Supply Chain Management

On

Submitted By:-Mr. Mahadev YadavMr. Yogesh Marathe Mr. Satish ArgiaMr. Sudhir PawarMis. Nikita Kadam

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INTRODUCTION TO McDonald's

• Leading global food service retailer• 32, 000 local restaurants, 60 million people,

more than 100 countries• Hamburgers, Chicken sandwich, French

fries, soft drinks, breakfast items and desserts

• Local deviation from the standard menu• Abide by regional taboos

McDonald’s History• McDonald's originally started as a small hamburger stand in

Bernardino, California, owned by Richard and Maurice McDonald in 1945.

• Re-opened in December 1948 as a self-service drive-in restaurant.

• In 1950s Ray Kroc, a Multimixer Salesman, signs a franchise agreement with Richard and Maurice McDonald in the name of McDonald Corporation at Illinois in 1955.

After few years in 1961, Ray purchased the ownership from McDonald brothers.

Today 34,000 McDonald's restaurants serving 69 million customers each day in over 119 countries.

McDonald’s StatementVision Statement

• To be the best and leading fast food provider around the globe.

Mission StatementMcDonald's mission is to be our customers' favorite place and way to eat with inspired people who delight each customer with unmatched

• Quality• Service• Cleanliness • Value

McDonald’s In India The 1st McDonald's restaurant in

India opened on 13th October 1996 at Basant Lok in New Delhi.

It was the first McDonald's restaurant in the world to not serve beef and pork based products. Its authority on non-beef and non-pork products still remains unchallenged.

McDonald's in India is a joint-venture partnership run by two Indians,Amit Jatia’s company, Hardcastle Restaurants Private Limited owns and manages McDonald's restaurants in the west. While in the north, McDonald's Restaurants are owned and managed by Vikram Bakshi’s Connaught Plaza Restaurants Private Limited"

McDonald’s Products

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McDonald’s– FOUR PILLARS OF SUCCESS

Limited Menu

Fresh Food

Fast Service

Affordable Price

McDonald’s E-Procurement• McDonalds E-Procurement System is basically a main reason for their

successful supply chain management.

• It is so efficient that it provides the backbone not only to all the logistics but the whole McDonalds supply chain management.

• E-MAC Digital: (Internet procurement site designed for McDonald's Corporation's 34,000

franchises)

• E-MAC Digital Company is E-Procurement website which is jointly owned by McDonalds and Accel-KKR Internet Co.

• It is a procurement hub launched in 2001 allow all of McDonald's franchises across the globe to buy everything needed to run their restaurants.

McDonald’s E-Procurement• In the process of procuring a product, a

typical McDonald’s franchise restaurant places an order through E-MAC digital website.

• The order is sent to the suppliers. Suppliers order is processed and managed by the logistics.

• The logistics sends the order of the products to the franchise restaurants. It is the responsibility of the E-MAC and logistics that the products are sent to the restaurant.

• All the above, steps are handled and executed by the E-MAC digital.

McDonald’s E-Procurement

Place Orders Supply Received

E-MAC Digital

Franchises

Suppliers Logistics

Coca Cola is McDonald’s beverage partner.

Suppliers of McDonalds in India

3 Logistical Drivers

• 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.

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

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

McDonald’s Logistics

Inbound logistics Operations Outbound

logistics

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Logistics of McDonalds• Handled by AFL Logistics Ltd.•~100 sales items in the restaurant•~400 SKUs in the warehouse (Hubs: up to 1,500)•~200 restaurants per DC (~180 DCs globally)•Delivery frequency: ~3/wk, higher in urban areas•Exclusive distributors• Long term partnerships with service providers,

risk sharing•Strong quality focus (Cold Chain, HACCP)

Logistics & Supply chain management

4 Distribution Centers (DC) owned by the company :- Delhi Mumbai Bengaluru & Kolkata

Employees strength of McDonalds India is 9,000 people in total across the country.

McDonald’s Logistics• The transportation of McDonald’s has been

completely outsourced and since 80% is in refrigerated truck movement.

• Multi-temperature and single temperature trucks transport the fast food swiftly to the McDonald’s restaurants across the country.

• The company has both cold and dry storage facilities with capability to store products up to -22º C as well as delivery trucks to transport products at temperatures ranging from room temperature to frozen state.

• The specially designed trucks maintained the temperature in the storage chamber throughout the journey.

McDonald’s Logistics INBOUND LOGISTICS

• It is the movement of materials from suppliers and vendors into production processes and storage facilities.

• Based on the demand forecast, Manager orders the Venus Distributors on daily basis.

• Venus Distributors stores all the raw materials, in its own cold stores and delivers only one-day material to the restaurant.

• It also received the DQMP (Distribution, Quality, and Management Process) Certification from McDonalds USA Audit Team.

• Some branch has its own cold storage facility, which is used to store the daily-procured raw material.

McDonald’s Logistics COLD CHAIN LOGISTICS• A cold chain is a temperature-controlled supply chain.

• It is used help extend and ensure the shelf life of products such as fresh agricultural produce, processed food.

McDonalds’ entire network supply-chain consists of movement of goods through a cold chain

An interesting and innovative feature of this cold chain is that the same truck can carry products at different temperatures

ranging from:

• Frozen products at -18C to -25C• Chilled products from 1C-4C • Dry products at ambient temperatures

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COLD CHAIN PARTNERS1. Dynamic Dairy Industries - Supplier of Cheese

– Baramati, Maharashtra– Immense benefit to farmers by setting up a network of milk

collection centres equipped with bulk coolers– 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

– Stringent quality control measures and continuous Research & Development

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COLD CHAIN PARTNERS (Cont.)2. Trikaya Agriculture-Supplier of Iceberg Lettuce

– Talegaon, Maharashtra– Grow lettuce all year round with the help of experts from Mc Donalds– A specialized nursery with a team of agricultural experts– Vegetables are moved into the pre-cooling room within half an hour of

harvesting. – The pre-cooling room ensures rapid vacuum cooling to 2º 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

– Refrigerated truck for transportation.

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COLD CHAIN PARTNERS (Cont.)3. Vista Processed Foods Pvt. Ltd. -Supplier of Chicken and

Vegetable range of products including Fruit Pies

– 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

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COLD CHAIN PARTNERS (Cont.)

4. Radhakrishna Foodland -Distribution centers for Delhi and Mumbai

– Thane, Maharashtra– Handles large volumes– Services include procurement, quality inspection, storage, inventory

management, deliveries, data collection, recording and reporting– Dry and cold storage facility to store and transport perishable products

at temperatures upto -22 Degree Cel.– 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

– Very vital role in maintaining the integrity of the products

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COLD CHAIN PARTNERS (Cont.)5. Amrit Food - Supplier of long life UHT Milk and Milk Products for

Frozen Desserts

– Ghaziabad, Uttar Pradesh– ISO 9000 company– Manufacture widely popular brands – Gagan 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.– Strict quality control supported by a fully equipped quality control

laboratory.

Reverse logistics• The buns are packed in

plastic crates to ensure their quality.

• These crates have to go back to the bakeries, that’s when return logistics takes place.

McDonald’s Operation• Cooking procedure and recipe is documented so that the products

become standardized and customers get the similar taste, quantity and quality to whichever restaurant they go.

• It is the policy of McDonald's to throw away any burger if they remain on heated grill for 15 minutes.

• All the utensils and equipment used in cooking are washed at the closing of restaurant every night, with anti-microbial fluid. Kitchen, floor, washrooms and all other restaurant areas are cleaned after every half an hour.

Process Optimization

ORDER PROCESSING system

Cash & cashless payments Online Orders :-

Online menu Delivery fees Redeeming discounts Cancellations

McDonald’s Delivery

ORDER PROCESSING SYSTEM

TRANSACTION PROCESSING SYSTEM (TPS)

“POINT OF SALE” SYSTEM

DECISION SUPPORT SYSTEM (DSS)

“MADE FOR YOU” SYSTEM

McDonald’s Logistics OUTBOUND LOGISTICS• Outbound logistics is the process related to the storage and

movement of products from the end of the production line to the users end.

• When customers enter the restaurant, they go to the counter, give their order, which they are served within a single minute.

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SUPPLY CHAIN INTEGRATION

Significant business benefits to both the customer and the supply chain

Enablers One stop shopping concept - Central file management Inventory management - Restaurant simplification

Synchronizing the perishable Supply Chain Demand forecasting

Promotional + Continuous Supply Supplier and DC level

Supply Planning Restaurant and DC level

Visibility and Collaboration across the chain

RESULT OF SUPPLY CHAIN INTEGRATION

McDonald’s Market Share

30%

25%15%

10%

5%

15%Market Share

McDonalds KFC

McDonalds has surpassed its competitors by Indianinzing more than 85% of its menu.

Thinks Global, Acts Regional

CONCLUSION

•McDonald‟s Supply Chain is quite uniquely handled with least number of employees on McDonald‟s payroll. The control on outsourced entities is commendable. With ever growing business of fast food McDonald‟s has laid down its systems efficiently and expanding at enormous speed. The model can be replicated in other sectors as well.

THANK YOU