Baking The Base

IIPM MANAGEMENT INSTITUTE

Elaborates Manveer Choudhary, President, FHRAI, “Expansion requires massive penetration, but what is more important is to have a strong base in QSR business, which lies in having suppliers on a fixed term basis.” A classic case is that of McDonald’s. The company has developed a strong supply chain in just six years, which has been one of the cornerstones of its success. Vikram Bakshi, MD, Mc- Donald’s reveals, “These suppliers are today an integral part of the cold chain... we source almost 90% of our products from within India.” The chain has not just roped in the best Indian suppliers, it has also introduced them to its global buyers. This has enabled McDonald’s to buy products from it’s suppliers at comparatively lower prices.

Fixed Indian suppliers also ensure that the QSR is able to maintain quality parameters at a lower cost. The $1.44 billion pizza major Domino’s Pizza, with 60 Indian suppliers, has been able to cut production costs significantly. “Having a strong Indian supply chain does help a lot in cutting down costs and at the same time, what becomes important is to have strong logistics,” divulges Ajay Kaul, CEO – Indian subcontinent, Domino’s Pizza. Well, a strong delivery model has helped pizza players like Domino’s & Pizza Hut steal the show with a steady growth rate of 50%, but Big Mac missed out big time on this model.

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Source : IIPM Editorial, 2007

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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