February 23
OPERATIONS MANAGEMENT
A report on operations at Pizza Hut
2012 Submitted by Avipsa Bhupesh Masum Mahesh Rajni Roshan Pai
Table of Contents OBJECTIVES: ............................................................................................................................................ 2 COMPANY PROFILE: ................................................................................................................................ 3 INTRODUCTION: ...................................................................................................................................... 4 OPERATIONS MANAGEMENT: ............................................................................................................ 4 OPERATIONS AT PIZZA HUT: ........................................................................................................... 4 PIZZA HUT AT BANGALORE: .................................................................................................................... 5 LOCATION: .......................................................................................................................................... 5 LAYOUT: .............................................................................................................................................. 6 WORKSTATIONS: ................................................................................................................................. 7 INVENTORY MANAGEMENT AND FORECASTING:................................................................................... 8 SUPPLY CHAIN MANAGEMENT: .............................................................................................................. 9 SUPPLIERS ........................................................................................................................................... 9 Direct Suppliers ............................................................................................................................... 9 Indirect Suppliers ............................................................................................................................ 9 LOGISTICS: ........................................................................................................................................... 9 QUALITY MANAGEMENT: ..................................................................................................................... 10 THE DATING STANDARDS:................................................................................................................. 10 PRODUCT SHELF LIFE: ....................................................................................................................... 10 THE “CHAMPS” STANDARD: .............................................................................................................. 10 DATA WAREHOUSING: .......................................................................................................................... 11 PIZZA HUT MANAGEMENT STRUCTURE................................................................................................ 11 CONCLUSION:........................................................................................................................................ 12
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OBJECTIVES: Understand about various operations that happen in a retail store. Know about the layout and store design. Understand the various supply chain practices. Understand about the inventory management. To get a better insight about the logistics and warehousing of goods. Know about the management structure.
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COMPANY PROFILE: Pizza hut was started on 1958. The dream of Frank and Dan Carney turned into the reality when he opened the first Hut in Wichita, Kansas. The website of pizza hut states that in very beginning the restaurant was as too small. It had just 25 seats available for customers. The inspirations for the name as ‘Hut’ came into thoughts through the design of the building. It looked like a hut. Therefore it geared the idea to carry on with name as ‘Pizza Hut’. The Pizza has superior place in the market, particularly for the Pizza business. Through the time it has scattered in to the markets of the world. The numbers of the growth depicts that it Pizza hut has more than 600 outlets in the UK only. The Pizza hut is a part of Yum, which is another big company. The Yum own several big companies like KFC, Long John Silver's, and A & W Taco Bell. The Pizza hut was formerly owned by Whitbread and Yum as a joint venture. But in the year 2006 Whitbread sold out their shares to Yum. Presently the Pizza Hut UK Ltd is now 100% owned by Yum.
The Pizza Hut franchisee stepped into the Indian fast food market by opening a dine-in restaurant at Bangalore in 1996. The pizza franchise soon expanded itself in India and now has the KFC brand beneath its umbrella. The fast food franchise was the first international fast food firm to make an entry into the Indian scene and has thus pioneered the Indian pizza market. The menu provided at the Pizza Hut franchise is that of a complete meal. Customers are considered as honoured guests at the fast food franchise and are treated accordingly. It is the customer satisfaction provided by the specialty food franchise that enabled it to position itself at the top of the Indian fast food market.
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INTRODUCTION: OPERATIONS MANAGEMENT: Operations management is the management of the system or processes that create goods and/or provide services’ which involves various inputs. The creation of goods or services involves the transformation or conversion of inputs into outputs. Inputs such as capital, labour and information are used to create goods or services using one or more transformation processes. Operations management plays a key role in determining the success or failure of an organization. To carry forward the inputs of each unit all together and getting turned it into the outputs is the real synergy, which helps the organization to set the directions towards climbing the heights of success. This includes the effective planning, scheduling and control of the activities that produce the required outcomes. OPERATIONS AT PIZZA HUT: The Pizza Hut restaurant’s operation is the face of the company. The role of operations is to be obsessed with the quality of our pizza and the experience that our customers receive. There are a number of different Pizza Hut concepts: Full Service Restaurants: These are the traditional pizza restaurants offering a seated service and takeaway. Home Service Restaurants: These restaurants offer home delivery and takeaway. Express Units: Offer lots of opportunity to expand into food halls and other busy retail locations. Franchise.
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PIZZA HUT AT BANGALORE: LOCATION:
The location of the Pizza Hut restaurant that we have selected is at Kanakapura Main Road, Bangalore. The restaurant offers services to customers like Dine-in, Delivery, Carry out and Birthday bang. The restaurant is located at a place where the number target consumers are high. Moreover, there are very few competitors within a vicinity of 5 kilometres of the restaurant making it a very good location.
Some key criteria for selecting the location of Pizza Hut: 1. It should be in an out of centre location on a retail or leisure park with good parking and accessibility. 2. The tenant mix of the park must be of good quality with the ability to draw from a wide area. 3. Ideally there should be a wide range of users giving both a day and night time activity to the area. 4. The area is of a specified minimum size and within a given drive time to the site. 5. There is good visibility both to the passing traffic and users of the park and corresponding good access to the unit. 6. The park will remain the major draw within its catchment area both now and in the future. 7. There is the opportunity to build a freestanding unit of Pizza Hut’s standard external design. 8. The unit can be standard size, built in line with our standard specification 9. Ideally there is a 25-year lease with the opportunity for periodic rent reviews and exclusivity of pizza sales on the park.
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LAYOUT:
Pizza making Workstation Layout
Layout for a Pizza Hut’s Kitchen
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WORKSTATIONS: The various workstations at Pizza Hut are: 1. Order taking counter: In the order taking counter, the waiters at the restaurant places the orders which are taken from the customers. Orders work on the FIFO system. 2. Dough storage: After the order is placed, the order is sent to the chef and he in turn, based on the type of pizza and the size takes the required dough from the storage. 3. Pizza preparation area: From the Dough storage place, the dough is taken to the pizza preparation. Activities at this workstation include defrosting of dough, making starters, spreading the cheese, adding toppings and baking. 4. Pizza cutting: The job at the cutting table is to receive the pizza and cut them according to the customer order. Special consideration is to be paid when cutting it as per the order. If it goes wrong, then it breaks down the flow of the processes and can cause bottlenecks. 5. Packing: The cut pizza is then packed. The size of the package differs according to the size of the pizza. 6. Dispatch counter: After the pizza is packed, it is ready to be delivered to the customer. In case of Takeaway, it is handed over to the customer directly. In case of Dine-in, the waiter takes it to the table to be served to the customer. The dispatching is tricky and critical work specially when there are more orders on the shelves and less drivers. The geographical area is divided in to the zones according to the post codes. The order is printed with address and the postcode. Usually it take less than 30 minute to deliver the order to the customer on his/her door, but the timing standards may vary according to the availability of work force and the level of peak that business receive in particular moment of time.
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INVENTORY MANAGEMENT AND FORECASTING: In this Pizza Hut restaurant, pizzas are served fresh and in order to retain the quality, various things that are used for making pizzas are ordered to be supplied the previous day. The inventory forecast is done based on the demand for pizza of the previous day. 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 in is taken into account. The various items that are stocked for the next days’ operations include:
Readymade dough Cheese Vegetables like tomato, capsicum, chillies, onion etc. Meat, Peperoni and chicken Cooking oil Potatoes for French fries Sauces
(NOTE: Different ingredients used in the pizza making process, carry different shelf life. Therefore, certain items are ordered on a weekly basis) If forecasting for the following day’s operations is not up to the mark, then that will cause difficulty or shortages of items that are necessary for the conversion process. If the forecasted goods will not be made ready for the next day operations that, will be virtually difficult for the next day’s shift manager to carry out the business operations.
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SUPPLY CHAIN MANAGEMENT: Supply chain of pizza hut starts from the suppliers of pizza hut. There are direct suppliers and indirect suppliers of Pizza hut.
SUPPLIERS Direct Suppliers
Pepsi Cremica Group (Buns)
Indirect Suppliers
Meat market Chicken from Brazil Vegetable market: Potatoes Sauce companies
LOGISTICS:
COLD CHAIN LOGISTICS Snowman Frozen Foods provides cold storage facility 16 warehouses and 110 trucks Equipped with Carrier and Thermo King Transport temperature control units. Cold storage capacity is between 100tonnes and 1,200 tonnes.
THE SUPPLY CHAIN OF PIZZA HUT Direct supplier
Indirect supplier
Pepsi Company
Sauces
Cremica group WEEKLY
Dough
Meat market
FIlling Vegetables ORDER
Topping Baking Customer
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Delivery service
Warehouse
QUALITY MANAGEMENT: The aim of the business unit is to achieve complete operational standards practices. The interview with Restaurant General Manager (RGM) of Pizza Hut revealed the fact that optimal strength is always utilized into the process to get the maximum results and maintain 100% product quality standards. The manager added, ‘All dough should be identified with an accurate timing system, as it is very critical for good dough management, good quality and wastage management’. Overlapping of the toppings gives a bad taste of the pizza and damages the expectations of the customer. There are 2 rules that are applied for toppings:
THE DATING STANDARDS: The dating standards are set for every ingredient used in the business. The items are labelled with correct MRD (Made, ready, discard) label. These labels must have either date made, date ready, date discard and time details or colour dating system
PRODUCT SHELF LIFE: In order to maintain the product quality up to the standard, that is very important to follow the set rules for the product shelf life.
THE “CHAMPS” STANDARD: All the Pizza Hut restaurants work on the CHAMPS standard: Cleanliness Hospitality Accuracy Maintenance Product Speed These six items define the very core of customer expectations. CHAMPS has become the vehicle which drives Operations Excellence into our business and is also supported by a reward and recognition scheme for team members. The ‘CHAMPS check’ is a tool used to ensure consistency of service and product quality across the entire Pizza Hut estate; in fact it is used for all Yum! Brands.
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DATA WAREHOUSING: All management programs are built on a data warehouse of thousands of customer records gleaned from point of sale transactions at the restaurant. Information regarding customer’s favourite topping, what was ordered last and what type of pizza they like. Much of that has to do with data mining, a technology that converts details from customer data into competitive intelligence that it uses to predict trends and behaviours. The restaurant uses a product called Teradata Warehouse Miner and after a year of using it, the restaurant is able better manage its direct mail campaigns better.
PIZZA HUT MANAGEMENT STRUCTURE SUPPORT MANAGER The Support Manager is part of the management team and will help run our business by either managing shifts or working as a key team member. The key skills required for this role include flexibility, communication, leadership and teamwork and customer service. DEPUTY DESIGNATE MANAGER This is the role in which most new recruits kick off their management careers with us. After completing your initial training, you will take responsibility for key areas of the business, assisting the management on a day-to-day basis. We will look to you to get involved in customer service, team training and development and business controls. DEPUTY MANAGER The Deputy Manager works as part of the management team to ensure that the restaurant operates effectively, meeting sales and profit targets and quality standards. The role is also to assist the manager in ensuring that all the team is recruited and trained to meet all quality and product standards. The Deputy Manager will take responsibility for the restaurant on the shifts that they run and will assist the manager on financial reporting and analysis of the business. RESTAURANT GENERAL MANAGER The Restaurant General Manager has a responsibility for the running of the restaurant, managing the business as if it were their own: managing the financial side, product ordering, production, quality monitoring and customer service and training and development of staff.
CORE COMPETENCY: The Pizza Hut has got high degree of core competency in the basic product. The Pizza Hut’s dough is treated as core competence of the business. This makes Pizza Hut different Fro it’s competitors.
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CONCLUSION: The operations management depicts the performance of each and individual unit that is participating in overall acceleration of the engine of business. The business may have sometimes low speed and high speeds. It highly depends on the strategies that the top management set for the business and the way the strategies are followed by the key components that run the actual business. The operations at Pizza hut have multifaceted situations. The each component working in the process cycle of business plays equally important role to win the customer. However, if any one of the units deviating from the set standards will cause a variance in the performances as overall. Thus it is concluded that the success of the business is possible through collections of inputs from all the units participating in the conversion process
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