Group 2 SCM McDonald's

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cIMP1

M

C

DONALD

S

A

S

TUDY OF WORLDS SECOND BEST SUPPLY

CHAIN

:

AN INDIAN PERSPECTIVE

GROUP

Ankit 60007

Ankita 60008

Khushboo 60017

K. Devashish 60019

K. Rohit 60021


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CIMP/SCM/GROUP-2/McDonalds 2

LETTER OF TRANSMITTAL

Group 2

Subject: Supply Chain Management

Batch 2013-2015

CIMP, Chajjubagh, Patna

Date: 14/12/2014

Prof Vijaya Bandyopadhyaya

Faculty, CIMP

Dear Professor,

This project contains the study by Group 2 on the supply chain practices of the fast foodrestaurant McDonalds for the academic purpose assigned by you based on the informationcollected from various sources. This work submitted by us is strictly for the academic

purpose to be used by the members of this group and in no manner and under nocircumstances shall it be reproduced. The confidentiality of the data would be maintainedintact.

The purpose of the project is to provide a uniform and detailed analysis of the various supplychain practices of the company selected by the group for this project. The group has tried to

provide all the related information pertaining to the project to make it meaningful. The worksubmitted by us will provide the intricacies of all the concepts of supply chain that helps inthe success of a company.

Yours sincerely,

Group 2 (PGP-2), CIMP

Enclosure:

Final Report


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ACKNOWLEDGMENT

We, the members of group 2 would like to acknowledge all the people who helped and

supported us throughout our project.

Our deepest thanks to our faculty and mentor Prof Vijaya Bandyopadhyaya for guiding and

instructing us at each and every step of our work. We express our sincere gratitude towards

her for taking the pain of going through our project and making necessary corrections as and

when required. It was her valuable suggestions, constant help and incessant monitor which

helped us in carrying out this project.

We express our deep sense of gratitude to Dr. V. Mukunda Das, Director CIMP for providing

us the opportunity to be a part of this prestigious institution. We also thank all the members

of the group for their constant help and support. We would like to appreciate our friends and

family for their valuable inputs and help. We would be failing in our duty if we ignore the

library resource centre of CIMP as it helped us in gathering information which helped us in

carrying out this project.


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TABLE OF CONTENTSLETTER OF TRANSMITTAL ............................................................................................................. 2

ACKNOWLEDGMENT ...................................................................................................................... 3

EXECUTIVE SUMMARY .................................................................................................................... 6

INTRODUCTION ................................................................................................................................ 7

CORPORATE VISION OF MC DONALDSS.................................................................................. 8

Mc DONALDS: PILLARS OF SUCCESS......................................................................................... 8

Mc DONALDS: GLOBAL SUPPLY CHAIN STRATEGY............................................................. 9

Mc DONALDS IN INDIA................................................................................................................ 10

PHASES OF Mc DONALDS IN INDIA..................................................................................... 10

Phase 1 1990-96 Setting up the Foundation ............................................................................ 11

Phase 2 1997-03: Meeting McDonalds expectations............................................................. 11

Phase 3 2004-10: Growth ........................................................................................................... 11

Phase 4 2011-17: Building for future ........................................................................................ 11

SUPPLY CHAIN NETWORK ........................................................................................................... 12

MULTI-LAYERED SUPPLY-CHAIN .......................................................................................... 12

Tier-I and Tier-2 suppliers ........................................................................................................ 13

OTHER COMPONENTS OF SUPPLY CHAIN ......................................................................... 13

Inbound Transportation ............................................................................................................ 13

Distribution Centres .................................................................................................................. 13

Outbound Transportation ......................................................................................................... 13

SERVICES OF SUPPLY CHAIN FOR MC DONALDS RESTAURANTS................................. 15

THE COLD CHAIN ........................................................................................................................... 16

THE COLD CHAIN PARTNERS ................................................................................................. 17

1. Dynamic Dairy Industries - Supplier of Cheese ............................................................ 17

2. Trikaya Agriculture-Supplier of Iceberg Lettuce .......................................................... 17

3. Vista Processed Foods Pvt. Ltd. ....................................................................................... 18

4. Radhakrishna Foodland -Distribution centers for Delhi and Mumbai ...................... 18

5. Amrit Food- Supplier of long life UHT Milk ................................................................. 19

DEMAND FORESCASTING: 31Q SYSTEM .................................................................................. 20

PERFORMANCE MODELLING ..................................................................................................... 20

QUALITY ASSURANCE............................................................................................................... 21

FOOD SAFETY & HACCP ........................................................................................................... 21LOGISTICS OF Mc DONALDS...................................................................................................... 22


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SOLE DISTRIBUTION PARTNER ............................................................................................... 22

SUPPLY CHAIN IT STRATEGY ...................................................................................................... 23

Qualitative Forecasting Methods ................................................................................................. 23

E-Mac Digital .................................................................................................................................. 23

The eFS Network's neutral web-based marketplace ................................................................. 23

SUPPLY CHAIN INTEGRATION ................................................................................................... 24

EVALUATION OF Mc DONALDS SUPPLY CHAIN................................................................. 25

CONCLUSION ................................................................................................................................... 26

LEARNINGS ....................................................................................................................................... 26

RECOMMENDATIONS .................................................................................................................... 26

REFERENCES ..................................................................................................................................... 27

LIST OF FIGURES

Figure 1: Phases of Mc Donald's in India........................................................................................ 10

Figure 2: Model of Supply Chain ..................................................................................................... 12

Figure 3: Critical components of supply chain .............................................................................. 14

Figure 4: Supply chain strategy in India ......................................................................................... 15

Figure 5: Supply Chain Services ...................................................................................................... 16

Figure 6: E-Procurement used in Mc Donald's .............................................................................. 23

Figure 7: Supply Chain Integration ................................................................................................. 24

Figure 8: Evaluation of supply chain of McDonald's .................................................................... 25


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EXECUTIVE SUMMARY

McDonalds is the world leader in QSR. Their presence in 119 countries with 35,000

restaurants glorifies its position as world leader and as fast food giant. Its committed to

provide quality products and fast friendly service at a real value. It supports other Indian

businesses through local sourcing and imparting new skills. It also generates local

employment by being a part of the local culture. 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 to get the highest quality food products, absolutely fresh and at great value.

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. This huge network is not easy to

manage where guest expectations are clean, hygienic, tasty and quick food every time. The

credit of this successful availability goes to the unique supply chain management and control

over this entire huge network. McDonalds is present in more than 40 cities of India with 250

eating outlets and adding more every now and then. This huge supply chain is entirely

outsourced without any legal contact with them. Some unique features of this supply chain

management are lean management, multi-layered supply-chain, cold chain, Hub and Spoke

system. The control on outsourced entities is commendable. With ever growing business of

fast food McDonaldshas laid down its systems efficiently and expanding at enormous speed.

The model can be replicated in other sectors as well.


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INTRODUCTION

The McDonald's Corporation is the world's largest chain ofhamburgerfast food restaurants,

serving around 68 million customers daily in 119 countries across 35,000 outlets.

Headquartered in the United States, the company began in 1940 as a barbecue restaurant

operated byRichard and Maurice McDonald; in 1948 they reorganized their business as a

hamburger stand using production line principles. BusinessmanRay Krocjoined the

company as a franchise agent in 1955. He subsequently purchased the chain from the

McDonald brothers and oversaw its worldwide growth.

In 2012, McDonald's Corporation had annual revenues of $27.5 billion, and profits of $5.5

billion. According to a 2012 report by the BBC, McDonald's is the world's second largest

private employer (behindWalmart)with 1.9 million employees, 1.5 million of whom work

for franchises.

McDonalds primarily sells hamburgers, cheeseburgers, chicken, french-fries, breakfast

items, soft drinks, milkshakes, and deserts. In response, to changing, consumer tastes, the

company has expanded its menu to include salad, fish, wraps, smoothies, and seasoned fries.

Focusing on its core brand, McDonald's begandivesting itself of other chains it had acquired

during the 1990s. The company owned a majority stake in Chipotle Mexican Grill until

October 2006, when McDonald's fully divested from Chipotle through a stock exchange.

Until December 2003, it also ownedDonatos Pizza. On August 27, 2007, McDonald's

soldBoston Market toSun Capital Partners.

Notably, McDonald's has increased shareholder dividends for 25 consecutive years, making it

one of theS&P 500 Dividend Aristocrats.In October 2012, its monthly sales fell for the first

time in nine years.
http://en.wikipedia.org/wiki/Hamburgerhttp://en.wikipedia.org/wiki/Fast_food_restauranthttp://en.wikipedia.org/wiki/Richard_and_Maurice_McDonaldhttp://en.wikipedia.org/wiki/Ray_Krochttp://en.wikipedia.org/wiki/Walmarthttp://en.wikipedia.org/wiki/Divestmenthttp://en.wikipedia.org/wiki/Chipotle_Mexican_Grillhttp://en.wikipedia.org/wiki/Donatos_Pizzahttp://en.wikipedia.org/wiki/Boston_Markethttp://en.wikipedia.org/wiki/Sun_Capital_Partnershttp://en.wikipedia.org/wiki/S%26P_500_Dividend_Aristocratshttp://en.wikipedia.org/wiki/S%26P_500_Dividend_Aristocratshttp://en.wikipedia.org/wiki/Sun_Capital_Partnershttp://en.wikipedia.org/wiki/Boston_Markethttp://en.wikipedia.org/wiki/Donatos_Pizzahttp://en.wikipedia.org/wiki/Chipotle_Mexican_Grillhttp://en.wikipedia.org/wiki/Divestmenthttp://en.wikipedia.org/wiki/Walmarthttp://en.wikipedia.org/wiki/Ray_Krochttp://en.wikipedia.org/wiki/Richard_and_Maurice_McDonaldhttp://en.wikipedia.org/wiki/Fast_food_restauranthttp://en.wikipedia.org/wiki/Hamburger


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CORPORATE VISION OF MC DONALDSS

Our number one priority continues to be satisfying our

customers needs by serving great-tasting, high-quality food in

contemporary restaurants We will continue to build customer

trust through our commitment to sustainabilityincluding

nutrition and well-being, a sustainable supply chain,

environmental responsibility, employee experience, and the

community.

MC DONALDS: PILLARS OF SUCCESS

The success of McDonalds is based on the four mantras that it follows:

Limited Menu:It offers limited products to its customers and so it is able to maintain

the quality and taste of the food.

Fresh Food:The effective supply chain and logistics of the company has helped it to

retain the freshness of its food.

Fast Service:The efficient and quick service of Mc Donalds has helped it to serve

650,000 customers each day. The staffs are well versed in their work and always meet

the expectations of their customers.

Affordable Price: Affordability has been the driving point behind the success of this

company. The range of prices that it offers for its products has been attracting to the

customers.

Donald Thompson, President and CEO


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MC DONALDS: GLOBAL SUPPLY CHAIN STRATEGY

The supply chain of the company is unique and world class. It is the second best supply chain

in the world. It has glorified its position as the giant food chain of the world.

Thousands of supply partners globally:The company has a wide range of suppliers who

compete to remain in the mainstream with their rigorous work. There is a big responsibility

that the suppliers carry right from the delivery of the products to the maintenance of its

quality. The job of the supplier extends from the point the products leaves till it is consumed

by the customer. Mc Donalds expects that its suppliers personally take care of the quality of

the product so as to minimize the risk. To cite one of the examples the beverage partner of

Mc Donalds Coca Cola provides the restaurant staff the knowledge of the quality of portable

drinking water.

Faith is the key:Mc Donalds also always focussed on building long term relationship with

the suppliers. It has never signed any legal agreement with its suppliers and entrusted faith

and belief on them. They follow a handshake relationship with its suppliers. They follow a

policy of one product one supplier relationship with its suppliers. This conviction and

credence has strengthened the relationship between the company and suppliers. There are

about 14 core suppliers who serve the entire supply chain and they fulfil 80% of the demand.

Strict guidelines ensure that stores get best products: The company follows strict standard

and guide lines to ensure the best quality and minimize the cost. They publish guidelines with

the product specifications to keep the quality of its products intact.

Outsourced Business: The success of the companys supply chain can be attributed to its

remarkable concept of outsourcing. The supply chain is 100% outsourced. It has efficiently

monitored the functioning of the supply chain based on certain Key Performance Indicators.

(KPIs).


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MC DONALDS IN INDIA

In 1996 the company laid its first pillar in India and since then it has been expanding at a

greater pace. In India, two business entities are responsible for managing the brand

Connaught Plaza Restaurants Private Limited, led by Mr. Vikram Bakshi, JV Partner

and Managing Director, North & East India

Hardcastle Restaurants Private Limited, led by Ms. Smita Jatia, Managing Director,

South & West India

McDonald's has followed the philosophy of QSCV (Quality, Service, Cleanliness and Value)

and this has served as the guiding force behind its service to the customers in India. Keeping

this philosophy and respecting the religious sentiments of Indian people Mc Donalds for the

first time introduced a menu without beef. In India the segregation of vegetarian and non-

vegetarian products is made right from the food processing plants to the point of serving the

customers.

McDonald's commitment to the Indian customers is evident from the fact that they have

always tried to serve the products in accordance with the cultural beliefs and food habit of

Indian origin.

PHASES OF Mc DONALDSIN INDIA

Figure 1: Phases of Mc Donald's in India


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Phase 1 1990-96 Setting up the Foundation

Supplier identification (food, packaging and service)

Training and technology transfer

No short cuts while keeping cost structures low

Phase 2 1997-03: Meeting McDonalds expectations

Food Safety and Quality

Cost and service Innovation

Cold, clean and on-time deliveries

Meeting service standards

Phase 3 2004-10: Growth

Capacity fulfilment (35% CAGR)

New product introduction

Corrections in supply / service models

Further localization

Phase 4 2011-17: Building for future

Backward Integration for key products

Capacity additions/expansion

Network optimization


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SUPPLY CHAIN NETWORK

The supply-chain network of Mc Donalds can be classified as follows:

100 percent outsourced

Lean with no back-up staff and no frills.

The company is experiencing a continuous growth of 30-40% every year because of its strong

supply chain network. The company was able to get a firm position in India because of the

background study and research done with the perspective of Indian origin and food habits.

The research team of the company has been working day and night to ensure the proper

functioning of the supply chain network and logistics. The company designed special menus

keeping in view the Indian religious and cultural sentiments. Mc Donalds which is famous

elsewhere for its beef burgers has kept a beef free menu for India.

MULTI-LAYERED SUPPLY-CHAIN

Figure 2: Model of Supply Chain


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The McDonaldssupply chain is both critical and multi-layered. There are two categories in

food ingredients supply:

Tier-I and Tier-2 suppliersIn Tier-I the number of suppliers are 14 and they provide processed products like Vegetables

and chicken patties from Vista Processed foods Pvt Ltd., French fries, potato wedges and

hash browns by McCain Foods India Pvt. Ltd.

In case of Tier-2 the suppliers includes the growers and processors who provide lettuce and

potato, poultry items and coating systems that are used for coating the chicken and vegetable

patties. The ingredients flow is from Tier 2 to Tier 1 suppliers. The processed food is being

transported to the Distribution Centres of the company with the help of refrigerated trucks.

These trucks have been used to transfer a variety of products. The trucks are of Multi

temperature and single temperature type and they help in quick and fast delivery of products.

OTHER COMPONENTS OF SUPPLY CHAIN

Apart from Tier 1 and Tier 2 suppliers the other critical components includes:

Inbound Transportation: This includes the fleet of trucks which are special refrigerated

trucks.

Distribution Centres: There are about four DCs which serves about 250 restaurants

effectively. Among the 4 distribution centres the primary ones are from Noida and Mumbai

while the other two are located in Kolkata and Bengaluru. The distribution centres of Mc

Donalds follow a hub and spoke model.

Outbound Transportation: This includes fleet of single temperature and multi temperature

trucks.


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Figure 3: Critical components of supply chain

Table 1: List of Tier 1 suppliers

Product Supplier

Cheese Dynamix Dairy Industries Ltd., Pune

Dehydrated onions Jain Foods, Jalgaon

Iceberg lettuce Trikaya Agriculture, Pune

Chicken patty Vista Foods, Taloja

Chicken (dressed) Riverdale, Talegaon

Buns Cremica Industries, Phillaur

Eggless mayonnaise Quaker Cremica Pvt Ltd, Phillaur

Sesame Seeds Ghaziabad

Iceberg Lettuce Meena Agritech, Delhi

Fish fillet patties Amalgam Food limited, Kochi

Iceberg Lettuce Ooty Farms and Orchards, Ooty

Vegetable for patties Finn Frozen Foods & Jain Foods, Nasik

Mutton and Mutton patties Al Kabeer, Hyderabad

Veg patty , veg nuggets Kitran Foods, Taloja

Source: Business India, October 4, 1999


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Figure 4: Supply chain strategy in India

SERVICES OF SUPPLY CHAIN FOR MC DONALDS

RESTAURANTS

Supply chain integration and network optimization: The restaurant provides a

strict 30 minutes window in which the delivery has to be made. The chances of failure

as per the data till date are negligible.

Automatic ordering: They follow a system of automatic ordering depending upon

the demand. This is further aided by Electronic Data Interchange (EDI).

Demand and supply planning:The proper forecasting of demand and supply is done

by the restaurants and then the order is placed accordingly to the suppliers which are

provided within time by them.

Central file maintenance: A data log file is there to keep track of all the products

delivery and sale on a day to day basis.


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Figure 5: Supply Chain Services

THE COLD CHAIN

A remarkable feature of Mc Donalds supply chain is that the entire network consists of

movement of goods through a cold chain. The fleets of truck transport all the edible goods

through a system of cold chain. These are capable to carry different items all together as

there are compartments created to store frozen products at -180C to -250C, chilled

products from 10C-40C and dry products at ambient temperatures. Another interesting

feature of these trucks is that they have containers 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. The concept of pull supply chain leads to the

effectiveness of supply-chain. The restaurant issues orders to the Distribution Center

which, in turn, routes the order to the supplier and only then does the supplier produce it.

The concept is also known as made to order. The supplier thus maintains barely any

extra stocks; only if there is a contingency, like the overhaul or servicing of machinery,

will the supplier produce surplus stocks. The fill rate to store is reported to be 99.8

percent.


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It is ensured that no disturbance occurs in the cold chain. The company always maintains

a contingency plan and a backup plan in the event of any failure. In case there is a power

breakdown in the Mc Donalds restaurants the reefer trucks are arranged to restore the

required temperature. AFL Logistics which is a joint venture between Coughlin of U.S.A

and RFPL has been actively engaged in ensuring and attaining the cold, clean and on-time

delivery standards of the company. Thus the cold chain helps to achieve freshness and

adequate moisture content of the food.

THE COLD CHAIN PARTNERS

1. Dynamic Dairy Industries - Supplier of Cheese

Located at Baramati, Maharashtra

Immense benefit to farmers by setting up a network of milk collection centres

equipped with bulk coolers

Transport from farm two degrees Celsius in 90 minutes

Fully automatic international standard processing facility

Capability to convert milk into cheese, butter/ghee, skimmed milk powder,

lactose, casein & whey protein and humanized baby food

Engaged in stringent quality control measures and continuous Research

& Development

2. Trikaya Agriculture-Supplier of Iceberg Lettuce

It is located in Talegaon, Maharashtra

They grow lettuce all year round with the help of experts from Mc Donalds

They own a specialized nursery with a team of agricultural experts


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Vegetables are moved into the pre-cooling room within half an hour of

harvesting.

The pre-cooling room ensures rapid vacuum cooling to 2 C within 90

minutes.

The pack house, post-cooling and cold room are located at the farms itself,

ensuring no delay between harvesting, pre-cooling, packaging and cold

storage

They use refrigerated truck for transportation.

3. Vista Processed Foods Pvt. Ltd.

Supplier of Chicken and Vegetable range of products including Fruit Pies

Located in Taloja, Maharashtra.

Produces a range of frozen chicken and vegetable foods

The technology includes hi-tech refrigeration plants for manufacture of frozen

food at temperatures as low as - 35 c.

Cultural sensitivity: Vegetable & chicken manufactured at different processing

lines separated by a shower (washing) area. Utmost care to ensure no mixing

up.

R&D facility for innovation in taste, nutritional value and convenience

4.

Radhakrishna Foodland -Distribution centers for Delhi and Mumbai

RFLP is located in Thane, Maharashtra

Services include procurement, quality inspection, storage, inventory

management, deliveries, data collection, recording and reporting


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Dry and cold storage facility to store and transport perishable products at

temperatures upto -22 Degree Celsius.

Effective process control for minimum distribution cost

Variety of items coming from across India, stored in rooms with different

temperature zones and are finally dispatched to the McDonald's restaurants on

the basis of their requirements

They play a very vital role in maintaining the integrity of the products

5. Amrit Food- Supplier of long life UHT Milk

Located in Ghaziabad, Uttar Pradesh

ISO 9000 certified company

Manufacture widely popular brandsGagan Milk and Nandan Ghee

State-of-the-art fully automatic machinery requiring no human contact with

product, for total hygiene.

Installed capacity of 6000 ltrs/hr for producing homogenized UHT (Ultra High

Temperature) processed milk and milk products.

It follows a strict quality control supported by a fully equipped quality control

laboratory.


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DEMAND FORESCASTING: 31Q SYSTEM

Mc Donalds follows a very unique and effective forecasting system called 31Q. Under this

system 3 indicates the three years in which the food chain would be checking and reviewing

its plans, 1 represents the detailed forecast of the next one year and the Q symbolizes the

quarterly monitoring of these forecasts. The fast food chain also tries to include the suppliers

while preparing their budgets so that the suppliers are closely knitted with the system. The

restaurants usually give a forecast of three days to one week to the distribution centres. The

distribution centres maintains a rolling forecast of three months with the suppliers which

helps to plan their production schedule well in time.

As they have nearly 250 restaurants spread all over the country so the lead

time has a vital role to play. The restaurants managers are aware of the exact time of the

arrival of the products which helps the supply chain to work backwards to ensure timely

distribution. The inventory turnover of the food chain is 36.

PERFORMANCE MODELLING

Mc Donalds has set certain KPIs (Key Performance Indicators) for the distribution centres.

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,

trucks utilization, etc.


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Backup plan: It has a contingency and backup plan to meet any unexpected situation

or sudden fluctuation of demand if any.

Data logs: This helps to track the movement of each and every batch. In case of any

complain reported from the restaurant the batch is isolated, identified and dumped.

Ensuring hygienic conditions: The cleanliness and hygiene is looked after by RPFL.

They ensure the hygiene of both the food as well as personal cleanliness and hygiene

of the truck drivers.

QUALITY ASSURANCE: Taste of the food is affected by its quality and so it

needs to be maintained. Mc Donalds has a Sensory Program for ensuring the quality

of food. There is a centralized laboratory under this program that is located in Hong

Kong. This prepares the sensory experts that approve every batch of food that is

manufactured at the suppliers plant. The products are given score and the product

with the best score is allowed to be distributed. Apart from this the fast food chain

also has random checks and inspection. Also, every quarter or half year, members of

the management do a product cutting with key suppliersfry a product, check its

taste and allot scoresto check if the product scores are moving in the right direction.

The samples of the products that are manufactured in the country are shipped to the

central laboratory at Hong Kong which evaluates the products.

FOOD SAFETY & HACCPFood safety is another critical area for quality standard. The company has a Hazard

Analysis Critical Control Point (HACCP) certification which ensures food quality is

applicable. This is an industry level certification and is applicable on all the suppliers

of the fast food chain. There are also other food safety systems like the Supplier

Quality Management Systems (SQMS) and the Distributor Quality Maintenance

Program (DQMP). SQMS is applicable for processing and manufacturing plants .The


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SQMS is a worldwide mandate for all McDonalds suppliers and includes essentials

of the HACCP control system. The DQMS audits and checks the warehouses of the

chain. Auditors worldwide are also trained on its SQMS and DQMP programs.

Independent auditors then audit plants and warehouses and allot scores to

McDonalds facilities globally to ensurehighest standards.

LOGISTICS OF MC DONALDS

It has a centralized distribution system which is very unique.

The entire logistics is handled by AFL Logistics.

~100 sales items in the restaurant

Has 400 SKUs in the warehouse (Hubs: up to 1,500)

200 restaurants per DC (~180 DCs globally)

Delivery frequency is ~3/wk, higher in urban areas

2-3 stops per route

Exclusive distributors (3PL)

Freight consolidation (via freight forwarders)

Long term partnerships with service providers, risk sharing

Strong quality focus (Cold Chain, HACCP, QIP)

SOLE DISTRIBUTION PARTNER

The entire distribution of McDonalds products in India is solely handled by Radhakrishna

Foodland Pvt. Ltd. RKFL manages the four DCs and also handles the truck movement in the

supply-chain right through the country since it has a transport division. RKLP has experts to

manage the day to day activities of raising purchase orders to suppliers, invoicing, keeping

track on working capital management, timely delivery, payments, etc. RK directly sources


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any item that is needed at any point of time. It is only the two products buns and cokes that

are sent directly to the restaurants.

SUPPLY CHAIN IT STRATEGY

Qualitative Forecasting Methods: Mc Donalds uses qualitative forecasting methods

to gather information from employees, customers and experts with the help of surveys. It uses

e- Food service network and proprietary ERP for information gathering and following them.

The suppliers uses SAP while the distribution centres uses RAMCO Marshall ERP with

Cobra software.

E-Mac Digital: It is a company jointly owned by Mc Donalds and Accel KKR Internet

Co. It is an E-Procurement website.

The eFS Network's neutral web-based marketplace: It has helped to streamline

information flow between participants as well as promote industry-wide technology

standards.

Figure 6: E-Procurement used in Mc Donald's


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SUPPLY CHAIN INTEGRATION

The result of the supply chain has been significant business benefits to both the customers

and the supply chain partners. This has led to one stop shopping concept and in proper

inventory management. It has synchronized the entire process of demand forecasting at the

level of suppliers as well as the DCs and restaurants. It is the result of this integration that

the visibility of Mc Donalds across the country has increased.

Figure 7: Supply Chain Integration


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EVALUATION OF MC DONALDS SUPPLY CHAIN

Figure 8: Evaluation of supply chain of McDonald's


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REFERENCES

1. Mc Donalds Food Chain. Retrieved December 1, 2014 from

http://www.icmrindia.org/free%20resources/casestudies/McDonald%20food%20chai

n.htm

2. A case study on Mc Donalds Supply Chain In India. (2013). Retrieved December 1,

2014 from www. indianjournals.com. Asia Pacific Journal of Marketing and

Management Review.

3.History of Mc Donalds. Retrieved December 3, 2014, from

www.mcdonaldsindia.com

4.Mc Donalds India Profile. Retrieved December 3, 2014, from

www.mcdonaldsindia.com

5. How does Mc Donalds manage its supply chain in India. (2013). Retrieved

December 4, 2014 , from http://www.retailmantra.com/how-does-mcdonalds-manage-

its-supply-chain-in-india/

Documents

Group 2 SCM McDonald's