Mcdonald's Operations and Supply Chain - a Sustainable Edge

Topics: Supply chain management, Sustainability, Supply chain Pages: 9 (2226 words) Published: April 25, 2012

This report will address the constant striving of sustainability throughout the operations and supply chain used by McDonald’s, thus providing a competitive advantage in a dynamic and volatile environment. Consumption at the detriment to the environment - that which was once accepted by society as common practice, has since migrated to greener thinking, urging companies like McDonald’s to implement sustainable practices throughout their operations and supply chains, and working to align business needs to societal and environmental needs.

This shift of consumers to go green, has forced McDonald’s to include a sustainable edge as a pivotal focus in maintaining its competitiveness, however this can be viewed as only ‘buying time’ - delaying the eventual destruction of the environment. More needs to be done by the company and its competitors to ensure that theirs (and our) futures are not eaten up by practices done today.

Explaining graphs and figures will be provided in the appendices. -------------------------------------------------

McDonald’s Operations and Supply Chain - A “McSustainable” Edge

McDonald’s is one of the world’s largest food service retail chains, with just under 33,000 company-owned and franchised or licensed restaurants in 117 countries. The key to McDonald’s success is through the strength of its brand (Anonymous 1996) and System – the strong alignment between the Company, its franchisees and suppliers. The company views itself primarily as a franchisor and believe that franchising is critical to delivering great, locally-relevant customer experiences whilst driving profitability (McDonald’s Corporation 2011). This report explores the operations and supply chain of McDonald’s where it is apparent that this franchisor-like culture is embedded within them both, giving its operations a sustainable edge. McOperations:

McDonald’s operations are exemplified by its quickness of service and efficiency, which is even reflected in its employment culture – whereby a large sum of restaurants employ almost 100 per cent part-time hourly staff (Hur et al 2004). McDonald’s puts a great emphasis on teaching the operating manuals to each franchisee (Ferdows 2006) so that every single restaurant is unified, with a commitment across all its employees reflecting a Total Quality Management (TQM) approach. Its restaurants have a standardized menu with slight variations dependant on what country it is in, serving a homogenous market, positioning it to being one of the largest food service retail chains in the world. In regards to sustainability - the main challenges that restaurant operations face are energy use, water consumption, and waste management and greenhouse gas emissions, which will be discussed further throughout this report. Supply Chain Management:

McDonald’s has two types of suppliers, Tier-1 and Tier-2 suppliers. Tier-2 suppliers are essentially the growers, whose products supplied to the Tier-1 suppliers who process them. The finished products are transported to the company’s Distribution Centres (DCs), which is then distributed via refrigerated trucks to the restaurants. The fleet consists of modified multi-temperature vehicles that allow the transportation of various products. This relatively new feature in the trucks has launched the efficiency and effectiveness of McDonald’s supply chain in comparison to its competitors such as Burger King. The McDonald’s supply chain is 100 per cent outsourced, whereby they successfully integrate supply and demand management within and across its restaurants (Mentzer et al 2008). The company believes in outsourcing to those who are subject matter experts and has high expectations of its suppliers as their identity revolves around efficiency and consistency (Ketchen et al 2011). The company...

References: 1. Anonymous. 1996, ‘Developing a truly international brand and company’, International Journal of Physical Distribution & Logistics Management, vol.26, no. 7, pp19-21
3. Cheema, P. 2011, The Big Idea; McDonald’s Unravels its Supply Chain, viewed 22 March 2012, <>
5. Ferdows, K. 2006, ‘Transfer of Changing Production Know-How’, Production and Operations Management, vol.15, no.1, pp1-9
7. Ketchen, D.J., Hult, J.R., G Tomas M. 2011, ‘Building theory about supply chain management: Some tools from the organizational sciences’, Journal of Supply Chain Management, vol.47, no.2, pp12-18
14. Mentzer, J.T., Stank, T.P., Esper, T.L. 2008, ‘Supply Chain Management and its relationship to logistics, Marketing, Production, and Operations Management’, Journal of Business Logistics, vol.29, no.1, pp31-VII
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