Reference no: EM132305981
Case One: Dunkin’ Donuts Prepares for Rapid Growth
Dunkin’ Donuts has a strong following of customers around the world who rely on the restaurant chain’s coffee, donuts, and other baked goods to get their day started. Established in 1950, Dunkin’ Donuts still uses the original proprietary coffee blend recipe created by its founder William Rosenburg, but what started as a small donut shop in Quincy, Massachusetts, has grown into a global business generating more than $800 million in revenue in 2015. And as the restaurant chain has grown, its business operations have become increasingly sophisticated.
Today, Dunkin’ Donuts franchises are backed up by a complex supply chain managed by National DCP (NDCP)—the exclusive supply chain management cooperative for more than 8,900 Dunkin’ Donuts stores in the United States and 51 other countries. Founded as a membership cooperative in 2012 with the merger of five regional food and beverage operating companies, NDCP’s mission is to support the daily operations of Dunkin’ Donuts franchisees and facilitate their growth and expansion plans. The company employs 1,700 people and maintains seven regional distribution centers along with another 32 logistics hubs.
Recently, NDCP began a massive multiyear project, dubbed “Project Freshstart,” to consolidate and upgrade its systems and transform its business processes throughout every area of the company—from accounting to customer service to warehousing and distribution. The goals of the project are to improve customer service, lower costs, and create supply chain efficiencies through inventory- and order-management improvements. According to Darrell Riekena, CIO at NDCP, the company began the process by asking “what capabilities and corresponding systems were needed to drive business process changes using leading-edge technologies, without a lot of customization.”
NDCP spent considerable time researching and evaluating implementation consulting partners and technology providers before opting to implement SAP’s Business Suite in partnership with Deloitte Consulting. NDCP selected the SAP system as the underlying technology for its business transformation because of SAP’s track record and experience with wholesale distribution. SAP’s software also offered NDCP the analytics and reporting tools the company felt were critical to supporting their plans for growth. According to Riekena, it was essential for the company to choose a technology platform that was flexible and could serve as the foundation for the company’s future expansion. Deloitte was chosen as NDCP’s implementation partner because it offered an extensive background in process redesign and a proven project methodology developed through years of experience in the wholesale distribution industry.
One of the first things Deloitte did during the implementation was to work with NDCP executives to define a business case for the project, which was used to establish a set of objectives and success criteria. Then, according to Deloitte Consulting’s Jerry Hoberman, they defined the scope of the project to meet those business objectives. Once the scope was set, the project team members worked together to set an aggressive but realistic two-year project plan.
According to Riekena, an important contribution from Deloitte—outside of its technical expertise—was its framework for change management and communication, which helped ensure that NDCP was effectively reaching out to all of its stakeholders throughout the project. “We recognized right off the bat that effective change management was critical for the success of the project,” Riekena says. “Leveraging multiple channels to reach all of the stakeholders, we took advantage of Dunkin’ Brands training programs, launched a comprehensive communications effort, and promoted face-to-face interactions with franchise store managers and field operations teams whenever possible.”
Unlike many companies that undertake a major system upgrade, NDCP was willing to change many of its business processes in order to truly transform its business, but Deloitte and NDCP also placed a priority on working within NDCP’s culture—a balanced approach the recently led to the successful deployment of the new SAP system in the first of the company’s four regions. As the system is rolled out across the remaining regions, more franchisees will see the benefits of NDCP’s careful planning and implementation efforts—from better demand forecasting and inventory management tools to improvements in NDCP’s customer service delivered by a centralized staff who will have immediate access to customer histories and will be able to provide real-time updates on order status and issue resolution.
Critical Thinking Questions
1. Because NDCP is a membership cooperative, Dunkin’ Donuts franchisees are both owners and customers. What might be some advantages to such an ownership structure in terms of getting the support of all stakeholders for a massive project like the one NDCP undertook? What might be some disadvantages?
2. How important do you think the communication and change management aspects of this project were? Why do you think so many companies underestimate the importance of those facets of an enterprise-level project?
3. What are some of the risks for a company that chooses to make changes to so many parts of its business and underlying technology at once? What are some of the things a company could do to mitigate those risks?