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Supply Chain Management of McDonalds

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Netra Shetty
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Supply Chain Management of McDonalds - December 29th, 2010

Supply Chain Management of McDonalds : McDonald's Corporation (NYSE: MCD) is the world's largest chain of hamburger fast food restaurants, serving more than 58 million customers daily.[4] In addition to its signature restaurant chain, McDonald’s Corporation held a minority interest in Pret A Manger until 2008, was a major investor in the Chipotle Mexican Grill until 2006,[5] and owned the restaurant chain Boston Market until 2007.[6]

A McDonald's restaurant is operated by either 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% over the three years ending in 2007 to $22.8 billion, and 9% growth in operating income to $3.9 billion.[7]

McDonald's primarily sells hamburgers, cheeseburgers, chicken products, french fries, breakfast items, soft drinks, shakes, and desserts. In response to obesity trends in Western nations and in the face of criticism over the healthiness of its products, the company has modified its menu to include alternatives considered healthier such as salads, wraps and fruit.




In a fast food business, supply chain is of highest importance. It helps in minimizing cost, cut down the delivery time, improve the profits and at the same time maintain the highest standards.
The importance of supply chain can be understood by the fact that before setting up their first restaurant in India, mc donalds infused around Rs. 400 crores in the supply and delivery chain.
Mc donalds india source all its products and its raw materials from India only. Mc donalds develops local businesses that supply them the products and that too of highest standards. Today mc donalds have around 38 suppliers and that too on the long term basis.



MC DONALDS DISTRIBUTION CENTRES……

• Noida and kalamboli(Mumbai)……………..1996
• Bengaluru……………………………………..2004
• Kolkata…………………………………………2007

1st distribution agreement was done by Radhakrishana group, a group engaged in food business in the year 1993 and it was their 1st distribution centre.

CONCEPT OF COLD CHAIN ………………

A cold chain is a temperature-controlled supply chain. An unbroken cold chain is an uninterrupted series of storage and distribution activities which maintain a given temperature range. It is used help extend and ensure the shelf life of products such as fresh agricultural produce, processed foods, photographic film, chemicals and pharmaceutical drugs.
This concept of cold chain in food industry and that too on such a large scale was started by mc donalds only.
This concept was unique in India and to start this concept, it took around 6 years. It benefited both farmers as wella s the consumers, as they are getting the fresh, best quality and great value food. With this concept mc donalds cut down its wastage and able to maintain its freshness and nutritional value of raw material.


STEPS INVOLVED IN COLD CHAIN CONCEPT…….

• Procurement
• Warehousing
• Transportation
• Retailing

All the above activities took place in tempreture controlled atmosphere.


• picture of a temperature controlled truck.
STEPS INVOLVED IN COLD CHAIN CONCEPT……
McDonald's finding the factor of cold room being vital ensured that even before vegetables from farms entered the refrigerated zones, they were locked in a pre-cooling room to remove field heat. Vegetables were placed in the pre-cooling room within half an hour of harvesting where rapid cooling decreased the field temperature of vegetables to 2șC within 90 minutes. Then a large cold room (a refrigerated van) was used for transportation to the distribution centers. In the van, the temperature and relative humidity of crop was maintained at 1-4șC and 95 per cent, respectively and the flavors and freshness are locked
At the suppliers' level, care was taken to guard against any possible contamination or interruption in the cold chain that can break the link and have a detrimental effect on the quality of our product.
The iceberg lettuce from Ooty, mutton patties from Hyderabad and sesame seed buns from Punjab were all delivered to Radhakrishna Foodland Private Limited (RFPL) distribution centre (cold storage) in its refrigerated vans. RFPL stored the products in controlled conditions in Mumbai and New Delhi and supplied them to McDonald's outlets on a daily basis.

By transporting the semi-finished products at a particular temperature, the cold chain ensured freshness and adequate moisture content of the food. The specially designed trucks maintained the temperature in the storage chamber throughout the journey. Drivers were instructed specifically not to switch off the chilling system to save electricity, even in the event of traffic jam.









LIST OF SUPPLIERS AND THE DISCRIPTION SHOWING HOW COLD CHIN CONCEPT WORKS AND CONTRIBUTE TOWARDS EFFICIENCY…….

• Dynamix dairy industry (cheese)
• Trikaya agriculture (iceburg lettuce)
• Vista processed food pvt ltd. (chicken and veg range of products)
• Radhakishana food land(distribution centre- delhi and mumbai)
• Amrit food(long life UHT milk and milk products for frozen desserts)




Below mentioned is the data about Refrigerated vans for McDonald's distribution
Type Route Quantity
National inbound Suppliers to Distribution Center 20 vehicles
Outbound North Distribution Center to restaurant 13 vehicles
Outbound West Distribution Center to restaurant 11 vehicles
Outbound South Distribution Center to restaurant 1 Vehicle

DYNAMIX DAIRY INDUSTRY (SUPPLYING CHEESE)

• Firm from baramati, maharashtra
• Milk collection centres with bulk coolers
• International standard and processing facilities
• Stringent quality control measures
• All activities from procurement of milk to changing it into cheese and then to serve that cheese in the restaurant is all under temperature control atmosphere



TRIKAYA AGRICULTURE (SUPPLYING ICEBURG LETTUCE)

• Advanced agricultural practices helps them to grow speciality crops like lettuce and herbs.
• Pre cooling room and large cold room for post harvest.
• Refrigerated transportation.



VISTA PROCESSED FOOD PVT. LTD. (FOR SUPPLYING FROZEN CHICKEN AND VEG PRODUCTS)

• For chicken, temperature maintained is -35 degrees Celsius.
• Refrigerated transportation.



RADHA KRISHNA FOODLAND (DISTRIBUTION CENTRE)

• Specialized in handling large volumes.
• Activities involved are procurement, quality inspection, storage, inventory management, deliveries, data collection, recording and reporting.
• One stop shop for all distribution management services.
• Both dry and cold storage facility.


AMRIT FOODS

• An ISO 9000 firm
• Supplies long life UHT milk/ milk products for desserts.
DIFFERENT ITEMS ARE SOURCED FROM DIFEERENT GEOGRAPHY IN INDIA……..








• BUNS-shah bector &sons, Maharashtra and cermica, ludhiyana
• BATTER & BREADING- cremica, ludhiyana
• VEGETABLE PATTY- kitran foods, taloja, Maharashtra
• CHEDDAR CHEESE- dynamix dairy, baramati, Maharashtra
• SEASAME SEED- Gaziabad, UP
• SPL VEG EGGLESS SAUCE- Quaker, cermica, ludhiyana








THREE LOGISTICAL DRIVERS…….

1. Facilities- they are the actual physical location in the supply chain network where the product is stored, assembled, or fabricated. The two main facilities are production sites and the storage sites.
In McDonalds, because the products are perishable, storage time was minimal so as to reduce the wastage.

2. Transportation- it is the process where the inventory is moving from place to place. Refrigerated vans are used here in this case.

3. Inventory- it includes raw materials, work in progress, and finished goods within a supply chain.



THREE CROSS-FUNCTIONAL DRIVERS……

1. sourcing- who will perform which activity( production, storage, transportation, and distribution) in a supply chain.
This activity was taken care by mcdonalds corporation.

2. information- it includes data and analysis related to facilities, inventory, transportation, cost, prices and customers in the whole supply chain.
This activity was done by Radhakrishana food land that acts as their distribution centre.

3. pricing- how much a firm could charge for a particular goods and services that it makes available in the supply chain.
Here it was done by the mcdonalds only.
















PULL/PUSH PROCESS

Pull processes are initiated by a customer order while the push processes are initiated by the anticipation of customer order.

Mcdonalds use both pull as well as push process, to a certain extent push is created and after that level the pull created by the firm did its task. One important question can be asked to what level that push can be applied.The products will be pushed to the restaurants where the customers automatically demand that product and hence a pull is created.



Fig. showing the boundry of pull and push, push last till the product reaches the restaurant and pull starts when a customer orders the product.






SUPPLY CHAIN PROCESS CYCLE……..

The processes in the supply chain are divided into a series of cycles, each performed at the interface between 2 successive stages of supply chain
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Last edited by bhautik.kawa; July 19th, 2016 at 06:08 PM..
   
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