PROJECT REPORT ON SUPPLY CHAIN MANAGEMENT OF PIZZA HUT

UNDER THE GUIDANCE OF Ms. Priyadarshni Bakshi

IILM INSTITUTE Gurgaon -122001 (BATCH- 2010-2012) SUBMITTED BY: Isha Jain Kiran Rawat Kunal Patil Madhuresh Shankar Manmohan Rai Manish Tanwar Manoj Maryrin Woleng Uttkarsh Mishra (GROUP-4) Section- H

ACKNOWLEDGEMENT
On the completion of this project we would like to thank large number of individuals who contributed to this project. As quotation goes: No single mole can move the mountain First of all we would like to give our gratitude and sincere regards to Ms. Priyadarshni Bakshi for giving us this opportunity and for her valuable guidance and support without which completion of this report would not be possible. Also, we would like to thank Mr. Vipin, restaurant manager of Pizza Hut, Sector 56 for giving his valuable time without which this report would not be possible. Finally, we thank our classmates for their support and valuable suggestions for the completion of this report.

Contents
VENDOR MANAGEMENT.......................................................................................................................... 4 Need For Vendor Management ............................................................................................................ 4 Steps for vendor Management............................................................................................................. 4 VENDOR MANAGEMENT PROCESS IN PIZZA HUT ..................................................................................... 5 About Company .................................................................................................................................. 5 The Products ....................................................................................................................................... 5 Ingredients and their Outsourcing ....................................................................................................... 5 PURCHASING POLICY ............................................................................................................................... 6 VENDOR SELECTION VENDOR EVALUATION INVENTORY MANAGEMENT INFORMATION SYSTEM CONCLUSION 7 ..7 .8 8 ..9

VENDOR MANAGEMENT
Vendor management is the discipline of establishing service, quality, cost, and satisfaction goals and selecting and managing third party companies to consistently meet these goals.

WHY DO WE NEED VENDOR MANAGEMENT?

The major contribution of procurement and vendor strategy in the overall performance of supply chain processes are optimum quality , lowest possible total cost , developing and maintaining reliable and competitive suppliers , contributing to low inventories and smooth flow , and cooperating and integrating with other functions . In other words, this strategy helps in gaining competency, utilization of resources, control of costs and consistency in logistics services.

STEPS FOR VENDOR MANAGEMENT

 Step 1: y Identify the vendors the covered entity is currently doing business with the existed partners. y Identify whether or not the vendor is a covered entity. y Identify whether or not each vendor is a business associate.  Step 2: y Identify the activities completed throughout the organization where information may be used electronically.
 Step 3:

y y

Identify the vendors that enable the organization to transmit electronic information. Determine whether or not the activity completed will require changes due to the compliance requirements.

 Step 4: y Review the organization business practices and systems to ensure the required components for the new electronic transactions can be gathered in day to day activities.

VENDOR MANAGEMENT PROCESS IN PIZZA HUT

ABOUT COMPANY
Pizza Hut Inc. is the largest pizza restaurant company in the world in terms of both the number of outlets and the percentage of market share that it holds. Pizza Hut was founded in 1958 by brothers Dan and Frank Carney in their hometown of Wichita, Kansas. The first Indian outlet was opened in Bangalore in 1996. Pizza Hut, Inc. operates as a subsidiary of Yum! Brands, Inc. Pizza Hut has over 34,000 locations and has annual sales around $10 billion. There are 12,500 restaurants across 91 countries and 147 restaurants across 36 cities in India. Pizza Hut believes in operational practice through CHAMPS : C - Cleanliness H - Hospitality A - Accuracy M - Maintenance P Product Quality S Speed

THE PRODUCTS
Pizza Hut delivers a wide range of products which include  Pizzas  Pastas  Soups and salads  Desserts, etc.

INGREDIENTS AND THEIR OUTSOURCING (approved)

Items
Wheat Cheese Tomatoes Spices Baby corn Pepperoni Mozzarella Cheese

Places
Jalandhar Karnal Bhubaneswar South India Nepal Australia Spain

PURCHASING POLICY
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:y Pepsi Company Bake parlour company (Buns)

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.

The actual physical locations in the supply chain network where raw material is stored and assembled. The two major types of facilities are production sites and storage sites. As we have seen the ingredients are carried out from different locations across the world so to maintain the same taste throughout in India, they made four commissionary in Noida, Mumbai, Kolkata, Bangalore where the Pizza base is prepared and then transported to different pizza stores . Here it is very clear that they provide the same base which is then customized and appear as a different product so there is a certainty pattern and on the other hand they provide variety also.

 Maintained by separate purchasing agent: In USA, the purchasing activity for foods, packaging and equipment of company YUM is done by UFPC while in India it is handle by YUM itself. The company YUM looks after all the purchasing activity of their brands like Pizza Hut or KFC. All the approved products are provided by the vendors to Pizza Hut after approval from the separate purchasing agent of the Company YUM only .The purchasing agent arrange supplier conferences and obtain the product information and other pertinent item and supplier data when requested.  A list of approved suppliers from where Pizza hut can purchase: Pizza Hut is bound to purchase their all required materials from the approved suppliers. There are

approximately nine suppliers for sec. 56 Pizza Hut restaurant who are approved. The approved suppliers should be ISO certified as the requirement of the company.  Purchasing policy is only applied for approved products: As we have seen above the ingredients required for the company is supplied from different locations. These all ingredients are approved for which purchasing policy is applied. The ingredients like inferior goods are not required to be approved.

Pizza forecast demand:

According to Mr. VIPIN they demand for material on the daily basis and for weekend they forecast on the basis average if they want to know about Saturday then they take the average of last four Saturday and forecast it 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.

VENDOR SELECTION
Scrutinizing the previous record: Company YUM is very strict for selecting the vendors hence first scrutinizes the previous details of vendors before selecting. Purchasing agent of the YUM are responsible for selecting the right vendors for the company to provide food materials , packaging and equipments used in Pizza Hut .Purchasing department mission is to ensure that all suppliers , materials , equipments ,and services are procured at the lowest cost hence they select those vendors only who follow these criteria .Their main objective is to provides the quality also to the company because the cost in YUM is defined as the optimum combination of price , quality , availability and services . Company also expects the highest level of professionalism from the vendors. Vendors who possess high value of ethics and strong commitment to quality and value are major factor for selecting them. Invites all vendors for selection process: Company invites all the vendors for their selection process so that they can judge the right one. They are not only giving the chance to same vendors after the end of contracts. The evaluation done by the company is according to some parameters which they follow. They evaluate the vendors according to their service which they provided, the materials which they supply timely and properly and posse s high value of ethics and values.

VENDOR EVALUATION
 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.

INVENTORY MANAGEMENT
It encompasses all raw materials, work in progress and finished goods within the supply chain. As the base is prepared in the commissionaires and then transported to different retail outlets and the outlets keep the inventory stock of only three days because it is the perishable goods so the inventory stock of only three days because it is the perishable goods so the inventory cost is reduced. As only the base is transferred to the store so in case of any particular item demand is increased it do not creates any problem. In pizza hut, here is no inventory left at end. As all the pizza s 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 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 take away to their homes. The other reasons are to estimate demand more carefully and not to compromise on quality.

INFORMATION SYSTEM The proper medium of coordination between the suppliers and the outlets managers required to maintained the database. The maintenance of proper inventory control through information system is needed so that there would not be any outlets receive any excess amount of inventory so the cost is increased. In Pizza hut, the ERP system is accepted in data center which is managed by third party specialist and offers extremely high resilience. They customized the SAP software for each requirement managed its roll out across the organization and provides support and maintenance SAP ERP. The software is based on JAVA. SAP ERP plays the crucial role in helping to manage the internal operations and to maintain the extended supply chain.

As we have seen above that the Pepperoni and Mozzarella is imported from Australia and Spain respectively so it takes time to maintain the database till the product deliver to right place, so at that moment information system plays crucial role also it cost high. Whenever any product dispatch to any outlets from any vendors or any product needed in any outlet during shortage then at that moment all the information update in database which is centralized and communicated to the concerned vendors.

CONCLUSION
Pizza Hut has many targets which it has achieve in a given period of time. The time-period is mostly a year. Therefore, in order to fulfill the targets different strategies are adopted by Pizza Hut. It can be concluded that these strategies have been successful and there is flexibility in the strategies, as they can be changed with the changes in the market conditions as well as the targets.