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Table of Contents
4.2 Brief Elaboration of a complete supply chain network for Pizza Hut ............... 20
1. Facilities: ................................................................................................... 24
2. Inventory:................................................................................................... 25
3. Transportation:........................................................................................... 26
4. Information: ............................................................................................... 27
5. Sourcing: .................................................................................................... 29
6. Supplier:..................................................................................................... 30
7. Pricing:....................................................................................................... 31
Conclusion .................................................................................................................. 45
REFERENCES ........................................................................................................... 46
1.1 Prelude
Supply chain management (SCM) is the oversight of materials, information, and
finances as they move in a process from supplier to manufacturer to wholesaler to
retailer to consumer. Supply chain management involves coordinating and integrating
these flows both within and among companies. It is said that the ultimate goal of any
effective supply chain management system is to reduce inventory (with the assumption
that products are available when needed). As a solution for successful supply chain
management, sophisticated software systems with Web interfaces are competing with
Web-based application service providers (ASP) who promise to provide part or all of
the SCM service for companies who rent their service. SCM is a conscious and
deliberate control, integration, and management of the business functions. SCM
contributes and affects that supply flow through the business for the purpose of
improving performance, costs, flexibility etc, which bring the ultimate benefits of the
end customers or consumers. The supply chain function includes many sub-areas such
as: forecasting and planning, purchasing and procurement, logistics, operations,
inventory management, transportation, warehousing, distribution, customer service etc.
However, it is difficult to find a standard model of Supply Chain Management operating
in the business community particularly in the food chain sector.
All business needs to forecast and plan. To look forward and predict what will be
required in terms of resources and materials in order to deliver their products or services
to their customers in a timely manner. In this area we find SCM activities such as
demand planning, inventory planning, capacity planning etc. The commercial part of
the supply chain is purchasing or procurement. This is where a business identifies
suppliers to provide the products and services that it needs to acquire in order to create
and deliver its own service or product. Costs and terms of business are negotiated and
agreed and contracts are formed. Thereafter the suppliers’ performance and future
contractual arrangements will be managed in this area. This area of the business is
sometimes referred to as purchasing, sometimes, procurement, buying, sourcing, etc. In
its strictest definition purchasing is limited to the actual commercial transaction and no
more, whilst procurement includes the wider elements of the acquisition, including
logistics and performance management.
In its strictest definition logistics refers to the movement of goods or materials, whether
inbound, though, or outbound. In some manufacturing businesses forecasting and
planning will be found within a logistics department, in other businesses logistics will
be exclusively managing the movement and transportation of goods and materials.
Operations are a general management type activity ensuring that a business uses its
resources effectively to meet its customer commitments. Inventory Management
typically takes responsibility for both the replenishment of physical stock, the levels of
physical stock, and of course storage and issue of physical stock. Stock may be
materials and goods sourced from suppliers, work in progress, or finished goods
awaiting sale/dispatch. Transport management can involve the control of a company
owned fleet of vehicles, collecting, moving, or delivering materials and goods, or
managing transport services sourced from a third party transport provider. Warehousing
can involve the control of company warehouse space, or managing warehouse space
sourced from third party providers. Distribution involves the physical distribution of
the company’s products to the sub-distributor or directly to the customer base.
Most people do not recognize customer service as part of supply chain management,
but it is to be considered as an important element. Because the final element is to check
that the customers’ expectations were achieved, and manage any actions necessary to
meet customer obligations and commitments. It is easily understandable that the
success of a company depends a lot on their supply chain management system. The
present success of many companies is the result of their successful supply chain
management system. With the help of well-organized SCM system a company takes
the satisfaction from their suppliers and also from the consumers. Through SCM an
organization can transmit properly what they are looking from the suppliers and
marketers. The supply chain management of agro based products deserves high priority
as it is related to the customer taste around the world. The present study is an attempt
to analyse the supply chain management of a renowned food chain company in
Bangladesh namely Pizza Hut Bangladesh Limited.
different manner from that of the exquisite toppings like black olives, jalapeno,
asparagus, pepperoni etc.
Imported items are ordered to the global inventory regulatory authority keeping
ample amount of inventory in hand, so that no customer has to be faced with
negation, whereas local ingredients are collected for one week keeping in hand.
This is yet another facet which helped us serve the purpose of doing this report.
This report also helped us understand how the global brands like pizza hut
regulate their raw material collection and global supply chain of delivering those
ingredients after assembling those in a global warehouse.
Secondary Sources
Secondary sources include internet, newspaper, articles and annual report of the Pizza
Hut ltd.
A semi-structured and pre tested interview schedule has been used to collect data. Data
has been collected through personal interview during December 2017. The recorded
data has been put into the computer and managed manually.
Estimation of data
Data Collection,
Interpretation
Processing, Factor
Analysis.
Major Findings,
Recommendations.
Time constraint is the main limitation of the study. It was prescribed to submit the
dissertation within two months. Though this was sufficient time but due to lack of
references the time seem to have become limited for gathering such huge information
regarding our report travelling from one outlet to another outlet.
Budget constraint is also a vital lacking of this study. Sufficient budget allocation is
required for collection of data and information from the primary sources. It is very
crucial when the field study covers different cities. Since this report served the purpose
of our academic course no funding was provided from any authorities rather personal
funding was our only source of finance while collecting data for completing the report.
Due to the budget constrain the data of only Dhaka city and its outskirts were collected
and mega cities like Chittagong remained untouched.
Due to the two constraints mentioned above. The sample size of this study had been
limited. Fast-food supply chain has wider network both at home and abroad. The study
is only limited to selected downstream partners. Only 35 respondents from retailers had
been purposely selected from four major cities viz. Dhaka, Chittagong and Sylhet. But
only 13 consumers had randomly been selected from Dhaka city and 8 executives from
the fast-food chain Pizza Hut.
Each and every respondent of this study was not well concerned about the whole supply
chain system of the fast-food chain Pizza Hut. In fact the consumers are not at all
concerned about the supply chain procedure of the ingredients used in the fast-food
chain. They blindly trust on the global brand name and not concerned about the quality
of the ingredients provided by the franchise. Both local and global toppings are
maintained through the supply chain process which diminishes the quality of the food
provided by Pizza Hut. This is one of the major lacking found while doing this report
The supply chain of Pizza Hut Bangladesh limited is not well documented. Therefore
we the researcher faced numerous difficulties to collect secondary data in relation with
the supply chain system of fast-food chain Pizza Hut. No exclusive study had been
found relating to fast-food supply chain in Bangladesh.
Time Frame
Preparation of proposal
for this purpose. Besides, how data were collected and analyzed is also stated. In the
findings section, first, the reliability measures of the pertinent variables are presented.
Factor analysis for the dimensions representing the SCM practices is then highlighted.
Chapter 1 : Introduction
Chapter 2 : Literature Review
– Suppliers
– Manufacturers / producers
– Distributors
– Retailers
– Customers
A brief of their role in the supply chain in underpinned;
As we know that supply chain management is a discipline that manages and controls
the flow of information throughout the various departments to meet the customer
demands. The supply chain starts from the extreme beginning of the manufacturing
process i.e. acquiring the raw materials from the suppliers or in other words choosing
the suppliers and ends at the extreme end of the production process i.e. the customers.
(Raghavan, N.R.S., Viswanadham, N., 2001)
Suppliers: suppliers are a significant party in the supply chain. The raw materials are
supplied / acquired through this resource. In terms of quality of materials / products the
suppliers are held responsible. The price of the product depends upon the price of the
raw material as well and the supply of raw material will influence the company's ability
to meet the customer demand at the right time. Hence we can say that suppliers have a
great impact on the price of the product and company's ability to meet the customers
demand on time. (Riddalls, C.E., Bennett, S., 2002)
Manufacturers / Producers: These are the members who convert raw materials / semi-
finished goods to finished goods. The production process is significant as the company
judges the quality and attributes of the process in this phase; hence manufacturers also
influence the quality of the product. (Riddalls, C.E., Bennett, S., 2002)
Distributors: These are people who are responsible to make the product reach to the
market (retailers). The distributors can be also termed as marketing intermediaries.
There are various aspects associated with marketing of a product and choosing the right
distributors. The reach of the distributor will always be directly proportional to the
availability of the product in the market. (Riddalls, C.E., Bennett, S., 2002)
Retailers: These are people who are at the end of the supply chain. In other words these
are the people who sell the product to the customers (supermarkets, stores etc). They
are one of the significant members in the supply chain as they are in direct contact with
the customers. They represent the product on behalf of manufacturer to the customers.
The demand and customer feedback can be analyzed at this level. (Riddalls, C.E.,
Bennett, S., 2002)
Customers: These are the end users of the products. Customers were not considered as
a part of supply chain, but the contemporary methods and study has added customers
into the supply chain. (Riddalls, C.E., Bennett, S., 2002)
The significance of these parties in the supply chain varies in context to industries.
Inventory size
This helps the organization decide the amount (size) of inventory to be ordered. This is
one of the significant aspects in the fast food industry as this helps the organization not
only order the right quantity but also meet the customer's needs with minimum
resources possible. (Raghavan, N.R.S., Viswanadham, N., 2001)
Stock outs
Stock outs are very common in every trade. This is a situation that arises due to
miscommunications in supply chain parties, lack of analysis, bad demand and sales
forecasting.
Safety stock
This is the excess stock that a firm maintains to manage demand fluctuations. The safety
stock is maintained at the lowest levels as most of the firms are efficient in sales
forecasting.
Reorder Point
This is a point in inventory levels wherein the firm feels the need to order more
inventories.
If we look into the history of the fast food industry, the roots of fast food are from 1920's
and from 1950's this industry saw a rapid growth. There are many reasons for this
transformation in food habits of people. People were busy and did not find time to cook
food or even to wait for long hours after ordering food. There arose the term fast food.
The Asians (Specifically Chinese) are responsible for this term and industry. There lies
the secret behind the customer expectations. Customers expect food to be served
quickly, should be delicious and should be healthy. In this scenario all the parties of the
supply chain play a major role in meeting this expectation. (Tony Hines, 2004)
Few of the objectives of supply chain management in fast food industry are mentioned
underneath;
Procurement
This is the process of selecting a supplier and managing healthy and profitable relation
with them. This also helps the organization maintain quality of their products. (David
Simchi-Levi, Philip Kaminsky and Edith Simchi-Levi, 2004)
Inventory management
This process helps the organization maintain right level of stock in the organization and
eliminate stock outs with variation in demand for the product. (David Simchi-Levi,
Philip Kaminsky and Edith Simchi-Levi, 2004)
Packaging
This is a discipline that helps in ensuring right package design and reducing the cost by
encouraging the recycling process of packaging. (David Simchi-Levi, Philip Kaminsky
and Edith Simchi-Levi, 2004)
Warehousing
This is the process of storing the raw material, semi - finished and finished goods.
Effective storage and correct warehouse design can reduce the overall cost of the
product (eliminates transportation cost to a certain extent) and improve the availability
of the product. The other factors in this discipline are safety of the product, storage
methods and locations of the warehouses. (David Simchi-Levi, Philip Kaminsky and
Edith Simchi-Levi, 2004)
Transportation
This process refers to transportation management of goods. This includes all the
possible modes of transferring goods from one location to another. The records
maintenance are also included in this aspect. (David Simchi-Levi, Philip Kaminsky and
Edith Simchi-Levi, 2004)
Logistics
This is referred to the use of technology in maintaining all the disciplines of supply
chain effectively. The use of softwares is a trend in logistics management (CRM
softwares). (David Simchi-Levi, Philip Kaminsky and Edith Simchi-Levi, 2004)
The entire above mentioned are effective ways to remain competent, exist and grow in
the market. Therefore managing supply chain effectively can help the business prosper.
There are few other associated concepts which have an influence on the supply chain,
one of them is Bull Whip Effect.
There are various reasons of Bull Whip Effect; few of them are mentioned underneath;
The fast food industry cannot store the stock (Raw materials) in advance. Most of the
products are vegetables and souses, which need to be fresh. Hence effective supply
chain management is required.
It has been observed that the major focus of most of the fast food chains is to improve
the service levels (quality of the product and delivery time to the customers). Recently
it has also been observed that in developing countries such as India, Pakistan, Srilanka
and others, the fast food industry is focusing on the quantity and price factors. Once
again this can be achieved through effective supply chain management.
In 1998, Pizza Hut celebrated their 40th anniversary, and launched their famous
campaign "The Best Pizzas under One Roof." In 1996, Pizza Hut sales in the United
States were over $5 million. The first Indian outlet was opened in June 1996 in
Bangalore. In India, Pizza Hut has 139 restaurants across 36 cities. Pizza Hut has been
voted the “best family restaurant” for the second year running at the 2007 Tommy’s
Parent Friendly Awards. "Pizza Hut is known for quality, innovation and category
leadership.
The largest national pizza chain, Pizza Hut has over 34,000 locations and has annual
sales around $80 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.
Cleanliness
Hospitality
Accuracy
Maintenance
Product quality
Speed
Based on the report submitted by the official, the restaurants are rated and in the rare
case of finding under performers, they are kept under strict vigil.
This is the most important for a food chain like Pizza Hut. All the employees’ back of-
the-house i.e. the kitchen assistants are trained accordingly. They are given extra classes
in order to meet 0the quality standards set by Pizza Hut around the world. This strategy
is important in order to satisfy the CHAMPS. This strategy is strictly implemented in
Pizza Hut in order to fulfill the quality standards. Different quality management staff is
also there at Pizza Hut. The shift managers have the task to observe whether the quality
standards are met or not, whereas there are a total quality management department at
the main office. This department has the task to implement quality standards and know
whether they are achieved or not.
H : Hospitality
A : Accuracy
M : Maintenance
P : Product Quality
S : Speed
Pizza Hut strictly follow the norms to attain the quality product .They have adopted
the best operational practice to attain the customer satisfaction. They are doing their
operational practice under an umbrella of C.H.A.M.P.S .So here comes the role of
supply chain because if they want to provide a quality product to their customer and on
the other hand they want to responsive as well the cost will definitely go high so to be
efficient enough they have to manage their supply chain.
Hut
Pepsi Company
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:
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 within 45 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”
Daily Indirect
Supplier S4
Sauces Company
W
e
e
k S5
W l Meat Market
Dough e y
d B
n a S6
Filling O O
e s
r r Bazar
s i
d d (Vegetables)
d sCommissary
Topping e e
a
r r (Ware house)
y
s s
Bake
(Cheese melts)
Customer Delivery
(Pizza Hut) Service
The best SC performers are more responsive to customer needs, quicker to anticipate
changes in the markets, & control costs much better.
Logistical drivers
Facilities
Inventory
Transportation
Cross-functional drivers
Information
Sourcing
Pricing
Company’s supply chain achieve the balance between responsiveness & efficiency that
best meets the needs of the company competitive strategy.
Drivers
1. Facilities:
Facilities are the actual physical locations in the supply chain network where product
is stored, assembled or fabricated. The two major types of facilities are:
Production sites
Storage sites
So the fundamental trade-off that managers face when making facilities decision
between the cost of the number, location & type of facilities (efficiency) & the level of
responsiveness that these facilities provide the company’s customer. There are some
facilities that are provided to the customers of Pizza Hut.
Air Conditioning
Parking in the Oracle
Take Away
Children's Goodie Bag
Buffet
Outdoor Seating in summer
Disabled Facilities
These facilities attract the customers and make them loyal to their product. These
facilities provided at the restaurant and there is another facility of home delivery is
provided by the Pizza Hut to their customers.
Here it is very clear they provide the same base which is then customized and appear
as a different product so there is a certainty in demand pattern and on the other hand
they provide variety also so there is a clear line between the push and pull strategy.
2. Inventory:
It encompasses all raw materials, work in progress and finished goods with in the supply
chain. As the base is prepared in the commissionaires and then transported to different
retail outlets and the outlets keep the inventory stock of only three days because it is
the perishable good so the inventory stock cost is reduced .As only the base is
transferred to the store so in case of any particular item demand is increased it do not
creates any problem.
Cycle Inventory:
This is the amount of inventory needed to satisfy demand for the product in the period
between purchases of the product. In pizza hut only specific quantity of material is
stored to satisfy the demand of customer because all material is perishable.
Safety Inventory:
In inventory control procedure all the activities are shown. How the material brings to
cold and dry freezers and reached to the oven.
Walk In Proffer
Oven
3. Transportation:
Transportation entails moving inventory from point to point in the supply chain.
Transportation can take the form of many combinations of modes & routes, each with
its own performance characteristics.
They use the refrigerated trucks in which the base is kept and there is controlled
temperature.
There is also a vacant space in which extra base is kept to fill the demand of a particular
store.
The company will not incur any additional transportation costs as the counters are along
the highway or on the truck’s route.
The type of distribution channel used by Pizza Hut is the direct channel. The direct
channel is successful when there is an extremely large market that is geographically
dispersed. The direct channel is also useful when there are a large number of buyers,
but a small amount purchased by each.
Pizza Hut uses three different methods of selling its products directly to the market.
The first method of distribution used by Pizza Hut is delivery. Customers can call Pizza
Hut ahead of time, place an order, and the order is delivered to the customer's home.
The third method of distribution is! Online ordering. Customers can now go on the
Internet and place an order. This method is useful because it allows customers to view
the entire menu, download any special coupons, and order without having to disclose
any credit card numbers. The market coverage for "The Extreme" will be nationwide.
Customers all over the country will be able to order "The Extreme" by one of the three
distribution methods.
4. Information:
Information serves as the connection between various stages of a supply chain,
allowing them to coordinate & maximize total supply chain profitability. It is also
crucial to the daily operations of each stage in a supply chain for e.g. a production
scheduling system.
There was no proper medium of coordination between the suppliers and the outlet
managers, due to this the flow of information at times the information was
misinterpreted and not correlated this all happened because of no customer data base
was maintained and outlet manager could not recall the need of customer. There was
not a proper inventory control, some outlets receive excess amount of inventory so the
cost is increased and they were not able to come across this problem in the absence
of proper information system. Billing problem, there was a deep problem faced by pizza
hut in initial years working of frauds at billing, of some unusual favors done by staff.
To tackle the billing system they made centralized. They had built in server storage system,
but due to continuous exponential growth, the system collapsed because of small
storage capability. This system didn’t allow any type of centralization in respect
of billing process and inventory control.
They need such a storage infrastructure which can be scaled up against increasing
demand. So at that point of time they went in for a direct –attach- storage solution from
HP with the capacity of 3tetra bytes. With the daily requirement of data base of about 2
giga byte which was to be stored and maintained ,to scale up the system with demand,
in march 2008 Pizza Hut took the call to upgrade its system from Intel Xeon
environment to Intel intaniom based HP integrity based system. Pizza hut developed
SAN of 15 tetra byte capacity .the SAN went on floor in 2008 after 1 month of testing ,it
has been sized for 3 years keeping in mind of 2 giga byte growth per day pizza hut opted
to run its SAP –ERP application on SUSE Linux enterprise server. Based on
operating systems prize performance, reliability and scalability. The ERP environment
is hosted in data centre managed by third party specialist and offers extremely high
resilience. They customized the SAP software for ccd requirements managed its roll
out across the organization and provides support and maintenance for SAP ERP.
The software is based on JAVA. SAP ERP plays the crucial role in helping to manage
the internal operations and to maintain the extended supply chain. The five SAP servers
connected to SAN and this is how increased capacity has helped pizza hut increase its
oracle data base space. This was how pizza hut managed its data base and keep on
inventing ways to maintain ever increasing data base. But how to know customer
preference, customer contacts, customer satisfaction, e-usage to guarantee customer top
of the world service.
There was no proper medium of coordination between the suppliers and the out let
managers.
This all happened because of customer database was not maintained and outlet manager
could not recall the need of customer.
The cost got increased and they were not able to come across this problem in the
absence of proper information system.
As someone new to our business you’ll be amazed with the state-of-the-art technology
we’ve adopted to make the task of leading your business as robust and efficient as
possible.
We constantly invest time and money in the management information systems that help
our stores forecast and monitor performance, labor usage, and food ordering and
inventory management. These systems are supported by a skilled internal team to make
sure you get the best use from them and we never rest on our laurels. We’re constantly
adding new technology to help make the business even more successful. Our current
plans include:
Real time performance reporting - so you can monitor the progress of your
business anytime, anywhere via remote log-in functionality.
Online recruitment of team members where only applicants who meet the
minimum success criteria are added to your shortlist.
Online training for managers and team members.
Digital marketing including online and mobile handsets.
5. Sourcing:
Sourcing is the set of business processes required to purchase goods & services.
Managers must first decide which tasks will be outsourced & those that will be
performed within the firm.
The Pepperoni and Mozzarella a cheese is imported from Australia and Spain
respectively.
To compensate an increased cost, they maintain a local supply chain to reduce the cost
like vegetables, wheat, tomatoes.
This provides the world class facility and taste by importing its main ingredients from
Spain and Australia but other ingredients from local vendors.
6. Supplier:
Supply chain of pizza hut starts from the suppliers of pizza hut. There are many
suppliers of the pizza hut but we divide them in two parts.
Direct suppliers
Indirect suppliers
Direct suppliers:
Pepsi Company
Indirect suppliers:
Pizza hut have many indirect suppliers because they need 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:
Vegetable market
Sauces companies
Explanation:
Pizza Hut demands the direct material on daily basis. 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 all material is purchased by the ware house named by
“Commissary”.
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 within 45 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.
7. Pricing:
Pricing determines how much a firm will charge for goods & services that it makes
available in the supply chain. The level of competition a business faces determines its
pricing strategy. Sometimes a business has the scope to set its price and sometimes a
business cannot. When a business has the scope to set its price there is a number of
pricing strategies or policies it might choose. As there are no such competitors of Pizza
Hut which could compete with the quality of pizza produced at Pizza Hut, therefore,
the pricing strategy adopted by Pizza Hut is 'market skimming'. Pizza Hut has adopted
this pricing strategy as they want to hold maximum share of the market by maximum
profit. This is a golden era for Pizza Hut, as there are no competitors and hence, Pizza
Hut is free to charge any price they want. They are charging higher prices due to the
uniqueness of the product. They satisfy the target market as the food quality is worth
the price paid. The pricing strategy is not just to get the worth of quality but also to gain
maximum profits before any competitor enters because then Pizza Hut will have to
change its pricing strategy. Although the prices would be lowered with the new entrants
in the market but not to a greater extent as the quality food products are not home-
produced. They are imported from different countries keeping in view the best quality.
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.
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.
"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.
Head office:
Pizza hut head office in Gulshan, Dhaka.
4.8 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 in 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 ie, 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 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).
– 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
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:
Enables them to work with a single vendor to reduce integration and implementation
issues
Cost effective.
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.
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. In case 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 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).
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
In pizza hut, here is no inventory left at end. All the pizzas are prepared as per
customer’s demand. But sometimes, in case 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
take away to their homes. The other reasons are to estimate demand more carefully and
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.
Perfect order 70% but errors are not from our side
fulfillment they are from their side when they want
to order something else and ordered
Supply Order • For home delivery 40 minutes
fulfillment lead • For regular customers 20
Chain time minutes
S W
T O
SWOT analysis of Pizza hut
Strengths:
All the ingredients except local vegetables are provided by Yum Restaurants through
their Restaurant Support System. All other inputs are according to the quality standards
provided by them.
2. Brand Name:
Pizza Hut is a franchise of Yum Restaurant which has its outlets worldwide.
Employing economies of scale, Pizza Hut has made its offerings more affordable. They
have starting range of Pizza with just Rs 75 and individual serving pizza with cold drink
for Rs 99 only.
4. Good Service:
are scattered around near all the tables so that incase the customer wants to call pizza
boy they just have to wave.
Weaknesses
Fewer Outlets: Their outlets are not spread all over the city as compared to other
competitors.
Opportunities
Pizza Slice: They are one of the best pizza makers. In their take away they can start
with pizza slices. This will attract people with small budget as well as those who wish
to try pizza hut. This has been started by Dominos – one of its competitors. Pizza Hut
being in market for a long time can cash on this opportunity
Threats
Housewives are interested in making Pizzas & other Fast Food at home.
Recommendations
From the analysis of the results obtained from this survey, the following
recommendations have been made to enable ‘Pizza Hut Bangladesh Limited’ to achieve
its main vision which is to provide the world's best quick service restaurant experience
and to become the best in providing outstanding quality, service, cleanliness and value,
so that they make every customer in every restaurant smile all around the globe.Some
of the recommendations that we found should be considered by the franchise authority
to help flourish the business of the brand in Bangladesh and grasp the emerging market
of Bangladesh by storm includes:
1. Pizza Hut Bangladesh should employee more strategic managers to sort more
effective meal deals to grasp the booming middle-class customers to their
business.
2. ‘Pizza Hut Bangladesh ’ should start to produce the core ingredients of the pizza
as well as of the additional items locally for the atmosphere in which they prefer
to grow their basic ingredients are found costly, but if the production is brought
down here in Bangladesh then the production cost will diminish so the prices of
its products would be cheaper to ensure that low level income earners could also
patronize them since the poor in Bangladesh form a larger proportion of the
population.
3. To help ensure the service quality of Pizza Hut Bangladesh regardless of the
cities ‘Pizza Hut Bangladesh’ should regularly organize training programs for
their serving employees to help them know the global standard of serving food
and table etiquettes and the possible unexpected demands as well as behaviors
of the customers. It is well known in Bangladesh, that not all highly educated
people go to the restaurant to enjoy their meal or dine in with their family, rather
many tenders go with friends to have fun after a monotonous semester chitchat
and relieve the monotony whereas others go to spend quality time with their
better-halves. Sometimes a bunch of valued customers might become the reason
for the disturbance of some other emerging customers. Employees should be
trained well enough to handle such delicate situations.
The other thing is there prices are high if they will lose their prices poor people will
also like to buy there pizzas and the house hold trend of food will change after some
time, people will like to buy food rather than making it at home.
Conclusion
The restaurant sector has already been declared as the booming sector by the business
analysts of Bangladesh. Bangladesh has built a strong baseline nationally and going
towards the self-sufficiency for the start-ups of many more types of cuisines.
Meanwhile, some other franchises like Burger King, Domino’s Pizza, Take-out,
Subway, Gloria Jean’s café etc. have started their journey in Bangladesh and are doing
good business. Besides the above discussing points, providing cash incentive by the
govt. to the franchisees to bring about more business opportunities in domestic market
and help flourish employment sectors as well as nurture the mentality of doing business
rather than finding jobs to the young minds of our country like RMG sector.
It is wrong to conclude that running a pizza chain is easy by looking its front-end
operations. Compared to the complexities involved in managing a supply chain, the
promise of pizza delivery within 30 minutes or offering it free is a child's play for pizza
chains. "Supply chain management is the factor that differentiates the winners and the
losers of the business”.
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