For the sake of studying knowledge management purpose we
have chosen pizza hut as our organization. Pizza Hut is one of the brands of
Yum Restaurant Int. which owns other known brands like KFC, Taco Bell, A&W
and Long John Silver’s. It’s the world’s largest pizza chain with over 12500
restaurants across 91 countries. We have visited pizza hut Multan so we will discuss
things with the perspective of pizza hut Multan.
We
have chosen
Pizza Hut for better understanding of concepts of “Knowledge
Management. . They have maintained their position because they have excessive
knowledge of today’s competitive environment. We want to know how they are
managing and implementing this knowledge. Pizza Hut is always trying to come up
with some innovative way to make a pizza into something slightly different
-different enough that customers will think it’s a whole new product. It shows they
are continuously updating their knowledge.
There are many business processes that are taking place in
Pizza Hutt. These are main five business processes in Pizza Hutt. All of these
are connected with each other. At branch level business processes are divided
in to two parts. 1: FOH (Front of the house), 2: BOH (Back of the house) with
other sub processes like customer order, maintaining facility and product
delivery. There are four functional departments at pizza hut Multan those are
knowledge centers, their main knowledge center is office from where they
control all the operations of pizza hut only top managers
Works there, other knowledge center are Dine In area,
Kitchen and Delivery. we have focused on “kitchen “as knowledge center.
Importance of knowledge management is very high in the kitchen because
employees working at pizza hut are not trained to-do only one specific work at
pizza but everyone can perform all the work from door cleaning to making
pizzas. Kitchen is divided in different areas bar, store, freezer, dishwashing,
ice making and main cooking area. All these work areas have small printing
device so when a customer place order they enter that in the computer in dine
in area that automatically received by the people who work in the kitchen. Any
related knowledge to working in kitchen is displayed on the walls of kitchen
according to the need. Managerial level staff is hired by country head office
and the minimum qualification for managerial staff is masters. Selected
candidates then have to go through training session and are given the
orientation about the working environment and their colleagues and organization
in which they have to work. They communicate their goals to their employees in
the orientation program and training programs. They also emphasize on knowledge
sharing and cooperation among the employees because their philosophy is “How
We Win Together".
Pizza hut is a technology oriented company they are
using a well structured IT infrastructure. They are having a web based system through
which they interact with their regional offices and they handle customer
services through this web based system. All branches and regional offices are
connected through internet with their main organization i.e. Yum International.
Technology used in kitchen is standardized i.e. used in all branches throughout
the world. In the portion of metrics development we have observed cultural,
financial and customer service metrics. While making cost benefit analysis a
company like pizza Hut is to require facing different types of costs like
software development, its operating and updating costs. But before that a
company has to suffer knowledge survey and its inventory and mapping management
cost.
Employees and chief knowledge officer’s (CKO) needed training as well as
their salary costs. In reward Pizza Hut enjoys both explicit as well as
implicit benefits which would be lifelong benefits. In conclusion Pizza Hut is
in transitional phase towards a knowledge centered organization as they are
currently trying to reap maximum benefits out of their employees, customer
feedback and learning from their competitors.
Fast food and pizza’s culture is rapidly promoting in Pakistan as well
as in Multan, so Pizza hut must also consider the stakes of its different stake
holders. They should take every stake holder on board and develop a new
knowledge management system which will replace their current web-based system
and give more autonomy in terms of decision making to its local franchises.
This will really help them to sustain their competitive position in the market
For the sake
of studying knowledge management purpose we have chosen pizza hut as our
organization. We will start by discussing its little introduction and profile
of the organization. Pizza hut (corporately known as Pizza Hut, Inc.) started
in 1958 is an American Restaurant chain and international franchise it brings
different styles of pizza for its customers with that it also offers dishes
including pasta, wings, breadsticks, garlic bread and shakes. Pizza Hut is one
of the brands of Yum Restaurant Int. which owns other known brands like KFC,
Taco Bell, A&W and Long John Silver’s. It’s the world’s largest pizza chain
with over 12500 restaurants across 91 countries. Its main head quarter is located
in Dallas, Texas in America. In Pakistan
pizza hut was launched in 1993.its head office is in Clifton Karachi and now it
is in almost all the 9 big cities with 36 outlets in Pakistan. As we have
visited pizza hut Multan so we will discuss things with the perspective of
pizza hut Multan. In Multan pizza hut started its operations on 27th December
2003.its located in Gulgasht colony, Bosan Road which is considered to be a
very attractive location as all the educational institutes are nearby and youth
is there target market so location is good in this regard. There is only one
branch of Pizza hut in Multan which is a very successful one, employed over 70
people. In Multan pizza hut is following all international standards in terms
of quality, rules, decisions, training but with the consideration of local
strategies in terms of management and taste offering special variety of pizza.
The Local HR SYSTEM is decentralized and the management hiring is centralized.
The hierarchy of the organization starts with Head Office leads to CEO, COO,
DEPUTY CEO, SENIOR OPERATION LEADER, AREA SALES LEADER, GENERAL MANAGER (BRANCH)
& ASSISTANT MANAGER (BRANCH) then supervisors and lower staffs.
We
have chosen Pizza Hut for better understanding of concepts of “Knowledge Management”
for several reasons like:
Pizza Hut is not only the acknowledged leader of
pizza industry worldwide, but it is also the world’s largest pizza chain, with
over 12,000 restaurants across 100 countries, employing more than 300,000
people, serving 1.7 million pizzas everyday to more than seven million
customers. Its leading position depict that how nicely they are managing their
operations worldwide. They have maintained their position because they have
excessive knowledge of today’s competitive environment. We want to know how
they are managing and implementing this knowledge.
Pizza Hut is always trying to come up with some
new and innovative ideas to make a pizza into something little bit different
enough that customers perceive it as new tasty product. It shows they are
continuously updating their knowledge.
Pizza Hut has always valued customer service and
satisfaction and manages knowledge about their customers. In 1995, Pizza Hut
started main two consumer satisfaction programs: customer hotline and a customer call-back
program. Such programs make sure that customers are happy, and always wanted to
return.
Pizza Hut is providing good taste, quality
products with qualified staff, good atmosphere and hygienic environment. They
are specialized in pizzas.
Motivation level of staff is very high which
make the organization more prosperous. . Workers are also told to do things in
a particular order. , the speed is set by international standards Employees
have to follow scripts, wear uniforms, and perform their tasks in a very
specific way. Training is given to employees to share new and better knowledge
for better practices.
Competitive Advantage the fact that they have
full service restaurant as well as delivery services.
There are many business processes that happen in Pizza Hutt. It
includes
These are main five business processes in Pizza Hutt. All of
these are connected with each other. Therefore Pizza Hutt managing all the
functions carefully to get higher demand and earning high profit. At branch
level business processes are divided in to two parts. 1: FOH (Front of the
house), 2: BOH (Back of the house).
Customer
Order: This process has three dimensions customer home delivery,
take away and Dine In.
BOH:
Includes sub processes regarding kitchen, raw material/inventory, quality of
foods, product operations.
Product
Delivery: Satisfying customer as they want is Pizza Hut`s first
priority, to meet this challenge they have a well organized product delivery
process.
FOH:
It includes sub process like customer order and delivery in dine in, front
desk, customer feedback, IT, Management and finance.
Maintain
facilities: This process ensure that all above mention processes are
performed in an organized manner.
Managers need to know whether their employees are performing
their jobs efficiently and effetely or whether there is need for improvement.
Performance of employees at pizza Hutt is appraised on daily bases. They area
appraised on the bases of following ten points. 1: Greeting, 2: Sitting,
3: Take Order 4:
Serving Starter, 5: Serve Main
Course, 6: Follow after main course,
7: Desert offer, 8: Take Desert Order, 9: Deliver Desert, 10: Bill and Good bye Gesture. If any employee is not fulfilling
all these responsibilities effectively and efficiently, a verbal warning is
given first. In which top management assign task to their employee and check
their performance. If employee do not perform their task than written warning
will be given to the employee, if again not perform better then employee will
be suspended. The management asks what the reason is. Why you did not perform
this task. If employee explain the reason and accept their mistake then
employee restored.
There are four functional departments at pizza hut Multan
those are knowledge center, their main knowledge center is office from where
they control all the operations of pizza hut only top managers works there ,
other knowledge center are Dine In area , Kitchen and Delivery .
|
Knowledge
Centers in Pizza Hut
|
|
Knowledge
Center
|
Office
|
Dine
In
|
Kitchen
|
Delivey
|
|
Knowledge Content
|
Employee
record
|
Customer
Greeting
|
Cleaning
|
Order
receiving
|
|
Sales
record
|
Sitting
Arrangement
|
Store
Management
|
Delivery
boy
|
|
|
Sales forecast
|
Cleaning
|
Temperature
|
Delivery
Ride
|
|
|
Financial
|
Temperature
|
Pizza recipe
|
Customer
Feedback
|
|
|
Planning
|
Order
receiving
|
Hand
washing
|
Time
management
|
|
|
Staffing
|
Customer
care
|
Proper
Dress
|
Order
Placement
|
|
|
Problem
solving
|
Time
management
|
Pasta
Making
|
New
Deals
|
|
|
Maintenance
|
Salad bar
|
Dough
Making
|
Trade
area
|
|
|
Performance
|
Wash
room
|
Daily
Purchases
|
|
|
|
Purchases
|
Customer
Feedback
|
Raw
Material
|
|
|
|
|
|
Order
Receiving
|
|
|
|
|
|
Preparing
Pizza
|
|
|
|
|
|
Dish
washing
|
|
Importance of knowledge management is very high in the
kitchen because employees working at pizza hut are not trained to-do only one
specific work at pizza hut like one employee who is making salad in regular
routine may asked to make pizza if the employee who makes pizza in normal
routine is busy in some other work. An employee who works in kitchen is known
as Back-of-house employees because all the time they work only in kitchen.
Any related knowledge to working in kitchen is displayed on
the walls of kitchen according to their need. The time when we visited pizza
hut first thing I noticed was information related to cleanness and the things
we have to do for working in kitchen first thing was to wash hand, how to wash
hand was displayed on the wall in detail. Everything was written like how you
must clean your hand and then cover your head. Kitchen is divided in different
areas bar, store, freezer, dishwashing, ice making and main cooking area. All
these work areas have small printing device so when a customer place order they
enter that in the computer in dine in area that automatically received by the
people who work in the kitchen.
Knowledge update in kitchen is normally done by
the pizza hut head office. For example if there are some new rules or some new
pizza recipe that is given by the head office to Multan pizza hut. Here they
have online system which is used to solve problem, if manager have any problem
they will put the problem in the system and will get the solution. Internal
source of information update is customer and employees, every say hundreds of
customer say a lot of things about the pizza hut so management give them
importance and try to make everything according to the need of customer.
Regularly they have brainstorming session where every employee is free to share
their ideas, all the good ideas firstly gives some reward and then implemented
in the pizza hut.
People Dimension
When talking about the people of Pizza Hut, they follow
criteria when selecting any person. This criterion depends upon the nature of
the job. Selection is based on the qualification and experience. Lower level
staff is hired by branch managers. Minimum qualification for the lower level
staff is matriculation and preference is given to the experienced person.
Managerial level staff is hired by country head office and the minimum
qualification for managerial staff is masters. Selected candidates then have to
go through training session and are given the orientation about the working
environment and their colleagues and organization in which they have to work.
They communicate their goals to their employees in the orientation program and
training programs. Pizza Hut also focuses on developing skills and expertise’s
of their employees because their employees are directly indulges with customer
dealing activities. The purpose is to make them familiar about their work. They
also emphasize on knowledge sharing and cooperation among the employees because
their philosophy is:
“How We Win Together"
From this philosophy we can understand the importance of
cooperation and knowledge sharing at Pizza Hut. For this purpose they took
customer feedback and also employees are encouraged to give positive
suggestions about serving the customer in a better way In order to increase
efficiency and decrease turnover, training sessions are organized for the low
level employees and management so that
they can cope with changing business environment. After training, the trainee
performance is appraised by their immediate supervisors. Pizza Hut also
considers the customer feedback about employee performance in order to bring
quality service improvements.
Pizza hut is a technology oriented company they are using a
well structured IT infrastructure. They are having a web based operating system
through which they interact with their regional offices and they handle
customer services through this web based system. All branches and regional
offices are connected through internet with their main organization i.e. Yum
International. Technology used in kitchen is standardized i.e. used in all
branches throughout the world. Every portion of their respective branch is
given the required international standard temperature e.g. 25 C in kitchen, -10
in freezing portions, etc… The bags in which home delivery is made keeps a
specific temperature so that in home we could enjoy the real Pizza Hut’s taste.
These bags are having a built in electrical heating system.
|
|
|
|
|
|
|
Methods for culture Learning
|
Time for Learning
|
Collaboration
|
|
Norms & Values
|
Courage
|
Openness
|
|
Employee's Turnover
|
Common Language
|
Trust
|
|
Reward & Recognition
|
Tolerance for Mistake
|
Team work
|
|
Job Rotation
|
Empowerment
|
Leadership style
|
|
Knowledge sharing
|
|
Risk taking
|
Philosophy of Pizza Hut is “How we win together”, to achieve
this they have developed a culture by applying KM in their organization in
which employees enjoy team work, rewards for their innovation and job rotation.
Management of Pizza Hut tolerates for employees mistakes up to a standard
level. Employees enjoy a shared culture in which they have a shared language
and norms & values.
|
|
|
|
|
|
Reduction Of operational Cost
|
Economic Value Added
|
|
Increase of Market Share
|
Earnings per Share
|
|
Increase Of shareholder Equity
|
Growth Rank In Industry
|
|
Increase Of Patent Income
|
Total Share holder Return
|
Managing finance in an efficient and effective way is the
back bone of managing process; Pizza hut is managing their finances by applying
Knowledge Management in their organization. With the help of KM Pizza hut has
reduced their operating cost resulting in increase in their market and new
patents.
|
|
|
|
|
|
|
Lead time
|
Grade Of reduction on rework
|
Average call hold time
|
|
Sale
|
Average time to sole problem
|
Call Monitoring
|
|
Staff Behavior/Productivity
|
Grade of reduction of Customer Complaint
|
Call handling time
|
|
Innovation
|
Customer feedback
|
Market Share
|
|
Product/service availability
|
|
Customer Turn Over
|
Serving customers as they want is the first priority of
Pizza Hut, so they are doing this with the help of applying KM and innovative
products and taking customer’s feedback. They made their customer care centers
efficient in a way that customer turnover rate is low. Pizza Hut proactively
deal with customer to solve their problem.
|
Pizza Hut Inc.
|
|
|
|
Cost
|
Amount
|
Benefits
|
Amount Y1
|
Amount Y2
|
|
Technology Infrastructure
|
Explicit Benefits
|
|
|
|
K.M Software
development
|
1,000,000
|
Excessive sale
|
1,000,000
|
1,350,000
|
|
Setup & Maintenance
cost
|
250,000
|
Increasing in new
Licensing
|
750,000
|
800,000
|
|
Annual Updating
cost
|
500,000
|
Increase in new franchises
|
100,000
|
125,000
|
|
Annual Operating
Cost
|
300,000
|
Increase of Pizza
Hut's Patents
|
100,000
|
125,000
|
|
Communication
Cost
|
50,000
|
Reduce employees
turnover cost
|
250,000
|
300,000
|
|
Fixed Operating Cost
|
Owner's Equity increases
|
350,000
|
375,000
|
|
Salary of CKO
|
1,000,000
|
Investment value increases
|
350,000
|
370,000
|
|
Salary of KM Team
|
500,000
|
Increase in
Financial Reserves
|
50,000
|
70,000
|
|
Patents &
legal charges
|
100,000
|
Total Explicit Revenue
|
2,950,000
|
3,515,000
|
|
Knowledge Audit Cost
|
|
Total of 2 years = 6465000
|
|
Knowledge Survey
|
300,000
|
Implicit Benefits
|
|
|
|
Knowledge Inventory
|
75,000
|
Competitive
Advantage
|
|
|
|
Knowledge Map
|
50,000
|
Reduce Financial
Cost
|
|
|
|
Human Resource Cost
|
Innovative
products & Services
|
|
|
|
Training Cost
(Out Station)
|
250,000
|
Increase org's
existing knowledge
|
|
|
|
Training Cost
(Local)
|
100,000
|
Emergency
Response
|
|
|
|
K.M Incentives
|
Improvement of
Staff quality
|
|
|
|
Annual additional incentives
|
150,000
|
Improvement of
customer satisfaction
|
|
|
Misc Expenses
|
400,000
|
Readiness for
change
|
|
|
|
|
Increase Market
Share
|
|
|
|
Total Investment = 5025000
|
Business
Reputation
|
|
|
|
|
|
Smarter Problem
solving & Decision Making
|
|
While making cost benefit analysis a company like pizza Hut
is to require facing different types of costs like software development, its
operating and updating costs. But before that a company has to suffer knowledge
survey and its inventory and mapping management cost. Employees and chief
knowledge officer’s (CKO) needed training as well as their salary costs. In
reward Pizza Hut enjoys both explicit as well as implicit benefits which would
be lifelong benefits. These advantages
help company to maintain their competitive position in the market. This is why
pizza hut is so successful so far and they are keep on working on their
knowledge management system by using their employee’s as well knowledge from
outside sources as a result they are harvest many benefits.
|
|
|
|
Initial
Investment
|
5,025,000
|
|
|
First Cash inflow
|
2,950,000
|
|
|
2nd Cash inflow
|
3,515,000
|
|
|
Period
|
1.59 year
|
|
|
|
|
|
Amount
|
(k,t)
|
NPV Amount
|
|
First Year cash
inflow
|
2,950,000
|
(11%1)
|
2,657,950
|
|
2nd year Cash
inflow
|
3,515,000
|
(11%,2)
|
2854180
|
|
Total NPV Amount
|
|
|
5,512,130
|
|
Less: Initial
Investment
|
|
|
5,025,000
|
|
NPV
|
|
|
487,130
|
TACIT
AND EXPLICIT KNOWLEDGE
Tacit
knowledge is embedded in the human mind through experience. It is more like
subjective in nature .It includes intuition, values, and beliefs that help to
create explicit knowledge.
In contrast
explicit knowledge is codified and digitized in books, documents, and white
paper and spread sheets. It is more likely objective knowledge. Tacit and explicit knowledge are basically
expressed in terms of knowing-how and knowing-what.
There are
four modes of renovation:
Tacit to tacit: Employees discus company strategy in brainstorming
session. This is called socialization. In pizza hut all the time knowledge
seeking occur through discussion between employees. If one make mistake his
colleague helped to get better results. Mistakes are taken as a part of
experience
.
Tacit to explicit: Expert showing them how to solve a problem. This is
called externalization. In pizza hut manager walk throughout the organization
during his duty time in order to solve and fix problems. If there is any deficiency
he listen his employee carefully and try to fix his problem. At the start and
end of the shift time he made special walk through the organization then
handover it to his colleague.
Explicit to tacit: Learning how to drive. It is
called combination. In pizza hut problems are solved within office. For manager
and employee’s help on line system are available. Tools and technique are
available to cope with the sudden problems. Manager show empathy in order to
solve the problems. There is job rotation and flexibility of time.
Explicit to explicit: Learning in a workshop or observing in a
demonstration. It is called internalization. In pizza hut knowledge is updated
through training. Regional general manager (RGM) visits twice in a week. Every
month a workshop is conducted on different topic related to current
issues.
Quality assurance came from
regional office who gives them demonstration how to assure quality. On job
training is giving to low level employees and top level employees are giving
training in training centers(Y block defense Lahore)
PIZZA
HUT MANAGERS REMARKS
After taking interview and
visiting the Pizza Hut premises we evaluate Pizza Hut’s operations and
management we come to know that they are successfully dealing with their
organization’s tacit as well as explicit knowledge. Tacit knowledge is embedded
in the human mind through experience. It is more like subjective in nature .It
includes intuition, values, and beliefs that help to create explicit knowledge.
In contrast explicit knowledge is codified and digitized in books, documents,
and white paper and spread sheets. It is more likely objective knowledge. There
are four modes of renovation:
In first tacit to tacit employees discuss company strategy
in brainstorming session. This is called socialization. In pizza hut all the
time knowledge seeking occur through discussion between employees. If one make
mistake his colleague helped to get better results. Mistakes are taken as a
part of experience. When we visit assistant manager told us that now a day
their regional managers and regional audit team just visit their branch and
have a brainstorming session in which every employee gives his/her input in
form of suggestions and action planes.
In tacit to explicit expert show how to solve a problem.
This is called externalization process. In pizza hut manager walk throughout
the organization during his duty time in order to solve and fix problems. Manager
before taking charge from previous shift manager first check the attendance,
Make table as well as essential items required for day to day operations. In
case of any deficiency/problem with its staff manager listen his employee
carefully and try to fix his problem. At the start and end of the shift time he
made special walk through the organization then handover it to his colleague.
In explicit to tacit
or combination process pizza hut’s problems are solved within office. For
manager and employee’s help on line system are available. Tools and technique
are available to cope with the sudden problems. Employees are facilitated with
technology as well as emotional support from their respective managers. Manager
shows empathy with his subordinates in order to solve the problems. There is
job rotation and flexibility of time for the employees also.
In explicit to explicit learning is achieved in a workshop
or observing in a demonstration. It is called internalization. In pizza hut
knowledge is updated through training. Regional general manager (RGM) visits
twice in a week. Every month a workshop is conducted on different topic related
to current issues. Quality assurance
came from regional office who gives them demonstration how to assure quality.
On job training is giving to low level employees and top level employees are
giving training in training centers (Y block defense Lahore).
Employees in Pizza Hut are appraised on the bases of
following ten points. These 10 points are carefully monitored while serving the
customers and giving them a unique experience. These ten criteria points are 1:
Greeting, 2: Sitting, 3: Take Order 4:
Serving Starter, 5: Serve Main Course, 6: Follow after main course, 7: Desert
offer, 8: Take Desert Order, 9: Deliver Desert, 10: Bill and Good bye Gesture.
If any employee is not fulfilling all these responsibilities effectively and
efficiently, a verbal warning is given first. In which top management assign
task to their employee and check their performance. If employee do not perform
their task than written warning will be given to the employee, if again not
perform better then employee will be suspended. The management asks what the
reason is. Why you did not perform this task. If employee explain the reason
and accept their mistake then employee restore.
Every good performance from employees and management is
appreciated. For example achievements of an employee are announced in
ceremonies to the other fellow employees. Such performances are highlighted and
displayed where other employees can look at them; such as on the display boards
and intranet etc. Employees are given appreciation cards which they ware as
medal during their job. It shows that Pizza Hut’s more emphasize on knowledge
sharing and their policies that reward those who share knowledge. Roles and
responsibilities of each employee are mentioned in their job description. All
the tasks that will be performed by a person are mentioned in the job
description. However cooperative projects across departments and possible
employee rotation of the employees are helping Pizza Hut to create a knowledge
sharing culture. Employees are having multiple skills at Pizza Hut for example
their assistant manager has the skills to work in kitchen as well as serving a
customer.
In conclusion Pizza Hut is in transitional phase towards a
knowledge centered organization as they are currently trying to reap maximum
benefits out of their employees, customer feedback and learning from their
competitors. Every outlet receives direction from regional as well as from its
parent company Yum International; there are few areas which are still centralized
e.g. product development and H.R & Finance. Pizza Hut is using standardized
methods of baking, washing, and distributing technologies throughout the world.
There is always little room for product customization according to local needs
like Tandoori and Tikka Pizza. Pizza hut normally promote its international
standards of cooking, operating, delivery and distribution. So, we can say that
their policy is a bit “ethnocentric policy”. One more issue which we observed
in Pizza hut was that low level staffs have only limited chances to promote to
middle or lower level management. According to company policy such people can
only be promoted to supervisor post only. Fast food and pizza’s culture is
rapidly promoting in Pakistan as well as in Multan, so Pizza hut must also
consider the stakes of its different stake holders. They should take every
stake holder on board and develop a new knowledge management system which will
replace their current web-based system and give more autonomy in terms of
decision making to its local franchises. This will really help them to sustain
their competitive position in the market.
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