The most efficient pizza shop - Ugi's in Buenos Aires

This blog post by the Operations Room, one of my favourite operations blogs, reminded me that I should write about the Argentine pizza chain, Ugi's. Its pizza was pretty good, but I was more fascinated by its operation of the stores and the business model, while visiting Buenos Aires (BA).

The business model

The product:
They sold one pizza. Exactly one type: mozzarella on tomato sauce on pizza dough.
No variations.

Size:
The whole pizza. Or by the slice.

Extras:
You can add condiments like chilli peppers and oregano, after you get the pizza, for free.
The cardboard box is extra.

Environment:
Basic and bare. No frills.
There is basically standing room only with very few seats and tables in the shops. Most people do take out.

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The USP (Unique Selling Point):
Cheap.
Fast.

The result: Very popular! Probably the longest queue for food in BA.
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The operation

Each shop had a big oven and 2 guys making the pizzas. That seems to be it.

Tasks of the pizza maker:

1. Work the dough and spin it out to lay onto a wooden pizza pan.

2. Ladle the tomato sauce from a big pot onto the dough, and smooth it over the dough with a circular smudge with the bottom of the ladle.

3. Cut a brick sized block of mozzarella from a giant block. Split it in half, and chuck it in the middle of the sauced dough. (It nicely melts all over somewhat evenly.)

4. Put the pizza into the oven.

5. Check on the other pizzas in the oven. Take them out onto the table when ready.

Tasks of the pizza giver:

6. Slice the pizza.

7. Box it. Or put a slice on a plate.

8. Hand it to the customer.

9. Take money.

I could have stared at the guy making pizzas for hours. It was so well practiced and smooth, since it's the only thing he makes all day long, by the hundreds, every day. It reminded me of some of the best run factories I've visited before. Precise. Lean and Mean. The simple business model makes it possible.

Change / Improve?

Do you find yourself asking, "Given their popularity, why don't they add 1 or 2 more flavours, like pepperoni or something?" or...why should they change anything?

• I think for one, it would trade off speed with variety.
• Secondly, they are already maxing out their capacity, so why add more. There's unlikely more revenue to be had, and I can't comment on profitability.
• Thirdly, given their popularity, why should they change any of it? The customers clearly like it the way it is.

You can read more about Ugi's here.

As much as I love the parrilladas Argentinas, do have a Ugi's pizza next time you're in BA!

My Jealous Supermarket II

Last week I wrote the Figure It Out article that was published to the Capgemini Consulting UK Operational Research team blog, My Jealous Supermarket.

I encourage to click through and read the article. To summarise, my supermarket is targeting me with discount coupons in order to maintain my loyalty which it mistakenly thinks it is losing because I am a travelling consultant and have shopped very little lately.

Anyhow, after returning from a week in the north of England followed by a weekend in Florence followed by another week in the north, it was immensely satisfying to see the "Spend £30, get £3 off" coupon roll off the receipt printer when I purchased ingredients for my meal this evening after making no purchases for two weeks. They DO care!

I wonder how this initiative is going for them? Are they successfully winning people back? Any proper initiative would have a benefits tracking element following implementation, but comparing before and after and asserting causality is always difficult. Consider myself. One day I will wrap up my project in the north and spend some time in London again. I will return to my supermarket and purchase lots of food. Success! After months of giving me coupons, they will have finally won back my favour and loyalty. Or not...

Starbucks and OR

Here is something that most people can relay to: Starbucks.
Being one of the largest and most well known brands in the world in the food and beverage industry, Starbucks relies heavily on operations research as well. Here is quoting from an article I found online:

Retiring executive vice president Ted Garcia joined Starbucks in 1995 as senior vice president, Logistics & Manufacturing. Through his prior experience developing manufacturing and logistics networks, as well as information systems and technology platforms, he was able to establish programs for Starbucks that have delivered savings totaling more than $250 million. These savings were achieved through consolidated global purchasing leverage, conversion cost reductions, reduced logistics costs and lower inventory levels. Additionally, Garcia was responsible for the development of three new roasting plants in York, Pa., Carson Valley, Nev. and Amsterdam, The Netherlands. Under Garcia's leadership, Starbucks became known as an established leader in supply chain activities.

Here is a little profile of Dorothy Kim - Starbucks Executive Vice President of Supply Chain Operations:

She is responsible for the day-to-day activities of SCCO, which include the global strategic business management of manufacturing, engineering, purchasing, distribution, planning and transportation; supply chain integrated systems; inventory management and worldwide sourcing of coffee. She will report to Jim Donald, ceo designate.

Kim joined Starbucks in 1995, where she gained four years of retail planning and operations experience prior to transitioning to SCCO. She held the positions of vice president, SCCO Logistics, and vice president, SCCO Finance & Systems, before her promotion to senior vice president, Global Logistics & Procurement. Kim was instrumental in leading the development of Starbucks SCCO Systems Vision and Master Project Plan.

Info from http://findarticles.com/p/articles/mi_m0EIN/is_2004_Dec_14/ai_n8570893