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Darden’s Restaurants
Darden’s Global Supply Chains Video Case Darden Restaurants (subject
of the Global Company Profile at the beginning of this chapter), owner of
popular brands such as Olive Garden and LongHorn Steakhouse,
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 $1.8 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, 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 .
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This supply chain is B2B, where restaurant managers directly place
orders with a preselected group of independent
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”.

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

There are many advantages to each of Darden’s four supply chains. The
first one, “smallware”, has an easily managed delivery route to
restaurants. Since Darden Direct Distribution is located in Orlando,
Florida, this location cuts down on the shipping costs of these small
items such as silverware and plates because they are all coming out of
the same area. Since everything is coming out of the one area,
inventory would be much easier and lowers the total cost. Another
advantage is that Darden Direct Distribution employs third party
distributors. By using a third party vendor, DDD is able to manage their
own inventory while leaving the management of the warehouse,
distribution, and transportation to the third party distribution experts
that they have hired.
The second supply chain, frozen, dry, and canned food products, has
eleven distribution centers. This makes management and inventory
control effective. Another advantage is by having 11 different
distribution centers which are “major U.S. food distributors”, which
ensures the cost to operate would be less.
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The third supply chain is the fresh food supply chain. Darden tries to
get the freshest food by ordering directly from independent suppliers
which is known as B2B. These suppliers know the product and grow
and ship out right away ensuring freshness.
The fourth supply chain is the seafood supply chain which includes
salmon, shrimp, tilapia, scallops, and other fresh fish. Darden works
with suppliers in 35 countries to ensure they get the best quality
seafood available. Another advantage is that this seafood is always
inspected by Darden’s overseas representatives. In the end, customers
get the most reliable and quality Darden products.

2. What are the complications of having four supply chains?

While there are many advantages to having four supply chains, there
are also
complications. For example, since there is just a single “smallware”
distributor in Orlando, Florida, management is quite easy but a lot is
dependent on that location. If some disaster should occur in Orlando,
Darden would need to buy their “smallware” from somewhere else
that might have a much higher cost and not be able to produce as fast
as Darden might need. Cost is another complication. It is very costly to
obtain fresh seafood from all over and to ship it. There are also
language barriers that would need to be dealt with. Darden has
suppliers from 35 countries that most likely speak different languages.
Dealing with so many people and in different languages might cost
something due to incorrect translation or cultural differences. All four
of the supply chains would also need to deal with the weather and
other natural disasters. Weather can affect crops, shipping, and
locations.

3. Where would you expect ownership/title to change in each of

Darden’s four supply chains?

In each of Darden’s four supply chains, ownership should be expected

to change. For example, the “smallware” supply chain ownership would
change once it is delivered to the Florida warehouse. With the second
supply chain, frozen, canned, and dry products and the third supply
chain, the fresh food, the ownership would change when they are
delivered to the individual restaurants. And finally, with the fourth
supply chain, the seafood, ownership would generally change when it is
delivered from overseas to the U.S.
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4. 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?

Darden’s supply chains seem to be well thought out and pretty unique
in their field. An automobile manufacturer would use different supply
chains in order to produce new and innovative automobiles and
products. These automobile companies will hold on to ownership until
the items are delivered to the assembly lines. Darden is different from
the automobile manufacturers in that Darden uses their four supply
chains to manage and reduce costs and to bring the best and most fresh
foods and products to their customers.