Supply Chain

The creation of value to gain competitive advantage in Domino’s supply chain is based on the strategic goal of maintaining a supply chain that is efficient and that is able to sustain competitive prices. To achieve this, the firm’s   adopts an approach of risk management and cost management within the domestic system of supply chain. This approach also adopted for cost and risk management at the store level. This step has been very critical to the firms’ in attaining about 1,115 franchisees in the United States which operates 4,475 local stores in U.S that also own. Serving as a support system and resource for its franchisees, the Domino’s headquarters is able to initiate value creation. The firm trains corporate workers on how to operate a store so that the business is pegged on the success of the all the franchised stores (Bell, Andrews & Shelman, 2013).  For quality enhancement, the local franchisees were allowed to source and buy their own supplies and ingredients in menu but Domino ensured that they approve of them. Moreover, the ingredients and the supplies had to be the approved ones. This enabled the firm’s domestic menu to reach its biggest state that also very diverse back in 2010, at the time when it offered various products options to its customers (Bell et.al 2013). For the purpose of remaining at the top in pizza- industry that is highly competitive and with relatively similar prices, the main pizza chain turned to differentiating themselves on the basis of customer experience, product quality and taste.  Domino assisted its franchisees in maintaining constant product quality and in the improvement of store economics by the use of various tools including some that firm had designed such as Spoodle and pizza oven.  Key equipment that assists in quality in product is the make-line equipment that was designed with the purpose of speeding up the making of pizza. It enables the pizza makers to worry less about wastage of food and hence, could use as little as 24 seconds in the preparation of a pizza (Bell et.al 2013). This means that there was reduced time for production, storage and delivery of the product as and when required by the customers.  These tools also ensure that stores are constantly producing high standard menu items, as expected by Domino and deliver them in a fast and efficient way. This also enables the firm to sustain efficiency as required in the delivery of pizza as a perishable product. The firm’s improved competitiveness is seen in that its franchisees became attracted to its local supply chain due to the consistency and efficiency that it has managed to sustain. The company’s value and competitiveness is also enhanced by encouraging the franchisees’ participation in a profit-sharing pact.   

The value of quality and consistency is regarded highly given that the company’s products have an influence on the brand image. Through transparency aspect saw the company adopt new technologies more so the use of networking sites like Facebook, Youtube and Twitter as their popularity increased (Bell et.al 2013). This technology enabled the firm to address issues in public perception especially of its products and facilitated the improvement of efficiencies in all of its stores.  In a 2009 scandal where employees recorded and posted a video online through Youtube showing food products being prepared in an unsanitary manner, the firm faced two main threats to the reputation of its brand and the perception of the firm by the company (Bell et.al 2013). The video had been video for over million times on youtube and the issue had spread throughout the online platforms such Twitter.   Rather than just trying to remove the video from the online platform- Youtube – the firm resolved to determine the culprits. The continuous growing effect of such viral sensations had been missed by the firm management and this meant that Domino faced a crisis on public relations which affected its reputation negatively in a big way for some days until it was determined that the video was just a hoax.  During the scandal the firm implemented a companywide policy whose focus was transparency and was turned into a major campaign when the firm resolved to alter the pizza recipe. This enable the firm’s pizza product to be graded higher than any other chain of pizza on the basis of general   satisfaction of customers , even though a survey had ranked the pizza products last in terms of taste along with other brands with countrywide presence(Bell et.al 2013). Furthermore, the firm ranking in top services delivery and low quality presented an opportunity for improving the firm’s weaknesses in turn enabling the firm to acquire more market share as compared to its competitors. Such an achievement can be attributed to the firm’s transparent and bold marketing campaign that was founded on open acknowledgment of taste problems with firm’s products. The campaign, through the social media and television showed customers who had complaints on the taste of pizza later acknowledge a new better taste (Bell et.al 2013). The achievements especially on increased market share showed that the risk taken in such a transparent approach were worthwhile.

The effectiveness of   the US supply chain model of the firm earned a strong following among the local franchisees who were also dedicated with 99 percent choosing to be customers of the supply chain (Bell et.al 2013). With such a following, the firm was able to have its new brand’s menu ingredients and supply to be sourced by local franchisees given that standard was highly observed. Furthermore, the supply chain system was centralized and vertically integrated in the manufacturing of dough and the distribution system with nationwide presence allowed the firm to attain low cost due to economies of scale and ensure quality is tightly maintained for the new pizza.

 

Macksood should implement the Domino supply chain model in reaching out to the international markets. The model grants exclusive rights of ownership to a master franchisee over the supply chain and stores for specific country, countries or region and then sub-franchise the brand within the market (Bell et.al 2013). Given that such a franchisee would be required to be deeply knowledgeable about local market and have access to the market, the Mucksood firm would not have to incur huge debt and financial burden of open stores in the foreign market. The model would allow the firm to achieve the necessary localization, faster expansion as the master franchisee would bear the financial burden in terms of capital required to recruit its own franchisees and establish new stores in the international markets. The firm would also put a threshold on the number of stores that a franchisee can open, so that it does not run into debt problems and that way keeping them profitable. This model would enable Mucksood to expand and grow in the international markets for its sandwich products on the basis of an efficient and locally established supply model.

Reference

Bell, D., Andrews, P., & Shelman M. (2013). Domino’s Pizza.  Harvard Business School.