years of order history in its database, consisting of all purchases delivered to households that ordered by telephone. Pizza Hut claims to have the largest fast food customer data warehouse in the world with 40 million US households or between 40 and 50 per cent of the US market. The existence of duplicate households in the warehouse (same family, different phone number) made it difficult to do direct mail campaigns because of higher postage costs. It was also a challenge to target the right homes for a particular campaign and to accurately apply results from a particular mail campaign. In the first year of using the Teradata Warehouse Miner product, manager said Pizza Hut was able to recover the cost of licensing, integrating and training staff to use the product and it made money for the company in the first quarter of use.

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Supply chain management on: Pizza hut

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Manager would not give the dollar value of revenue from using the data mining product, saying the information is now considered critical to the company's competitive advantage. ""We made so much money this year on this we're afraid our competition will start using it,"" said manager. Using Warehouse Miner meant an improvement in ""household uniqueness"" from 80 per cent to 95 per cent. While direct mail has traditionally been a breakeven cost centre, Pizza Hut has managed to turn it into a profit centre with increased ROI, manager said, in excess of 200 per cent. Again, precise ROI was not available as it is ""confidential."" ""We use it to do target marketing and find the best coupon offer for that household. We can profile and segment customer households for groupings according to patterns of past pizza buying behaviours, offer preferences and price points,"" he said. ""We can also use it to predict the success of a campaign."" Pizza Hut now tracks not only phone orders, but online orders and can track in real time what commercials people are watching and responding to. By using Teradata Warehouse Miner, all data mining functions run directly inside the database. ""A lot of data mining can be sloppy as a result of situations where they are sampling from too small a source and it comes up with conclusions that are too preliminary. With Teradata Miner, you can scan all the data as opposed to sampling,"" Manager said database vendors are pushing mining into the warehouse and they are doing it so companies can exploit all the technology of data mining from the database. "Pizza Hut is taking advantage of this," The added benefits of in-database mining include minimizing data redundancy, reduced proprietary data structures and simplified data and system management. ""You get better results using a larger amount of detailed data. You eliminate the human factor that can lead to potential errors during data movement and samples,"" manager said.

Mode of Transportation:

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Supply chain management on: Pizza hut

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Bikes used in delivery service

Trucks which bring material from ware house to pizza hut

Head office: Pizza hut head office in Karachi is at Shara-e-Iran. Iqra University

Supply chain management on: Pizza hut

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Supply chain management on: Pizza hut

City KARACHI

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Outlets

Address

Clifton 1

QM Building, Plot# BC 15, Block, Khayaban-e-Roomi, Clifton

Clifton 2

Plot No. GPC-6, KDA Scheme 5, Kharkhar Chowrangi, Clifton

Zamzama

19-C, Zamzama Commercial Lane-9, Phase V, D.H.A

Gulshan-e-Iqbal

36-B, Hina Centre, Gulshan-e-Iqbal

I.I Chundrigar Road

Mitha Chamber, I.I Chundrigar Road

North Nazimabad

D-5, Block-D, North Nazimabad

Sea View

Sea View

Cantt. Station

Cantt. Station

Shahbaz

14-C, Lane 2, Kh-e-Shahbaz, Phase 6, D.H.A.

Atrium Mall

249, Staff Lines, Zaib un Nisa Street, Saddar

Shaheed-e-Millat Road Shop S-104 & Mazzanine Floor, Plot 7/4, block 3, DMC Housing Society, Shaheed-e-Millat Road

LAHORE

HYDERABAD

ISLAMABAD

Rashid Minhas Road

Plot No. 8, Block 10-A, KDA Scheme No.24, Main Rashid Minhas Road

Sharae' Faisal

Shop No. 6, Al-Kamran Centre, Plot # 7-A,Block 6, P.E.C.H.S.

M. Ali Society

Plot No. 12-C, Reliance Arcade, Muhammad Ali Soicety

Gulshan Block 7

1-B/FL-6, Block 7, Gulshan-e-Iqbal

Nazimabad 2

Opposite Matric Board Office

Korangi (Industrial Area)

Plot ST-6/4, Sector 24, Chamra Chowrangi, Korangi Industrial Area

Gulberg

89/B-1, Gulberg-III, M.M. Alam Road,Aligarh Chowrangi

Mall Road M-3

73- Mall Plaza, The Mall Fortress Stadium

Defence

122-Y, Lahore Cantonment Soceity, Defence

Railway Station

Railway Station

Johar Town

Plot #15, Block N, Johar Town

Iqbal Town

Block 6, Near Akbari Store, Allama Iqbal Town

Barkat Market

Barkat Market 8, Power Block, Garden Town

Gulberg Delco

4-E-1, Hali Road, Gulberg 3

PSO Sunshine

PSO Petrolium (Sunshine), Abid Majeed Rd. (Girja Chowk), Cantt.

Hyderabad

Plot # 45, Hotel Indus, Thandi Sarak

Jinnah Super F-7

13-1, Sector F-7, Markaz, Jinnah Super Market

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Supply chain management on: Pizza hut F-10

PESHAWAR

Peshawar

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1-K, Plaza, F-10 Markaz

Captain Karnal Sher Khan, Stadium, ShamiRoad, Peshawar Cantt.

II. OPERATIONS/PRODUCTION: Pizza Hut estimates demand on daily bases. Demand estimation is based on past experiences where chances of buffer are also considered and 10% buffer ratio is taken. Demand estimation is done through the mutual participation of the managers of the particular outlet. While estimating customer’s demand, both, the home delivery orders of customers and those customers who used to dine inn, take into account. After the demand estimation, operation process started. From 8am to 11am pizza hut gets open for the production function only. From 11am till 3 at night, customers are welcomed to come inn and enjoy their meal. Operation/production includes the preparation of pizza dough according to the estimated demand. The preparation of dough is go through by three different processes. First process includes the addition of different spices and yeast in flour. All the ingredients are measured and followed SOP’s to help maintain the same taste at all outlets in all cities. Skilled and trained labor is used to make the whole process speedy and efficient as well as to reduce the lead time of each process. After the addition of spices, in second process, the different sizes of dough is prepared to response the requirements of customers. In third process, dough get baked. All of the three processes include machines and labor both. Each dough is not prepared by a single person but each person is assigned to complete a single task in order to improve efficiency. Till 11am, all the dough get prepared and rest of the pizza preparation process i-e, filling, topping and baking, is done after receiving orders from customers. After the order placement of customers, preparation of pizza get started, the preparation time of pizza or the serving time of customer’s order is max 16 minutes. Whether there are too many customer’s orders and takeaways, but the pizza hut’s serving time never exceeds up to 16 minutes. Their ready dough helps them to make the entire customers satisfy in time. Incase of unexpected large number of customers or too many take away and delivery orders, the work is done in a way that one person spreads sauce, other add veggies, other one fills meat and the other Iqra University

Supply chain management on: Pizza hut

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person spreads cheese on it and then finally pizza goes in oven. This chain helps to serve customers as quickly as possible. But in normal routine only one person is responsible to prepare a single order (filling, topping etc). The detailed steps in pizza production are given below: ➢ ➢ ➢ ➢ ➢ ➢

➢ ➢ ➢

➢ ➢ ➢ ➢

➢ ➢ ➢

Identify toppings Saucing procedures Using quality rings Layout method overview Placement of Pizza in the oven In-store production, time concept Need to give priority to home delivery tickets Hands-on practice of making pizzas Making half-n-half pizzas, single topping pizzas, special instructions, substitutions, making Using the Peak Revenue Period Checklist Explain the service times of all items served by the station Closing of the make table Storage of left over toppings Cleaning procedures Thawing charts usage and placing meats for thawing Tracking wastages on the make table\

In pizza hut, here is no inventory left at end. As all the pizza’s are prepared as per customer’s demand. But sometimes, incase of any food festival or food stalls at exhibitions, there may some error occur to estimate the demand of unexpected arrivals of customer. If expected demand is high as compare to actual demand then finished goods inventory may left. At the end the cost has to be paid by company. To cut this cost pizza hut has a straight policy that this ending inventory (remaining pizzas) neither distributed among employees/workers nor stored in refrigerators to resell the next day but directly through into dustbin. The aim is to demotivate workers for producing extra units, keep them not to think that remaining pizzas would be serve to them or they may takeaway to their homes. The other reasons are to estimate demand more carefully and not to compromise on quality.

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Supply chain management on: Pizza hut

III.

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IMPROVEMENT IN SUPPLY CHAIN PERFORMANCE

Pizza hut has worked a lot to increase the responsiveness towards customer’s demand. Few years back they had some complaints from the customers, who ordered for home delivery service. Actually the pizza hut claims that where ever you live, your location does not matter, we deliver your order with in 45 minutes to you. For this purpose they have designed their own software system at which they save the data (name, contact number and address) of customers who call at their call centre to order pizza and enjoy the home delivery service. Pizza Hut now tracks not only phone orders, but online orders and can track in real time what commercials people are watching and responding to. After receiving the order from customer, pizza hut let go the bike rider. But sometimes customer complaint that they did not receive their order at the time. This may happened because of traffic jam, in case of accident of bike rider or due to disorder of bike in the middle of the way. To make their customers satisfied with their service, pizza hut found a solution that whatever the sort of, whenever there may some problem occur, the bike rider must has to call at pizza hut and make them aware of the problem. After receiving call from that rider, pizza hut immediately sends the other rider to deliver the order and at the same time call centre connects the call to that customer who is waiting for his desired order, explains him whole situation and requests him for his cooperation and patience (if there may few minutes exceeds up to 40 minutes). By sending another person to deliver customer’s order, pizza hut now successfully improves the flow of its supply chain process. After the implementation of specialized software they have achieved: •

Maximum return on their technology investment

•

Provides the fastest time to value

•

Enables them to work with a single vendor to reduce integration and implementation issues

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Is built by experts on a foundation that expands as their business grows

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Rapid Time to Value

•

Cost effective.

By this way they have improved their supply chain process. Iqra University

Supply chain management on: Pizza hut

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Measures of SC performance: Pizza hut using performance measurement to achieve leadership position & twice as likely to handle a major change successfully. Supply chain strategy must consider the potential trade-offs existing between: –

Cost

–

Quality

–

Quantity

–

Service

But Pizza hut compete on cost and services basis. Their Performance measurement system is link with its all suppliers or traders to achieve breakthrough performance in satisfying the end users.

Supply Chain Asset Managem

Invento ry days of supply

Hardly 1 day cash is tied in inventory

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Supply chain management on: Pizza hut

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References • •

Supply Chain Manager Pizza hut Haidery Branch Karachi “Miss Sehar Tariq”. Pizza hut Sites In Pakistan

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