Domino's India Logistics Management
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DOMINO'S LOGISTICS MODEL contd...Earlier, if
Domino's had to open a new outlet, the commissary in Delhi would have to
process the raw material and send it to the outlet. The truck would return
empty. With the revamped supply chain, Domino's was able to leverage its
fleet much better (Figure I explains how Domino's new hub-and-spoke model
worked.
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There were two hubs in the northern region—the
commissary in Delhi and the principal sourcing area in Jalandhar. The
spokes were Shimla and Chandigarh). The logistics model adopted by
Domino's offered some obvious benefits including lower transportation
costs, cheaper procurement and economies of scale.
Domino's had already cut out the duplication in procurement and
processing of raw materials across each of the three commissaries. The
old model of self-contained commissaries had another disadvantage:
adding new outlets did not translate into greater economies of scale. |
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Bhatia planned to extend the model to other parts of the
country as well. The commissary was to be located near the largest market in
that region. Bhatia said, “Our roll-out began only after we mapped out our
procurement strategy.” Based on the agricultural map of India, Domino's
looked for the best product at the lowest cost.
Thus, tomatoes would come from Bhubaneshwar, spices from the south, baby
corn from Nepal (where it's 40% cheaper than in India) and vegetables from
Sri Lanka (Refer Table I). Similarly, Domino's India planned to extend its
operations to Nepal, Sri Lanka and Dhaka. The company planned to establish a
commissary in Sri Lanka.
Domino's also identified specialty crops in each region. The commissary in
that region was entrusted with the task of processing that specialty crop.
For instance, the commissary for the eastern region in Kolkata was
responsible for buying tomatoes, processing them and then sending them to
all the other commissaries.
Similarly, the northern commissary had to deliver pizza bases. This way,
Domino's minimized duplication as well as the dangers of perishability.
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FIGURE I - DOMINO'S LOGISTICS MODEL
EXHIBIT I - THE PIZZA HOTLINE
EXHIBIT IV - MCDONALD'S-OUTSOURCING THE INGREDIENTS
[3] Regular ingredients like onions were sourced and processed locally by the commissaries.
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