Domino's India Logistics Management

<< Previous

Domino's Logistics Model Contd...

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. 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. Once the new model was formalized, Bhatia planned to use Domino's 25 refrigerated trucks⁴ to transport products for other companies on the same route. For instance, if an operator in Kochi (Kerala) needed to transport specialty cheese, he could use the Domino's fleet to transport his products.

Said Bhatia, "Not too many people have refrigerated trucks in the country. And we can offer them quality service because we will be giving them standards we use for ourselves." Company sources said that enquiries from clients for such transport facilities had started coming in. Bhatia said he was in the process of selecting a person to head the logistics operation, which would be spun off as a separate profit centre. Bhatia seemed confident that the profit centre had the potential to bring in Rs 10 bn by 2006. However, he said the profit center would not be allowed to impede the growth of the pizza business, Domino's core operation. Only those deliveries that did not delay or deroute the truck would be considered.

Next >>

---

4] The number was to be increased to 100 by 2001.