Supply Chain Management of Pizza Hut

Table of Contents

Table of Contents Chapter One: Introduction Introduction .......................................... ................................................................ ............................................ ......................... ... 3

1.1

Prelude ........................................... .................................................................. ............................................ ........................................... ...................... 3

1.2

Background of the Report .................................................. ......................................................................... ............................. ...... 3

1.3

Justification of the Study ......................................... ............................................................... ........................................ .................. 5

1.4

Objective of the report.............................. report.................................................... ............................................. ................................. .......... 5

1.5

Scope of the Study............................. Study................................................... ............................................. ........................................ ................. 6

1.6

Methodology of the study ........................................... ................................................................. .................................... .............. 6

1.7

Data Sources and Methods Metho ds of Data Collection Collecti on ............................................ ............................................... ... 7

1.8

Techniques of Data Analysis............................... Analysis..................................................... ............................................ ...................... 7

1.9

Diagram of Research Design............................... Design..................................................... ............................................ ...................... 8

1.10

Limitations of the Study ..................................................... ........................................................................... ......................... ... 8

Chapter two: Literature Review......................................... ............................................................... ...................................... ................ 11

2.1 Literature Review: ......................................... .............................................................. ............................................ ............................... ........ 11 Chapter Three: Overview of Pizza Hut ............................................ .................................................................. ........................ 16

3.1

About Pizza Hut .......................................................... ................................................................................ .................................. ............ 16

3.2

Pizza Hut in Bangladesh ......................................... ............................................................... ...................................... ................ 16

3.3

Vision Statement .......................................... ................................................................. ............................................. .......................... .... 17

3.4 Mission Statement ........................... ................................................. ............................................ ............................................ ........................ 17 3.5 Competitors of Pizza Hut .......................................... ............................................................... ......................................... .................... 17 3.6 Product Line ................................ ...................................................... ............................................ ............................................. ........................... .... 18 3.7 QUALITY MANAGEMENT ................................... ........................................................ ......................................... .................... 18 3.8 Operational Practice through (C.H.A.M.P.S.): .......................................... .................................................. ........ 19 Chapter Four: Supply Chain Management System Of Pizza Hut ........................ 20

4.1 Supply Chain Management ........................... ................................................. ............................................. ............................... ........ 20 4.2 Brief Elaboration Elaboratio n of a complete supply suppl y chain network for Pizza Hut ............... 20

An Analysis of Supply Chain Management Department Functions of Pizza Hut

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Table of Contents 4.3 Supply Chain of Pizza hut................................................... hut.......................................................................... ............................... ........ 22 4.4 Adjusting Adju sting Supply chain ch ain Member Capabilities Capab ilities .................................... ................................................... ............... 23 4.5 Supply Suppl y Chain drivers of Pizza Pizz a Hut........................................................ Hut..................................................................... ............. 23 1.

Facilities: ........................................... ................................................................. ........................................... .................................. .............24

2.

Inventory:.......................................................... Inventory:.................................... ........................................... ......................................... .................... 25

3.

Transportation:............................................................ Transportation:....................................... ............................................ ............................... ........ 26

4.

Information: ........................................... ................................................................. ............................................ .............................. ........ 27

5.

Sourcing: ............................................ .................................................................. ........................................... .................................. ............. 29

6.

Supplier:.................................................... Supplier:.............................. ............................................ ............................................. ........................... .... 30

7.

Pricing:.................................................. Pricing:............................. ........................................... ............................................ ............................... ......... 31

4.6 Supply chain strategies: ............................................ .................................................................. ......................................... ................... 31 4.7 Mode of Transportation: ............................................................. ................................................................................... ........................ 33 4.8 Operations/Production: ......................................... ............................................................... ............................................ ........................ 34 4.9 Improvement in Supply Sup ply Chain Performance....................................... Performance...................................................... ............... 36 4.10 Demand estimation of Pizza Pizz a Hut .......................................... ................................................................. ........................... .... 37 4.11 Production Pro duction management of Pizza Piz za Hut..................... Hut ........................................... ......................................... ................... 37 4.12 Measures of Supply chain ch ain performance:............................... per formance:...................................................... ........................... .... 39 4.13 Efficiency Verses Responsiveness ............................................ .................................................................. ........................ 40 4. 14 SWOT analysis of Pizza hut ..................................... ........................................................... ...................................... ................ 41 Chapter Five: Analysis & Recommendations Recommendations ........................................................ .......................................................... 43 Conclusion ........................................... ................................................................. ............................................ ............................................. ........................... .... 45 REFERENCES........................................... .................................................................. ............................................ ......................................... .................... 46


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Table of Contents 4.3 Supply Chain of Pizza hut................................................... hut.......................................................................... ............................... ........ 22 4.4 Adjusting Adju sting Supply chain ch ain Member Capabilities Capab ilities .................................... ................................................... ............... 23 4.5 Supply Suppl y Chain drivers of Pizza Pizz a Hut........................................................ Hut..................................................................... ............. 23 1.

Facilities: ........................................... ................................................................. ........................................... .................................. .............24

2.

Inventory:.......................................................... Inventory:.................................... ........................................... ......................................... .................... 25

3.

Transportation:............................................................ Transportation:....................................... ............................................ ............................... ........ 26

4.

Information: ........................................... ................................................................. ............................................ .............................. ........ 27

5.

Sourcing: ............................................ .................................................................. ........................................... .................................. ............. 29

6.

Supplier:.................................................... Supplier:.............................. ............................................ ............................................. ........................... .... 30

7.

Pricing:.................................................. Pricing:............................. ........................................... ............................................ ............................... ......... 31

4.6 Supply chain strategies: ............................................ .................................................................. ......................................... ................... 31 4.7 Mode of Transportation: ............................................................. ................................................................................... ........................ 33 4.8 Operations/Production: ......................................... ............................................................... ............................................ ........................ 34 4.9 Improvement in Supply Sup ply Chain Performance....................................... Performance...................................................... ............... 36 4.10 Demand estimation of Pizza Pizz a Hut .......................................... ................................................................. ........................... .... 37 4.11 Production Pro duction management of Pizza Piz za Hut..................... Hut ........................................... ......................................... ................... 37 4.12 Measures of Supply chain ch ain performance:............................... per formance:...................................................... ........................... .... 39 4.13 Efficiency Verses Responsiveness ............................................ .................................................................. ........................ 40 4. 14 SWOT analysis of Pizza hut ..................................... ........................................................... ...................................... ................ 41 Chapter Five: Analysis & Recommendations Recommendations ........................................................ .......................................................... 43 Conclusion ........................................... ................................................................. ............................................ ............................................. ........................... .... 45 REFERENCES........................................... .................................................................. ............................................ ......................................... .................... 46


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Chapter One: Introduction

Chapter One: Introduction 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 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. 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 mode l of Supply Chain Management operating operatin g in the business community particularly in the food chain sector.

1.2 Background of the Report 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. SCM is both a horizontal business function (i.e. managing the supply chain in a business) and a vertical industry sector (i.e. businesses involved in managing supply chains on behalf of their clients). A company may operate as a supply chain services provider within the vertical supply chain industry sector. But each of the clients serviced servic ed by a company will employ supply chain staff within their business operating on a horizontal basis across their organizations. All business needs to forecast and plan. To look forward and predict what will be required in terms of resources and materials in order ord er to deliver their products or services An Analysis of Supply Chain Management Department Functions of Pizza Hut

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Chapter One: Introduction 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. formed. Thereafter the suppliers’ 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 b e found within a logistics l ogistics department, depart ment, in other oth er 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 An Analysis of Supply Chain Management Department Functions of Pizza Hut

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Chapter One: Introduction 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.

1.3 Justification of the Study Given the increased attention of achieving effective supply chain management particularly in fast-food industries around globe, this study will seek to assess the supply chain management of a leading fast-food chain in Bangladesh namely Pizza Hut Bangladesh Ltd. Supply Chain Management addresses supply chain strategy, supply chain planning, procurement, logistics, asset management and product lifecycle management. Supply chain management is crucial tool for economy, efficiency and effectiveness in sourcing, manufacturing, processing, inventory management, logistic, transport, distribution and customer satisfaction. SCM is also important for achieving competitive advantages over the business rivals through a stronger relationship, closer and collaborative cooperation as well supplier development. SCM also contributes in reducing cost of production and distribution through elimination of waste, compliance with standards and quality, promoting ethical sourcing, curbing unethical practices and diversity and equality in the workplace throughout the supply chain. The study will seek to assess the supply chain management in fast-food industries. No comprehensive study has so far been done in this regard. The proposed research will attempt to fill up this gap.

1.4 Objective of the report 

The objective of this report on the supply chain management of fast food chain Pizza Hut is to understand the supply chain regulation process of franchise of global brand Pizza Hut.



The objective also served the purpose of understanding the inventory management system in the real realm of business for University fresher’s like

us. 

The management of the inventory supply of heavy demanded toppings like mushroom, green pepper, pineapple, sun dried tomato etc. are done in a totally


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Chapter One: Introduction 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.

1.5 Scope of the Study The study will focus on the overall supply chain management of a fast growing fastfood chain in Bangladesh. The study will highlight the theoretical aspects of SCM and its potential advantages for a fast-food chain where there is intense competitive rivalry within the industry. Relevant models and theories will be adequately analysed in this study. Information gathered through secondary sources and survey questionnaire will lend support to the research on what the extent of SCM is effective and contributing to achievement of corporate strategy of the organization under the study.

1.6 Methodology of the study The broad objective of the study is to evaluate the supply chain management of Pizza Hut Ltd. The study follows cross section data analysis techniques and tools for identified different aspects of SCM of Pizza Hut. The survey method of field investigation is utilized and standard tools are applied to achieve the objectives of this study.

Nature and Method of Study This dissertation has investigated the issues and challenges of the supply chain management of a leading fast food industry in Bangladesh. This study is not only an exploratory but also an evaluative research. The exploratory, Evaluative and Content or Documentary Analysis methods are applied to achieve the objective of the study.


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1.7 Data Sources and Methods of Data Collection Primary Source

The data from the primary sources have been gathered through field survey from the relevant respondents. Total number of respondents is 35. The respondents are suppliers, executives, staff s and consumers. This method is employed to assess the stakeholders’ opinions towards the process, benefits, views, knowledge, risks of the supply chain management of Pizza Hut Ltd. The suggestion for achieving an effective supply chain are also taken from the respondents. Data was collected from both staff and managers Pizza Hut and Transcom Food and Beverages ltd. Customers through structured interviews and administration of questionnaire in Dhaka city. Secondary Sources

Secondary sources include internet, newspaper, articles and annual report of the Pizza Hut ltd.

1.8 Techniques of Data Analysis To address the research objectives, this study utilizes a mixed methods approach comprised of quantitative and qualitative techniques. Questionnaire technique of survey method is used to collect primary data. Purposive and simple random method are used to select 8 respondents who are directly involved in managing operations and supply chain of Pizza Hut procurement, 4 from suppliers, 10 from staffs and 13 from end customers. 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.


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1.9 Diagram of Research Design The research process of this study is shown in Chart 1. Supply Chain Management Process of Pizza Hut

•

•

•

Methodology, Variables Chosen, Models Specifications.

Setting of Objectives

Literature Review

Estimation of data Interpretation

Data Collection, Processing, Factor Analysis.

Major Findings, Recommendations.

Diagram of Research Design

1.10 Limitations of the Study The study has encountered a number of limitations which also discount the authenticity and reliability of the findings of the study. Some of the limitations are as follows: 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.


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Chapter One: Introduction 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

December 2017-January 2018 Preparation of proposal Completion of data collection and processing of data. Completion of draft dissertation writing. • Editing and upgrading the draft.

Submission of the final dissertation. 1.11 Report Plan (Breakdown of Chapters)

The paper is structured as follows: following this introduction, a literature review is provided first, on the theories adopted in this study, and then on the dimensions of supply chain management practices and their impact on customer satisfaction demonstrating the theoretical framework of the study. Next, in the methodology section, instrumentation of the measurement items concerning the SCM practices and customer satisfaction is provided by mentioning the articles that have been reviewed An Analysis of Supply Chain Management Department Functions of Pizza Hut

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Chapter One: Introduction 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. The outline of chapters or organization of the dissertation is as follows: Chapter 1

: Introduction

Chapter 2

: Literature Review

Chapter 3

: Overview of Pizza Hut

Chapter 4

: Supply Chain of Pizza Hut

Chapter 5

: Analysis, Recommendations and Conclusion

References


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Chapter Two: Literature Review

Chapter Two: Literature Review 2.1 Literature Review: Supply chain plays a critical role in maintain the organizatio ns brand image and service levels in the market. In this section we will speak about Supply Chain Management (SCM) in general first and then will confine it to the fast food industry. Supply chain is the term used to define the parties involved in the process of meeting customer demand. The parties involved in the supply chain are – – – – –

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) The members or parties of the supply chain are briefed below; 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)


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Chapter Two: Literature Review 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. Few of the terms involved in SCM are underpinned; 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) Replenishment Lead Time

This refers to the time between placing an order and acquiring the raw material. Usually lead time is always considered as an entity that makes the supply chain ineffective (loss in supply chain). (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.


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Chapter Two: Literature Review 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. Specific to Fast Food Industry

Fast food is referred to food which can be cooked easily and can be eaten quickly. There are various food chains across the world, which are famous for fast food. 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; Supply chain planning

This sets the chain direction and the strategies associated with all the aspects of supply chain. This is the overall sketch of the supply chain. (David Simchi-Levi, Philip Kaminsky and Edith Simchi-Levi, 2004) 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


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Chapter Two: Literature Review This process helps the organization maintain right level of stock in the organizat ion 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) Customer Service and marketing

This refers to meeting the customer expectations effectively and creating new opportunities through customer service. This is one of the major aspects that organizations are focusing in contemporary business world. (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. An Analysis of Supply Chain Management Department Functions of Pizza Hut

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Chapter Two: Literature Review There are few other associated concepts which have an influence on the supply chain, one of them is Bull Whip Effect. Bull Whip Effect

This is referred to sudden increase in customer demand that forces the supply chain to reconsider its strategy and rearrange the stocks in the supply chain. This forces the management to include more stocks into the system to meet the increased product demand. The Bull whip effect always flows in reverse direction to the flow of products. I.e. starting with realtor and ending it with the supplier of raw materials to the manufacturers. (Raghavan, N.R.S., Viswanadham, N., 2001), (Peter D Ball, 2006) There are various reasons of Bull Whip Effect; few of them are mentioned underneath; 

Under - estimation of demand  Wrong sales report  Inefficiencies Lead time management  Miscommunication in the supply chain (Peter D Ball 2006) Hence we can say that effective communication (information flow) in the supply chain is significant. 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.


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Chapter Three: Overview of Pizza Hut

Chapter Three: Overview of Pizza Hut 3.1 About Pizza Hut Pizza Hut is one of the flagship brands of Yum! Restaurant Int. which also has KFC, Taco Bell, A&W and Long John Silver’s under its umbrella. It is the world’s largest

pizza chain with over 12,500restaurants across 91 countries. Pizza Hut was started in 1958, by two brothers Frank and Dan Carney in Wichita, Kansas. They had the idea to open a pizza parlor. They borrowed $600 from their mother, and opened the very first Pizza Hut. In 1959, the first franchise unit opened in Topeka, Kansas. Almost ten years later, Pizza Hut was serving one million customers a week in their 310 locations. In 1970, Pizza Hut was put on the New York Stock Exchange under the ticker symbol PIZ. In 1986, Pizza Hut introduced delivery service, something no other restaurant was doing. By the 1990's Pizza Hut sales had reached $4 billion worldwide. 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.

3.2 Pizza Hut in Bangladesh Pizza Hut entered Bangladesh in 2003, and opened its 8 dine-in restaurant and 8 Pizza Hut outlets. Since then it has captured a dominant and significant share of the pizza market and has maintained an impressive growth rate of over 40 per cent per annum. Pizza Hut now has 13 outlets around Bangladesh and employed nearly 4,000 people by end of 2016. Yum! has invested about US$ 25 million in Bangladesh so far; this is over and above investments made by franchisees. Yum! Brands Inc is the owner of the Pizza Hut chain worldwide. A Fortune 300 company, Yum! Brands owns Kentucky Fried Chicken, Pizza Hut, Taco Bell, A&W and Long John Silver’s restaurants worldwide .

Yum! generated more than US$ 103.9 billion in worldwide sales in the year 2016, and has more than 59,000 restaurants in over 120 countries.


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Chapter Three: Overview of Pizza Hut 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 so me 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.

3.3 Vision Statement Pizza Hut's vision is to be the world's best quick service restaurant experience. Being the best means providing outstanding quality, service, cleanliness and value, so that they make every customer in every restaurant smile.

3.4 Mission Statement "We take pride in making a perfect pizza and providing courteous and helpful service on time, all the time. Every customer says, "I'll be back!"


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Chapter Three: Overview of Pizza Hut

3.5 Competitors of Pizza Hut 

Domino Pizza  Pizza Inn  Local Pizza Restaurants

3.6 Product Line

Sou es

Starters

Pizzas

Pizzas

Pastas

Sandwiches

Desserts

Bevera es

3.7 Quality Management To ensure stringent international bench-marks in the quality of products and services at all its restaurants across the world, Pizza Hut has a mystery shopper program in which an unknown official visits a restaurant and evaluates it on certain defined parameters called C.H.A.M.P.S. that stand for Cleanliness Hospitality An Analysis of Supply Chain Management Department Functions of Pizza Hut

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Chapter Three: Overview of Pizza Hut 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.

3.8 Operational Practice through (C.H.A.M.P.S.): C :

Cleanliness

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.


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Chapter Four: Supply Chain Management System of Pizza Hut

Chapter Four: Supply Chain Management System of Pizza Hut 4.1 Supply Chain Management The movement of material from source to end customer is called supply chain. Supply Chain includes purchasing, manufacturing, warehousing, transportation, customer service; demand planning, supply planning and Supply Chain management. It is made up of the people, activities, information and resources involved in moving a product from its supplier to customer.

Model of global supply chain management

4.2 Brief Elaboration of a complete supply chain network for Pizza Hut Supply chain of pizza hut starts from the suppliers of pizza hut. There are direct suppliers and indirect suppliers of Pizza hut. Direct suppliers of Pizza hut are three named as: Pepsi Company Bake parlour company (Buns) Habib oil Mills (First mineral water)


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Chapter Four: Supply Chain Management System of Pizza Hut 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: Meat market (Their owns cattle) 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”


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4.3 Supply Chain of Pizza hut

S1

S2

S3

Pepsi Company

(Buns) Bakery

First water

Dail S4 Sauces Com an W e e

Dough

Filling

Topping

O

O

r

r

d

d

e

e

r

r

k

S5

W

l

Meat Market

e

y

d

B

n

a

e

Bazar

s d

S6

Commissary Ware house

Bake

Customer

Delivery

(Pizza Hut)

Service


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4.4 Adjusting Supply chain Member Capabilities Manager audit the Supply chain members capabilities & their partners, to determine consistency with needs of end customers & SC. Pizza hut continually reassess performance with respect to requirements. The best SC performers are more responsive to customer needs, quicker to anticipate changes in the markets, & control costs much better.

4.5 Supply Chain drivers of Pizza Hut Supply chain management is the factor that differentiates the winners and the losers in this business," drivers play an important role in terms of the responsiveness and efficiency. We must examine the cross-functional and logistical drivers of supply chain performance: facilities, inventory, transportation, information, sourcing, and pricing. Supply chain management is the factor that differentiates the winners and the losers in this business. The cross-functional and logistical drivers of supply chain performance are: 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.


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Drivers of Supply Chain Performance Efficiency

Responsiveness

Supply chain structure

Inventory

Transportation

Facilities

Information

Sourcing

Pricing

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 (effi ciency) & 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


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Chapter Four: Supply Chain Management System of Pizza Hut 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:

Inventory that is held as a buffer against uncertainty. If demand forecasting could be done with perfect accuracy, then the only inventory that would be needed would be cycle inventory. In Pizza Hut there is no safety inventory because material is not stored for longer period only the beverages are stored for the customers. In inventory control procedure all the activities are shown. How the material brings to cold and dry freezers and reached to the oven.


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Chapter Four: Supply Chain Management System of Pizza Hut Procedure Inventory Control:

Cold

Dry Storage

Freezer

Prep Room

Walk In

Proffer

Retarder

Make Table

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 are 80 trucks to supply the bases across Bangladesh. 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.


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Chapter Four: Supply Chain Management System of Pizza Hut 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. Another method of distribution is for customers to dine-in. Customers can go to the nearest Pizza Hut, place an order and either leave with the order or eat at the restaurant. One of Pizza Hut's largest competitive advantages is its restaurant style facility. Pizza Hut offers a clean place to sit down and enjoy the variety of pizzas, salads, and sandwiches in a fun, family atmosphere. 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 An Analysis of Supply Chain Management Department Functions of Pizza Hut

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Chapter Four: Supply Chain Management System of Pizza Hut 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. An Analysis of Supply Chain Management Department Functions of Pizza Hut

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Chapter Four: Supply Chain Management System of Pizza Hut The cost got increased and they were not able to come across this problem in the absence of proper information system. Therefore, commissionaires were created. 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.


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Chapter Four: Supply Chain Management System of Pizza Hut 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:

There are three direct suppliers of Pizza hut named as: Pepsi Company Bake parlor company (Buns) Habib oil Mills (First mineral water) 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: Meat market (Their owns cattle) 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 suppl iers 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


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Chapter Four: Supply Chain Management System of Pizza Hut 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. Pizza hut is using Market Skimming Price Strategy. Low price for meal and expensive for just one Coupons Worldwide and Gift Card in Developed Countries Charging method in Bangladesh is, Price +21% Tax e.g. For a Pizza of 999 you will pay Rs. 1208

4.6 Supply chain strategies: The fast food chain recounts its transition from early data mining efforts to a project where it recovered the costs of software licensing and started generating revenue. Its ware house is situated in Banani. From where they have got all the material except direct one. Its ware house is named as “Commissary”.


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Chapter Four: Supply Chain Management System of Pizza Hut 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. Using Warehouse Miner meant an improvement in "household uniqueness" from 80 per cent to 95 per cent. While direct mail has traditionally been a breakeven cost centre, Pizza Hut has managed to turn it into a profit centre with increased ROI, manager said, in excess of 200 per cent. Again, precise ROI was not available as it is "confidential." An Analysis of Supply Chain Management Department Functions of Pizza Hut

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Chapter Four: Supply Chain Management System of Pizza Hut "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.

4.7 Mode of Transportation:

Bikes used in delivery service


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Trucks which bring material from ware house to pizza hut 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 An Analysis of Supply Chain Management Department Functions of Pizza Hut

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Chapter Four: Supply Chain Management System of Pizza Hut 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 serv ing 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). The detailed steps in pizza production are given below:

– 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 An Analysis of Supply Chain Management Department Functions of Pizza Hut

35


– Thawing charts usage and placing meats for thawing – Tracking wastages on the make table In pizza hut, here is no inventory left at end. As all the pizza’s 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 not to compromise on quality.

4.9 Improvement in Supply Chain Performance Pizza hut has worked a lot to increase the responsiveness towards customer’s demand.

Few years back they had some complaints from the customers, who ordered for home delivery service. Actually the pizza hut claims that where ever you live, your location does not matter, we deliver your order with in 45 minutes to you. For this purpose they have designed their own software system at which they save the data (name, contact number and address) of customers who call at their call centre to order pizza and enjoy the home delivery service. 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. 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 serv ice, 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 An Analysis of Supply Chain Management Department Functions of Pizza Hut

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Chapter Four: Supply Chain Management System of Pizza Hut 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: Maximum return on their technology investment Provides the fastest time to value Enables them to work with a single vendor to reduce integration and implementation issues Is built by experts on a foundation that expands as their business grows Rapid Time to Value Cost effective. By this way they have improved their supply chain process.

4.10 Demand estimation of Pizza Hut 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.

4.11 Production management of Pizza Hut 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.


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Chapter Four: Supply Chain Management System of Pizza Hut 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 gets 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 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). The detailed steps in pizza production are given below:               

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


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Chapter Four: Supply Chain Management System of Pizza Hut 

Tracking wastages on the make table

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

not to compromise on quality.

4.12 Measures of Supply chain performance: Pizza hut using performance measurement to achieve leadership position & twice as likely to handle a major change successfully. 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.


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4.13 Efficiency Verses Responsiveness SCOR: Customer Facing

Perform Perform Supply Chain Delivery Reliability

Supply

Performance

Delivery performance

95%

Perfect order fulfillment

70% but errors are not from our side they are from their side when they want

Order fulfillment lead

•

For home delivery 40 minutes • For regular customers 20

Table of Responsiveness and Efficiency

As we have seen that pizza hut open their outlet in bulk in a particular city so they are responsive enough and they provide delivery within 30 minutes or offering it free is also to increase their responsiveness

it is difficult to maintain such kind of

responsiveness because it will incur extra margin and the profit margin will decrease that’s the main reason they open their outlet in bulk and if a particular customer order

a pizza where pizza store is not available that store immediately call the nearest pizza corner to deliver that particular order to be responsiveness and if a particular product is not available they use to do transfer in and transfer out in which they take the product from different outlet.


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4. 14 SWOT analysis of Pizza hut SWOT analysis (strengths, weaknesses, opportunities and threats analysis) is a framework for identifying and analysing the internal and external factors that can have an impact on the viability of a project, product, place or person. SWOT analysis is most commonly used by business entities, but it is also used by non-profit organizations and, to a lesser degree, individuals for personal assessment. Additionally, it can be used to assess initiatives, products or projects.

S

W

T

O

SWOT analysis of Pizza hut

Strengths: 1. Good Quality Food (Hygiene)

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. 3. Food worth its Price:

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:

They provide good service in terms of timeliness of pizza, courteousness of employee, knowledge of employees, taste of pizza etc. They provide pizza before time, their staff An Analysis of Supply Chain Management Department Functions of Pizza Hut

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Chapter Four: Supply Chain Management System of Pizza Hut are scattered around near all the tables so that incase the customer wants to call pizza boy they just have to wave.

Weaknesses Queue during Peak Hour Higher Overhead Costs They advertise very less 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 Competitors like Dominos, Italian Pizza. Housewives are interested in making Pizzas & other Fast Food at home.


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Chapter Five: Recommendations & Conclusions

Chapter Five: Recommendations & Conclusions 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.


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Chapter Five: Recommendations & Conclusions 4. Pizza Bangladesh Limited’ should improve its data collection and communication systems. These would enhance information flow within the Company and promote the implementation of new strategies and directives. It would also help to reduce the inconvenience of the customers as lack of availability of topping ingredients makes customers unhappy, moreover it creates negative impression about the restaurant on the customer and as we know positivity is less spreaded while negativity is spreaded faster than wind. Good data collection system would help it improve on its forecasting system to reduce the shortages it encounters in order to effectively meet the needs of its customers. 5. ‘Pizza Hut Bangladesh Limited’ should buy more basic ingredients and exquisite ingredients distribution vans to improve its supply chain system. 6. Bangladesh government should emphasis on the franchises to create pressure on the main organization to produce as much ingredients as is possible locally to ensure means of employments for the farmers of our country. Along with farming many other sectors like transportation and distribution will emerge as sectors of income for Bangladesh. 7. Bangladesh government should encourage more global restaurant chains to enter in Bangladeshi market along with nurturing the local start-ups for the entrance of such chains will facilitate entering opportunities in global markets for our local and traditional restaurants. Moreover, the entrance of such food chains will enhance the standard of living of our future generation. 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. After implementing these strategies they can get: 

Maximum return on their investment  Value proposition  Expands their business growth  Increase in sales


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Conclusion

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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