Outsourcing Offshore At Darden Case Study Answers

Darden Restaurants, Inc. is an American multi-brand restaurant operator headquartered in Orlando. The firm owns several casual dining restaurant chains: Olive Garden, Longhorn Steakhouse, Bahama Breeze, Seasons 52, Eddie V’s Prime Seafood, The Capital Grille and Yard House. Until July 28, 2014, Darden also owned Red Lobster. Darden has more than 2,100 restaurant locations and more than 200,000 employees, making it the world’s largest full-service restaurant company.

As of 2012, Darden is the only Fortune 500 Company with its corporate headquarters in Greater Orlando. Darden’s supply chain is large and complex. They buy about $2.5 billion in food products from 2,000 suppliers in 35 different countries every year which affects the environment, local economies and people’s lives in myriad ways. For example, all of the different foods they purchase require inputs of water, energy and other natural resources to produce and process. The food and other products they purchase must also be packaged and transported to our distribution centers and then to more than 1,500 restaurants. Hundreds of thousands of people’s livelihoods depend on helping produce or provide the goods and services they buy.

(b)Darden has four important supply chains. The first is small ware for linens, dishes, tableware, kitchenware and silverware. Those items come directly from their headquarters ensuring the highest quality shipped to each restaurant. The advantage from this supply chain is that from a single warehouse, all items are shipped via a common carrier to all the near places. They therefore diminish the shipping price of the small items. The second supply chain is for frozen, dry and canned food products. Its advantage is that it is handled economically by Darden distribution centers in North America. They are managed by major US foods distributors. The third supply line is the one providing fresh food.

These supply chain is business-to-business where restaurant managers directly place orders to their group of independent suppliers that has to deliver it in the right amount of days. The fourth supply chain is its worldwide seafood line. They have many seafood suppliers and it is an advantage because the seafood industry is particularly unstable. By using this strategy, they ensure a stable inflow of inventory. Darden also have the complications of having four supply chains. The limitations of having four supply chains reside first in its complexity. Having suppliers in 35 countries implies a huge flow of products overseas. This may also trigger a lot of expenses. Therefore, it is also extremely costly to have four different supply chains. Moreover, dealing with foreign suppliers could result in miscommunications due to the different management styles across cultures and to the different languages they could be using.

I think the ownership changes at the specific stage in which it the product or good is in the hand of the company. Ownership/title should be expected to change in each of Darden’s four supply chains. For the small ware, the title changes once it is in Orlando at Darden Direct Distribution’s warehouse. For frozen, dry and canned foods as well as fresh foods, the ownership changes as soon as it is in the restaurants. Concerning the seafood, its supply chain would change ownership after being delivered to the U.S. territory. The way Darden organized its supply chain is very careful, strategic and unique.

(c)Overall, Darden locates carefully its distribution centers to provide quick delivery to each restaurants, timely response to customer’s needs and decrease in costs of inventory. This effective management style offers them with a great competitive advantage over their competitors that increase their responsiveness. Their supply chains are completely different from the ones of the automobile industry. However, a common point may be about how responsive their supply chains allow them to be. For the case of Darden’s, regular inventory allow them to continually satisfy their customers’ needs. The same can be applied to the automobile industry. Consequently, both industries have to adopt a responsive strategy.

Case Study:
Outsourcing Offshore at Darden
William A. Lewis
MBA 630-D3A3 Operations Management
March 3, 2013

Darden Restaurants is the owner of many popular restaurant chains such as The Olive Garden and Red Lobster.     These, along with their other restaurants, serve over 300 million meals a year in over 1,700 locations in US and Canada.   In order to provide the best quality foods for the restaurants, Darden's employs purchasing agents which scour the globe in search of the biggest competitive advantage in the supply chain.   Darden also uses outsourcing to keep costs down and to more efficiently prepare the food for its restaurants.
Even though restaurants are a straight to user enterprise, there are still many ways to utilize outsourcing to keep costs down. One opportunity for outsourcing would be marketing.   By outsourcing the marketing, it allows the restaurant to focus on its core competency: cooking.   It also eliminates the financial costs for keeping employees around to analyze the market and develop strategies.   Outsourcing this responsibility means that you only have to pay for the service when it is needed.   Also, preliminary preparation of the food could be outsourced as well.   For example Darden   outsources the peeling of its shrimp, and the preparation of its meats to other companies where they can do it more effectively than their individual restaurants.   Research and development is another area where restaurants could benefit from outsourcing.   An R&D firm would be able to focus efforts on developing new dishes for the restaurant and also conducting the market analysis and taste testing to help insure its success.   This would be beneficial to a large restaurant chain because they would not have to dedicate resources to this effort, only pay a fee for services.   In general outsourcing non-core competencies is more effective, and prevents the company from having to invest capital for short term endeavors....

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