Feinstein Graduate School
Final Project Operations Management
DUNKIN’ DONUTS
A Research Project Submitted in Partial Fulfillment of the Requirements for the General
MBA Degree Course: Operations Management (MGMT 5575)
Professor: Dr. Christine Perakslis
Winter 2013 –2014
Outline
I. Introduction
II – Design of Goods and services:
1- Customization is delayed
a- Current
b. Recommended
2 – Modularization
a- Current
b. Recommended
3. Automation/ Reduced customer interaction
a- Current
b. Recommended
4. Moment of truth
a- Current
b. Recommended
III. Quality
Fish-Bone Analysis
IV. Process Analysis for making a hot coffee and ice coffee in Dunkin Donuts
a. Time Function Mapping (Ice coffee)
b.Flow chart (Hot Beverage)
V. Process Strategy
1. Key Constraint using TOC
2. Recommendation for mitigating the constraint
VI. Layout strategy
a. Current Layout
b. Proposed re-design of layout
VII. Human Resources / Ergonomics
VIII. Supply-Chain Management
I. Introduction
Dunkin’ Donuts is an American global doughnut company and coffeehouse chain based in
Canton, Massachusetts. It was founded in 1950 by William Rosenberg in Quincy,
Massachusetts. Since its founding, the company has grown to become one of the largest
coffee and baked goods chain in the world, with 15,000 restaurants in 37 different
countries. The chain has grown to include over 1,000 items on their menu, including
doughnuts, bagels, other baked goods, and a wide variety of hot and iced beverages. The
logo is two Ds side by side in orange and hot pink, placed on a coffee cup next to the
words “Dunkin’ Donuts” written in orange and hot pink. (Dunkin` Donuts Corporate
Website, 2013)
As the leading retailer of hot and iced regular coffee-by-the-cup in America, Dunkin
Donuts, or simply recognized as Dunkin’ Donuts , is the largest coffee and baked goods
chain in the world. Dunkin’ Donuts is currently located in 31 countries, and has 10,800
locations worldwide. Their primary target market consists of people who enjoy a great cup
of coffee and sweet treats. As a brand they take pride in still using the original proprietary
coffee blend recipe established by its founder (Dunkin` Donuts Corporate Website, 2013).
In 2012 alone, beverages accounted for 58 percent of sales, with coffee leading the ranks.
The remaining 42 percent of sales were bakery items such as donuts, bagels, muffins and
new oven-toasted products, including hash browns and new flatbread sandwiches (Wong,
2013). Nearly 100% of DD stores are franchised and though located throughout the US, a
few states hold as an exception. Currently, Dunkin’ Donuts is capitalizing on openings in
California and Texas as well, not only the East Coast (Dunkin` Donuts Corporate Website,
2013).
Dunkin’ Donuts comparative advantage focuses on low cost leadership, thus they are able
to offer the same or better service quality at a price that is less than other competitors such
as Starbucks. Dunkin’ Donuts is basically appealing to cost-conscious and price sensitive
consumers. Hence, Dunkin’ Donuts must be able to operate at a lower cost than its
competitors which they achieve with a total cost of only 10 cents per coffee. Because it is a
franchise business, customers expect consistency in every Dunkin’ Donuts. Customers also
anticipate their coffee orders to be customized to their individual needs. The production of
donuts and bagels however, cannot be customized because it would go beyond of the scope
of production and hinder throughput. (Wong, 2013)
Dunkin’ Donuts sells 52 varieties of donuts and more than a dozen coffee beverages as
well as bagels, breakfast sandwiches and other baked goods (Dunkin` Donuts Corporate
Website, 2013)
II – Design of Goods and services:
1- Customization is delayed
a- Current
The drinks are totally customized and prepared according to the customer’s preferences.
Customers can choose to add ice to their drink, extra sugar cream or even flavors to their
beverage. The design of the product by the customer is narrative.
The job description is vague since the employee at the register takes the orders from
customers and communicates the order to an employee or sometimes performs the order by
himself. So technically, every employee is capable to do any task to keep the operations
process fluid.
Since each customer can build his beverage the way he wants to, employees cannot fully
pre-make each beverage. There is a possibility to pre-made the basic ingredient of the
beverage but the extra features cannot be added until the order is placed
b. Recommended
From our analysis, we think that the process of customization can’t be improved more than
the way Dunkin Donuts does. But, we think that improvement of the service can help
speed up the process. A reward card for customers can be implemented. The reward card
keeps track of the person’s name, the drinks the person normally purchases, the last
beverage purchase, use of coupons, etc. It could customize the service so much; that all
one would have to do is swipe the rewards card and the counter service specialist would
say, “John,you’re usual? Largeice coffee, one sugar, right?” Then John would answer “Yes,
thank you!” It could be as simple as swiping a card in a scanner.
2 – Modularization
a- current
Basically the process line has been built up and separated into different stages: toasting,
donuts, coffee machines, breakfast and bakery sandwiches and cashier.
Each stage is separated from the other since Dunkin Donuts have racks for the different
donuts they offer, another one for the sandwiches bakery and the different sizes of coffee
cups are next to the coffee maker.
The meat and cheese used in sandwiches are already cut, weighted evenly and ready to
use. For hygiene concern, the meat and cheese are preserved in closed containers.
Existence of few inputs (bakery, bread, coffee) and many outputs since they offer to
customers many kind of sandwiches and beverage flavors based on their preferences.
The bread is already cooked and placed in displays ready to be delivered instantly when a
customer makes an order.
· Bottles of soda and water which are not considered as the major product that the company
sells are placed in a freezer placed close to the customers ’line.
b. Recommended
The bread for breakfast sandwiches and donuts in different stores have sometimes different
texture, so Dunkin donuts should work on consistency of its products when designing
products
Some stores over toast sandwiches, therefore we recommend Dunkin Donuts to set a
control procedure in order to make sure that each store is working with a standardized
norm in terms of ovens temperature and quality.
The process at Dunkin Donuts is not completely modularized. For instance, in some stores,
if a customer orders a breakfast sandwich they can grab a bottle of water or juice from a
fridge placed in the back of the main entrance. In other stores, customers get their drinks
before ordering since the fridge is placed next to the cashier. Therefore, Dunkin Donuts
should request every store to put the fridge just next to the cashier. In this way, customers
can pick the juice or soda they want to get without walking back to the front of the order
line and then have clear visibility of the menu offered.
Freshly brewed coffee can only be kept on a burner for 18 minutes, in some stores it stays
for a longer time. For consistency purpose, we recommend Dunkin Donuts to discard the
pot that exceed this period of time and make a fresh one.
3. Automation/ Reduced customer interaction
a. Current
Menu for sandwiches and different beverages is clearly visible for customers on the back
of the wall.
Donuts and bakery are displayed behind the counter which help customer to clearly see the
available products the store have at the time of the order.
Dunkin donuts created ” Dunkin Run” which is an application that allows customers to
place their orders before they literally run down the road and grab them.
All products that customers purchase (beverages, sandwiches, donuts) are served by the
employees.
Only water, soda and juice can be picked up by customers from the fridge.
Muffins and donuts displayed behind the counter allow employees to simply place the
product in a bag and hand it to the customer which ultimately reduce interaction with
customers.
b. Recommended
Dunkin Donuts should consider having some prepared breakfast sandwiches with standard
recipes and ingredient ready for pick up. This could reduce the interaction time with some
customers
We notice that there is no available display for napkins. If the customers need more, they
need to go back to the cashier and ask for more. However, we recommend that the napkins
should be available in different places of the store in order to avoid customers asking for
extra napkins.
There is no self serving station to get knives, forks , ketchup or sugar, so the customers
need to ask for them which sometimes disturb people on the line. We suggest the stores to
make a self serving station full of whatever customers might need to use.
In cases of long lines like at the rush hours, we recommend that some types of writing
orders in paper should be available to customers to write down what they need before to
