Operations Engine

Faculty :-Mr.RakeshChaudhry, Dr.AnupamaPrashar& Ms Rajkumari Mittal
Student :...
1) Introductions
2) Global operations
3) Transportations &Logistics
4) Outsourcing the Ingredients
5) Processing
Introductions :-McDonald's Corporation (NYSE: MCD) is the world's largest chain
of hamburger fast food restaura...
made it a frequent topic of public debates about obesity, corporate
ethics and consumer responsibility.
The McDonald's hea...
Cheese -Dynamix Dairy Industries Ltd., Pune, Bar...
system and pack house at the farm allowing a small agri-business venture to provide fresh,
high-quality lettuce to McDonal...
Green Bay Machinery Co (USA), Westphalia Separators (Germany), Dam row (USA),
Tuchenhagen, Tetra Pak, APV, and Corazza Ita...
The example shown is that of a product that is made from processed components. The raw
material for processing is held in ...
minimise the resources needed. The trucks are then given specific load of the products and
routes which they follow in ord...
due to electronic tracking systems installed on board each truck, every restaurant manager
knows the exact time of arrival...
local sourcing and imparting new skills and to generate local employment by being a part of
the local culture. This commit...
McDonald’s expectation of “cold, clean, and on time delivery” and plays a vital role in
maintaining the integrity of the p...
Recommendations:Upon analysing entire supply chain of McDonald’s we conclude that the outsourcing of their
entire supply c...
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Mc donald operation engine

  1. 1. AcademicYear:PGP2012-2014 Operations Engine Faculty :-Mr.RakeshChaudhry, Dr.AnupamaPrashar& Ms Rajkumari Mittal Student :-Apurva Singh CharuRana DivyaTaneja MayankKhullar Raba Raza Sarah Vasishtha
  2. 2. Content 1) Introductions 2) Global operations 3) Transportations &Logistics 4) Outsourcing the Ingredients 5) Processing 6) Logistics from DC to outlet 7) Analysing Centralized Distribution Center of McDonalds India 8) Conclusion 9) Recommendations 10) References
  3. 3. McDonald’s Introductions :-McDonald's Corporation (NYSE: MCD) is the world's largest chain of hamburger fast food restaurants, serving around 68 million customers daily in 119 countries. Headquartered in the United States, the company began in 1940 as a barbecue restaurant operated by Richard and Maurice McDonald; in 1948 they reorganized their business as a hamburger stand using production line principles. Businessman Ray Kroc joined the company as a franchise agent in 1955. He subsequently purchased the chain from the McDonald brothers and oversaw its worldwide growth. A McDonald's restaurant is operated either by 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 revenues grew 27 per cent over the three years ending in 2007 to $22.8 billion, and 9 per cent growth in operating income to $3.9 billion. McDonald's primarily sells hamburgers, cheeseburgers, chicken, French fries, breakfast items, soft drinks, milkshakes and desserts. In response to changing consumer tastes, the company has expanded its menu to include salads, fish, wraps, smoothies and fruit. The business began in 1940, with a restaurant opened by brothers Richard and Maurice McDonald at 1398 North E Street at West 14th Street in San Bernardino, California.Their introduction of the "Speedee Service System" in 1948 furthered the principles of the modern fast-food restaurant that the White Castle hamburger chain had already put into practice more than two decades earlier. The original mascot of McDonald's was a man with a chef's hat on top of a hamburger shaped head whose name was "Speedee". Speedee was eventually replaced with Ronald McDonald by 1967 when the company first filed a U.S. trademark on a clown shaped man having puffed out costume legs. McDonald's first filed for a U.S. trademark on the name "McDonald's" on May 4, 1961, with the description "Drive-In Restaurant Services", which continues to be renewed through the end of December 2009. In the same year, on September 13, 1961, the company filed a logo trademark on an overlapping, double arched "M" symbol. The overlapping double arched "M" symbol logo was temporarily disfavoured by September 6, 1962, when a trademark was filed for a single arch, shaped over many of the early McDonald's restaurants in the early years. Although the "Golden Arches" appeared in various forms, the present form as a letter "M" did not appear until November 18, 1968, when the company applied for a U.S. trademark. The present corporation dates its founding to the opening of afranchised restaurant by Ray Kroc, in Des Plaines, Illinois, on April 15, 1955, the ninth McDonald's restaurant overall. Kroc later purchased the McDonald brothers' equity in the company and led its worldwide expansion, and the company became listed on the public stock markets in 1965.Kroc was also noted for aggressive business practices, compelling the McDonald brothers to leave the fast food industry. The McDonald brothers and Kroc feuded over control of the business, as documented in both Kroc's autobiography and in the McDonald brothers' autobiography. The San Bernardino store was demolished in 1976 (or 1971, according to Juan Pollo) and the site was sold to the Juan Pollo restaurant chain. It now serves as headquarters for the Juan Pollo chain, as well as a McDonald's and Route 66 museum. With the expansion of McDonald's into many international markets, the company has become a symbol of globalization and the spread of the American way of life. Its prominence has also
  4. 4. made it a frequent topic of public debates about obesity, corporate ethics and consumer responsibility. The McDonald's headquarters complex, McDonald's Plaza, is located in Oak Brook, Illinois. It sits on the site of the former headquarters and stabling area of Paul Butler, the founder of Oak Brook. McDonald's moved into the Oak Brook facility from an office within the Chicago Loop in 1971. Product :-McDonald's predominantly sells hamburgers, various types of chicken sandwiches and products, French fries, soft drinks, breakfast items, and desserts. In most markets, McDonald's offers salads and vegetarian items, wraps and other localized fare. On a seasonal basis, McDonald's offers the McRib sandwich. Some speculate the seasonality of the McRib adds to its appeal. Various countries, especially in Asia, are currently serving soup. This local deviation from the standard menu is a characteristic for which the chain is particularly known, and one which is employed either to abide by regional food taboos (such as the religious prohibition of beef consumption in India) or to make available foods with which the regional market is more familiar (such as the sale of McRice in Indonesia). In Germany, McDonald's sells beer. Global operations: -McDonald's has become emblematic of globalization, sometimes referred to as the "McDonaldization" of society. The Economist newspaper uses the "Big Mac Index": the comparison of a Big Mac's cost in various world currencies can be used to informally judge these currencies' purchasing power parity. Norway has the most expensive Big Mac in the world as of July 2011, while the country with the least expensive Big Mac isIndia (albeit for a Maharaja Mac—the next cheapest Big Mac is Hong Kong). Thomas Friedman once said that no country with a McDonald's had gone to war with another. However, the "Golden Arches Theory of Conflict Prevention" is not strictly true. Exceptions are the 1989 United States invasion of Panama, NATO's bombing of Serbia in 1999, the 2006 Lebanon War, and the 2008 South Ossetia war. Some observers have suggested that the company should be given credit for increasing the standard of service in markets that it enters. A group of anthropologists in a study entitled Golden Arches East looked at the impact McDonald's had on East Asia, and Hong Kong in particular. When it opened in Hong Kong in 1975, McDonald's was the first restaurant to consistently offer clean restrooms, driving customers to demand the same of other restaurants and institutions. McDonald's has taken to partnering up with Sinopec, the second largest oil company in the People's Republic of China, as it takes advantage of the country's growing use of personal vehicles by opening numerous drive-thru restaurants.McDonald's has opened a McDonald's restaurant and McCafé on the underground premises of the French fine arts museum, the Louvre. The company stated it will open vegetarian-only restaurants in India by mid-2013.
  5. 5. DISTRIBUTION CENTER: CENTRALIZED DISTRIBUTION OUTSOURCING THE INGREDIENTS Cheese -Dynamix Dairy Industries Ltd., Pune, Baramati - Gujarat Dehydrated onions - Jain Foods, Jalgaon Chicken patty - Vista Foods, Taloja Mumbai Veg. Patty, Veg. nuggets, Pineapple/Apple pie - Kitran Foods, Taloja Mumbai Chicken (dressed) - Riverdale, Talegaon Buns - Cremica Industries, Phillaur Buns - Mrs. Bector’s, Noida (UP) Eggless mayonnaise - QuakerCremicaPvt. Ltd., Phillaur Sesame seeds - Ghaziabad Sesame Seeds - Bora Agro Foods, Pune, Maharashtra Iceberg lettuce -MeenaAgritech, Delhi Fish fillet patties - Amalgam Foods Ltd., Kochi. Iceberg lettuce -Ooty Farms & Orchards, Ooty Vegetables for the patties - Finns Frozen Foods & Jain Foods (Nasik, Jalgaon) Mutton and mutton patties - AlKabeer, Hyderabad Special Veg [eggless] Sauce - Mrs. Bector Foods, Phillaur, Punjab Batter &Breading - Cremica EBI, Ludhiana, Punjab Fresh Iceberg Lettuce - Initially lettuce could only be grown during the winter months but with McDonald's expertise in the area of agriculture, Meena Agriculture Farms around Delhi and Nainital, Amar Agro farms in Ambala& Himachal Pradesh and Agriflora (Now, Green Earth Fresh Produce) farms in Ooty, Tamil Nadu are now able to grow this crop all the year round. McDonald's has provided assistance in the selection of high quality seeds, exposed the farms to advanced drip-irrigation technology, helped develop a refrigerated transportation
  6. 6. system and pack house at the farm allowing a small agri-business venture to provide fresh, high-quality lettuce to McDonald's urban restaurant locations. Today, Vista fodds with the help of their growers - MeenaAgri, Amar Agro &Agriflora is a major supplier of iceberg lettuce to McDonald's India for their Indian operations. Exposure to better agricultural management practices and sharing of advanced agricultural technology with Vista Foods has made all these suppliers extremely conscious of delivering its products with utmost care and quality. Vista Processed Foods: Fresh Produce Division - While Vista Processed Foods is supplying chicken & vegetable product range to McDonald’s India and exports to McDonald’s Middle East. It has also been supplying freshly produce in chilled form to McDonald’s India. Vista, through its parent, OSI Foods, has wide network & expertise in the field of fresh produce. To leverage this expertise a fully integrated fresh produce division (from farm to fork) was created to ensure better and consistent quality products and services for McDonald’s India round the year. This division manages all the fresh produce requirements of McDonald’s India. The agriculture professionals at Vista are involved in implementation of best production practices at the farm to improve overall farm productivity and Good Agricultural Practices (GAP). This has involved working with farmer groups with the scope to 1. Identify high yield & disease and pest resistant seed varieties with better irrigation techniques 2. Crop protection training - Reducing farm wastage due to crop loss 3. Harvesting practices Vista Processed Foods – Chicken and Vegetable Range of Products Vista is McDonald's supplier for the chicken and vegetable and pie/puff range of products in India. McDonald's India gets its chicken and vegetable products from Vista. Vista’s contribution to development of some of McDonald’s Iconic products in India like McAlooTikki Patty and Chicken McGrill specifically for the Indian palate has been significant. Today it supplies McChicken patty, grilled chicken patty, chicken nuggets, chicken herb stick vegetable patty, McAlootikki patty, paneer herb stick and Pizza Puff. Vista has also been supplying range of products for McDonald’s Breakfast Menu, which is currently being piloted in selected McDonald’s restaurants in Delhi and Mumbai. Vista operates from Taloja on the outskirts of Mumbai. It has also leased a facility in Pune for manufacturing Pizza McPuff. On-going R&D, done both locally and at the parent companies, work towards innovation in taste, nutritional value and convenience. Vista has also been exporting to McDonald’s Middle East. Schreiber Dynamix Dairies Ltd. - SchreiberDynamix Dairies Ltd is a Joint Venture between Schreiber Foods USA (51%) and K.M. Goenka group (49%). The JV has one of India's most integrated and automated dairy plants at Baramati near Mumbai in Western India, producing a wide range of dairy products that include Cheese (Cheddar, Mozzarella) and processed Butter, SMP, WMP, Dairy Whitener, Ghee, Non Dairy Creamer, Whey Protein Concentrates, Lactose, Casein (Rennet), UHT Plain and Flavored Milk and Juices, Yogurt etc. The facility has the equipment and technology supplied by world leading firms like
  7. 7. Green Bay Machinery Co (USA), Westphalia Separators (Germany), Dam row (USA), Tuchenhagen, Tetra Pak, APV, and Corazza Italy. Mrs.Bectors Food Specialities Ltd. – Liquid Condiments, Batter & Breading Mrs.Bectors Food Specialities Ltd. is a fast growing food company based in North India. It was started in 1980 as small ice-cream unit run by Mrs.Bector’s out of her backyard in Ludhiana, Punjab. However after its initial success Mrs.Bectors Food Specialities Ltd. added buns and biscuits to their product line and In 1996 McDonald’s selected Mrs.Bectors Food Specialities Ltd supplying buns, liquid condiments, batter & breading. To achieve the standards and stringent norms adhered at McDonald’s; it received technical expertise and guidance from McDonald’s global partners, who helped in setting of the most modern stateof-the-art production facilities. The joint venture partners put Mrs.Bector’s Food Specialties Ltd. through aggressive training programs for developing an understanding of McDonald’s requirements on food safety, quality and consistency in all the aspects of supply chain management. Amrit Food - Dairy Mixes - Amrit Food, (A division of Amrit Corp Ltd.) has been associated with McDonald’s India as a supplier of Dairy based products (Soft Serve Mix and Milk Shake Mix). McDonald’s India team and EBI Company Limited worked with Amrit Food for two years, before the opening of the McDonald’s 1st store in India, to develop formulations using local ingredients and took trial productions. Today, Amrit Food has a state-of-the-art dairy processing facility with equipments from Denmark, France and Sweden. The plant deploys first of its kind of technology, in India, of Ultra Heat Treatment with direct steam Infusion which ensures zero bacteria products with unmatched quality and flavor. Amrit Food has also deployed an automatic bottle filling line and superheated water spray sterilizer, for long shelf life of bottled milk drinks. Processing: -The suppliers receive the crop from the framers. The crop is then processed and dispatched to the Distribution centres in special temperature controlled trucks, which ensures that the quality of the items is not compromised. These items are stored in rooms with different temperature zone and are finally dispatched to the McDonald’s restaurants on the basis of their requirement. McDonald’s expectation of “cold, clean and On-time delivery” plays a very vital in maintaining the integrity of the product thought the entire “cold chain”. Often, the activities associated with a process affect one another, so it is important to consider the simultaneous performance of a number of activities, all operating at the same time. A good way to start analysing a process is with a diagram showing the basic elements of a process—typically, tasks, flows, and storage areas. Tasks are shown as rectangles, flows as arrows, and the storage of goods or other items as inverted triangles. Sometimes, flows through a process can be diverted in multiple directions depending on some condition. Decision points are depicted as a diamond, with the different flows running from the points on the diamond.
  8. 8. The example shown is that of a product that is made from processed components. The raw material for processing is held in inventory. When the product is ready to be manufactured, the raw material is withdrawn from the inventory in appropriate quantities and the components are made. Then these components are shipped to the second facility where they wait for some time before being assembled into the final product. The product then goes through a final inspection. If it passes inspection it is shipped. Otherwise, it is returned to the final assembly area for rework. The flowchart could be more or less detailed, as required. For example, Exhibit 6.1 does not include the option for inspection after component processing. This could be added if appropriate. Further, the component processing and final assembly process nodes could be expanded to show more detail. One important advantage of process flowcharting is that it allows decision makers to identify opportunities for improving the process. For example, one may question why components need to be moved to a second facility for assembly, thus encountering delays. This might lead to reorganization of the process so that all the processing is done in one facility, resulting in a faster process. Thus, process flowcharting is related to a concept called Value Stream Mapping (VSM) which analyses processes for improvement. Transportation and Logistics McDonald’s uses distribution agents that handle the logistics and transportation of their supply chain. They have in essence outsourced the entire process in order to focus on their core business. The benefits are saved costs and less number of people needed to handle this function. The agent acts as the main controller in the process of collecting the products from the vendors and suppliers and delivering the same at distribution centres. The role of a DC will be taken up later. The process then continues and the agent is responsible for transfer of component batches to the specified outlets under a fixed time window. The agent also ensures proper care of the product as they are perishable items and hence need to be at all times kept under a controlled environment in order to ensure freshness. The trucks deployed are all monitored and routes are predefined. The steps involved in first stage of the delivery process involve the supplier to evoke a query which is directly linked to the query of demand generated from the outlets. This involves demand forecasting on part of any particular outlet. The combined estimated demand is then generated as a query which the supplier then processes. The various vendors are also involved in this on-going process as they have to regularly send in the raw materials to the component suppliers that are then processed in their plant. The next step involves estimating the number of trucks required and route planning in order to maximise efficiency and
  9. 9. minimise the resources needed. The trucks are then given specific load of the products and routes which they follow in order to deliver the products at specified Distribution centre(s). The materials when once separated into component batches of semi- finished product is sent out from the distribution centres to various McDonalds outlets. This process level is also outsourced but the logistics contractors need to maintain specified conditions inside the containers in order to preserve freshness of the products due to their perishable nature. The process is in close sync with the real time query generation systems at the McDonalds outlets that send in their requirements and reserves of the products well in advance to these distribution centres as well as other points of exchange in the supply chain in order to maintain complete coordination among the various supply levels. The main aim is to ensure highest operational efficiency at minimum cost by cutting down on supply time and storage requirements. In India McDonalds’ products are distributed by Radhakrishna Foodland Pvt. Ltd a wholly owned subsidiary of Radha Krishna Hospitality services. RK Foodland manages the four DCs and their functions are discussed in the next section. The transport division of RKF, handles the truck movement in the supply-chain right through the country by meeting its standards of cold, clean and on-time delivery. In addition to distribution agents McDonalds also extends outsourcing contracts for transportation of theintercity load of their products to AFL Logistics Ltd. A joint venture between RFPL(Radhakrishna Foods pvt ltd) and Coughlin of US. The responsibility to ensure effectiveness and quality of this supply chain was onto RFPL and the transportation bit was done by Coughlin. RK Foodland manages the day-to-day activities of the fast food chain like raising purchase orders to suppliers, invoicing, keeping an astute eye on working capital management, timely delivery, payments, etc. There are only two products, buns and Cokes, which are sent directly to the restaurants. Buns have a limited shelf life, hence they are sent directly to the outlets, while Coca Cola has a separate distribution system to ensure its delivery. McDonald’s has no legally documented Service Level Agreements (SLAs) with RK Foodland. The fast food chain carefully calibrates the performance of its distribution partner, 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 administration efficiency— the total number of cases managed per man hour, warehouse efficiency, overtime as a percentage of the total number of hours worked and in the case of transportation, the number of cases handled per trip, truck utilization, etc. McDonald’s constantly scrutinizes the performance of RK Foodland against these KPIs; if its distribution partner is unable to meet certain benchmarks, together they devise solutions which would enable them to achieve set goals. In order to handle the vast geographical constraints in terms of transportation of the products under pre specified and temperature controlled conditions they have come out with a design of multi-temperature vehicles which could carry all three temperature products. Truck containers are made with two side doors in addition to the rear door. The side doors are used to unload products without disturbing the products in the other temperature zones. Further
  10. 10. due to electronic tracking systems installed on board each truck, every restaurant manager knows the exact time of arrival of each product which enables the supply chain team to work backwards to ensure timely distribution. The truck fleet is also highly dedicated and can accomplish a 5 day delivery task in two days due to non-stop running of the fleet. This ensures that lead times for trucks and deliveries are pretty much predictable . With a maximum inventory of ten days in its system, McDonald’s maintains an efficient inventory turn ratio of 36. For in city deliveries trucks are monitored from the time they leave the regional Centre to the time they do not make delivery to the specified outlets. There are generally multiple outlets that each trucks caters to in the area delegated to them. The time taken to unload a truck is also noted and there is only a 30 minute window during which the truck has to complete the entire operation. 2 special categories of trucks deployed are reefers and chillers each with their specific temperate settings. Reefers are maintained at around -18 to -22 degree C, while the chilled trucks have a range of 1-4 degree C. The transport company also ensures proper training and cleanliness of its drivers to match international standards and optimum work efficiency. The packaging, quality , hygiene and storage temperatures are also doubled checked at the time of loading the trucks at any given distribution Centre by the transport company. Random checks are also conducted to test and maintain the quality of frozen items. Digitally marking each batch helps in rejecting the batches that do not conform to the standards or are damaged without shutting down the entire process as this helps in isolating the affected stock. There are also separate supply links for veg and non- veg products due to the fact that around 60% of Indians are vegetarian. They are supplied and handled in separate containers and at no point is the vegetarian products mix with non- vegetarian products. Reverse logistics At McDonalds the job of logistics is not just finished at delivery of products but also the proper waste disposal and recycling facilities are involved in smooth working of any outlet. Separate trucks equipped with specialized systems to handle such wastes are deployed catering to multiple outlets. The waste disposal trucks collect the organic and inorganic waste separately in order to take it back to respective treatment facilities. While the inorganic waste is sent to various recycling facilities the organic waste is used to make manures back at the McDonald farms which help in clean and sustainable agricultural production at a very competitive cost. ANALYSING CENTRALIZED DISTRIBUTION CENTER OF MC DONALDS INDIA:A unique sense of dedication and commitment characterizes McDonald's India - a commitment to be driven by the leadership of local owners. Commitment to provide quality products and fast friendly service at a real value to support other Indian businesses through
  11. 11. local sourcing and imparting new skills and to generate local employment by being a part of the local culture. This commitment has translated into enduring benefits to the businesses at the grass root level, in the areas of introduction of new crops, new agricultural practices and food processing methods and procedures. McDonald's unique 'cold chain', on which the QSR major has spent more than six years setting up in India, has 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. Explaining the concept, Mar.AmitJatia, Joint Venture Partner & Managing Director, McDonald's - Western India, said, "Every year, Rs. 50,000 crore worth of food produce is wasted in India because of lack of proper infrastructure for storage and transportation under controlled conditions. These range from physical damage and vermin infestation to improper temperature, humidity and air-flow." CONCEPT OF COLD CHAIN: - "McDonald's, through its unique cold chain, 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 Setting up this extensive cold chain distribution system has involved the transfer of state-ofthe-art food processing technology by McDonald's and its international suppliers to pioneering Indian enterprises who, today, are an integral part of the McDonald's cold chain. HOW IT WORKED: -Vegetables were placed within the cooling room within half an hour of harvesting where rapid cooling decreased the temperature of vegetables from 2°C within 90 minutes. Then large cold room (a refrigerated van) was used for transportation to the distribution centre. In the van, the temperature and relative humidity of the crop was maintained at 1-4°C and 95% respectively, and the freshness and flavours were locked at 35°C. Refrigerated trucks: -with multi temperature facility are divided into three zones- Freezer, Chillier, Ambient…to ferry products demanding varying temperatures from supplier’s location to the distribution centre. DISTRIBUTION CENETR: - IS also divided into similar zones as the trucks for storing products. With freezer from 0°f to -10°f, chillier at 33°f to 40°f and ambient at room temperature. FINALLY TO RESTAURANTS: the distribution centre then supplies to Mcd Restaurant, which have inbuilt cold storage units divided into the aforementioned zones. ALL LEADING TO THE CONSUMER: -Mcd’s local supply networks through RadhakrishnanFoodland (logistics and distribution partner), which operates distribution networks for mcd across India. The DC’s have focused all their resources to meet
  12. 12. McDonald’s expectation of “cold, clean, and on time delivery” and plays a vital role in maintaining the integrity of the products throughout the entire “cold chain”. The DC as the distribution centre is called in the McDonald’s system is responsible for procurement, the quality inspection, storage, inventory management, deliveries to the restaurants and data collection (reporting and recording). It also provides value added service like repacking of promotional items, distribution of uniforms, training material and other consumables. It plays a vital role in maintaining the integrity of the products throughout then tire “cold chain”- a distribution system that ensures the product availability on time. The company uses ERP application for efficiency, speed and accuracy in the system. That’s why it knows what and when to deliver. By transporting the semi-finished products at particular temperature, the cold chain ensures freshness and adequate moisture. With this cold chain infrastructure in place, Trikaya Agriculture has also a plan to export this high value product to other international markets, especially to McDonald's Middle East and Asia Pacific operations. McDonald's expertise in packaging, handling and long-distance transportation has helped Trikaya to do trial shipments to the Gulf successfully. Foodland’s association with McDonald’s India is a typical example of McDonalds support and commitment to its local partner’s, which are now growing with growth of McDonald India. MANAGING STOCK: TYPES OF STOCKS ARE:RAW MATERIAL WORK IN PROGRESS FINISHED GOODS At the Mcd, all raw materials, works in progress and finished products are handled on a First come first out basis (FIFO) basis. This means that raw materials are used in the order they are received. Therefore stock is always fresh because products are sold in the order they are made. If the processes First In, Last out (FILO) were used, then the finished product would be dry and unappealing because the first one prepared would be the last one sold. Conclusion: -A McDonald's burger is not just a burger but an outcome of dedicated efforts by farmers, its suppliers, distribution centre and a firm promise by McDonald's. McDonald's contributes a great back end process which enables you to enjoy your favourite burger fresh & hot, and forthat, the supply chain truly acts as a backbone of the business. The supply chain begins at the grass root level, with the supplier’sreceiving the crop from thefarmers. The crop is then processed and dispatched to the Distribution centres in specialtemperature controlled trucks, which ensures that the quality of the items is not compromised.These items are stored in rooms with different temperature zones and are finally dispatchedto the McDonald's restaurants on the basis of their requirements. McDonald's expectation of'Cold, Clean, and On-Time Delivery' plays a very vital role in maintaining the integrity of theproducts throughout the entire 'cold chain'.
  13. 13. Recommendations:Upon analysing entire supply chain of McDonald’s we conclude that the outsourcing of their entire supply chain process has helped them in focussing on their core business and competency i.e., selling fast food. The just-in-time delivery mechanism has helped them in maximising efficiency and cost cutting. The system itself is highly efficient and suitable for the business. We would highly recommend they follow this model. ISSUE: -The efficiency of McDonald’s delivery system and supply chain model is unmatched however we would like to highlight the issue here that they have very little control over the entire system as it is being managed by their agents and trade partners. McDonald’s business depends entirely upon the timely delivery of fresh and quality products. The entire model being outsourced they don’t have much control over the quality of food being supplied. Even though there are filters to monitor the quality of product but the final testing on part of McDonald’s only happens at the outlets and can under exceptional conditions affect the daily sales of outlet(s) if the quality was not up to the mark. We would suggest that some control points are setup in the supply chain model to monitor the smooth functioning of the entire process. Also the number of employees involved in the supply chain process need to be increased so that they can properly handle any contingency arising in the SCM model on behalf of McDonald’s. They need to be properly trained in order to be better equipped to handle the problems that may arise in the delivery model.
  14. 14. References 1) 2) 3) 4) 5) We also have interviewed Mr Amit Kumar who is working as Operations Consultant at McDonald in Dwarka.