Discussion 1. Video Case Outsourcing Offshore at Darden
Darden Restaurants, owner of popular brands such as Olive Garden, Bahama Breeze, and Longhorn Grill, serves more than 320 million meals annually in over 1,500 restaurants across the U.S. and Canada. To achieve competitive advantage via its supply chain, Darden must achieve excellence at each step. With purchases from 35 countries, and seafood products with a shelf life as short as 4 days, this is a complex and challenging task.
Those 320 million meals annually mean 40 million pounds of shrimp and huge quantities of tilapia, swordfish, and other fresh purchases. Fresh seafood is typically flown to the U.S. and monitored each step of the way to ensure that 34°F is maintained.
Darden’s purchasing agents travel the world to find competitive advantage in the supply chain. Darden personnel from supply chain and development, quality assurance, and environmental relations contribute to developing, evaluating, and checking suppliers. Darden also has seven native-speaking representatives living on other continents to provide continuing support and evaluation of suppliers. All suppliers must abide by Darden’s food standards, which typically exceed FDA and other industry standards. Darden expects continuous improvement in durable relationships that increase quality and reduce cost.
Darden’s aggressiveness and development of a sophisticated supply chain provide an opportunity for outsourcing. Much food preparation is labor intensive and is often more efficient when handled in bulk. This is particularly true where large volumes may justify capital investment. For instance, Tyson and Iowa Beef prepare meats to Darden’s specifications much more economically than can individual restaurants. Similarly, Darden has found that it can outsource both the cutting of salmon to the proper portion size and the cracking/peeling of shrimp more cost-effectively offshore than in U.S. distribution centers or individual restaurants.
Read the Case “Outsourcing Offshore at Darden” – CH 2 and respond to the following:
- From your understanding of globalization, there could be many possible reasons for outsourcing some part of business operations. Why do they follow this strategy and how do these add value to resturants?
- Detail supply chain issues that are unique for a company sourcing from 35 or more countries and discuss how other firms or industries develop international supply chains as compared to Darden
Show your understanding of the OM chapter concepts and the specific case situation