Mcdonald's Supply Chain

Topics: Supply chain management, Milk, Supply chain Pages: 5 (1505 words) Published: February 20, 2011

Supply Chain is one of the critical factors for the smooth functioning of any business in the world. When talking about fast food restaurant or business, McDonald’s Supply Chain model is one of the highest precisions. It is this unmatched Supply Chain Structure, which not just ensures on time delivery of raw materials and supplies to McDonalds but also enables it to cut down on its cost and maximize profitability along with maintaining highest quality standards of its products. From the study done in India, the level of commitment of McDonald’s has been done even before it set up its first restaurant in the country. Most of the cost and resource is use to set up its delivery mechanism. McDonald’s initiative to set up an efficient supply chain and deploy state of art technology changed the entire Indian fast food industry and raised the standards of performance to international levels.

Management Issues

McDonald’s have a large number of direct suppliers companies that make or deliver final products for to the restaurants as well as an even larger number of indirect suppliers companies and farms that grow or process the ingredients that are eventually delivered to the direct suppliers. McDonald’s work closely with direct suppliers to continuously improve the practices that impact the employees, the communities, the environment, own suppliers, and the customers. The Social Accountability program and Environmental Scorecard is a review of adherence to the programs that related to sustainable supply, are included in McDonald’s Supplier Performance Index. It is used as the primary evaluation tool used to evaluate the suppliers overall performance in serving McDonald’s needs. McDonald’s expected their suppliers to share and apply their vision of sustainable supply to their own suppliers (indirect suppliers). They also ask them to help them understand industry wide sustainability challenges and opportunities related to the ingredients they use to make their products. McDonald’s don’t have direct control over those issues, but they can use the size and recognized brand to be a positive influence by raising questions, bringing people to the table, and encouraging improvement. The success of McDonalds India was achieved by sourcing all its required products from within the country. To ensure this, McDonalds developed local businesses, which can supply it highest quality products.

Distributor / Direct Supplier

Cold Chain was one of the unique concepts of McDonalds supply chain in India, on which it had spent more than six years to get the system into place. This system brought about a veritable revolution, immensely benefiting the farmers at one end and enabling customers at retail counters get the highest quality food products, absolutely fresh and at great value. Through its unique cold chain, McDonalds has been able to both cut down on its operational wastage, as well as maintain the freshness and nutritional value of raw and processed food products. This has involved procurement, warehousing, transportation and retailing of perishable food products, all under controlled temperatures. From the Indian McDonald’s study, McDonald's local supply networks through Radhakrishna Foodland, which operates distribution centers for McDonald's restaurants in India. The distribution center has focused all their resources to meet McDonald’s expectation of ‘Cold, Clean, and On-Time Delivery’ and plays a very vital role in maintaining the integrity of the products throughout the entire cold chain. Ranging from liquid and perishable products, the distribution center receives items from different parts of the country. These items are stored in rooms with different temperature zones and are finally dispatched to the McDonald's restaurants on the basis of their requirements. The company has both cold and dry storage facilities with capability to store products up to -22º C as well as delivery trucks to transport products at...
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