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Published by: Ankit Singh on Sep 02, 2010
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Between 1992 and 1996,opened its first outlet in india USUS-based fast food giant, McDonald's success in India had been built on four pillars: limited menu, fresh food, fast service and affordable price. Training to the local farmers to produce lettuces or potatoes to specifications . These efforts paid off in the form of joint ventures between McDonald's India (a 100% wholly-owned whollysubsidiary of McDonald's USA)

US in the year 1937. ‡ By mid-1950s. Speed. The business.000. got a further boost with the emergence of a revolutionary concept called 'self-service. Richard and Maurice McDonald in California. service and cleanliness became the critical success factors of the business.McHistory McDonald's was started as a drive-in restaurant by drivetwo brothers.000 per annum in the 1940s.¶ 'self‡ The brothers used assembly line procedures in their kitchen for mass production. which was generating $200. the restaurant's revenues had reached mid$350. . ‡ Prices were kept low.

By end of 1960·s kroc established over 400 outlets. By end of 1970·s Mcdonald established over 7000 outl. customer service and product uniformity. McDonald's went public. In late 1990· it faced huge drop in sales. . In 1965. Ray Kroc finalized a deal with McBrothers for franchisee and established McDonald system Inc. outl.McHistory The franchisees failed as it did not maintain the same standards of cleanliness. to appoint franchisees in 1955.

They also preferred to eat at other fast food joints that offered discounts. . McDonald's entered into a $1 billion 10-year 10agreement with Disney. In 1996.McHistory Due to changing customer preferences and increasing competition. Customers were becoming increasingly healthhealth-conscious and wanted to avoid red meat and fried food.

it had 30. ‡ And by 2001.093 restaurants all over the world with sales of $ 24 billion .McHistory ‡ McDonald's agreed to promote Disney through its restaurants and opened restaurants in Disney's theme parks.

Effective and efficient supply chain management system.Key points of the case How did McDonald's set up its roots in the market? market? Cold chain the unique concept. McDonald's IN MOSCOW AND McDonald's IN MEXICO .

What is cold chain? Explain how Mcdonalds managed the components of the cold chain ?? .

This has involved procurement. warehousing. It ensure McDonald's. that the integrity of the product is maintained throughout the cold chain. all under controlled temperatures . chain.Cold Chain was one of the unique concepts of McDonalds supply chain in India. this centralized distribution system is unique to McDonald's. transportation and retailing of perishable food products.

Vista Processed Foods Pvt. Dynamix Dairy Industries (Supplier of Cheese) 2. Vegetable range of products including Fruit Pies) 4. Trikaya Agriculture (Supplier of Iceberg Lettuce) 3. Ltd. (Supplier of Chicken and Pvt.COLD CHAIN Partners 1. Radhakrishna Foodland (Distribution Centres for Delhi and Mumbai) 5. Ltd. Amrit Food (Supplier of long life UHT Milk and Milk Products for Frozen Desserts) .

restaurant. and RFPL was responsible for ensuring these standards. The challenge was the physical movement of material and inventory control in a country with bad roads and basic infrastructure bottlenecks. country.McDONALDS SUPPLY CHAIN Meeting McDonald's "cold. . clean. Coughlin's task was to make sure that McDonald's had the proper amount of supplies and materials at each restaurant. a joint venture between and Coughlin of the US. onfor that there were 30 suppliers situated all over the country. on-time" delivery standards . AFL Logistics Ltd (ALL). standards.

. This helped Coughlin vendors. inrestaurants. deliver the lowest cost with the highest quality. RFPL also handled in-city distribution to restaurants. unused capacity in the vehicles was used to transport goods from other vendors. temperature and packaging requirements were met. quality. Coughlin ensured that quality. At the same time. met.To meet McDonald's high standards.

Not just that. too. the time taken restaurant. the truck was monitored from the intime it left the distribution centre till the time it reached the restaurant. For in-city delivery. perishable. the time limit for distribution centres or warehouses was a stringent 14 days to minimize costs and optimize quality control. since most of the items were perishable. . in offloading was noted too.The restaurants were not supposed to stock more than 3 days of inventory. control. This required round-the-clock monitoring of pick-ups round-thepickand truck movements .

US. McDonald's had also applied supply chain technology when setting up Dynamix Dairy Industries Limited. Range Foods. Limited.' In the light of this statement. for vegetable patties. analyze the steps taken by McDonalds to standardize its supply chain in India. firms. India. India. Kitran's Taloja plant was commissioned in December 1996. Vista and Kitran Foods was formed through a joint venture between Vista and OSI Industries. for chicken products. Vista and patties. The Dynamix Dairy plant. UK. McDonald's sourced ingredients from all parts of India. advantage. 'McDonald's is one of the few companies that has placed substantial emphasis on effective and efficient supply chain management system as a means to leverage for competitive advantage. with technological collaboration from various international firms. . 1996. and between Kitran and Kitchen products.Q2.

specifications. milk.McD & Baramati did a survey and set up 35 bulk cooling stations with 50 tanks where milk can be collected. which was used to make processed cheese exclusively for McDonald s & according to the multinational's specifications. Dynamix procured 3.5 lakh litres of milk every day.5 km to deliver his product. longer life for milk. That ensures product. . checked and stored at 3º Their aim was to ensure that the milk producer does not travel more than 2.

This room.which was done by hand. hand. These two production lines were housed in two different rooms and the only way a worker could cross over from one line to the other was by passing through the shower room. barring only the final compilation of the bun. the entire production line was automated using sophisticated technology. cheese and patty . . India. This kept food fresh and free from contamination. contamination. eliminated all chances of contamination. keeping in the mind the link between food and religion in India. this. Apart from contamination.McDonald's convinced its suppliers to set up two separate production lines for chicken and vegetable patties.

located at different parts . Haulage from the distribution center to the restaurant exceeded 1000 miles. Contract carriers (transporters) did not have standard size vehicles and were unreliable .EXHIBIT II McDonald's IN MEXICO Mexico could not grow potatoes that met McDonald's high standards. which were centers. The country had few distribution centers. There were uncontrolled highway robberies.

or Sydney.EXHIBIT III McDonald's IN MOSCOW Taste must be the same in all the outlets. One of the most unique McDonald's outlets was the 700700seat McDonald's in Moscow. McDonald's wanted the Big Mac to taste the same in Moscow as it did in New York. . yet it wanted all food products to be secured locally . . yet all the products used must be secured locally. McDonald's prepared for this challenge by planning the supply chain for the Moscow restaurant six years in advance . Paris..

This type of centralized system. lettuce plant.Supplier location was an important part of the supply chain at McDonald's. . fish plant. and past experience had shown that what worked best was a combination of a number of independently owned-food-processing owned-foodplants dedicated solely to supplying McDonald's restaurants. reduced both transportation and material handling costs. meat plant. and distribution center. chicken plant. A $60 million food town was established in Russia that combined a bakery. called a food town. center.


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