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SCM Individual Assignment - PGMB1960

Domino's and McDonald's both opened their first stores in India in 1996. Domino's uses a vertically integrated supply chain model with four commissionaires hubs that directly supply raw materials to outlets. It aims to deliver orders within 30 minutes without delivery fees. McDonald's uses a 100% outsourced supply chain model where suppliers provide raw materials to distribution centers, which then supply stores 2-3 times per week. Unlike Domino's, McDonald's does not guarantee a maximum delivery time and usually charges a delivery fee. Overall, Domino's supply chain is more streamlined with fewer intermediaries, while McDonald's relies more on outsourcing.

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vaibhav chaurasia
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86 views5 pages

SCM Individual Assignment - PGMB1960

Domino's and McDonald's both opened their first stores in India in 1996. Domino's uses a vertically integrated supply chain model with four commissionaires hubs that directly supply raw materials to outlets. It aims to deliver orders within 30 minutes without delivery fees. McDonald's uses a 100% outsourced supply chain model where suppliers provide raw materials to distribution centers, which then supply stores 2-3 times per week. Unlike Domino's, McDonald's does not guarantee a maximum delivery time and usually charges a delivery fee. Overall, Domino's supply chain is more streamlined with fewer intermediaries, while McDonald's relies more on outsourcing.

Uploaded by

vaibhav chaurasia
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as DOCX, PDF, TXT or read online on Scribd
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What is Supply chain?

Supply chain can be defined as a network established between the suppliers and the company
to produce and distribute the goods or services manufactured by a particular company. It
involves supplier of raw materials, producer, mode of transportation, warehouse (facilities),
inventory level, distribution centers, wholesalers, retailers.
For the given project I have chosen fast food outlets Domino’s and McDonald’s and would
be describing their supply chain and comparing both.

Domino’s
Let us first consider the supply chain of Domino's whose parent company is Jubilant
FoodWorks. Domino’s is the largest food chain in the world with 8300 approx. outlets (they
have also decided to shut around 150 less revenue generating outlets in India).
As per the last available data they are operating in India with 749 stores and are present in
152 Indian cities. They opened their first store in the capital of the county (Delhi) in 1996.
Domino’s follow a vertical integrated supply chain (VIS) that is they have their own
Domino’s Commissionaires who are supplying to all the outlets in the country. They supply
their raw materials to all the outlets in one state or city by using road transport.

Outlet
1

Outlet Dominos Outlet


Commissionaires
4 2

Outlet
3

Fig.1: Domino’s structure of supply chain

They have 4 commissionaires are there as hubs and they are in:
 Delhi NCR
 Mumbai
 Bangalore
 Kolkata
They distribute to all the outlets in the country.
Following are the benefits of following this type of vertical integrated supply chain:
o Control on whole system: Keep a check on all the activities and movement of the
goods in the supply chain.
o Helps in increasing the coordination within the supply chain.
o Decreases the price of the product as the cost of transportation decreases.

How are they doing it?


o They order pizza dough and other required ingredients to the commissionaires get
them supplied in the outlets where the final order is prepared and delivered to the
customers within 30 minutes of placing the order to ensure that the food is hot and
fresh when reached to the customers. Before COVID-19 they were not charging
anything for delivery but there was a criterion that either the bill should be of more
than RS. 300 or minimum 4 pizza mania’s pizza. And after the lockdown but since the
lockdown they are charging RS. 30 for delivery of each order placed to the outlet to
cover the cost.
*It needs to be noted they are giving free of cost food if not delivered before 30 minutes and
maximum amount is Rs 300 in such cases.
o The dough balls are being sent to the outlets in refrigerated trucks and each
commissionaire is responsible for supplying its specialty product to the outlets in
time. For example: Delhi- Pizza Dough, Kolkata- Tomato, Bangalore- Spices.
o All outlets have mini- cold storage system. They have thermal bags which work on
magnetic induction helping the delivery person to keep the pizza hot and fresh. The
box of the pizza is also corrugated fiberboard so that the pizza inside is hot for a
longer duration of time.
o During uncertain conditions there is inter store transfer.

Features of the Domino’s supply chain:


 They have a responsive supply chain.
 Their main competitive strategy is to provide pizza at affordable price to the
customers within 30 minutes if the order is not for dine-in.
 They have large number of facilities/outlets because they are trying to fit their
decision with their competitive fir that is, they are trying to make there supply chain
more responsive.
 The transportation used by them is a faster mode as they have a responsive chain and
they need to deliver the final food to the consumers within 30 minutes after placing
the order.
 The shelf life of their inventory is between 4-5 days and all the outlets are
maintaining at least 4 days of inventory.
 The prices of the product are a bit high but compared to the local food providers
whose main aim is to be cost efficient.
 The company is monitoring the inventory level of each of the stores centrally via POS
data using Intura Vision in every outlet so that they are aware of the demand of the
outlet and are ready to supply them the required materials on time and make there
supple chain more responsive.

McDonald’s
McDonald’s opened its first door in India in October in 1996. Both the companies Domino’s
and McDonald’s started its food chain in the same year.
It is a joint venture in India is 50-50 joint venture partnership between McDonald’s
corporation of USA and two Indian businessmen. Amit Jatia’s company Hardcastle
Restaurants Pvt. Ltd. Owns and operates McDonald’s in western India. While Connaught
Plaza restaurant Pvt. Ltd and headed by Mr. Vikram Bakshi owns and operates northern
operations.
They have 400 stores across India.
Talking about the supply chain of McDonald’s it is a 100 percent outsourced supply chain
which is very rare in the fast-food industry of India. But besides outsourcing they have a
complete control over its functioning. The performances of the outsource companies are
monitored on Key Performance Indicators (KPIs).
They supply 96% of the total raw materials from the Indian suppliers only and imports only
oil and fries from outside India. In total McDonald’s has 40 suppliers out of which 14 are the
core suppliers for the company also known as tier suppliers i.e. they supply directly to the
supply chain.
They have 200 restaurants per distribution centre (DC). The delivery frequency is around 3
times a week. As the company has around 100 sales items so they have 400 SKUs in the
warehouse. They also focus on quality food by having cold chain, QIP.

How are they doing it?


Supply chain structure of McDonald’s

o The tier 2 supplier supplies tier 1 and they supply to the distribution centres.
o The figure explains well how the DC gets the supply from the supplier and after this
they are giving the raw materials to the stores.
o The items are stored in the rooms in different temperatures. They are then dispatched
to the restaurants as and when they are ordered.
o They have their own trucks specially designed and they transport the items to the
restaurants through roads.
Features of McDonald’s supply chain:
 They have a responsive supply chain.
 Their main competitive strategy is to provide food at affordable price to the
customers within if the order is not for dine-in.
 They have large number (comparatively lesser than Domino’s) of facilities/outlets
because they are trying to fit their decision with their competitive fit that is, they are
trying to make there supply chain more responsive.
 The transportation used by them is a faster mode as they have a responsive chain and
they need to deliver the final food to the customer.
 The shelf life of their inventory is between 4-7 days and all the outlets are
maintaining at least 2 days of inventory.
 The prices of the product are a bit high but compared to the local food providers
whose main aim is to be cost efficient.
 They don’t have any POS system in their supply chain which separates the two supply
chains.
 They also don’t have any maximum order delivery time which is not good to attract
more customers.
 They have a responsive supply chain and in the recent times they had a dispute in
their supply chain and only a few restaurants/outlets were working while others were
shut.
 They always charge delivery fee for the orders placed to them and the food is not
always as hot as Domino’s provide with because of the delivery time taken by both
the food chains.

Comparison:
 Less stores (facilities) of McDonald’s as compared to Domino’s.
 The number of intermediaries/stages in the supply chain are more of McDonald’s as
compared with Domino’s who have only DC supplying to their outlets.
 McDonald’s have an outsourced supply chain and Domino’s have their own supply
chain.
 The delivery time taken by Domino’s assures delivery within 30 minutes and
McDonald’s don’t provide any delivery time.
 Delivery fee is less of Domino’s and high of Domino’s.
 The number of orders placed in Domino’s for delivery are almost twice when
compared to McDonald’s (as per economic times).
 They don’t have any POS system in their supply chain which might become a point of
difference while knowing the demands of their restaurants/outlets.

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