Supply chain management Report

on: Pizza hut

SUPPLY CHAIN MANAGEMENT

Iqra University
Supply chain management Report
on: Pizza hut

Table of Contents

Part I:
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
7.
Pizza hut outlets

Part II.
- Operations/ Production
Part III.

- Improvement in Supply chain

- Measures of supply chain performance
References

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Supply chain management Report
on: Pizza hut

Company Overview:

The largest national pizza chain, Pizza Hut has over 34,000 locations and has annual sales around
$10 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 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

I. Brief Elaboration of a complete supply chain

network for Pizza
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)

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 with in 45
Iqra University
Supply chain management Report
on: Pizza hut

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”

Supply Chain of Pizza hut

Direct supplier
S1 S2 S3
Pepsi (Buns) First water
Company Bake Parlour (Habib oil

Daily
Indirect Supplier
S4

W Sauces
e Company
e
k S5
l
W Meat Market
y
Dough e
d
B
n
a
e
s S6
Filling O O s
i
r r d Mandi
s
a (Vegetables)
d d
y
Topping e e Commissary
r r (Ware house)
s s
Bake
(Cheese

Customer Delivery
(Pizza Hut) Service

Iqra University
Supply chain management Report
on: Pizza hut

Adjusting SC 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.

Ware house:
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 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.

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Supply chain management Report
on: Pizza hut

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.""
""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.

Mode of Transportation:

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Supply chain management Report
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Bikes used in delivery service

Trucks which bring material from ware house to pizza hut

Head office:
Pizza hut head office in Karachi is at Shara-e-Iran.

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Supply chain management Report
on: Pizza hut

Iqra University
Supply chain management Report
on: Pizza hut

City Outlets Address

KARACHI
Clifton 1 QM Building, Plot# BC 15, Block, Khayaban-e-Roomi, Clifton
Clifton 2 Plot No. GPC-6, KDA Scheme 5, Kharkhar Chowrangi, Clifton
Zamzama 19-C, Zamzama Commercial Lane-9, Phase V, D.H.A
Gulshan-e-Iqbal 36-B, Hina Centre, Gulshan-e-Iqbal
I.I Chundrigar Road Mitha Chamber, I.I Chundrigar Road
North Nazimabad D-5, Block-D, North Nazimabad
Sea View Sea View
Cantt. Station Cantt. Station
Shahbaz 14-C, Lane 2, Kh-e-Shahbaz, Phase 6, D.H.A.
Atrium Mall 249, Staff Lines, Zaib un Nisa Street, Saddar
Shaheed-e-Millat Road Shop S-104 & Mazzanine Floor, Plot 7/4, block 3, DMC Housing
Society, Shaheed-e-Millat Road
Rashid Minhas Road Plot No. 8, Block 10-A, KDA Scheme No.24, Main Rashid Minhas Road
Sharae' Faisal Shop No. 6, Al-Kamran Centre, Plot # 7-A,Block 6, P.E.C.H.S.
M. Ali Society Plot No. 12-C, Reliance Arcade, Muhammad Ali Soicety
Gulshan Block 7 1-B/FL-6, Block 7, Gulshan-e-Iqbal
Nazimabad 2 Opposite Matric Board Office
Korangi (Industrial Plot ST-6/4, Sector 24, Chamra Chowrangi, Korangi Industrial Area
Area)

LAHORE Gulberg
89/B-1, Gulberg-III, M.M. Alam Road,Aligarh Chowrangi
Mall Road 73- Mall Plaza, The Mall
M-3 Fortress Stadium

Defence 122-Y, Lahore Cantonment Soceity, Defence

Railway Station Railway Station
Johar Town Plot #15, Block N, Johar Town
Iqbal Town Block 6, Near Akbari Store, Allama Iqbal Town
Barkat Market Barkat Market 8, Power Block, Garden Town
Gulberg Delco 4-E-1, Hali Road, Gulberg 3
PSO Sunshine PSO Petrolium (Sunshine), Abid Majeed Rd. (Girja Chowk), Cantt.

HYDERABAD
Hyderabad Plot # 45, Hotel Indus, Thandi Sarak

ISLAMABAD
Jinnah Super F-7 13-1, Sector F-7, Markaz, Jinnah Super Market
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Supply chain management Report
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F-10
1-K, Plaza, F-10 Markaz

PESHAWAR
Peshawar Captain Karnal Sher Khan, Stadium, ShamiRoad, Peshawar Cantt.

II. 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 inn
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 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. 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
Iqra University
Supply chain management Report
on: Pizza hut

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
➢ 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, incase 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 takeaway to their homes. The other reasons are to estimate demand more carefully and
not to compromise on quality.

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Supply chain management Report
on: Pizza hut

III. 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 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 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 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.
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Supply chain management Report
on: Pizza hut

Measures of SC 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.

Supply Invento Hardly 1 day cash is tied in

Chain ry days inventory
Asset
of
Managem
supply

Iqra University
Supply chain management Report
on: Pizza hut

References

• Supply Chain Manager Pizza hut Haidery Branch Karachi “Miss Sehar Tariq”.
• Pizza hut Sites In Pakistan

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