Supply Chain Management

Project Report on Supply chain process of Pizza Hut

Pakistan

Submitted by:
Group Members:
Moeez Gill
Noman Shafqat
Rana Rizwan
Mubashir Abbas
Class:
BBA- 8th A

Submitted To:
Maam Sehrish Somro

Our efforts on this report are solely dedicated to our

respected & supportive teacher.

TABLE OF CONTENTS

1. Elaboration of Supply Chain of Pizza hut

2. Pictorial Supply chain of Pizza hut
3. Adjusting supply chain members capabilities
4. Ware house
5. Mode of transportation
6. Head office
8. Operations/ Production
9. Improvement in Supply chain
10. Measures of supply chain performance
11. Recommendations
12. References

Company Overview:

Pizza Hut is an American restaurant chain and international franchise known for Italian-American cuisine
including pizza and pasta as well as side dishes and desserts. The company has over 15,000 locations
worldwide as of 2015, and is a subsidiary of Yum! Brands, Inc., one of the world's largest restaurant
companies. Pizza Hut is also in the process of exploring green building design and has already
incorporated some 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.

1. ELABORATION Of a COMPLETE SC Of PIZZAHUT:

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 parlor company (Buns)
Habib oil Mills (First mineral water)
Indirect suppliers of Pizza hut are:
Meat market (Their owns cattle)
Vegetable market
Sauces brands
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 suppliers 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. 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 managers 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.

2. PICTORIAL SUPPLY CHAIN Of PIZZAHUT:

3. 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. WAREHOUSE:

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 Bahadurabad from where they have got all the material except direct one. Its ware
house is named as Commissary.
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 favorite 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 behaviors. 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 40million 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 center, Pizza Hut has
managed to turn it into a profit center with increased ROI, manager said, in excess of 200 per
cent. Again, precise ROI was not available as it is ""confidential." "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 behaviors, 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.

5. MODES Of TRANSPORTATION:

Bikes used for the delivery service to customers at their doorstep.

Pizzahut Trucks to bring material from warehouse to outlets.

6. HEAD OFFICE:
Pizza hut Pakistan head office is situated at Shaheed e Millat road, Karachi.

7. 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 customers 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 SOPs 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 gets baked. All of the three processes includes 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
customers order is max 16 minutes. Whether there are too many customers orders and takeaways, but
the pizza huts serving time never exceeds up to 16minutes. 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
Baking 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

 Tracking wastages on the make table

In pizza hut, here is no inventory left at end as all the pizzas are prepared as per customers 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 tore sell 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.

8. IMPROVEMENT IN SUPPLY CHAIN PERFORMANCE:

Pizza hut has worked a lot to increase the responsiveness towards customers 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 within 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 center 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 service, 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 center connects the call to
that customer who is waiting for his desired order, explains him whole situation and requests him for his
cooperation and patience (if there may few minutes exceeds up to 40 minutes). By sending another person
to deliver customers 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 really well.

9. MEASURES Of SC PERFORMANCE:

Pizza hut is 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.

10. RECOMENDATIONS:
The supply chain strategy of Pizza Hut is very good but there area of supply is so small. They are
providing there products only in big cities of Pakistan. There other competitors are moving into
smaller cities so if they will not make there outlets there they will lose competitive advantages.
The other thing is there prices are high if they will lose their prices, average 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

11. REFERENCES:

Pizza hut Sites

http://www.pizzahut.net.pk/
Pizza hut face book page
http://www.facebook.com/PizzaHutPak
Pizza Hut outlet Multan