Mc donalds

McDonald's Corporation (NYSE: MCD) is the world's largest chain of hamburger fast food restaurants, serving more than 58 million customers daily.[4] In addition to its signature restaurant chain, McDonalds Corporation held a minority interest in Pret A Manger until 2008, was a major investor in the Chipotle Mexican Grill until 2006,[5] and owned the restaurant chain Boston Market until 2007. McDonalds is present in 40 Indian cities with 217 restaurants and serves 650,000 customers daily.

background
A McDonald's restaurant is operated by either a franchisee, an affiliate, or the corporation itself. The corporation's revenues come from the rent, royalties and fees paid by the franchisees, as well as sales in company-operated restaurants. McDonald's primarily sells hamburgers, cheeseburgers, chicken products, french fries, breakfast items, soft drinks, shakes, and desserts. McDonalds is known for its beef burgers. But in India, which is known for its religious sensitivities, a special effort was made to create new menus without beef and pork. About 60 percent of Indias population is vegetarian, so new vegetarian recipes were devised for this segment This Quick Service Restaurant chain (QSR) promises its customers a oneminute guarantee of service, which is amply evident by the speed of operations at the outlet.

Supply chain practices

Supply chain efficiency helps in:I. minimizing cost, II. cut down the delivery time, III. improve the profits IV. maintain the highest standards. The importance of supply chain can be understood by the fact that before setting up their first restaurant in India, mc donalds infused around Rs. 400 crores in the supply and delivery chain. Mc donalds india source all its products and its raw materials from India only.(localization). It now has 38 suppliers across the country.

History of mcdonalds supply chain.

The seed of McDonald's success was sown in 1990 - six years before it started its actual operations. From 1990 onwards, special teams arrived from the United States to check the effectiveness of Indias logistics industry, the reliability of its transport sector, etc. Work was done to put together a supple and efficient supply-chain which, despite Indias crumbling infrastructure, would work at an optimal level.

"McDonald's had worked aggressively to attain the right suppliers and systems that ensured that 90 per cent of yield was indigenous before the doors were opened to consumers. The only products that we used to import were oil and fries, for which we have had made arrangements to manufacture the oil in India. We ensured that the products developed locally abide by global McDonald's standards," Suppliers like Coca Cola which is McDonalds beverage partner also, for instance, take water management classes in its restaurants to ensure potable quality of drinking water.

Effects used: Bull Whip effect Cannibalization

Another benefit in the company's favour was its expertise in the areas of agriculture, which allowed it, along with its suppliers, to work with farmers in Ooty, Pune, Dehradun and other regions to cultivate high quality iceberg lettuce. To take care of price fluctuations, the company goes with yearly rate agreements with suppliers.

SUPPLY CHAIN OVERVIEW OF MCDONALDS

Source: www.personal.psu.edu/kzk107/McDonalds

LOCAL SUPPLIERS
Continuing with its culture, McDonald has tied up with various local supplier to carry out its business in India. McDonald's India works with as many as 38 Indian suppliers on a long-term basis, besides several others standalone restaurants working with it, for various requirements.

MCDONALD'S SUPPLIERS IN INDIA

Amrit Foods: Amrit Foods, a division of Amrit Banaspati, has been associated with McDonald's India as a supplier of Dairy Mixes, Soft Serve Mix and Milk Shake Mix for over a decade now. Cremica Industries: Cremica Industries was started in 1980 as small icecream unit run by Mrs Bector out of her backyard in Ludhiana. However after its initial success Cremica added buns and biscuits to its product line and in 1996 McDonald's selected Cremica to be its supplier for buns, liquid condiments, batter and breading in collaboration with its international partners. Dynamix Dairies: McDonald's India has approved Dynamix Dairies, Baramati (Maharashtra) for supply of cheese to its restaurants. Dynamix has a modern automated plant that is fully computer controlled. Trikaya Agriculture: Trikaya Agriculture is McDonald's supplier of fresh iceberg lettuce. The farms at Talegaon, Maharashtra produce the crop throughout the year.

suppliers

Tier 2 suppliers
Tier 1 suppliers

growers and processors who include importantly, lettuce and potato growers, poultry farms companies which manufacture coating systems that coat the vegetable and chicken patties
ingredients are supplied to Tier-I suppliers

process them, for instance, into vegetable and chicken patties done by Vista Processed Foods Pvt. Ltd potato products like French fries, potato wedges and hashbrowns done by McCain Foods India Pvt. Ltd.

DISTRIBUTION CENTERS
In the supply chain management for a QSR, the distribution centres hold special place for bringing food right to the outlet counters. For McDonald's India, the distribution centres came in the following order: Noida and Kalamboli (Mumbai) in 1996, Bangalore in 2004, and the latest one in Kolkata (2007). The company owns DCs in Noida and Mumbai which are primary Distribution Centers. The other two Distribution Centers are in Bengaluru and Kolkata and are housed in leased properties. The supply-chain of the fast food chain is in effect a hub-and-spoke model because the DCs act as hubs. The transportation of McDonalds has been completely outsourced and since 80 percent is refrigerated truck movement, the company has a dedicated fleet which transports their goods.

Outsourcing
the company has a 100 percent outsourced supply chain. the principles of trust and collaboration between the brand, the owners or operators, and the suppliers. Its like a three-legged stool, Each leg (principle) has to be equally strong so that theres no collapsing foundation. McDonalds also believes in a culture of partnership and transparency with its suppliers

 The 3 legged stool: Corporation Franchisees Suppliers Exclusive, certified facilities Handshake agreements, Trust Long term win-win partnership, risk sharing Rigorous product and service specifications Strong focus on quality, product specification and environmental audits Decentralized supplier structure, zone consolidation for multinational suppliers

SOLE DISTRIBUTION PARTNER

RK Foodland manages the four DCs and since it has a transport division, handles the truck movement in the supply-chain right through the country. Foodland is the sole distribution partner for McDonalds in tier-2.

PLATTER OF SERVICES BY FOODLAND

Supply Chain Structuring Inventory Planning & Replenishment Management Warehouse Management Customer Order Fulfillment Logistics Temperature Controlled

KEY FEATURES OF FOODLAND

Dedicated to cold chain movement The only logistics solution provider with expertise in handling agri produce Total kilometer run per month is 7,00,000 km Perishable tonnage handled per month 7,000 tons Robust quality systems & processes First in the country to use multi temperature vehicles Use of innovative methods to ensure temperature integrity during transit Experienced staff The BEST in the industry

 McDonalds carefully calibrates the performance of foodland, measuring it against its own KPIs to ensure its performance does not dip below its own exacting standards. The DCs are assessed on several factors like
the total number of cases managed per man hour, Warehouse efficiency, overtime as a percentage of the total number of hours worked the number of cases handled per trip truck utilization, etc.

ONE-STOP-SHOPPING LEAN LOGISTICS SOLUTION

Source: www.personal.psu.edu/kzk107/McDonalds

THE COLD CHAIN

Prior to McDonald's arrival in India, the concept of a cold chain for the distribution of food and dairy products from the farm to the end supplier was at a very nascent stage of development. For five years prior to opening our first restaurant, McDonald's pioneered the effort to develop this cold chain so that the high standards would be assured. Various Indian and international players later adopted this system to deliver quality fresh produce to consumers.

THE COLD CHAIN (contd.)

The entire network of McDonalds consists of movement of goods through a cold chain. The suppliers are also a part of this. The same truck can carry products at different temperatures, ranging from frozen products at 18C to -25C, chilled products from 1C-4C and dry products at ambient temperatures. Apparently, McDonalds is the only company whose supply-chain network is characterized by this successful experimentation.

THE PULL-SUPPLY SYSTEM

The restaurant issues orders to the distribution Center

DC routes the order to the supplier

only then the supplier produces it

The supplier thus maintains barely any extra stocks; only if there is a contingency,

DEMAND FORECAST
McDonalds has devised the 31Q system
3 stands for the three years that the fast food chain will keep checking its plans, 1 represents the detailed forecast of the next year Q symbolizes the quarterly monitoring of these forecasts.

Every restaurant manager knows the exact time of arrival of each product SC team can work backwards to ensure timely distribution Lead time can be predicted perfectly low inventory can be managed.
With a maximum inventory of ten days in its system, McDonalds maintains an efficient inventory turn ratio of 36.

TECH PROWESS
McDonalds, is powered by various IT systems which enhance its effectiveness. Vista Processed Foods Pvt. Ltd, Tier-1 supplier of the chain use SAP Foodland uses ERP implemented by RAMCO Marshalls. At the restaurant level, the fast food chain has inhouse developed technologies which track dayto-day sales, enables restaurants to schedule staff and send forecast orders to DCs.

SYNCHRONIZATION OF SUPPLY CHAIN

Enablers
One stop shopping concept Inventory management - Central file management - Restaurant simplification

Synchronizing the perishable Supply Chain

Demand forecasting Promotional + Continuous Supply Restaurant and DC level Supply Planning Restaurant and DC level Visibility and Collaboration across the chain

REFERENCES
http://www.aboutmcdonalds.com/mcd/sustaina bility/our_focus_areas/sustainable_supply_chain. html www.bestpractices.mcdonalds.com/sections/2best-of-sustainable-supply http://www.mcdonaldsindia.com/ www.personal.psu.edu/kzk107/McDonalds http://logisticsweek.com/feature/2011/07/thebig-idea-mcdonalds-unravels-its-supply-chain/

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