McDonald's is an American fast food company founded in 1940 with global headquarters in Chicago. It has over 100,000 locations in more than 100 countries. The document discusses McDonald's inventory management practices, including using a lean approach, centralized stock planning, demand forecasting, and first-in first-out inventory. McDonald's inventory system aims to reduce waste and costs while improving order fulfillment times and customer satisfaction.

1. A McDonald's Restaurants case study

3.  American origin fast food company
 Since 1940
 global headquarters - Chicago in 2018
 more than 100 countries
 Global System:
◦ Company-owned
◦ Franchised restaurants
 Franchising decision depends on,
◦ availability of individuals with the entrepreneurial
experience and financial resources,
◦ local legal and regulatory environment

7.  fluctuating customer demand, variable
requirements & changing market conditions
 unexpected events such as cricket matches,
musical extravaganzas
 Maintaining the perishable food items in their
inventory.
 Creation of additional cost such as
maintenance cost, other fixed costs etc.

10.  Raw materials
◦ Frozen
◦ Chilled
◦ Ambient
 Work in progress (WIP)
 Finished products
E.g. : Filet-o-Fish, Big Macs & side salads

11. Raw materials are
used in the order
they are received
First In First Out
(FIFO)
inventory is used in
order reverse of that in
which it was received

13.  “Lean” refers to a systematic approach to
enhancing value in a company’s inventory by
identifying and eliminating waste of
materials, effort and time through continuous
improvement in pursuit of perfection.
 Lean inventory management techniques are
built upon five principles:
 Value
 Flow
 Pull
 Responsiveness
 Perfection

14.  Cost Reduction
◦ Lean inventory management will help to reduce waste &
drive down their costs.
 Fulfillment Time:
◦ Will be able to speed up their order fulfillment time &
improve customer service.
◦ Can create good customer satisfaction & good image.
 Stock Turnover:
◦ Implies good business health to management.
◦ Helps to open new branches & through that can increase
their market shares.
 Cash Flow:
◦ With less capital tied up in their inventory levels, they have
freedom to invest or pursue other business projects.
◦ Then can expand their business

16.  In 2004, McDonald's introduced a specialist
central stock management function known as
the Restaurant Supply Planning Department

17.  The team (includes employees, control
specialists)
 builds the new planning and forecasting
system to forecast likely demand of finished
menu items by past performance & future
sales campaigns.
e.g. : Big Macs.
 Contributes to constant communication
which helps to manage the inventory more
accurately

18.  shows the balance of orders for new
inventory against sales

19.  systematic, enterprise-wide assessment of
suppliers’ assets and capabilities with respect
to overall business strategy, determination of
what activities to engage in with different
suppliers, and planning and execution of all
interactions with suppliers, in a coordinated
fashion across the relationship life cycle, to
maximize the value realized through those
interactions

20.  term that refers to practices, strategies and
technologies that companies use to manage
and analyze customer interactions and data
throughout the customer lifecycle, with the
goal of improving customer service
relationships and assisting in customer
retention and driving sales growth.

22. • “You Deserve a break today, so
get up and get away – To
McDonalds”
• “Food, Folks, and Fun”
• “I’m Loving it”
McDonalds is excellent in promotion, sales, & people skills.

23.  For building sufficient stock to meet
customer demand without
overstocking which cause to unnecessary costs and
reduces profits &
Understocking which cause to lost sales, reducing
profitability
 Stock can be reduced automatically at the end
of a promotion, avoiding too much stock.

25.  Time to Fulfillment
◦ Good inventory control means that your time to fulfill
orders stays low
 Returns
◦ Inventory management helps you maintain customer
satisfaction when it comes to product returns.
 Pricing
◦ When you don't carry extra inventory for extended
periods of time, your inventory costs decrease.
 In Stock
◦ A good inventory management system means that
you have an up to date inventory count at all times.

26.  Can avoid running out of stock. As a result,
customers can always receive what they
order.
 Possibility to obtain purchase discounts
 Eliminates inexperience in the ordering
enables a new Restaurant Manager to ensure
the order is right first time.
 Saves time in ordering
 Orders are based on the current stocks. The
Restaurant Manager simply inputs the
current stock level.

27.  Less waste means food costs are reduced.
This cost saving is then passed on in better
value for money for customers.
 The amount of stock ordered for
promotions is more accurate, being based
on past performance.
 Reduce the need for emergency delivery,
saves money.
 Stock levels are always at optimum level,
helping to ensure sales and the freshest
product

28.  R.H.L. KODITIHUWAKKU AS2014116
 L.H.G. KOSHALA AS2014119
 S.P. DAHANAYAKE AS2014028
B. Sc. (Honors) in Management Science
Faculty of Applied Sciences
University of Sri Jayewardenepura