Pizza Hut Supply Chain Management

[Dunstan Jomphe]

RSCSis the exclusive supply chain management organization for Yum! Brands, Inc. and its four national restaurant brands (KFC, Pizza Hut, Taco Bell and The Habit Burger Grill). We also provide supply chain services for the A&W restaurant system through specific purchasing agreements. With world-class buying expertise, supplier-relationship management and impactful strategic processes, RSCS negotiates pricing for over 22,000 products including food, packaging and equipment items in support of these iconic national restaurant brands.

Millions of people benefit from co-ops everyday. Cooperatives are organizations controlled by their members, who actively participate in setting their policies and making decisions. Members of the KFC, Pizza Hut and Taco Bell National Purchasing Co-ops are a part of this fortunate group. These national purchasing co-ops offer our franchise members value in the procurement and distribution of restaurant food, packaging and equipment.

No matter where we are, whether at our main office in Louisville, KY, at one of our Brand locations or at home, our teams work collaboratively to support each other and our stakeholder groups to drive breakthrough results.

The RSCS main office location houses the majority of the RSCS team including the executive leadership and all functions outside of the Brand Supply Chain teams. Our offices embody the World Class With Class Culture in look, feel and support.

The Pizza Hut and International Supply Chain Teams are located within the Pizza Hut and Yum headquarters in Plano, TX, north of Dallas. This team coordinates and collaborates with the Pizza Hut Food Innovation, Marketing, Finance, and Operations teams to deliver outstanding products to customers across the US. The International team works with stakeholders in Latin America and the Caribbean to support KFC, Pizza Hut and Taco Bell franchisees.

The Taco Bell Supply Chain Team is in the Taco Bell Restaurant Support Center in Irvine, California. The Taco Bell team works closely with the Taco Bell Food Innovation, Marketing, Finance, and Operations teams to provide craveable, affordable Mexican-inspired food with bold flavors.

The warehouse associate is essential to the daily running of Domino's Supply Chain Centers. Responsible for managing inventory and deliveries, this fulfilling supply chain career role requires a cool head, strong arms and an even stronger work ethic.

The quality team is responsible for managing the quality and food safety of all purchased food ingredients for the United States and Canada. Management falls under the main categories of meat, veggies, sauces, cheeses, flour and dough. Daily activities mostly revolve around specification adherence, standards and food safety, as well as subsequent resolution of issues through corrective actions. These activities require interaction between suppliers, quality assurance, supply chain and stores.

Lesser known, is how supply chain management also plays a critical role in society. SCM knowledge and capabilities can be used to support medical missions, conduct disaster relief operations, and handle other types of emergencies.

Whether dealing with day-to-day product flows or dealing with an unexpected natural disaster, supply chain experts roll up their sleeves and get busy. They diagnose problems, creatively work around disruptions, and figure out how to move essential products to people in need as efficiently as possible.

Since 1963, the Council of Supply Chain Management Professionals (CSCMP) has been providing networking, career development, and educational opportunities to the logistics and supply chain management community.

The need for Supply Chain Management graduates has been increasing across the globe. Many companies depend on supply chain managers to help create net value by improving efficiency inside and outside of the company. The responsibilities of a supply chain manager include everything from product development, sourcing, production, and logistics to the information systems needed to coordinate these activities.

Six Sigma is the perfect compliment to a supply chain management degree and is a set of management tools designed to improve business processes, with the goals of reducing process variation, improving quality, eliminating waste, improving speed and efficiency, and saving time.

Students have the opportunity to participate in a study abroad program to earn Six Sigma certification. The program begins with on-campus classes during the spring semester. It concludes with a Six Sigma Green Belt pre-certification exam before jumping the pond to Ireland or Italy for a six-week internship.

"Let's order a pizza!" It's a common phrase uttered thousands of times each year in households around the world. When the pizza is finally delivered, the last thing we think about is where its ingredients came from. We are usually too busy stuffing our faces. However, if the pizza was stale or had spoiled ingredients, we would immediately have a negative perception of the pizza shop. After all, freshness counts.

Domino's Pizza (Ann Arbor, MI) realizes the importance of fresh ingredients. In 1999, the company sold 360 million pizzas and reached $3.36 billion in sales. In the United States, Domino's distribution division ensures that its 18 DCs (distribution centers) are never overstocked or run out of fresh ingredients. These DCs supply more than 4,500 Domino's Pizza outlets with items such as pizza dough, sauces, toppings, and even boxes for the pizza.

In 1999, the DCs relied on general desktop computing tools and Excel spreadsheets to create forecasts for ordering supplies. Often, the DCs ordered an extra supply of products to create a "safety stock." If the perishables in this safety stock were not sent quickly enough to the Domino's outlets, the company had to throw these items out. Additionally, in some emergency cases, the DCs were forced to pay expedited freight charges to deliver products at the last second. Domino's executives knew they had to improve the company's forecasting methods. The company needed a real-time system that would:

allow Domino's to increase inventory "turns" (This refers to how long inventory is kept at a DC. Since many of Domino's items are perishable, it is imperative to "turn over" this inventory quickly.)improve customer service by reducing out-of-stock ingredientsincrease efficiency in its purchasing process adjust stock for variables such as bad weather and coupon promotions.Forecasting For Supply Chain Variability

To solve this forecasting problem, Domino's chose Prescient XE – a supply chain management (SCM) software solution from Prescient Systems, Inc., (Fort Washington, PA). "We chose Prescient XE because it is specifically designed to handle supply chain variability and uncertainty," said Barry Smitherman, implementation manager for Domino's Pizza distribution division. First, Domino's identified two groups of users for the software. One group consisted of national purchasing managers from Domino's corporate headquarters who negotiate annual contracts with suppliers. The second group included the buyers at each of the individual DCs. These buyers are responsible for securing the goods that are shipped to the Domino's Pizza outlets.

The next step was to enter each DCs historical demand data into the Prescient XE's demand planning software. This software calculates future forecasts of product by DC. Once a forecast is made, the software's replenishment function suggests safety stock, order date, and order quantities. This data goes to the order-generation function, where rules for optimal shipping configurations are established. Once the suggested orders have been reviewed and approved, they are sent to the purchasing function of Domino's ERP (enterprise resource planning) system. The ERP system then executes the order.

Delivering The Right Amount, On Time

"The Prescient system standardizes our purchasing procedures so we are not inputting data from 18 different spreadsheets," Smitherman said. "Our deliveries are now 99% complete (the proper product, in the proper quantities, in non-damaged condition) and on time in the first delivery attempt. That means out-of-stocks are practically nonexistent."

With the new system, Domino's can create a true weekly forecast instead of the previous system's monthly average report. In addition, Domino's inventory turns have increased, and safety stock levels are now under control. This division's success has prompted Domino's to add its equipment and supply division as a user of the Prescient software. This division provides Domino's stores with everything from pizza ovens and store signage, to uniforms and promotional items.

Questions about this article? E-mail the author at Da...@corrypub.com.

Domino's 50% growth comes from the U.S. business alone. In the next 10 years, Allison said, he envisions the company could reach an 8,000-store footprint. With some restaurants today requiring three deliveries a week, a stagnant supply chain network can become more of a crutch than an asset when demand outgrows capacity.

The company did not provide too many more details on the two new warehouses it is planning to launch in the next 18 to 24 months. However, Lawrence teased the "cost will be materially less than the New Jersey build." The strategy, he added, is to be closer "to the customers in these 2 or 3 new spots" and deploy new technology to help overcome the costs of building the new facilities.

"These are centers we knew we were going to have to build, probably over time," Lawrence said in the earnings call. "But as we did almost 12% ... retail sales growth again in the second quarter for the U.S. business and most of that again is volume and traffic-driven, it simply accelerates what we knew what we had to do already."

Russell Weiner has served as Domino's chief executive officersince May 2022. Prior to that, he was chief operating officer andpresident - Domino's U.S. from July 2020 to April 2022, duringwhich he oversaw Domino's U.S. business in addition to the globalcenters of excellence teams that support operations, development,marketing, innovation, analytics and insight, communications, andtechnology in more than 90 countries. Weiner was first named tothe newly-created position of COO and president of the Americas inJuly 2018.

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