Question

Darden Restaurants (subject of the Global Company Profile at the beginning of this chapter), owner of popular brands such as Olive Garden and Red Lobster, requires unique supply chains to serve more than 300 million meals annually. Darden’s strategy is operations excellence, and Senior VP Jim Lawrence’s task is to ensure competitive advantage via Darden’s supply chains. For a firm with purchases exceeding $1.5 billion, managing the supply chains is a complex and challenging task.

Darden, like other casual dining restaurants, has unique supply chains that reflect its menu options. Darden’s supply chains are rather shallow, often having just one tier of suppliers. But it has four distinct supply chains.

First, “smallware” is a restaurant industry term for items such as linens, dishes, tableware and kitchenware, and silverware. These are purchased, with Darden taking title as they are received at the Darden Direct Distribution (DDD) warehouse in Orlando, Florida. From this single warehouse, smallware items are shipped via common carrier (trucking companies) to Olive Garden, Red Lobster, Bahama Breeze, and Seasons 52 restaurants.

Second, frozen, dry, and canned food products are handled economically by Darden’s 11 distribution centers in North America, which are managed by major U.S. food distributors, such as MBM, Maines, and Sygma. This is Darden’s second supply line.

Third, the fresh food supply chain (not frozen and not canned), where product life is measured in days, includes dairy products, produce, and meat. This supply chain is B2B, where restaurant managers directly place orders with a preselected group of independent suppliers.

Fourth, Darden’s worldwide seafood supply chain is the final link. Here Darden has developed independent suppliers of salmon, shrimp, tilapia, scallops, and other fresh fish that are source inspected by Darden’s overseas representatives to ensure quality. These fresh products are flown to the U.S. and shipped to 16 distributors, with 22 locations, for quick delivery to the restaurants. With suppliers in 35 countries, Darden must be on the cutting edge when it comes to collaboration, partnering, communication, and food safety. It does this with heavy travel schedules for purchasing and quality control personnel, native-speaking employees onsite, and aggressive communication. Communication is a critical element; Darden tries to develop as much forecasting transparency as possible. “Point of sale (POS) terminals,” says Lawrence, “feed actual sales every night to suppliers.”

Discussion Questions

What are the advantages of each of Darden’s four supply chains?

What are the complications of having four supply chains?

Where would you expect ownership/title to change in each of Darden’s four supply chains?

How do Darden’s four supply chains compare with those of other firms, such as Dell or an automobile manufacturer? Why do the differences exist, and how are they addressed?

Answer 1

Answer: The advantages of Darden’s four supply chains are as below

First Supply Chain: “smallware” is a restaurant industry term for items such as linens, dishes, tableware and kitchenware, and silverware. These are purchased, with Darden taking title as they are received at the Darden Direct Distribution (DDD) warehouse in Orlando, Florida

Advantage:

• The main advantage for this is that it can be easily shipped from the common carriers like using the trucking companies.
• All small items for the restaurant can be managed in one lot.
• Easy for purchasing from a common Darden Direct Distribution station so that it can be shipped to all key locations as required.

Second Supply Chain: Frozen, dry, and canned food products are handled economically by Darden’s 11 distribution centers in North America, which are managed by major U.S. food distributors, such as MBM, Maines, and Sygma. This is Darden’s second supply line.

Advantage:

• Frozen, dry and canned food products are handled effectively as the process of handling is common for similar products.
• Managing by major US food distributor is advantageous act for the organization, as it brings the optimized results/improved support for the core competency of the US food distributors.

Third Supply Chain: The fresh food supply chain (not frozen and not canned), where product life is measured in days, includes dairy products, produce, and meat. This supply chain is B2B, where restaurant managers directly place orders with a pre-selected group of independent suppliers.

Advantage:

• Better management approach for fresh food supplys for the restaurants.
• This helps in optimized management of fresh food products which are needed for the restaurant.
• Pre-selected independent supplier brings the better quality products for the restaurant at competitive prices.
• This brings the main advantage for the restaurant to get the supplys for effective products for the restaurant with better quality at competitive prices.
• Long term approach for management of such products.

Fourth Supply Chain: Fourth, Darden’s worldwide seafood supply chain is the final link. Here Darden has developed independent suppliers of salmon, shrimp, tilapia, scallops, and other fresh fish that are source inspected by Darden’s overseas representatives to ensure quality. These fresh products are flown to the U.S. and shipped to 16 distributors, with 22 locations, for quick delivery to the restaurants. It had suppliers in 35 countries.

Advantage:

• The optimized supply chain for managing the sea food and quickest supply to their worldwide locations.
• Quality sea food supply at multiple global locations with desired quality is the biggest advantage for the restaurant business.
• Long term survival supply chain delivers larger benefits to the restaurant business.
• Restaurant business manages the effective sourcing and supply of sea food to global locations with lowest cost model and competitive lead times.