Dunkin Donuts, Historical Background, Forecasting

Dunkin Donuts
Student’s Name
Institutional Affiliation
Dunkin Donuts
Historical Background
Dunkin Donuts is an American based doughnuts and coffee shop chain with its headquarters in Canton, Massachusetts. It was established in 1950 by William Rosenberg in Quincy, Massachusetts. Since its establishment, Dunkin Donuts has undergone different changes that have enabled it to grow into the world’s largest donuts and coffee chain with more than 15,000 outlets in more than 35 countries across the world. Dunkin’ Donuts growth has enabled it to include more than 1,000 items on its menu including bagels, doughnuts as well as variety of hot and iced drinks.
The success of any organization is dependent on its design as well as how it coordinates its operational activities. Consequently, its managers and employees contribute to the realization of the company’s objectives. Skilled workforce will create a conducive environment and push the organization towards its objectives. The work environment reflects how the employees view the organization. With proper alignment of various aspects of the organization, Dunkin’ Donuts has been able to climb the ladder to become one of the leaders in the industry. Some aspects that has enabled it to claim the position it is enjoying now are discussed below.
Forecasting
Forecasting is an important aspect for all organizations. It allows the organization to make accurate predictions of future performance based on historical records. By forecasting, an organization is able to ensure that there is efficiency in its operations by planning on future activities. Expansion of business operations is one benefit that organizations enjoy from forecasting. Forecasting is utilized by organizations in planning how to allocate the available resources or plan for anticipated events in the coming period (Granger, 2014). This depends on the goods and services provided by the company.
Organization management uses different techniques to determine how future events may impact the organization. They focus on revenue changes across different economic indicators. Financial changes or statistical data are observed to establish any relationship in the variables. This relationships are based on historical events, for example, a sales forecast is based on a specific period or event in the past. Therefore, forecasting is used to address certain issues in an organization. Assumptions regarding the situation that needs to be analyzed are made before its variables are determined. After determining the variables of the situation, appropriate data is used to manipulate information. The selected data is carefully analyzed before the determination of the forecast. Lastly, when the anticipated time of the forecast reaches, it is compared with the actual results to determine an accurate forecasting model for future forecasts (Hyndman & Athanasopoulos, 2014).
Where the time is limited, the managers use qualitative forecasting models to make the forecasts. These models rely on expert opinions making them beneficial in the short-run. Examples of these models include, market research and surveys that use the Delphi method. Quantitative forecasting models do not rely on expert opinions but rely on statistical data, they include discounting methods, econometric models and time series methods.
In Dunkin Donuts, forecasting will be applicable in the following areas:
* Stock and product management. Sales forecasts will allow the organization to control its inventory in an effective and efficient manner. The management will be able to examine various events and trends to determine the organization’s peak and slow selling times. Knowing your peak and slow selling periods prevents lost sales that may arise from out-of-stock situations and storage costs of having large inventory.
* Customer Information. Sales forecasts will enable the organization spot the buying patterns of their customers to know when to sell some products that have not been purchased for a while. It also allows the management to identify the products that are frequently bought to provide promotional and special offers to boost the sales. Dunkin Donuts will utilize forecasting to know what their customers buys more and at what period. This will also allow them to know when they have more customers at a time to plan on how to reduce their waiting time to improve their operations.
* The information can also be used by the staff members in planning their commissions and bonuses. By knowing when to expect more customers and what they buy during certain periods will allow them plan themselves in advance so that they will not miss the sales. They will also know what customer wants this and call them to pick their products when that time comes. From forecasting, Dunkin Donuts’ staff will be able to use their time well.
Forecasting is beneficial to the organization since it enables the management to know when to hire more staff workers and lay some. For example during peak selling periods, the management will have to hire more workers to meet the high demand of customers and during slow selling periods, they will have to decide on the best way to reduce the organization’s expenditure either by laying some employees off or reducing worker hours in the organization.
Global Sourcing
With the world becoming more globalized, organizations are trying to find out the best ways in which they can utilize the benefits that have been created by globalization. With Globalization, international demand for quality products and services has increased and competition has become more intense. Therefore, organizations need to keep up with these changes, lower their costs and improve the quality of goods and services they offer to the customers at all levels of the value chain. One of the ways that has proved to help organizations align themselves to these significant changes in the market is global sourcing.
Global sourcing is all about sourcing goods and services from international markets with the aim of exploiting the global efficiencies such as cheap raw materials, low labor costs and some of the economic factors such as low trade tariffs (Cavusgil, Knight, Riesenberger, Rammal & Rose, 2014). Companies are establishing their operations in foreign countries to take advantage of reach raw materials or culture of that country. Others are expanding to international markets as their growth objective. Global sourcing enables an organization to acquire quality raw materials that will enable it to expand and diversify their product portfolio as well improve their quality However, this has been criticized by a research that was conducted by Steven, Dong, and Corsi (2014), which suggests that outsourcing results to inferior products that result in large recalls. Those organizations that are not able to do the sourcing by themselves are using outsource solutions such us international procurement organizations (IPOs) to do the task for them. The IPOs act as agents for the companies and outsource from low cost countries on their behalf. They identify and develop suppliers for the organization across the different sourcing categories from both large and complex economies like China (Schwarz, & Suedekum, 2014).
Through global sourcing, organizations are able to acquire skilled personnel to run its operations at low costs. In the modern business environment, organizations regardless of their industry are hiring foreign workers. Organizations are importing raw materials from other countries, we are witnessing mushrooming of organizations in foreign countries. This is aimed at global sourcing (Schniederjans, Schniederjans, & Schniederjans, 2015).
For an international organization such as Dunkin’ Donuts, global sourcing is crucial for it to expand and continue providing quality goods and services to its wide range of customers. Dunkin has a diverse work force in its outlets across the world. This has enabled it to create a diverse culture that accommodates all of its customers. In the United States, which is a culturally diverse country, Dunkin’ Donuts every outlet has more than 5 foreign workers. This is aimed at providing quality services to their customers who are more indigenous. Secondly, Dunkin’s Donuts has included foreign dishes in their menu. This is aimed at providing a wide range of products to provide a new experience to its customers. The raw materials used to prepare the indigenous dishes such as French, Chinese and Japanese foods are sourced from the respective countries. This not only benefits Dunkin’ Donuts but also the involved countries as it enhances international relationship.
Procurement
Johnsen, Howard and Miemczyk (2014), define procurement as “the business management function that ensures identification, sourcing, access and management of the external resources that an organization needs or may need to fulfill its strategic objectives.” From these two definitions, it can be argued that procurement enables organizations to acquire all the necessary resources that are required to continue with operations.
The objective of procurement in organizations goes beyond the traditional belief of obtaining goods and services depending on the needs of an organization. With the dynamic changes in the business environment, the needs of organizations are becoming more complex where the management team need integrated strategies to respond to these changes. Procurement is one of the functions that allows the management to adopt integrated strategies in the organization since it is linked to almost all functions of organizations (Witjes, & Lozano, 2016). Therefore, procurement serves various roles in an organizations, they include:
* Supporting the operational needs. In order to support the operational needs of an organization, procurement needs to understand what the organization requires and obtain the required goods and services at the right price, quantity and quality, specifications that meets the needs and preferences of the customers and from the right source.
* Improving the efficiency and effectiveness of an organization.
* Developing strong relationships with other functional units or groups. Procurement is responsible for the creation of internal and external relationships both in the short-run and long-run. Internal relationships occurs between the users of the procured goods and services within the different functional units. External relationships occurs between the organization and suppliers. It is the responsibility of procurement to identify the right suppliers of the organization and the relationship between them determines how effective the organization will be. Strong relationships may enable the organization to acquire quality resources even on credit but poor relationships may result to premature canceling of the tenders. This may affect the efficiency of an organization. In the modern business environment, organizations are relying more on suppliers for designing, developing and even manufacturing certain items which they used to produce. As Lysons and Farrington (2006) observes: “The main issue facing managers is no longer about ‘buying the right products at the right time at the right place’ but of handling and developing relationships with key suppliers over long period.”
* Supporting the goals and objectives of the organization. Organizations are developing procurement strategies that contributes to the realization of the company’s overall objectives. This is done by monitoring the supply trends and determining how they will affect the organization. Secondly, it identifies the resources that are required to support the goals of the organization especially during the development of a new product.
Procurement is being viewed as a problem-solving. This view has been supported by the Industrial Marketing and Purchasing Group as cited by Lysons and Farrington (2006):
“Customers are not looking for a product from a manufacture. Instead they seek a solution to a problem from a supplier. Business procurements are problem driven. A problem may relate to the customer’s need to carry out its basic activities efficiently and economically. Examples include problems of wastage of material, poor utilization of staff or unacceptable failure rate in components. We refer to these as problems of ‘rationalization’. A problem can also arise for positive reasons such as when a company is trying to develop relationships with new customers or enhance the performance of a product. We refer to these as problems of ‘development’.”
Therefore, procurement is crucial to organizations. It is responsible for the creation of an “integrated cross-functional problem-solving unit” that brings solutions to the organization in satisfying the needs and preferences of its customers. In Dunkin’ Donuts, procurement is seen in almost all functions of the organization especially in sourcing. The management uses external sources to source for the necessary resources such as ingredients for indigenous dishes and skilled personnel.
Supply Chain Management
In an effort to understand what supply chain management we need to understand few concepts. First is the supply chain and the second is supply management. The supply chain has been described as to consist of all entities that are involved in serving customers either directly or indirectly. This network consists of suppliers who supply raw materials, manufactures, warehouses, distribution centers, and those who are responsible for delivering the products to customers. Without these chains, producers will not be able to provide the customers with what, when and where at fair prices of what they want. Also, supply management has been described as the process of acquiring and managing all the required resources for an organization to continue with its operations. Scholars have gone further to provide the elements of a supply management as budgets, actual products, employees and information. From this definition, it can be argued that supply management is responsible for keeping costs stable and utilize the available resources in an effective manner that increases the efficiency and profits of the organization. Therefore, the definition of supply chain management has been described as the management of all activities in the supply to ensure customer satisfaction. This requires all supply chain partners to work closely to enable the organization realize its objectives.
Supply chain management in organizations ensures that suppliers deliver the required resources at the right quantity, quality and fair price. It also ensures that external manufactures delivers the right products at the right time and where they are needed. Consequently, it is responsible for ensuring that the customers get what they want, when and where at fair prices. This requires strong relationships between the management and suppliers because without it the organization will have to incur additional costs.
Dunkin Donuts, does not supply its products and services to its customers directly. Procurement is mainly carried by National DCP, LLC, which is owned by members of Dunkin Donuts’ franchisee and is responsible for all procurement activities of the organization. NDCP sources resources from best suppliers from across the world. Dunkin Donuts uses centralized manufacturing locations to produce cakes and donuts and deliver them to its outlets on a daily basis. Very few outlets of the company produce the cakes and donuts while those that are not near to centralized manufacturing locations rely on onsite producers for the supplies. Also, the company used to manufacture and sell the Baskin-Robbins ice cream before 2000. Since then, Dunkin Donuts contracted Dean Foods, which has a large milk market share in the United States. In the international markets, the company’s franchises source the materials that comply with the organizations specifications. Those that do not use the services of centralized manufacturing locations, follow strict process to ensure that they produce quality donuts. Franchises in some countries do local sourcing while few of them use NDCP in sourcing for resources. However, those resources that are not locally available are sourced by NDCP. Baskin-Robbins is not owned or operated by Dunkin Donuts.
Benchmarking
This is the process of comparing an organization with its competitors in the industry. The comparison is done on operations and the products and services provided to the market place. Therefore, this process is applicable to any function, product or process of an organization. The major drive for benchmarking is to measure customer satisfaction and efficiency and effectiveness among others in order to create a competitive advantage (Attiany, 2014). Moreover, organizations do benchmarking to compare their operations with those of their competitors to generate new ideas on how they can improve their processes, approaches and strengthen customer loyalty (Lai et al., 2011). Therefore, ben...