McDonalds SCM

-Monica Patra & Yash Malani

 About McDonalds.
Started as a drive-in restaurant in the late 1940s in USA
Global Scenario: Currently serves more than 69 million customers per day in
more than 3600 locations spread over 100 countries
Indian Scenario: Currently present in 40 cities with 250 restaurants and
serves 6.5 lacs customers daily
Philosophy that drives McDonald's business : Quality, Service, Cleanliness
and Value (QSC&V)
Success of the supply-chain model of McDonalds can be directly attributed to
its unique concept of 100% outsourced supply chain
In the restaurants, products and supplies are used on a "first-in, first-out
(FIFO) basis to ensure freshness
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 McDonalds Supply Chain

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McDonalds efficiency and effectiveness are due to its Pull-Supply chain

Restaurant issues orders to the Distribution Center which, in turn, routes the
order to the Supplier and only then Supplier produces it
Supplier maintains barely any extra stocks and produces surplus stocks only if
there is any contingency like the overhaul or servicing of machinery
According to RK Foodland, Fill Rate to Store is 99.8 percent
For extensive long-term planning, McDonalds has devised the 31Q system for
demand forecasting
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 McDonalds Supply Chain
Strategy
Unique features of this
supply chain management:
1. Lean Management
2. Multi-layered supply-chain
3. Cold chain
4. Hub and Spoke system

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 Lean Management
Supply-chain network of McDonalds has following
features:
o 100 percent outsourcing
o Lean with no back-up staff and no frills
Managed by just five people across the whole country
Including the Quality Assurance people, only eight
people are all responsible for its efficient Supply Chain in
Indian territory
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 Multi-layered Supply Chain
McDonalds supply chain is critical and multi-layered
There are two categories in food ingredients supply:
1. Tier-I suppliers : 14 core suppliers who provide processed
products
2. Tier-2 suppliers : 26 growers and processors who provide
lettuce and potato, poultry items and coating systems

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 Cold Chain
McDonalds has spent over Rs. 400 crore and more than 4 years before opening their
first restaurant to set up an efficient cold supply chain system
Cold Chain is necessary to maintain the integrity, freshness and quality of food
products
Items are stored in rooms with different temperature zones and dispatched to
McDonalds restaurants based on their requirements
Transportation is done through trucks which can carry different items all together as
there are compartments for Frozen products at -25 C to -18 C, Chilled products at -
4 C to 1 C and Dry products at ambient temperatures
Truck containers are made with two side doors in addition to the rear door which are
used to unload products without disturbing the products in the other temperature zones
Four Distribution Centres serve all the 250 restaurants effectively

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 Hub and Spoke System

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