Supply chain management of McDonalds


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  • 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 agricultureprovided 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.
  • “With a Cold Chain in place, there is practically no need for a knife in the restaurant. Chopping and food processing is done in the plants. Restaurants are confined to only the actual cooking” – AmitJaitia
  • 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
  • Supply chain management of McDonalds

    1. 1. SUPPLY CHAIN MANAGEMENT& DISTRIBUTION MANAGEMENTPerishable Products (Restaurant Chain)
    2. 2. Presented by:P.Saravanan SS10-12/Finance IIPM,Chennai
    3. 3. 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.
    4. 4. McDonalds In India• 1996 - First restaurant opens in India, at Basant Lok,Vasant Vihar, New Delhi.• McDonalds India is a 50 – 50 JV partnership between McDonald’s Corporation (U.S.A) and two Indian businessmen Amit Jatia (Hardcastle Restaurants Private Limited, Mumbai)and Vikram Bakshi (Connaught Plaza Restaurants Private Limited, Delhi).• Two separate operations in Northern & southern India.• Partners and their management teams trained extensively in Indonesia & the U.S.• Approximately 75% of the menu available in McDonald’s in India is Indianized and specifically designed to woo Indian customers.
    5. 5. PLACELocationTier 1 cities• Big family size restaurants:• High density marketplaces• Shopping Malls• Railway Stations/Metro StationsTier 2 Cities• National Highways (Drive In’s)Channels• Franchise Model• Company Owned Flagship OutletsCoverage• Pan India Presence
    6. 6. Co -BRANDING• McDonald’s has major tie-ups with various companies as their co-branding strategy• Few are: – Coco-cola – Barbie – Cadbury – Hotwheels
    7. 7. Supply Chain Management
    8. 8. McDonald’s SUPPLY CHAIN• McDonald’s Supply chain is based on the three-legged stool concept : Suppliers Company Franchisees
    9. 9. Vital links of Mc Donald’s cold chain. Procurement• McDonalds spent a few years setting up a unique Cold Chain. warehousing• The Cold Chain is necessary to maintain the integrity of food products and retain their freshness and Transportation nutritional value. Retailing of food product
    10. 10. • 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.• They provided assistance in the – Selection of high quality seeds – Drip-irrigation technology – Refrigerated transportation system
    11. 11. E-Procurement• E-procurement (electronic procurement) is the purchase and sale of supplies,Work and services through the Internet as well as other information Enterprise Resource Planning.• e-procurement is a Web site that allows qualified and registered users to look for buyers or sellers of goods and services.• Buyers or sellers may specify costs or invite bids online.• Customers can Qualify for volume discounts or special offers on the web.
    12. 12. How McDonald’s Uses E- procurement Systems• Emac Digital: (Internet procurement site designed for McDonalds Corporations 27,000 franchises )• Emac Digital Company is E-Procurement website which is jointly owned by McDonalds and Accel-KKR Internet Co.
    13. 13. • It is a procurement hub launched in 2001 allow all of McDonalds franchises across the globe to buy everything needed to run their restaurants. From uniform to HamBurger
    14. 14. • Aside from being faster and more convenient for franchisees, the procurement site also allow business owners to buy supplies and materials at a discounted price, ultimately reducing costs for McDonalds.• E-Procurement allows 85% cut in costs according to McDonald’s supply chief Edwards.
    15. 15. Benefits For the Suppliers• McDonald’s works with two types of suppliers. Major Suppliers Small Suppliers
    16. 16. Major SmallSupplier Suppliers Emac Digital
    17. 17. McDonalds E-Procurement Model Global FranchisesPlace Orders Supply Received Emac Digital Suppliers Logistics
    18. 18. IP (Internet protocol) technology• The quicker connection would also allow McDonalds to track purchases and offer customer loyalty programs.• it will connect headquarters with stores.• Replacing traditional and old Dial-up Networking.• McDonalds can collect data much faster
    20. 20. Geographically Diverse suppliers: Ensuring stringent quality standards
    21. 21. SUPPLIERS1.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
    22. 22. 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.
    23. 23. 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 -35⁰C.
    24. 24. 4. Amrit Food• Supplier of long life UHT Milk and Milk Products for Frozen Desserts
    25. 25. OUTSOURCING THE INGREDIENTS ITEM PLACECheese Dynamix Dairy Industries Ltd., PuneDehydrated onions Jain Foods, JalgaonIceberg lettuce Trikaya Agriculture, PuneChicken patty Vista Foods, TalojaVeg. Patty, Veg. Nuggets, Pie’s Kitran Foods, TalojaChicken (dressed) Riverdale, TalegaonBuns Cremica Industries, PhillaurEggless mayonnaise Quaker Cremica Pvt. Ltd., PhillaurSesame seeds GhaziabadFish fillet patties Amalgam Foods Ltd., Kochi. Finns Frozen Foods, Nasik and JainVegetable for the patties Foods, JalgaonMutton and Mutton Patties Al Kabeer, Hyderabad
    26. 26. Logistics• AFL Logistics – 50:50 JV between AirFreight and FX Coughlin of USA- McDonalds international logistics partner – 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)
    27. 27. Transportation• The DC receives items from different parts of the country.• The items are stored in rooms with different temperature zones and are finally dispatched to the McDonalds restaurants on the basis of their requirements.
    28. 28. Transportation• 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 temperatures ranging from room temperature to frozen state.• The specially designed trucks maintained the temperature in the storage chamber throughout the journey.
    29. 29. Distribution• Matching supplier production with deliveries to meet schedules and restaurant needs• 3 centralized distribution centers at Mumbai, Delhi and Kochi• Emphasis on economies of scale – High storage volumes• QIP (Quality Inspection Program)
    30. 30. Distribution• HACCP (Hazard Analysis Critical Control Point) – Food safety standards emphasizing prevention of faults rather than detection through inspection• No Knife in restaurants
    31. 31. Radhakrishna Foodland Ltd• Distribution Centres and cold storages.• Completely dedicated distribution and supply chain.• Specialized in providing services • procurement • quality inspection • storage • inventory management • deliveries • data collection • recording and reporting
    32. 32. Radhakrishna Foodland Ltd• Dry and cold storage facility – Transportation trucks maintained at 22⁰ C – Implemented ERP software.
    33. 33. McDonalds Distribution systemsMcDonald uses three types of Distribution strategy – Franchising – Licensing – Joint ventures
    34. 34. FranchisingMcDonald require franchising from countries on conditions like this• The entrepreneur should be trained.• 45000$ in franchise fees which is higher than other fast-food companies• Total investment would range from 1 million to 1.8 million• After setting the entrepreneur will have to pay 12.5 % as royalty tax• Contract wll be for 20 years• Cash liquidity should be around 250000
    35. 35. McDonalds Distribution systems• Samsung Corby Crave Hit McDonald’s: – The joint promotion aims to generate excitement among the youth and providing them a feel of the touch phones and boosting their comprehension.• McDonalds have license on Airports, Railways etc.
    36. 36. McDonalds Distribution systems• Joint venture• GAM Corp (Private) Ltd is a joint venture company of McDonald’s Corporation USA. Mc Donald’s is world’s leading Fast Food chain having over 30,000 restaurants world wide• Other than this “TOYS R US” is another joint venture
    37. 37. Process: