Report on

Supply Chain Management of Domino’s

Submitted by:

Ajay Singh Chauhan PGDM/2nd sem/201027

Manab Jyoti Gogoi PGDM/2nd sem/201028

Raja Das PGDM/2nd sem/201029

Joseph Mukherjee PGDM/2nd sem/201030

Bimalendu Konar PGDM/2nd sem/201031

Partha Sarathi Paul PGDM/2nd sem/201032

Nilam Pokhrel PGDM/2nd sem/201033

Nilam Das PGDM/2nd sem/201034

Jyoti Ray PGDM/2nd sem/201035

Gaurav Tripathi PGDM/2nd sem/201036

INTRODUCTION

Domino’s pizza stores are operated by Jubilant FoodWorks Limited, a food-service

company which holds the Master franchisee rights for Domino’s pizza for India, Nepal, Sri

Lanka and Bangladesh. In January 1996, the company opened their first Domino's pizza

store. In September 14, 1996, the company was converted into a public limited company and

the name was changed to Domino's Pizza India Ltd. The Company was formerly known as

Domino’s Pizza India Limited but changed its name to Jubilant FoodWorks Limited (JFL) in

September 2009.

Domino’s has built a niche in the home delivery arena and has built a branding

strategy around it. In the year 2004, they launched '30 minutes or free' campaign which

promised a quick and fresh delivery of pizzas at the customer’s door step. Presently Dominos

uses occasion based segmentation as the most important way to segment the market. For

family celebrations and small parties the emotional component of “Khushiyon Ki Home

Delivery” and the implicit feeling that it is not just food but happiness which is getting

delivered makes it an attractive option for family celebrations.

The company was the largest pizza chain in India and one of the fastest growing

multi-national fast food chains between 2006-2007 and 2008-2009, in terms of number of

stores. As of March 11th, 2010, the company operated 300 stores in India located in 20 states

and union territories, as well as 5 stores through a sub-franchisee, DP Lanka in Sri Lanka, all

in Colombo. Their Domino's pizza stores in India are generally located in neighborhood

markets in urban areas. Out of 300 stores in India 234 stores also had the dine-in facilities, as

opposed to their global strategy, where the main focus has been on home delivery. It also

operates pizza stores located in food courts in shopping malls and in institutional campuses. It

is currently based in Noida, India. Below is a map of India showing the cities in which it

operated pizza stores.

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SUPPLY CHAIN MANAGEMENT

Initially, Domino’s had a simple supply chain model. It had three commissaries in

New Delhi, Mumbai and Bangalore, which worked as self-contained, independent outfits.

They bought their own wheat, tomatoes and other ingredients, processed them, then delivered

them in refrigerated trucks to each outlet. But increasingly, as volumes began to grow and

more towns were brought under the fold, the model stretched far too wide. In January 2000,

Domino’s began rolling out its own logistics model.

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Domino’s plan to expand the business led it to revamped its entire supply chain

operations, from sourcing raw materials to shipping them for processing at a central location

to delivering it to the customers. Domino’s first decided procurement strategy for its key raw

materials like wheat, baby corn tomatoes and spices. For instance, wheat was cheapest in

Jalandar’s wholesale market. Its refrigerated trucks got the wheat back to the commissary in

Delhi.The Commissary processed the wheat and prepared the pizza dough. The pizza dough

and other items prepared in commissaries were then sent to the retail outlets again in

refrigerated trucks. The temperature inside the truck was fixed based on the distance between

the retail outlets and the commissaries. This was to set the dough at a particular level when it

reached the outlets. The retail outlets had to use up the processed dough within three days of

delivery. If they failed to do so for some reason the entire quantity was discarded.

As the trucks had to go through Chandigarh, to reach Jalandhar, and since

Chandigarh was a potential market for Domino’s products, it opened an outlet there. The cost

of entry was very low because there was no additional transportation cost. The same logic

was extended to Shimla. From Chandigarh, Shimla was just a three-hour drive away with a

large market, especially in the tourist season. And on the way back to Delhi, the trucks pick

up cheese from Karnal, a town on the Chandigarh-Delhi highway. This cheese was

transported to its commissaries across the country

Based on the agricultural map of India, Domino's looked for the best product at the

lowest cost.Thus, tomatoes come from Bhubaneshwar, spices from the south, baby corn from

Nepal (where it's 40% cheaper than in India) and vegetables from Sri Lanka (Refer Table I).

Similarly, Domino's India planned to extend its operations to Nepal, Sri Lanka and Dhaka.

The company planned to establish a commissary in Sri Lanka. 

TABLE IOUTSOURCING THE INGREDIENTS

Wheat Jalandhar (Punjab)

Cheese Karnal, Haryana

Tomatoes Bhubaneshwar, Orissa

Spice  South India

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Baby Corn Nepal

Exotic Vegetables Sri Lanka

Pepperoni Australia

Jalapeno Spain

Supply chain model of Domino’s

There were three obvious benefits of the revamped supply chain model:

1. Lower transportation costs

2. Cheaper procurement

3. Economies of scale.

It also cut out the duplication in procurement and processing of the raw materials

across each of the three commissaries. Based on the agricultural map of India, Domino’s was

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looking for the best product at the lowest cost. Identifying specialty crops in each region also

had strategic implications for Domino’s. It allowed the commissary in a region to specialize

in processing a particular crop. For instance, the commissary for the eastern region in Kolkata

was responsible for buying tomatoes, processing them and then sending them to all the other

commissaries. Similarly, the northern commissary sent out pizza bases. This way, not only

did it cut out duplication, the dangers of perishability were also minimized. Domino’s also

planned to use its fleet of 25 refrigerated trucks to transport products of other companies on

the same route. The savings from the logistics model and money from third-party

transportation was passed on to customers in the form of lower prices.

LOGISTICS

Domino’s has an association with GATI for meeting its distribution and logistics

requirements. They have a Logistics requirement for sending frozen foods, which have to be

sent at a temperature of minus 18 degree Celsius and of refrigerated trucks in which food is

sent at a temperature range of between 1 to 4 degrees Celsius.The four commissaries

(Regional Centralized Facilities) – Delhi, which serves the whole of North; Bangalore, which

serves whole of South India; Kolkata for the Eastern region and in Mumbai, serving the

whole of Western India. There are inter-commissary movements that are regularly required

too. In the North, they make fifteen deliveries a month in stores in NCR and approximately

ten deliveries a month to outstation stores, which are in excess of hundred in total. Also they

use reverse logistics to pick up material from the vendors to their central facility in Delhi.

REFERENCES:

http://www.icmrindia.org/casestudies/catalogue/Operations/OPER005.htm

http://www.capitaline.com/user/framepage.asp?id=1&treeid=1

http://investing.businessweek.com/research/stocks/people/board.asp?ticker=9515743

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Jubilant Foodworks IPO prospectus Jan 2010

Mr Yogesh Singh-Logistics Manager

Domino’s Pizza

Ph. No.-9810306880

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