Operations Management

Executive Summary: The standard of operations plays a vital role in any business. To obtain maximum positive results, set procedures are a must. I have chosen Pizza Hut because it is one of few brands which serve all around the globe. Pizza hut have their set operation procedure to make sure they meet customer’s satisfaction to the maximum. This report includes Pizza hut’s supply chain management, inventory, product and service design, production process, planning and controlling, and quality management along with conclusion, recommendations and some areas of improvement.

Introduction: Pizza Hut turns out to be a dream comes true for Frank and Dan Carney in Wichita, Kansas in 1958. They started the pizza business in a Hut shaped building with the seating arrangement of only 25 people though the name strikes as Pizza Hut. As they continued through their journey, they now have more than 600 outlets in UK only. Yum owned pizza hut as a joint venture with other company but since 2006, it is fully owned by Yum. Pizza hut offers a variety of different pizzas as per customer’s choice like stuffed crust pizza, Sicilian pizza, pan pizza, the Italian, the edge, twisted crust, the quad, etc. We can find more information on the following websites:
Website address for information:
 http://www.pizzahut.co.uk
 http://www.yum.com
 http://www.careersatpizzahut.co.uk
 http://www.pizzahutfranchise.co.uk

Corporate Vision of Pizza Hut:

Global strategic objectives: Pizza hut have almost the same objective which they follow throughout the world. These are some set strategies which drives them one of the best in what they do. They follow the targeted international growth amongst their competitors. They are flexible with pricing, have a huge variety in the menu and a have an excellent 24 hour delivery model to be carried out on all of their outlets around the globe. They invest in training and auditing to make sure that they stay stable at the performance and quality they give to their customers.

The Value Chain: It is essential to know the main base of the Pizza hut business. The activity of any business is divided depending on the functionality and nature of the organization. The Operations of Pizza hut are a collection of several set of activities which are followed to meet customer’s demands and needs. These operational sets are operated separately but are connected altogether by the help of job activities. Pizza hut has focused on every detail which a customer looks for. That includes presentation, quality, taste, way to be served, importance of customer’s satisfaction, accessibility, financial range, etc. They have a well trained staff and they focus on training and development so that they could keep up with the desirable taste or pricing situations depending on the area they are serving. For example, people living in US or China will be having different choices in taste and would be considering less or high value for money than those who are living in UK. Pizza hut has managed to combine cooperate level and operation level strategies to make the best out of it in terms of profitability, quality and reliability. This is one of the reasons that Pizza hut is considered to be one of the most reliable and most efficient brand of pizza in the world.

Operation Strategies Implications: The main focus of Pizza hut is to provide the maximum quality and service to their customers. There are some strategies which are set to achieve this goal. Pizza hut emphasizes on to cover most of the processes in the minimum duration of time by keeping in mind the quality standards. This, in return, saves the operating cost and delivers the quick way to cope up with the constantly risen demands from their customers. Their strategy is to locate as much as outlets in neighborhoods so that they are easily accessible and the risk of not making in time could be reduced to almost 10%. They design their stores by using the state-of-the-art technology and so that customers could feel comfortable as well as the processes and tasks by the staff could be done easily in time. They focus on making processes for each task in the food making. For example, they have different individuals for their set task. One person prepares the crust, other will fill the crust with as per customer’s order, and another one will do the toppings, than one with the boxing and packing and so on. By following this strategy they keep up with the time set as well as every individual put their whole effort in their particular task to make it perfect.

Product and Service Design: Pizza hut has a very unique set of product and service designs. They have a large variety in their menu including several deals. This gives customers a very flexible opportunity to mix and match according to their suitability. Mainly they deal in pizzas however they have many other varieties to offer. One of the most famous is their free unlimited salad. Other than the salad, they have different dips, chips, garlic bread, a range of different toppings on pizzas, foot long dishes, sauté pasta and ice-creams etc. They have different types of menus for different types of situations, like children’s menu, weekday buffet, lunch buffet, collection deals and happy hour. Customers can enjoy the deals specifically made for different situations like birthday parties, take-away, eat-in etc. Pizza hut has given concept of mix-and-match to the customers with their huge range of products so that customer could design their deals by themselves according to their needs.

Process Design:
 Preparations: First thing is the preparations. Pizza hut prepares all the necessary things for making a pizza a day before of their service. For example preparing starters, cheese and defrosting of the dough. They carry out this process depending on the next business day forecast so that everything is ready to be made for the next day and there is no delay in the service to the customers.

 Make Table: The make table is defined as to make orders are received on the FIFO system bases in Pizza hut. That means first come, first serve basis until or unless the order is for collection or for the home delivery. Pizza hut takes 10 to 15 minutes if customer is willing to collect from the store or alternatively, they take give at least 30 to 35 minutes of time if customer has asked for a home delivery. They make the table at 2 to 5 degrees temperature so that the ingredients, taste and freshness is kept at the right and appropriate level. They are very serious about the toppings as they want to serve the customer the pizza just as the customer has selected from their manual.

 Cut Table: Receiving the pizza, cutting and guest check is done on this stage. This is a critical stage as it is very important that the right pizza is served to the right customer otherwise there would be a mess in the whole system which will raise a question to the service of pizza hut.

 Dispatching: Dispatching the orders for home deliveries is a critical task for the managers specifically if there are more pizzas to deliver but there are fewer drivers. The areas in the delivery region are divided depending on the post codes hence it’s a critical task for the shift manager to manage the address and the post code with the drivers to make sure nothing goes wrong in the delivery time. Shift manager also sort out that if two deliveries could be done by one driver at a time to utilize the time at its best during the peak hours of operations.

Below is a diagram of process map to explain the order making and delivery to customer:

Store Layout: Pizza hut has very aggressive store layouts to cover up as much area as they can. They have delivery only store and dine-in stores as well. Delivery stores are only used by the customers who want their pizzas to be delivered at their door steps or are willing to collect from the store. However, the dine-in restaurants are around 1 to 2 in every region. They offer home deliveries and dine-in experience to their customers. They have designed their stores in such a way that customer could feel comfortable in every manner. They have their specific choice of colors which includes black and red and also specific choice of interior so that customers could make the most out of their experience. Pizza hut has selected this unique pattern of theme and color scheme to ensure the customers that they will get the same excellent quality and standard of experience which ever branch they go for their eat out. They have standards of health and safety complying with the standard UK rules and regulations however they always keep in mind the safety of their staff in regards to the environment and interior of their stores.

Suggested area of Improvement: Some of the areas of improvement are in the process and equipment. As it turns out, every process takes different span of time to be done. However, these timings are not the same. Some processes takes longer than the others. This puts a hold on certain processes which in result waste the time and utilization. They should work on a system that could saves time on the processes and utilize the most of the time to efficiency and service. This happens most of the times during the peak hours of the day like lunch time or dinner time. There are a lot of orders to be carried out however, somehow they are delayed due the time taken by particular process to complete. This could be done by ensuring that every process is always ready to be worked on and the time is consumed properly on each stage of the process. The second area of improvement is in the equipment for deliveries. At the moment, the drivers at Pizza hut are not using GPS systems. They have to see through the maps and make their way out to the delivery. This totally depends on once knowledge of area and efficiency to make their way to the customer’s door. There is also space of improvement in the kitchen area. Pizza hut currently have a capacity to maintain the demand of the store however, they will not be able to be prepared if there are big orders especially during the peak hours. Although they do have their backups from nearby stores but still this could cause a problem since the pizza trend is getting higher in UK during the recent times.
Demand Forecasting: Demand forecasting is very essential part of any business. At Pizza hut, they totally depend on the forecasting even with the food ordering. They observe the forecast of expected upcoming events and expected number of sales in the calendar. Usually, they have around 2 to 3 drivers, kitchen staff and a shift manager during the weekday shifts however the number of staff increases during the weekends for example shift and support manager, 4 to 5 store staff and the number of drivers goes to even 7 to 10 depending on the weekend. This works fine as long as everything sticks to the plan but there are some external factors which could effect. The external factors are a bad whether, a road hazard or a social event new the store. On the other hand, more demand against limited availability of ready to use products may cause a problem. For example, a good weather, an event, special occasions, rituals and festivals. Statistics also shows that the demand during the start of the month is much higher than that of the end of the month; this is due to the less availability of funds during the ending days of the month. However, not coping up with the demands can cause a serious damage to the reliability of Pizza hut in the eye of the customers.
Promotion Planning: Pizza hut invests considerable resources so that they could find exactly what their customers are looking forward to. A pizza hut covers the segments from teens and youngsters to the families for the delivery branches. According to their own database, they have a huge customer based on the young adults and teens which they consider as their primary customers. According to their internal database, the maximum orders they take for their home deliveries or collections from the stores are mostly the adults ranging from 19 to 27 years of age.
Innovation and Development: Pizza hut is known to be the world’s biggest pizza franchise in the whole world comprises of more than 30,000 outlets in 90 countries. The very first innovation by Pizza hut was the MICROS business information system.
 Micros was developed to create a network point of sale terminal for the order entries, series of kitchen display monitor to maintain the order of food preparation and it makes most of the complicated tasks like cash handling and controlling delivery easy to do. Micros has multiple capabilities like store control, production and making of reports through business processes with a strong network which connects store management, regional manager and even the head office.

 Management change of innovation: Management is one of the most essential concepts in an organization. Change mostly depends on the corporate structure, technology and the people. Every day is different and new from the one which has past. So, change is the only option to adapt the in the uncertainty of situations.

 Product Development Team: At Pizza hut, there is a specific product development team who run focus groups with customers to have new ideas for the products. These ideas are transformed into concepts and are presented to a panel of customers. The excitement and feedback from the panel decides the best of the concepts and those concepts are taken forward to be transformed into actual products. These products are than tested by the customers and if the product proves popular, it is taken to the next stage of marketing.

Supply Chain Management: Pizza hut uses the Total Quality Management approach for its supply chain management. The main factors of supply chain management are:
 Facilities: Facilities are the production sites, warehouse or storage sites where the product is kept or assembled. As we have seen that the ingredients are transferred here from different parts of the world. To maintain the same taste, they prepare the pizza bases at the facilities and then transport them to different outlets. They provide the same base which is customized to look as a different product which means there is a certainty in the pattern of demand while they provide variety as well. This shows the line between push and pull strategy.

 Inventory: Pizza hut keeps the inventory stock for only three days because the goods are perishable hence it reduces the cost of inventory stock. Only the base is transferred to the outlets so there is very less chance of any problem if demand of a certain item is increased.

 Transportation: To deliver the base from the facilities to the outlets, Pizza hut uses big trucks which are temperature maintained according to the distance of the outlet from the facility. The trucks leave some vacant space to fill up with extra bases according to the necessities of a specific outlet.

Quality Management: Pizza hut is very strict with the quality management. This is done by setting up rigorous standards through the process of development. To make sure that the quality is maintained, they use regular auditing and monitoring of the whole system which is called the Champs Excellence Review. They also use the complaints monitoring system so that the complaint is taken care of as soon as possible and no compromise is taken on the quality. The most important quality management factors that Pizza hut use are delivered on time, delivered completely, undamaged and invoiced correctly. If a customer complains about anything, they take action right away to make sure customer is satisfied.

Conclusion and Recommendation: Pizza hut is a huge name in the food industry as one of the biggest food chain in the world. Their operation’s strategies are simple and effective. However, by studying the processes, I have concluded that the success depends on each and every stage of the process. If a single process is delayed or misplayed, it can ruin the entire process. Although Pizza hut is always prepared for the unusual situations, but still it will take a lot of time to recover from if they have their brand image effected. The success of a business can only be achieved by through collections of inputs by all the units participating in the whole process. The operations management strategies used by Pizza hut have taken up the name of the brand and value to a much higher from where it was since last 3 years. This all happened because of the consistent workout on the supply chain management, quality management and innovation of using different procedures for the processes.

References:

Cecil C. Bozarth, Robert B. Handfield (2008), ‘Introduction to operations and supply chain management’, second edition, ‘Operations Management’, Ch: 1, pp5
Peter Bolstroff, Robert Rosenbaum (2003), Supply Chain Excellence, Initiating the opportunity analysis, Fish bone diagram, Ch: 10, p 124-12
Mary Say, ET al (2003) ‘The Importance of the Customer Experience’ Admap Magazine, June 2003, Issue 440
Roberta S. Russell, Ernard W. Taylor III (2000), ‘Operations Management’ Third Edition, Ch: 1, pp17
William J. Stevenson (2005), Operations Management, 8th Edition, ‘Introduction to operations management’ published by McGraw-Hill, Ch: 1, p.5-9
Thompson L. John (2001). Strategic management 4th edition, published in England

References: Cecil C. Bozarth, Robert B. Handfield (2008), ‘Introduction to operations and supply chain management’, second edition, ‘Operations Management’, Ch: 1, pp5 Peter Bolstroff, Robert Rosenbaum (2003), Supply Chain Excellence, Initiating the opportunity analysis, Fish bone diagram, Ch: 10, p 124-12 Mary Say, ET al (2003) ‘The Importance of the Customer Experience’ Admap Magazine, June 2003, Issue 440 Roberta S. Russell, Ernard W. Taylor III (2000), ‘Operations Management’ Third Edition, Ch: 1, pp17 William J. Stevenson (2005), Operations Management, 8th Edition, ‘Introduction to operations management’ published by McGraw-Hill, Ch: 1, p.5-9 Thompson L. John (2001). Strategic management 4th edition, published in England