Sarah [PDF]

Citation preview

Sarah Lessor Mgt 301 1. Darden has four major supply chains for their small ware, canned food, fresh foods, and sea food this has some advantages to it. First, Darden Direct Distribution one of the advantage for small ware is it cuts down on shipping price of these small items such as plates napkins since they are all coming from the same area. It also helps to uniform all of their restaurant together. Giving them all the same quality small ware. Most of Darden restaurants have another one of their restaurant right next to them, this helps by having the same delivery path and having common carriers. With less travel and trips it cuts down on waste the big trucks give off and makes them more environmentally friendly. Their distribution is passed out of Orlando, FL. Everything being in this one location makes it easy to manage, lowers cost, and easy to inventory. They can buy economical bulk quantities. The supply chain advantages for the canned food are that with its eleven distribution centers it makes it inexpensive to operate. The eleven distribution centers also makes inventory management more effective. Darden independent supply chain is where they get their fresh vegetables and dairy products. They purchase these items directly from independent suppliers, which is known as B2B. This helps make sure that the suppliers they are getting the product from is supplying them with the freshest products. They are ensured that these distributers know how to grow and raise these products correctly. The last one is the seafood supply chain. This chain has Independent suppliers from 33 different countries. Then it is Flown to the U.S. and shipped to 16 distributors at 22 locations. This is a lot of work but they get it from overseas to ensure it’s the best of the best. Every different type of seafood is being caught by an expert fisherman in that area. This makes sure that it is reliable and the best product. Darden has these four different supply chains to ensure quality food for their consumer and to gain loyal and satisfied customers. 2.The complications that go into having four supply chains is it is complex, expensive to ship, communication, and then every individual supply chain has its own set of problems. The supply chain is very complex, because of how large it is. It has suppliers from 35 different countries. This mean there is a lot of driving and flying around for their products. This can result in things becoming unusable, old, or lost. This also hurts them economically. It is not cheap flying things overseas and all the fuel it uses to transport things once it is in America. It has issues with communication because it is dealing with such a large number of people and many different languages. The small ware distribution has complications, because if something happens at the location in Orlando, FL they do not have another distributer to get them small ware items and will be out of luck on purchasing new ones. The canned goods distributer is rather problem free. The independent supply chain has problems when it comes to making sure everything stays fresh and gets to their locations on time. The last supply chain of seafood has cost issues. They have inspectors that they use to make sure that all the sea food is perfect. It is very expensive to ship this fresh food overseas as well, high transportation



costs and high legal costs. All of these supply chains can have issues with weather, quaintly control of packaging rather the small ware could get broken or the food not be package good enough and go bad. They also will have to spend lots of money on tracking all the different orders and transportation vehicles. Managing four distinct supply chains is a demanding management task that requires specialized talents, organization, and budgeting, and career paths. 3.Ownership/title should be expected to change in each of Darden’s four supply chains. During the small ware supply chain, ownership will change when it is delivered to the warehouse in Florida. With the canned food chain title changes when it is in the restaurants hands. For fresh food, title typically changes at delivery to the restaurant as well. Last, for the sea food supply chain title change is most likely to be when it is delivered to the U.S. from overseas. 4.Darden’s supply chain has a very well thought out and unique supply chains. Their supply chains differ from the automobile industry. The automobile industry develops new and innovative supply chains such as vendor-managed inventory, with suppliers holding the title to major modules up until delivery to the assembly line. The distinction between the automobile company and Darden’s is that the often fragile nature of Darden's raw material makes four very odd and unique supply chains an economical and fresh approach. Darden Restaurants Case Study October 10, 2014 Darden is a company that owns and manages several niche restaurants and restaurant chains. These restaurants cater to different segments of the population so that Darden is able to reach multiple markets. Looking across the full spectrum of segmentation variables, Darden divides the sit-down dining market based on: Behavioral segmentation: every one of their restaurants caters to a different occasion and provides the consumer with different benefits. Olive Garden fulfills the need for people wanted to go to a restaurant to get emotional nourishment, so the occasions for visiting this restaurant will mainly be family-related and the benefit is quality family time. For Red Lobster, the occasion and benefits relate to seeking quality seafood that is healthy too. For LongHorn Steakhouse, the occasion and benefits of the visit to the restaurant are to provide a relaxing atmosphere that will remind you of a rancher’s home in the West with great tasting steakhouse style meals. Consumer’s behavior has changed; the market has experienced a decline in the number of customers who are visiting restaurants and also, the number of visits of each customer to sit-down style restaurants.



Geographic segmentation: Darden’s different restaurants are located all across the United States; they target markets based on other segmentation variables that are not geographic segmentation. Geographic localization might occur where menus or communications campaigns vary from region to region, but overall the idea is that you can also find a restaurant from the chain wherever you go, that will adhere to the same standards and provide you with the same experience that your local restaurant would provide. In addition to this, in the article it is mentioned that LongHorn Stakehouse restaurants are located primarily in the east side of the country, which gives the chain an opportunity for westbound expansion. Demographic and Psychographic segmentation: by having different types of restaurants, Darden is trying to cater to different segments of the population. Offering alternatives like ethnic food in Bahamas Breeze, Italian food in Olive Garden, seafood in Red Lobster and steakhouse meals in LongHorn Steakhouse, there are plenty of options just among Darden’s chains to fulfill the customer’s needs, likes, lifestyles and personalities. Taking into account their customer’s income, Red Lobster was created to fill in the gap that was found between expensive restaurants and fast food seafood chains. As explained before, Darden restaurant chains cater to different segments of the market. Additionally, they are also differentiated brands that are positioned in the market as separate brands, even if the operations of the individual restaurants are handled almost identically. Darden has found a way to optimize the restaurant’s operations to maximize results and increase revenue. This standardization and collaboration is catered to improving the services and the lowering the preparation times of items in the menu. They have standardized what happens behind the counter and in the kitchen but they haven’t standardized the look and feel of their restaurants, nor the type of food each restaurant serves. As a result of this standardization, expertise in targeting and market segmentation, and scale, each chain is able to provide superior customer value with a competitive advantage: quality products that cater to your wants and needs, served on a timely manner. For example, one differentiating aspect that Olive Garden offers is that their menu has been created as a result of a partnership with Olive Garden’s Culinary Institute of Tuscany, Italy. Red Lobster’s differentiation strategy was to expand to offer healthier menu choices that are fresh and cooked in the grill. As a result of their differentiation strategies and their knowledge and understanding of the of customers, they have positioned themselves on top of their competitors and we can see this reflected in the Darden restaurant chains’ performance: Red Lobster was named the “best sit-down chain in America” by Men’s Health magazine. LongHorn Steakhouse’s customer traffic is increasing and surpassing Olive Garden and Red Lobster’s traffic growth.



Darden’s restaurants outperformed the rest of the industry during the Great Recession. Darden’s standardization has resulted in more efficient and cost effective operation efforts but that doesn’t mean their competitors aren’t concerned about catching up and surpassing Darden Restaurants’ performance. Darden Restaurants is the largest full-service restaurant operation in the world but they need to be careful about sharing their corporate secrets and efficiency strategy because a competitor with that information and other initiatives/ideas may gain more competitive advantages over Darden Restaurants. Of course they are not going to share their secrets with the competition, but sharing secrets about their strategy with the overall scope of employees puts the company at risk. Moreover, sharing the standardization practices with the general public puts the company at risk of loosing clients that would prefer to bring their business to a more localized or family-owned restaurant, instead of bringing the business to a multi-chain nation-wide company. The standardization practices that Darden Restaurant has put into practice can backfire if the differentiation and positioning of each separate restaurant chains aren’t carried correctly and constantly, and if the experience of visiting any of their chains is similar to visiting another one. Lines shouldn’t be blurry when we are talking about the customer’s experience at each restaurant chain; the experience at each chain should be differentiated and aimed at their specific target market. If Darden Restaurants continues to constantly position and differentiate their restaurant chains while providing superior customer value, they will continue to dominate the market. With their current goal of increasing revenue by at least 50% in the next five years, Darden Restaurants is trying to capture a bigger market share of customers. The company also has the option of expanding several restaurant chains to new geographical regions so that their growth is also extended to new markets. To keep themselves at the top –dominating the market–, and to keep growing, Darden Restaurants chains may want to add more healthy food to their menu, emphasizing that they care about their customer’s well being and health, they appreciate the customer’s business and they also want to take care of their customers like family. On another hand, Darden Restaurants should implement a strategy for each chain to get connected with the community through different events, like charity and aid events. This will help the chains be connected more deeply with the customers’ life and develop a corporate image that is closer to the customer’s heart, thus increasing customer loyalty to their brand.



Sourcing Approach Achieving Darden's sustainability goals and upholding our commitment to food safety, seafood sustainability and animal welfare depends on actions taken at every step of the supply chain. Highlights 



Saving over 38 million miles of driving, and the accompanying gas and emissions, during FY2012







Developing of the world's first fully integrated lobster aquaculture park







Increasing supply of tilapia and catfish meeting "best aquaculture practices" standard



Darden's supply chain is large and complex. We buy about $2.5 billion in food products from 2,000 suppliers in 35 different countries every year which affects the environment, local economies and people's lives in myriad ways. For example, all of the different foods we purchase require inputs of water, energy and other natural resources to produce and process. The food and other products we purchase must also be packaged and transported to our distribution centers and then to more than 1,500 restaurants. Hundreds of thousands of people's livelihoods depend on helping produce or provide the goods and services we buy.



Managing Supply Chain Sustainability Over the past few years, one of Darden's key areas of focus has been to better understand and manage sustainability issues in our supply chain and explore how we can influence positive change. In addition, we have established expectations for and regularly engage our suppliers on a range of sustainability issues, from human and labor rights to animal welfare to seafood sustainability. Our approach is to develop long-term, mutually-beneficial relationships with our suppliers, and to work with them constructively and cooperatively to improve their sustainability performance when needed. We continue to explore waste reduction through our Supplier Packaging Optimization program. By working with our suppliers to reduce the amount of packaging, we reduce the amount of fuel needed to transport goods while reducing the waste packaging that can generate downstream. Darden Direct We have also made a significant investment in implementing a best-inclass food distribution system, called Darden Direct, which dramatically increases the efficiency of our logistics and distribution activities. This not only has financial benefits, but also environmental ones because it results in fewer miles being driven on Darden's behalf resulting in less fuel consumption and fewer emissions. Also as part of Darden Direct, we are beginning to examine fleet fuel economy and explore alternative fuel vehicles for transporting Darden products.



Aquaculture In FY2012, we took a significant step toward the development of the world's first fully integrated lobster aquaculture park when we announced plans to build the facility in Malaysia. After several years of research and investment in hatchery technology, we selected Malaysia as the site since we intend to grow a species of Spiny Lobster known as panulirus ornatus that is indigenous to the region. While we're excited about the prospects for this initiative, it will be several years (2017) before it's operational and even longer (2029) before production is expected to reach scale. By the end of FY2011, approximately 75% of the aquaculture tilapia Darden buys was certified to the Global Aquaculture Alliance (GAA) "best aquaculture practices" tilapia standard. Darden has already achieved 100% supplier certification for aquaculture shrimp (see Seafood Stewardship).



Food Quality & Safety Approach Darden's industry-leading food safety, animal welfare and total quality program ensures that all 320 million meals served annually meet our stringent safety and quality standards. Highlights 



Automating traceability to improve tracking of food supply chain







Industry-leading food safety and animal welfare programs







Stricter food safety regulations for suppliers







Developed Third Party Food Safety audit process for locally-sourced fresh produce



We serve approximately 1 million meals each day made up of 2,000+ different ingredients and there is no single issue more important to Darden than food safety. We have an international team of more than 50 biologists, food scientists and public health professionals dedicated to implementing and continually improving our industry-leading food safety/total quality program.



Food Safety In Darden's view, the best way to ensure the safety of the food we purchase is to go directly to the source as well as to multiple points across the supply chain. Our objective is to have traceability from "pond to plate" or from "farm to fork." We use a risk-based, Hazard Analysis of Critical Control Points (HACCP) approach which provides the highest level of security across all levels of the supply chain. We employ field plant inspectors in the U.S. and abroad who inspect food plants, processes and products to verify they meet our standards before they are shipped. We also have 18 total quality managers in the field who, as registered sanitarians, review and certify in-restaurant food processes to ensure the integrity of the system all the way through to when the meal is delivered to the guest.



Traceability Darden is transitioning our entire supplier base to Global Food Safety Initiative (GFSI) Third Party Audits. While we have long conducted food safety audits of our suppliers utilizing Darden TQ personnel and Third Party auditors, our objective is to harmonize the process, ensuring that we are applying the same, internationally recognized food safety standards across our global supply chain. GS1 barcodes have been used on packaged goods for decades, but have only recently begun being used for fresh food products. Animal Welfare Darden believes that ensuring the welfare of animals in the food supply chain is both an ethical issue and an important aspect of food safety. Darden has a set of Food Animal Welfare Principles and Policies and suppliers are required to certify their animal welfare practices, which are confirmed through third-party audits. Darden regularly reviews our principles and policies as new science and information becomes available and, in FY2013, we updated them to more clearly outline our supplier audit process.



Seafood Stewardship Approach We have a vested interest in seafood stewardship to ensure that the supply of seafood remains available, affordable and meets the quality and safety standards we expect. Highlights 



Launching the Honduras Spiny Lobster Fishery Improvement Project







Promoting more of the GAA "best aquaculture practices" standards



Fisheries In FY2011, Darden announced a commitment to rebuilding troubled fisheries through three targeted Fishery Improvement Projects. The commitment is part of Darden's membership in the Clinton Global Initiative (CGI) and was recognized by CGI as an exemplary approach to addressing environmental challenges. The initial FIP was launched in partnership with Publix Super Markets and Sustainable Fisheries Partnership in the U.S. Gulf of Mexico. The focus is to support the rebuilding of commercial reef fish fisheries, primarily grouper and red snapper, using several tools including the development of data collection methods to enhance management, testing different gear types to reduce interactions with sea turtles, and building new markets for the fish as populations recover. In FY2013, Darden announced its second FIP commitment, this one involving the Honduras Spiny Lobster Fishery. We are collaborating on this effort with the National Fish and Wildlife Foundation and the Walton Family Foundation, creating a Fishery Improvement Fund for Honduras and beyond. In FY2009, Darden helped launch the Atlantic Lobster Sustainability Foundation, a nonprofit organization that works with fisherman, processors, buyers, government agencies and other stakeholders to preserve and enhance a viable, strong and sustainable lobster industry. Darden provided $200,000 in seed money, and continues to play an active role in the organization. (seewww.lobstersustainability.ca) Aquaculture



We are continuing to work with our aquaculture suppliers to help them implement the GAA "best aquaculture practices" standards. Darden regularly evaluates our purchasing practices to ensure they support and encourage sustainable fisheries. In partnership with the New England Aquarium, we maintain and regularly update a list of wild harvest species that we do not buy due to overfishing or mismanagement. We have also committed to require that all aquaculture species be certified to Global Aquaculture Alliance (GAA) standards, as they become available. By FY2013, we were working with our suppliers to implement GAA standards for four species, including catfish and salmon.



Health and Wellness Approach Darden's Health and Wellness commitments are an exciting response to our guests’ increasing interest in healthy eating.



Highlights Reducing our calorie and sodium footprint and enhancing the nutrition of our children's menus Providing a growing number of lower calorie dining options Increasing availability of nutritional information online and in restaurants One of Darden's core strengths is our ability to continually evolve to meet the consumer's ever-changing needs. When it comes to health and wellness, we know our guests are increasingly interested in healthy dining. We believe that responding to this growing demand will help us strengthen our relationship with our current guests, while expanding our appeal to a broader base of future guests. Darden's approach to health and wellness is guided by three core principles: Transparency: Ensuring guests have easy access to the menu information they want Choice and Variety: Providing options on all of our menus to suit individual tastes and dietary needs Innovation and Collaboration: Creatively identifying new and different ways to support guests' individual health and wellness goals Partnership for a Healthier America Darden has made the most comprehensive health and wellness commitment in the restaurant industry to date. Working with the Partnership for a Healthier America, in 2011 Darden has pledged to reduce our overall calorie and sodium footprint by 10% by 2016 and by 20% by 2021. We are making progress on our calorie and sodium goals and, in FY2013, Darden released new children’s menus that are compliant with our promise - including offering 1% milk as the default beverage, a fruit or a vegetable as the default side and prominently promoting at least one item that meets defined nutrition criteria. We have also made significant investments to enhance our nutrition analysis capabilities. These new capabilities help us to make nutritional considerations a more integral part of recipe development, in the same way taste, quality and cost have always been. This new approach has proven critical to helping us develop lighter dishes on many of our menus. Offering Guest Options



Darden's brands are offering our guests increasing options through lighter-fare selections. Seasons 52 is a pioneer in this approach and today, almost all Darden brands offer lighter fare selections. As consumer’s diets continue to evolve, Darden is providing options, including vegetarian, gluten-free and many others. The goal is to continue to provide an atmosphere where guests can be nourished while meeting their goals. Online Availability In addition to providing our nutritional information on all of our casual dining restaurant websites, in FY2010 Darden joined HealthyDiningFinder.com, an online resource center that provides consumers with "dietitianapproved" menu options, to extend the online availability of our nutritional information.