“You Got 30 Minutes!”
Madelon Eland and Tamara Lee Noiman
Transportation Management - What it is?
Transportation Management is the process that oversees reducing transportation cost and increases delivery reliability through collaboration across all modes and providers. This blog will look at the transportation management systems incorporated in Domino’s Pizza. [1]
Domino’s Case Study:
About Domino’s:
Domino's Pizza is the second largest Pizza delivery company in the world and the largest American restaurant chain specializing in pizzas. The company, founded in 1960, has branches in more than 60 countries and operates in over 13,800 locations delivering Pizzas. The Company operates through three segments: domestic stores, international franchise and supply chain. Its basic menu features pizza products in various sizes and crust types. [2]
Logistics picture about how it works
As illustrated by the diagram, there are two segments of transportation management that need to be taken into consideration by the management team: supplier-side store deliveries, and customer-side pizza deliveries. Both segments will be discussed below.
Supplier Transport Management
The first segment of the Domino transportation system to be discussed is the supplier-side distribution network. Here the management of transportation involves minimizing costs whilst maintaining timely deliveries. On their website, Domino’s has discussed a plan that will, not only cut costs, but also increase brand reputation. This plan, created in 2016, emphasizes the company’s commitment to reducing emissions and aims at maximising environmentally friendliness for supplying trucks. Their goal was to reduce their delivery mileage by 52,800 miles in 2016 through the use of three double-decker trailers, that would deliver supplies at less frequent intervals. This will help to minimize transportation costs as less trips will be made. Additionally, they also stated that their trucks would not exceed 56 mph, helping to reduce CO2 emissions as well as reducing fuel costs. Finally, the company also revealed plans about regular trainings of transportation team members to encourage road safety practices. This would serve to, not only improve the image of the company but also reduce unnecessary costs on traffic tickets etc. [3]
Customer-Side Transport Management
The second part to the transportation management system is the customer pizza delivery aspect. As it works today, deliveries stem from branches that are distributed according to population concentration and demand. According to the website, “not driver is supposed to take more than 2-3 orders at a time,” this ensures timely delivery of warm and quality pizza. However, this incurs a lot of transportation costs and human capital costs. [4]
30 Min Delivery Rule
To market delivery of quality pizza in a timely manner, Domino’s adopted a policy of the 30min delivery rule, where the company guaranteed delivery within 30min or there would be some sort of financial reimbursement. This was a good marketing strategy that has been maintained in countries such as Colombia, Vietnam, Mexico, China and Turkey. However, in other countries, this system proved problematic and was revoked. In some countries, the system was documented as encouraging speeding, reckless driving and bad working conditions, incurring unnecessary costs for the company such as speeding tickets and high turnover of staff. Therefore, they changed their philosophy to: “You Got 30 min” in this way not guaranteeing 30 min delivery, rather stating a target. [5]
Delivery Tracking
In a hope of further advertising their transportation efficiency, Domino’s created a delivery tracking system on their website that enables customers to locate the progress of their pizza. In this way encouraging more customers. However, many have commented on the lack of reliability of this system, some even claiming that workers change figures to improve the image of the branch. Despite this, most customers have not been angered as warm pizzas were often delivered within 30-45 min range from the ordering point. [6]
Future:
Domino Branded Cars:
Nowadays, Domino’s is looking for ways to improve their transportation management and they have been working for 4 years on a delivery car: The Domino’s DXP, which stands for Delivery eXPert. The car is a modified Chevrolet Spark, contains a warming oven and it has room for 80 pizzas, sides, two-litre bottles of soda and dipping sauces. It even comes with the special gadget of a projector that shows the Domino’s logo onto the ground.
CP+B executive creative director Matt Talbot comments that “The DXP can deliver on the desire of people to get their pizza as hot and fresh as possible better than any vehicle before it. The other compartments in the vehicle also mean that any drinks, sides and sauces will make it safely to your front door as well.” [7]
Drones for Pizza Delivery
Another possibility that became available for Domino’s Pizza in 2016 is drone delivery systems. This concept can offer the company huge cost reductions on fuel, human capital, and customer dissatisfaction costs, as it avoids traffic and uses less fuel. This system has already been incorporated in a New Zealand branch and has proven to be effective. Below, see an attached link that illustrates how this system works. As it is now, the drone can only serve houses within a 1.3-kilometre radius of the branch traveling at 30kmph. However, the end target is for the drone to be able to travel a 10km radius and deliver pizzas within 10 min, a huge reduction on the previous 30-45 min interval required for delivery. [8]
Video Link:
Robot Deliveries:
Domino’s Pizza Enterprises CEO Don Meij said in a statement that “with our growth plans over the next 5 to 10 years, we simply won’t have enough delivery drivers if we do not look to add to our fleet through initiatives such as this.”
In March 2017, Domino’s announced that they would start a pilot project using robots to deliver the pizzas within a one-mile radius of stores in Dutch and German cities.
They will do this in partnership with Star ship Technologies and their battery-powered robot is designed to operate autonomously on sidewalks and has a maximum speed of 4 miles per hour. The robot could carry a capacity of up to 20 pounds and Domino’s said that depending on the size of the robot it can carry up to eight pizzas on a delivery or a variety of combination of pizzas, sides and sodas or desserts.
Customers are provided with a code that is sent to their phone with which they can unlock the cargo hold. The products can be put into a special hot or cold bag that is like the delivery drivers already use. [9]
Self-Driving Car Deliveries
A final future prospect that is about to be made available for Domino’s delivery is self-driving cars. In fact, Domino’s has recently partnered with Ford and have begun testing self-driving car deliveries. If this were to become effective it would mean cost reductions in staffing and potentially more accurate deliveries on time. [10]
Something interesting to consider: https://www.thesun.co.uk/news/2274413/dominos-planning-to-use-reindeer-to-deliver-pizza-this-winter-because-of-blizzards-and-snow-storms/
[10] http://www.businessinsider.com/transportation-and-logistics-briefing-gms-maven-attracts-millennials-ford-and-dominos-test-self-driving-
delivery-vehicles-amazons-impact-on-logistics-software-market-2017-8
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