Fast Food Supply Chain Management
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The document discusses the fast food industry in India and provides details about the operations of McDonald's, Domino's, and Pizza Hut in India. It summarizes the history and growth of each company, their product offerings and corporate strategies. It also describes the sophisticated supply chain management systems established by each company, involving centralized procurement, production facilities, cold storage, and logistics for effective delivery of goods to retail outlets. The document concludes that McDonald's has been able to balance quality and cost effectively through superior supply chain and cold chain management.
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Fast Food Supply Chain Management
- 2. FAST FOOD INDUSTRY World’s largest growing food type. Industrial growth is 40% a year. The organized pizza market in India is worth about Rs.675 crore. Foreign investments are worth Rs.3600 million (1/4th total investment in this sector)
- 5. McDonald’s History It started as a drive-in-restaurant in the late 1940’s. In 1966, McDonald’s was listed on the New York Stock Exchange. In June 1967, McDonald’s opened its first restaurant outside U.S in Canada. In 1996, McDonald’s entered India in a joint venture.
- 6. McDonald’s System – the World’s Best QSR experience World Market Leader in the QSR area (Quick Service Restaurant) Franchise System (75%) System employees: 1.6 million Customers Per Day: 58 million Corporate Strategy: QSC&V: Quality, Service, Cleanliness and Value Plan To Win -> Successful business revitalization
- 8. Non-Veg Menu
- 9. McCafe
- 10. Desserts
- 11. McDonald’s SUPPLY CHAIN McDonald’s Supply chain is based on the three-legged stool concept : Company – Franchisees – Suppliers Logistics 100 sales items in the restaurant 400 SKUs in the warehouse 200 restaurants per DC (~180 DCs globally) Delivery frequency: ~3/wk, higher in urban areas 2-3 stops per route Exclusive distributors (3PL) Strong quality focus (Cold Chain, HACCP, QIP)
- 12. McDonald’s took 4 years and around Rs 450 crores to set up the food supply chain even before opening its 1st restaurant. McD India has pioneered the cold chain management system.
- 13. SUPPLIERS 1. Dynamix Dairy Industries (Supplier of Cheese) Fully automatic international standard processing facility. Network of milk collection centres equipped with bulk coolers. Dedicated quality program. Dedicated R&D centre
- 14. 2. Trikaya Agriculture (Supplier of Iceberg Lettuce) Specialized nursery with a team of agricultural experts Drip and sprinkler irrigation in raised farm beds with fertilizer mixing plant. The pack house, pre-cooling and cold room are located at the farms itself to ensure no delay.
- 15. 3) Vista Processed Foods Pvt. Ltd. (Supplier of Chicken and Vegetable products) World class infrastructure and support services. Separate processing lines for chicken and vegetable foods. Hi-tech refrigeration plants for manufacture of frozen food at temperatures as low as -35 C.⁰
- 16. DISTRIBUTION Radhakrishna Foodland Ltd. Specialized in providing services procurement quality inspection storage inventory management deliveries data collection recording and reporting Dry and cold storage facility Transportation trucks maintained at 22⁰ C
- 17. OUTSOURCING THE INGREDIENTS ITEM PLACE Cheese Dynamix Dairy Industries Ltd., Pune Dehydrated onions Jain Foods, Jalgaon Iceberg lettuce Trikaya Agriculture, Pune Chicken patty Vista Foods, Taloja Veg. Patty, Veg. Nuggets, Pie’s Kitran Foods, Taloja Chicken (dressed) Riverdale, Talegaon Buns Cremica Industries, Phillaur Eggless mayonnaise Quaker Cremica Pvt. Ltd., Phillaur Sesame seeds Ghaziabad Fish fillet patties Amalgam Foods Ltd., Kochi. Vegetable for the patties Finns Frozen Foods, Nasik and Jain Foods, Jalgaon Mutton and Mutton Patties Al Kabeer, Hyderabad
- 18. Quality Inspection Programme (QIP) carried out in the Cold Chain system. Hazard Analysis Critical Control Point (HACCP) Based on HACCP guidelines, control points and critical control points for all McDonald's major food
- 21. OVERVIEW Founded in 1965 by Tom Monaghan. Second-largest Pizza chain in the United States. about 8,500 corporate and franchised stores in 55 countries. Domino's Pizza outlet in India opened in 1996. Close to 274 outlets in 55 cities of India.
- 22. CORPORATE STRATEGY “ Exceptional people on a mission to be the best pizza delivery company in the world! " 'Think global and act local’ Fun, happiness and convenience
- 24. OPERATIONS Indian operations are ranked number one for the past 3 years. Delivers an average of 1 million pizzas per day. Over the last 2 years, they opened stores in 15 new cities. The company operates in three segments: 1. Domestic stores 2. Domestic supply chain
- 25. 1. Domestic Stores uses its company-owned stores as a testing ground for new products and technologies which may then be passed onto franchisees. generates income from company- owned stores in the form of store profits. 2. Domestic Supply Chain Vertically integrated supply system automatic delivery of raw materials cuts out a lot of the "back of-store" activities.
- 26. 3. International consists of 3,469 franchised stores outside the United States. operates six supply chain centers which manufacture dough and distribute food and supplies.
- 27. DOMINOS SUPPLY CHAIN 1. Procurement of raw materials Raw materials like wheat, baby corn, tomatoes and spices are got, out of which wheat was bought in from jalandhar and then sent to the commissaries in refrigerated trucks. 4 commissaries (Regional Centralized Facilities) 1. Delhi 2. Bangalore 3. Kolkata 4. Mumbai
- 28. 2.Distribution Pizza dough processed from the wheat is then sent to the retail outlets again in refrigerated trucks. Logistics requirement for sending frozen foods, at a temperature of ₋18 C⁰ and of refrigerated trucks in which food is sent at a temperature range of between 1 to
- 29. 3. Retail Outlets 1. Regular stores 2. Super stores : High traffic, More counters 3. Express stores : those where people were expected to walk in and order rather than ask for home delivery.
- 31. Outsourcing the Ingredients ITEM PLACE Wheat Jalandhar (Punjab) Cheese Karnal, Haryana Tomatoes Bhubaneshwar, Orissa Spice South India Baby Corn Nepal Exotic Vegetables Sri Lanka Pepperoni Australia Jalapeno Spain
- 33. OVERVIEW one of the flagship brands of Yum! Brands, Inc. Frank and Dan Carney opened Pizza hut in 1958 12,500 restaurants across 91 countries Indian outlet opened in June 1996 in Bangalore. 147 restaurants across 36 cities in India.
- 34. CORPORATE STRATEGY “We want to satisfy our customer by offering them the best” C.H.A.M.P.S (Cleanliness, Hospitality, Accuracy, Maintenance, Product quality and Speed)
- 35. PRODUCTS Sauteed Pastas Beverages Appetizers Soups and Salads Pizzas Desserts
- 36. SUPPLY CHAIN SUPPLIERS Direct Suppliers Pepsi Cremica Group (Buns) Indirect Suppliers Meat market : Chicken from Brazil Vegetable market : Potatoes from Australia Sauce companies
- 37. COLD CHAIN LOGISTICS Snowman Frozen Foods provides cold storage facility 16 warehouses and 110 trucks Equipped with Carrier and Thermo King transport temperature control units. Cold storage capacity is between 100 tonnes and 1,200 tonnes.
- 38. Teradata Warehouse Miner largest customer data warehouse Profile and segment customer households Track phone orders & online orders Increased ROI Predict the success of a campaign Simplified data management
- 40. CONCLUSION Fast Food industry in India is growing at a fast rate. From the study done among the 3 fast food services – McDonalds, Dominos and Pizza hut, we can clearly come to the conclusion that McD with its superior supply chain management (cold chain) is able to balance between its quality and cost. The setting up of cold chain has enabled it to cut down on its operational wastage.
- 41. Thank You
Editor's Notes
- Three Pillars of the Plan to Win Brand direction Freedom within a framework Measurable milestones More customers More often More brand loyalty More profitable best ingredients, strict standards, and proven preparation procedures value is defined as the total experience you receive for what you pay, and at McDonald’s, the total experience includes great food, friendly folks, a clean environment, as well as quick and accurate service.
- each support the weight of McDonald’s equally. For one to prosper, we each must prosper. SCM starts from procuring raw materials, converting them efficiently into finished products and despatching them to the final destinations.
- Cold chain refers vto the procurement warehousing transportation and retailing under controlled temp.
- 15 bulk cooling centres , is equipped with modern measuring and testing equipment , nearer to farmers farms, chilled immediately to two degrees Celsius to stop bacterial growth and preserve freshness. From this point onwards, until just before the burger is actually served in a McDonald’s restaurant hundreds of kilometers away, the temperature is never allowed to increase, . When the refrigerated milk arrives at the Dynamix plant at Baramati, the milk in every single tanker is thoroughly tested and rejected if found sub-standard, adulterated or contaminated. The sophisticated testing lab can check fat content with an accuracy of 0.1 per cent.
- lettuce could only be grown during the winter months but with McDonald's expertise in the area of agriculture provided assistance in the selection of high quality seeds, exposed the farms to advanced drip-irrigation technology, and helped develop a refrigerated transportation system allowing a small agri-business in Maharashtra to provide fresh, high-quality lettuce to McDonald's urban restaurant locations . pre-cooling room to remove field heat, a large cold room and a refrigerated van for transportation where the temperature and the relative humidity of the crop is maintained between 1º C and 4º C and 95% respectively. Vegetables are moved into the pre-cooling room within half an hour of harvesting. The pre-cooling room ensures rapid vacuum cooling to 2º C within 90 minutes
- Capability to produce frozen foods at temperature as low as -35 Degree Cel. to retain total freshness. Hi-tech refrigeration plants is to ensure that the frozen food retains it freshness for a long time and the 'cold chain' is maintained. keeping cultural sensitivities in mind, both processing lines are absolutely segregated and utmost care is taken to ensure that the vegetable products do not mix with the non-vegetarian products.
- The DCs have 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'. the DC 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. Ramco Systems pdt “Marshal” ERP Implementation-order processing, order fulfillment, shipping, invoicing
- As the ingredients move from farms to processing plants to the restaurant, McDonald's Quality Inspection Programme (QIP) carries out quality checks at over 20 different points in the Cold Chain system. Setting up of the Cold Chain has also enabled it to cut down on operational wastage. HACCP emphasizes prevention within its suppliers' facility and restaurants rather than detection through inspection of illness or presence of microbiological data. The HACCP verification is done at least twice in a year and certified.
- About 90% of the company's 5,155 domestic stores are franchised . First, automatic delivery of raw materials cuts out a lot of the "back-of-store" activities letting store operators focus more on sales and customer service. the vertically integrated supply chain lets Domino's leverage the purchasing power of thousands of company-owned and franchised stores nationwide which can help keep down food costs
- has a supply chain in a limited number of its international markets; During 2007, Domino's international segment generated revenues of $126.9 million, of which approximately 52% resulted from the collection of franchise royalties and fees, accounting for 93% of the segment's $57.2 million in operating income
- Commissary processed the wheat and prepared the pizza dough. The pizza dough and other items prepared in commissaries were then sent to the retail outlets again in refrigerated trucks. The temperature inside the truck was fixed based on the distance between the retail outlets and the commissaries. This was to set the dough at a particular level when it reached the outlets. The retail outlets had to use up the processed dough within three days of delivery. If they failed to do so for some reason the entire quantity was discarded.
- Setting up of the Cold Chain has also enabled it to cut down on operational wastage