McDonald's Supplier of Cheese

Towards fulfilling its commitment to sourcing almost all of its products from local suppliers, McDonald's has identified local Indian businesses, which share its level of commitment and dedication in satisfying customers by supplying them the highest quality products. The relationship between McDonald's and its Indian suppliers benefits both parties. For McDonald's world-class products of the highest quality are readily available from local sources. For the suppliers it is an opportunity to expand their business, have access to the latest technology and exposure to advanced practices; in addition to the ability to grow as McDonald's expands in India. Through McDonald's, the suppliers also get access to overseas markets to export their products. One of the best example of this supplier relationship is evident in the case of the multi crore Dynamix Group, McDonald's supplier of cheese in India. McDonald's India has approved Dynamix Dairy, Baramati (Maharashtra) for the supply of cheese to its restaurants, which has 100% computer control, high tech automation equipment. Baramati is small district, which has a large number of milk cattle. However, average land holding per farmer is very low and the farms are scattered across the countryside. Due to this scattering of farms, there are long times lapses between the milking of the cows and the final refrigeration of the milk at the diary farm. The lack of proper refrigeration can impact the quality of milk and the farmer does not get a good price for his product. Owing to the lack of infrastructure in Baramati, milk producers were not able to channel the surplus milk to places outside Baramati. Within the region, the market was not large enough. Consequently, milk producers were throwing away the excess milk and increasingly opting out of the milk business. Recognising the need for quality milk to make quality cheese, Dynamix set up a dedicated quality program for milk procurement and invested significantly in setting up bulk coolers at all milk collection centres in the Baramati area. Efforts were made to see that the bulk cooling centres were located at an accessible location so that the farmer had to travel only a distance of 1-2 km from his farm to the collection centre, drastically reducing the time from milking to refrigeration. On receipt, the milk is immediately stored in the bulk coolers installed in Dynamix's 45 milk collection centres, to prevent further growth of bacteria in the milk and preserving its freshness thus, maintaining the cold chain.' The company also provided these centres with electronic testing and measuring instruments so that the milk producer could be given an exact value for his milk. This helped the farmer to improve yield and quality as well as obtain a better price for his milk. To support this, a passbook system has also been introduced so that the farmer is able keep a record of his

milk production and its quality. A model demonstration dairy farm, with a dedicated R&D centre, was established to educate milk producers with the latest concepts in modern dairy like animal management. This highlights hygiene and cleanliness, regulated feeding, disease control and the genetic improvement of milch cattle to increase the yield and ensure consistent high quality. Moreover, modern equipment involving utilisation of natural resources like the use of solar energy to heat water for cleaning and sanitizing the milk containers have also been subsequently installed. To encourage these improvements in quality standards and world class manufacturing capabilities at Dynamix, McDonald's introduced Dynamix to two of its global suppliers Schreiber Foods, USA and Erie Foods, USA. This resulted in a joint venture with one company and an export order worth $12 million per year from the other company. It also helped Dynamix in acquiring technology to market a large number of high-quality, valueadded milk products. Dynamix Dairy's association with McDonald's India is a typical example of McDonald's commitment to its local suppliers, especially at the grass root level, who not only gain by the technology transfers, but also by obtaining a better price for their products. McDonald's and Dynamix Dairy's efforts not only helped milk-producing farmers to find a market for their produce, but have also helped them to increase their surplus produce.