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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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.
