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OPERATION AND Mac D FINAL PRESENTATION.pptx
- 1. FOOD SUPPLY CHAIN PresentedBy Kavita Bhatnagar Tarun Bairathi (16th PPM)
- 3. THE MAGIC 3Golden Rules for retail success = Location, location, location But for McDonald they change to – Supply chain, supply chain, supply chain INNOVATIVE DESIGN THINKING IDEA- Develop suppliers with economies of scale & lower prices while maintaining consistent quality ( Feasibility) LOGIC- As few suppliers as possible, who are expected to keep reducing costs through improved efficiencies ( Viability ) MAGIC- Burger in Delhi tastes and feels the same as the one in Chennai ( Desirability)
- 4. DESIGN PROCESS Package Proces s Capitalized on market needand value of product Gamechanger Wow/Delighter Exemplary supply chain management
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- 6. THE MOVEMENT 2 distributioncentres – Thane & Noida All ingredients dispatched at night in hi-tech, multi-temperature vans to warehouses & then onwards to specific retail golden arch outlets -48 across 10 towns 500 tonnes per month of varied 250 ingredients from 50 suppliers at varying temperatures – efficiency redefined Each truck has three levels of variable refrigeration, with flexible sizes to accommodate required quantity
- 7. THE STRATEGY Supply Chainstrategy centered around Three –Legged Stool Philosophy – Suppliers Franchisees Employees Suppliers as partners- Ensuring mutual growth and providing value to its suppliers is another delighter here Standardization - Not just in menu but in operating procedures. This leads to efficient production & streamlined delivery of products Quality Control & Risk Management - Stringent quality control is practiced throughout its supply chain. All suppliers face the rejection risk if quality issues surface. Testing of raw materials, inspection of suppliers and having back up/ contingency plans for any failure are the hallmarks
- 8. CONTD… Strategic distributionnetwork – regional distribution centres and warehouses. It enables the company to quickly & efficiently move products from suppliers to restaurants. LEAN principles – Its supply chain management is governed by lean principles optimizing productivity, eliminating waste & cutting costs. Over 300 outlets are serviced by just 5 distribution centres JIT inventory management minimizes inventory holding costs. Only essential items are stocked which also ensures fresh products. Here, it makes use of accurate demand FORECASTING based on historical & real time data analytics, thus aligning delivery with demand Technology - Energy efficient equipment, automated kitchens, made for you order system, and an advanced inventory management system that automatically triggers orders when stock drops
- 9. CONTINUOUS IMPROVEMENT Invested Rs.400Crorein supply chain, planning of another Rs.400Crore.Wise step looking at the likely 12 fold growth of fast food industry to Rs.6000Crore at that time Broke even in 7 years after first outlet in 1996;compared to which rival KFC remained a non-starter Costs of wastage, mishandling & intermediaries could not be passed on to consumers. Hence, increased efficiency through better crop yield & treating suppliers like partners allowing them to expand their business portfolios Planning began 4 years ago – identifying farmers and handholding them for consistent quality, establishing a cold storage chain and customizing the menu Panning for any new food item begins 2 years in advance. Product is launched only when everything is in place
- 10. VALUE ANALYSIS Mc Donald’shas continuously added value to its suppliers – TRIKAYA :ICEBERG LETTUCE •Seeds imported by McD, planted with technological advice •Maximum yield, sustain quality over 150 acres •Supplies1/3 of 450 tonne requirement/Excess sold in local market USE •Integrated Pest Management- Pest related rejections down to 10% •Improved infrastructure- Cooling plant/minimized labor handling •Specialty products ,herbs & vegetables ESTEEM • Heavy investment –infra upgrade, specialized nursery, team of agro experts, drips &sprinkler irrigation, fertilizer mixing plant, cold room, refrigerated truck COST • Supplied through out the year • Increased shelf life TIME
- 11. VALUE ANALYSIS VISTAPROCESSED FOODS • State of the art plant • Technical Know –How • Provides20-30% of McD’s total purchase of processed food USE • Quality control drill • Supplies 12 products from 45 suppliers from frozen peas ,assorted vegetables to chickens ESTEEM • Obtain the right quality of crop • High quality of bird feed • Have to minimize rejections by McD ,currently at 2% COST • High Tech Process to make patty in half hour and give it shelf life of 1 year • Chicken journey –egg hatching to bird killing cycle is of 45 days TIME
- 12. VALUE ANALYSIS McCainFoods Focuses on producing high-quality potatoes suitable for French fries and wedges. • Implements best farming practices to ensure consistent product quality. USE • Enhances the credibility of Indian agriculture through partnerships with global brands like McDonald's. • Provides training and support to farmers, elevating their skills and market value. ESTEEM • Potential for long-term cost savings for McDonald's and McCain by sourcing locally. • Investment in local farming techniques may lead to better yields and lower prices over time. COST • Achieving the desired quality of 24% solid content in potatoes projected to take 3-4 years. • Commitment to gradual enhancement of local agriculture to ensure future supply stability. TIME
- 13. Kano Model Actual Performance Unknown:Unexpected Customer Satisfaction Unspoken: Expected Very Satisfied Very Unsatisfied Performs Very Poorly Spoken Wants Satisfiers Dissatisfiers Delighters Performs Very Well Hygiene, Food Quality, Quick Service etc. Affordability, Freshness, Taste Consistency. Localized Menu, Fancy Outlet Local Supplier Growth- supporting Make-in-India concept.
- 14. SAND CONE MODEL Quality:McDonald's ensures consistent food quality through standardized processes Dependability: Year-round availability of key ingredients (e.g., lettuce) guarantees reliable menu offerings without disruption Speed : McDonald’s ensures quick service even during peak times Flexibility: Adapting to local tastes. Introducing both mutton and McAloo Tikki to cater to Indian preferences Cost: By leveraging economies of scale and process improvements, McDonald's keeps costs low
- 15. FACT FILE McDonald'sNet worth > USD 200 billion. 4th biggest Global employer, with over 2.5 Mn employees. 25.2% of the fast-food market share (Q1, 2024). 1 in every 5 sales includes a Happy Meal with a toy. Offers meals approved by diet experts. Changes its menu to fit the tastes of each country. Every day, > 70 million people eat at McDonald's. Over 8K McDonald's in 47 countries offer home delivery. Average McDonald's employee makes about USD 25,163 a year Every 30 seconds, 4000 McDonald's coffees are sold. McDonald's sells burgers every second. French fries are McDonald's top-selling item worldwide. 9 million pounds of French fries sold daily - about 3.29 Bn pounds p.a. Every minute, McDonald's sells 80 hamburgers around the globe. McDonald's global sales grew by 9.9% in 2023 To add more than 1,600 net restaurants in 2024, operating margin >40% McDonald's strategic initiative, “Accelerating the Arches,” sets ambitious growth targets for 2024 . The company faced challenges, including a sales miss in the fourth quarter of 2023, partially due to the war in the Middle East . In response to backlash over increased menu prices, McDonald's CEO promises affordability, addressing concerns of core customers .
- 16. KEY TAKEAWAYS Efficient &robust supply chain management with focus on single supplier for single product Win –Win situation for all stakeholders. Emphasis on outcomes, everyone is committed and on the same page Long term relationship with suppliers leading to mutual growth. McDonald’s focuses on building long term business partnerships that will further the goals of the business Collaborative planning with suppliers is crucial to McDonald’s supply chain strategy. The company works closely with suppliers to optimize production schedules, manage demand fluctuations, and drive continuous improvement It must capitalize on Industry 4 to meet its challenges of changing consumer preferences, diverse regulations and geo political risks
- 17. RAY KROC’S WORDSOF WISDOM THANK YOU