Supply chain is the management of flow of corporate goods and services, with involves movement and storage of raw materials, work-in-progress and delivering the finished goods to the point of consumption (Schoenherr and Speier?Pero 2015). The organization chosen for the study is Domino’s Australia, which is the largest pizza chain in Australia. The organization is also the largest franchisee of the brand Domino’s in the world (Dominos.com.au 2017). The aim of this report is to explore sustainability aspects of Domino’s supply chain management. The study will describe the current supply chain practice of the organization and analyze the sustainability management practice. Apart from that, the study will also recognize the gaps between the supply chain and sustainable management of the organization. Based on the gaps, the study will also provide some suggestion for the organization towards enhancing supply chain effectiveness.
Domino’s Pizza is the largest pizza chain in Australia with its network store numbers and network sales. In 1983, Domino’s was first opened in Australia. Moreover, it is the largest franchisee for the Domino’s brand in the world. The organization produces the best pizza at affordable price. Pizza is the prime focus for the organization with tradition, special and customized crust style and toppings (Dominos.com.au 2017). Apart from Pizza, the organization also provides pasta, oven-baked sandwich, bread bowls, chicken side dishes and other beverages. It does not provide ordinary but exceptional products. Domino’s has hold 34% market share in Australian market (Business Insider Australia 2017). In the year 2016, Domino’s has made a record profit in Australia by $92 million, which is an increase by 43.6% from the last year (Business Insider Australia 2017). Moreover, Domino’s Australia is expecting to have 4550 stores within the decade.
The success behind Domino’s increasing sales volume is its effective supply chain. Over the years, the organization has sourced the best suppliers to provide the best quality raw material to the organization. It has helped the organization to manufacture best quality pizza for the satisfaction of the customers (Msimangira and Venkatraman 2014). Moreover, effective supply chain management has also reduced the overall cost of production of the organization. Moreover, effective supply chain management has become the critical success factor for Domino’s Australia.
Current Supply Chain Management
The journey for the supreme quality of Domino’s does not just start and stop with its pizza. The process starts with the suppliers and partners, who provide best quality raw materials and equipments to satisfy their customers.
According to Brandenburg et al. (2014), considering supply chain planning, long relationships are to be kept with suppliers, which help in discounts and risk minimization in terms of quality. On the other hand, Pagell and Shevchenko (2014) pointed out that unless companies opt out for new suppliers they cannot experience the latest market products and necessities for manufacturing. Dominos Australia has established long-lasting relationship with suppliers that have helped in keeping low purchasing price. Supplier leverage is established by Dominos by being the largest purchaser of cheese, flour, pizza box and sauce. Both single-source and multi-source procurement strategies are followed by Dominos, which values leverage, persistency and quality.
The supply chain management of Dominos Australia is completely comprised of the following:
Supply Chain Management
Supply Chain Strategy
? Focusing on inventory management and fulfillment with raw supplies (dough, meat, cheese and flavor, packing box and materials)
? Edible raw materials are supplied each day to conserve the freshness
Supply Chain Planning
? Getting supplies from the following:
· 5 dough making and food supply manufacturing centers in locality
· Receiving dough from Canadian manufacturing facilities
· Supplementary crust manufacturing centre (thin)
· Vegetable processing centre
· Material and equipment supply centre
· Trailers and tractors (more than 160)
Supply Chain Integration
? Well established nationwide integrated network through NetSuite Suite Commerce supplied by Capgemini
? Order supply management and equipment management is controlled and monitored in real time through the cloud-based services
? Existing retail outlets having material handling management for cooking assets, which are cleaned at recurring time
? Incorporating latest technology in online booking and demand forecasting
? Inventory fulfillment concerning raw materials for pizza preparation
? Best supplier selection from Queensland and Victoria for dairy products
? Establishing strong and long lasting relationship with suppliers
? Buying bulk materials and advance payment with credit facilities
? Green supply chain practices in logistics with transport vehicle having low carbon emission
? Creating small regular supply hubs so that transport cost is reduced
Table 1: Supply Chain Management Practices of Dominos Australia
(Source: Seuring 2013)
The current supply chain of Dominos Australia is driven by six factors, which are facilities, inventory, transportation, information, sourcing and pricing. Each of the factors is interconnected. Cloud based internal server acts as the real time information exchange between different outlets (Beske and Seuring 2014). Suppliers are contacted and information is updated regarding inventory replenishment at each day. However, Dominos is affected by limited supplies and change in prices from suppliers at very rare point of time. Commodity hedging is not followed by Dominos but at present huge capital is consumed in transportation. Operational facilities are improved by asset management and through incorporation of NetSuite Suite Commerce (Bosona and Gebresenbet 2013).
Sustainability Management Practice
Domino’s efforts in sustainability present the knowledge exchange between Domino’s and its suppliers. Domino’s is always intended save the money of the customers and provide healthy food quality. The people planet strategy of the organization helps the organization to maintain sustainability in the supply chain management. The organization always looks after the health of the customers. Hence, the management sources the suppliers, who provide only fresh and best quality raw materials. For example, domino’s has recently switched to full taste mozzarella cheese, which has 14% less fat (Gold, Hahn and Seuring 2013). In order to get the supply of such low fat cheese, the organization has searched the whole world for getting the best supplier. Finally, it has found such supplier in San Joaquin Valley, who made cheese from Grade A milk.
Moreover, during the distribution of the raw materials, the organization always used refrigerated trucks for getting fresh and hygienic products. On the other hand, the organization also highly concerned about the durability of the raw materials like Pizza dough, cheese dip, cheese blend, seasoning and toppings, onion, tomato and capsicum. All these raw materials are reached at the inventory within their durability with just in time approach in supply chain management (Manzini and Accorsi 2013). Furthermore, the business practice and employee practice on online platform has ensured ethical standard with the suppliers. The organization ensures that the delivery trucks do not exceed 45mph so that fuel consumption is reduced. Moreover, it uses the procuring vehicles, which comply with noise specification and latest EC emission. Sustainability management practice of Dominos also saves the money of customers with offering affordable price for the pizzas. Apart from that, the Pizza boxes of the organization are 100% recyclable, which emphasizes on waste management (Dominos.com.au 2017). The organization is also concerned about providing all nutritional information transparently to the customers. It ensures the standard quality of pizzas to be provided to the customers. It also conduct frequent training program for the transport team towards road safety and safe driving practice.
Match between Supply Chain and Sustainability Approach
According to Alexander, Walker and Naim (2014), sustainable management practice takes initiatives towards maintaining transparent and good relationship with the suppliers. The intention behind this practice is to get right quality raw materials at right price in right time. However, Meixell and Luoma (2015) opined that the current supply chain management of Domino’s often relies of credit facilities for the payment to the suppliers. It can create a mismatch between the supply chain and sustainable management practice of the organization. Most of the suppliers in recent market are not interest to do business in credit facilities. Moreover, they are more likely do business through advanced payment facility. Therefore, the current approach of supply chain management can create ineffectiveness in the sustainability approaches of the organization.
According to Isakson (2014), Domino’s is highly concerned about the protecting the environment from harmful carbon emission. The organization has taken several initiatives towards minimizing carbon footprint. On the other hand, Beske and Seuring (2014) opined that the current supply chain management of Domino’s performs green supply chain practices in logistics. The organization uses all the transport vehicles, which emit less carbon footprint and have less impact on environment. Therefore, there is no chance of mismatching between the green supply practice and sustainable environment management.
According to Meixell and Luoma (2015), the sustainable management practice of the organization relies on providing all hygienic quality food to the customers. Apart from providing tasty pizzas, the organization is also responsible for maintaining the good health of the customers. As per Pagell and Shevchenko (2014), currently, Domino’s has less number of supplier sources for getting adequate supply of raw materials. Therefore, the organization often cannot produce adequate amount of finished food in exact time. Moreover, lack of adequate suppliers often forces the organization to minimize amount of ingredients than required. Therefore, there is chance of low quality food with fewer sources of suppliers. It can create mismatch between the supply chain and sustainable management practice of Domino’s Australia.
According to Andreoni and Miola (2015), the sustainable management practice of Domino’s is concerned with supplying the raw materials in the inventory in right time. It is also concerned with using just in time approach for making the supply chain sustainable. On the other hand, Ellram and Cooper (2014) opined that Domino’s uses green supply chain practice for the supply of goods for reducing carbon footprint in the environment. However, the green vehicles are very susceptible to cause accidents with less security system in the cars. Moreover, the drivers are not often trained enough to drive such cars safely. Moreover, the vehicle breakthrough can damage the products of the organization during its transportation and can causes huge organizational loss.
The recent suppliers are not happy with the credit payment system of Domino’s. They are not willing supply materials to organization with credit payment system. Domino’s is facing difficulties in maintaining long term relationship with the suppliers through this credit payment system. Hence, Domino’s should only practice advancement payment system for getting the raw materials from the suppliers. It would help the organization to maintain long term relationship with the suppliers and maintain effective inventory management.
Limited number of supplier sources hinders the production effectiveness of the Domino’s Australia. It can reduce the quality of Pizza, as sufficient among of ingredients are not available through sufficient supplier source. Moreover, it can ultimately reduce the satisfaction level of the customers. Hence, the organization should enhance their supplier source for enhancing the quality of the products. Moreover, they should source the suppliers beyond the domestic boundaries and get best source of suppliers for getting best quality raw materials. All these efforts would actually produce super quality Pizzas, which can have huge impact on customer satisfaction.
With the move towards green supply chain management, Domino’s is shifting towards low carbon emission transport cars for goods transportation. It is obviously positive for protecting the environment from polluting carbon emission. However, in many case, such green cars are highly vulnerable to break down during the transportation. In such situation, the organization faces huge loss in terms of damage in goods during transportation. Hence, Domino’s should hire such green cars, which are technologically advanced. Moreover, the green cars should be having updated software for reducing the chance of accidents.
While concluding the study, it can be said that supply chain management plays an important role for the success of Australia. The organization always focuses on integrated supply chain management with effective supplier sources. It assists the organization to have fresh and hygienic raw materials. Moreover, the organization highly focuses on the durability of the perishable products for maintaining their freshness. Hence, the organization uses refrigerated trucks for transporting their goods. In sustainable management practice, the organization uses green transportation vehicles for minimizing carbon foot print in the environment. However, such vehicles are very vulnerable to breakthrough during transportation, which can cause goods damage. Therefore, the organization should hire technologically advanced green vehicles for maintaining effective supply chain management.
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