A study on Supply Chain Management System Of

McDonalds India


McDonald's India . Their introduction of the "Speedee Service System" in 1948 furthered the principles of the modern fast-food restaurant that the White Castle hamburger chain had already put into practice more than two decades earlier.000 locations serving approximately 64 million customers in 118 countries each day. corporate ethics and consumer responsibility. Vice Chairman. Celebrating over 15 years of leadership in food service retailing in India. The present corporation dates its founding to the opening of a franchised restaurant by Ray Kroc. immensely benefiting the farmers at one end and enabling customers to get the highest quality food products. In line with this respect for local culture. With the expansion of McDonald's into many international markets. the company has become a symbol of globalization and the spread of the American way of life. which can supply the highest quality products required for its Indian operations. absolutely fresh and at a great value. owns and operates McDonald's in North and East India. Ltd. Richard and Maurice McDonald came to make a career in Hollywood and sadly ended up as owners of a drive-in restaurant in San Bernardino of Los Angeles. Kroc later purchased the McDonald brothers' equity in the company and led its worldwide expansion. Group 6 McDonalds. Hardcastle Restaurants Pvt. Illinois. In the year 1940 the brothers began with a restaurant which today is among one of the largest retail food chain. Connaught Plaza Restaurants Private Limited. the company invested six years to develop its unique cold chain. owns and spearheads McDonald's operations in West & South India. the ninth McDonald's restaurant overall. McDonald's has developed a menu especially for India with vegetarian selections to suit the Indian palate and has also re-engineered its operations to address the special requirements of IMT Ghaziabad Page 2 .I Section F. McDonald's now has a network of over 235 restaurants across the country. Vikram Bakshi.i’m Lovin’ it! McDonald's Corporation History: Two brothers. India is the first country in the world where McDonald's does not offer any beef or pork items. in Des Plaines. which has brought about a veritable revolution in food handling. Respect for Indian Customs and Culture: McDonald's worldwide is well known for the high degree of respect to the local culture of each market it operates in.A Profile McDonald's is the world's leading global foodservice retailer with more than 33. McDonald's India today has developed local Indian businesses. Its prominence has also made it a frequent topic of public debates about obesity. In India. and the company became listed on the public stock markets in 1965. Prior to its launch. McDonald's is managed by two Indian entrepreneurs:   Amit Jatia.Operations Management. MD and Joint Venture Partner. 1955. Local Sourcing Is Key for Truly Indian Products: McDonald's India is committed to sourcing almost all of its products from within the country. on April 15.

Service.  We operate our business ethically Sound ethics is good business. This effectively means that the McDonald's menu is priced at a value that the largest segment of the Indian consumers can afford while at the same time ensuring that quality is not sacrificed for value . in a clean and pleasant environment at an affordable price. using dedicated equipment and utensils. Special care is taken to ensure that all vegetable products are prepared separately. and leverage our size. welcoming environment. cooking and serving. develop leaders and reward achievement. An Employer of Opportunity: McDonald's India is an employer of opportunity. We are individually accountable and collectively responsible. This separation of vegetarian and nonvegetarian food products is maintained throughout the various stages of procurement. The average McDonald's restaurant employs 60-80 people from crew to restaurant manager. Cleanliness & Value McDonald's is driven by the philosophy of Quality. So much so that the mayonnaise and soft serves are also 100% vegetarian and McDonald's uses only vegetable oil as a cooking medium in India. IMT Ghaziabad Page 3 . work is essential to our continued success. served quickly with a smile. We believe that a team of well-trained individuals with diverse backgrounds and experience.I Section F. honesty. at a great value.  We believe in the McDonald's System McDonald's business model. At McDonald's. and company employees. suppliers. scope and resources to help make the world a better place. McDonald's invests in its employees.Operations Management.  We give back to our communities We take seriously the responsibilities thet come with being a leader.rather McDonald's leverages economies to minimise costs while maximizing value to customers. This translates into a commitment to provide customers high quality products. The brand currently has over 8000 employees in India. depicted by the "three-legged stool" of owner/operators. Our Values  We place the customer experience at the core of all we do Our customers are the reason for our existence. We help our customer build better communities. and Cleanliness & Value for Money. is our foundation. We demonstrate our appreciation by providing them with high quality food and superior service. leveraging world class-training inputs to create ambassadors of the brand and creating food service professionals with global attitudes.  We are committed to our people We provide opportunity. support Ronald McDonald's House Charities. we hold ourselves and conduct our business to high standards of fairness. Quality. nurture talent. and integrity. in a clean. providing quality employment and longterm careers to professionals across the country. Service. Group 6 vegetarians.

and An operator of restaurants Approximately 15% of McDonald's restaurants are owned and operated by McDonald's Corporation directly.I  We grow our business profitably Section F. In most. In addition to ordinary franchise fees and marketing fees. age. and finished goods from point of origin to point of consumption (supply chain).  We strive continually to improve We are learning organisation that aims to anticipate and respond to changing customer. building a competitive infrastructure. 1996). control. Group 6 McDonald's is a publicly traded company. the franchisee does not own the location of its restaurants. The remainder are operated by others through a variety of franchise agreements and joint ventures. Supply Chain Management Supply chain management (SCM) is the management of a network of interconnected businesses involved in the ultimate provision of product and service packages required by end customers (Harland. McDonald's does not make direct sales of food or materials to franchisees. and location. country. instead organizing the supply of food and materials to restaurants through approved third party logistics operators. and monitoring of supply chain activities with the objective of creating net value. As a condition of many franchise agreements. As a matter of policy. we work to provide sustained profitable growth for our shareholders.000 franchises) IMT Ghaziabad Page 4 ." How McDonald’s Uses E-procurement Systems Emac Digital: (Internet procurement site designed for McDonald's Corporation's 27. leveraging worldwide logistics. In countries other than US and UK. which may also be calculated on the basis of sales.Operations Management. McDonald's restaurants are operated by joint ventures of McDonald's Corporation and other. As such. the Corporation may own or lease the properties on which McDonald's franchises are located. The McDonald's Corporation's business model is slightly different from that of most other fast-food chains. employee and system needs through constant evolution and innovation. synchronizing supply with demand and measuring performance globally. McDonald's may also collect rent. work-in-process inventory. Business model McDonald's Corporation earns revenue as    An investor in properties. local entities or governments. This requires a continuing focus on our customer and the health of our system. which vary by contract. A franchiser of restaurants. which are calculated as a percentage of sales. planning. execution. if not all cases. Supply chain management spans all movement and storage of raw materials. Another definition is provided by the APICS Dictionary when it defines SCM as the "design.

and it allows all of McDonald's franchises across the globe to buy everything needed to run their restaurants from uniform to HamBurger. Cold Chain. when it studied the nuances of McDonald's operations and requirements for the Indian market. a part of the Radha Krishna Group engaged in food-related service businesses. McDonalds developed local businesses. This unmatched Supply Chain Structure of McDonalds not just ensures on time delivery of raw materials and supplies to McDonalds but also enables it to cut down on its cost and maximize profitability along with maintaining highest quality standards of its products. It is a procurement hub launched in 2001. Value-added services like shredding of lettuce. the procurement site also allows business owners to buy supplies and materials at a discounted price. developed its Indian partners in such a manner that they stayed with the company from the beginning. McDonalds. an international brand which was trying to make inroads into the country. ultimately reducing costs for McDonald's. and The latest one in Kolkata (2007) McDonald's entered its first distribution partnership agreement with Radha Krishna Foodland. inventory management. McDonalds Supply Chain Management Supply Chain is one of the critical factors for the smooth functioning of any business. The level of commitment of McDonalds can be gauged from the fact that even before it set up its first restaurant in the country it infused Rs 400 Crore to set up its delivery mechanism.I Section F. Group 6 Emac Digital Company is E-Procurement website which is jointly owned by McDonalds and Accel-KKR Internet Co. McDonalds India works with 38 different suppliers on a long term basis and several other stand alone restaurants for its various other requirements. the quality inspection programme. on which it had spent more than six years to get the system into place. the company was responsible for procurement. recording and reporting. To ensure this. As distribution centres. McDonald's distribution centres in India came in the following order:    Noida and Kalamboli (Mumbai) in 1996. Aside from being faster and more convenient for franchises. Bangalore in 2004. The association goes back to July 1993. storage. Today. This system brought about a IMT Ghaziabad Page 5 .The unique concept of McDonalds Cold Chain was one of the unique concepts of McDonalds supply chain in India. E-Procurement allows 85% cut in costs according to McDonald’s supply chief Edwards. re-packing of promotional items continued since then at the centres playing a vital role in maintaining the integrity of the products throughout the entire 'cold chain'. deliveries to the restaurants and data collection.Operations Management. which can supply it highest quality products. The success of McDonalds India was achieved by sourcing all its required products from within the country. And when we are talking about fast food business with McDonald's as the subject of the study a Supply Chain model of one of the highest precisions is expected. McDonald's initiative to set up an efficient supply chain and deploy state-of-art technology changed the entire Indian fast food industry and raised the standards of performance to international levels.

The company therefore spent 6 years and around Rs.000/Crore worth of food produce due to wastage at various levels. The variety of potato required by McDonald's had to have a certain length. India. McDonald's was committed to working with local suppliers and farmers to source all its requirements. McDonald's was looking for a particular variety of potato for manufacturing its world famous French fries. despite being the world's second largest producer of food. Nonetheless. which are as per McDonald's international quality standards.50. absolutely fresh and at great value. McCain Foods Pvt. The right quality potato in India was unavailable as farmers used seeds from the preceding crop. Following is the brief outline of the supply chain management of McDonalds India: Potato Farming Radhakrishna Foodland Trikaya Agriculture Dynamix Dairy Vista Processed Food private Ltd. transportation and retailing of perishable food products. McDonald's and its supplier partner. as well as maintain the freshness and nutritional value of raw and processed food products. especially due to lack of proper infrastructure for storage and transportation. began to work closely with farmers in Gujarat and Maharashtra to develop process-grade potato varieties. immensely benefiting the farmers at one end and enabling customers at retail counters get the highest quality food products. McDonald's India has pioneered the cold chain management system wherein the freshness. as per its initial commitment to local sourcing. loses nearly Rs.. This has involved procurement. Ltd.I Section F. high solids content and low moisture content while the ones that were available were of the tablegrade variety. In 1991. Group 6 veritable revolution. Let us now look at the various levels in detail: Potato Farming In Gujarat-Sourcing the Right Potato Even prior to its entry into India. 450 Crore to set up the food supply chain before opening its first restaurant in the country.Operations Management. McDonald's needed the process-grade variety of potato for its products. Through its unique cold chain. McDonalds has been able to both cut down on its operational wastage. crispness and nutritional value of vegetables and processed products are retained. which in turn resulted in a single variety and poor quality potatoes. all under controlled temperatures. warehousing. IMT Ghaziabad Page 6 .

fertilizer application programmes and better storage methods for the produce. Leaders in agronomy. Group 6 McCain Foods Pvt. Better facilities and infrastructures were created and new systems were adopted to satisfy McDonald's demands. Ltd. instead of commission agents. The result of these efforts has been that now the Gujarat potato crop has been utilised to make McDonald's ‘Chatpatey' Potato Wedges. From this evolved the mission statement. The DC plays a very vital role in maintaining the integrity of the products throughout the entire 'cold chain' . all those efforts put in by Foodland culminated into a handshake agreement with McDonald's India. much before McDonald's started its operations in India. Walkers of Australia. which arrive at McDonald's restaurants from suppliers all over India. Ltd. which is engaged in food and related service businesses. sowing seed treatments. McDonald's helped Foodland to start an affiliation with F. inventory management Deliveries to the restaurants and data collection Recording and reporting Value added services like repacking of promotional items are also carried out at the DC. planting methods. McCain Foods Pvt. In addition to this.right from better agronomy techniques like irrigation system.the distribution system that ensures the products. Finally.I Section F. Ltd. "To ensure that all McDonald's restaurants are supplied without interruption. is the world's largest French Fry Company in the world. Clean and On-time Delivery'. The operations and accountings are totally transparent and are subject to regular audit. is a part of the Radhakrishna Group.effective manner. are absolutely fresh and as per McDonald's Quality Standards. From July 1993. partnered with McDonald's to work with farmers in Gujarat (specifically the towns of Deesa and Kheda) to interact with agronomists and field assistants to demonstrate the best practices . the farmers also benefit through incremental monetary gains as they sell directly to McCain Foods Pvt. J. All these operations need to be managed in the most cost.Operations Management. sincere efforts were made by Foodland to carefully understand McDonald's operations and requirements for the Indian market. technology and innovation. products conforming to acceptable standards at lowest local costs to the system.” The Distribution Centre (DC) is responsible for      Procurement Quality inspection programme Storage. Radhakrishna Foodland-McDonald's Distribution Partner Radhakrishna Foodland (P) Ltd. so as to refine its operations to achieve the following:   Designing and establishing the distribution system to handle large volume Engineering the storage and delivery network to service the unique requirements at each of the customer's locations IMT Ghaziabad Page 7 . The division has focused all its resources to meet McDonald's expectation of 'Cold. to serve as Distribution Centres for their restaurants in Mumbai.

ensuring no delay between harvesting. and cold storage. which has a large number of milch cattle. average land holding per farmer is very low and the farms are scattered across the countryside. high quality lettuce to McDonald's urban restaurant locations thousands of kilometers away. McDonald's India has approved Dynamix Dairy.McDonald's Supplier Of Fresh Iceberg Lettuce McDonald's India benefits other Indian businesses through local sourcing. is now able to grow this crop all the year round. Working with these local suppliers. Dynamix Dairy. The pack house. Trikaya Farms in Talegaon. One of the best examples of this supplier development is Trikaya Agriculture. Due to this scattering of farms. Today.McDonald's Supplier of Cheese Towards fulfilling its commitment to sourcing almost all of its products from local suppliers. speed and accuracy into the system. Group 6 Devising delivery schedules to minimise business interruption and maximise efficiency so that store managers know exactly what to expect and when Maintaining open communication lines with customers. This results in freshness and no spoilage. Maharashtra. exposed the farms to advanced drip . there are long times lapses between the milking of the cows and the final refrigeration of IMT Ghaziabad Page 8 .Operations Management. Dynamix Group is McDonald's supplier of cheese in India. Trikaya Agriculture is a major supplier of iceberg lettuce to McDonald's India for its Indian operations. suppliers and all business associates Emerging as a key system player after realising the inter-dependence of all the associates in the McDonald's business system Transferring some of the good distribution practices to other divisions of the group. However. McDonald's has provided assistance in the selection of high quality seeds. which share its level of commitment and dedication in satisfying customers by supplying them the highest quality products.irrigation technology and helped develop a refrigerated transportation system allowing a small agro . warehousing and distribution. Its post harvest facilities include a cold chain consisting of a vacuum precooling room to remove field heat. high tech automation equipment. The pre-cooling room ensures rapid cooling to 2°C within 90 minutes. which has 100% computer control. Initially lettuce could only be grown during the winter months but with McDonald's expertise in the area of agriculture. food processing.I     Section F. packaging. The company has also invested in ERP Software to bring in efficiency. McDonald's and its international supplier network have helped transfer advanced technology and state-of-the-art procedures in the areas of agriculture. Vegetables are in the pre-cooling room within half an hour of harvesting. Baramati is small district. McDonald's has identified local Indian businesses. a large cold room and a refrigerated van for transportation where the temperature and the relative humidity of this crop is maintained between 1°C and 4°C and 95% respectively. pre-cooling.business in Maharashtra to provide fresh. Baramati (Maharashtra) for the supply of cheese to its restaurants. restaurant operations and other disciplines related to the food service industry to them. McDonald's supplier of fresh iceberg lettuce. restaurant equipment manufacturing. Trikaya Agriculture. pre-cooling and cold room are located at the farms itself.

McDonald's introduced Dynamix to two of its global suppliers Schreiber Foods. McDonald's suppliers for its chicken and vegetable range of products. To encourage these improvements in quality standards and world class manufacturing capabilities at Dynamix.' A model demonstration dairy farm with a dedicated R&D centre was established to educate milk producers with the latest concepts in modern dairy like animal management. This is vital to ensure that the frozen food retains it freshness for a long time and the 'cold chain' is maintained. to prevent further growth of bacteria in the milk and preserving its freshness . regulated feeding. Vista has installed hi-tech equipment for both the chicken and vegetable processing lines. The lack of proper refrigeration can impact the quality of milk and the farmer does not get a good price for his product. drastically reducing the time from milking to refrigeration. Also. both processing lines are absolutely segregated and utmost care is taken to ensure that the vegetable products do not mix with the non-vegetarian products. This highlights hygiene and cleanliness. Commitment to provide quality products and fast friendly service at a real value to support other Indian businesses through IMT Ghaziabad Page 9 . the milk is immediately stored in the bulk coolers installed in Dynamix's 45 milk collection centres.Operations Management. Owing to the lack of infrastructure in Baramati and recognising the need for quality milk to make quality cheese. maintaining the ‘cold chain. Group 6 the milk at the diary farm.-McDonald's Supplier of Chicken and Vegetable Products Vista Processed Foods Pvt. Vista Processed Foods Pvt.I Section F. The frozen product is immediately moved to cold storage rooms. disease control and the genetic improvement of milch cattle to increase the yield and ensure consistent high quality. coating. keeping cultural sensitivities in mind. forming. Conclusion McDonald's India's Cold Chain-Spreading the spirit of Enterprise all over India A unique sense of dedication and commitment characterizes McDonald's India . is another important player in this cold chain.thus. the latest vegetable mixers and blenders are in operation. Ltd. frying and freezing). which reflect the latest food processing technology (de-boning. USA and McDonald's India Private Limited have enabled Vista to set up world-class infrastructure and support services. blending. Ltd. Technical and financial support extended by OSI Industries Inc. On receipt. Dynamix set up a dedicated quality program for milk procurement and invested significantly in setting up bulk coolers at all milk collection centres in the Baramati area.. USA and Erie Foods. This infrastructure includes hi-tech refrigeration plants for manufacture of frozen food at temperatures as low as . For the vegetable range.35° C. Efforts were made to see that the bulk cooling centres were located at an accessible location so that the farmer had to travel only a distance of 1-2 km from his farm to the collection centre.a commitment to be driven by the leadership of local owners.. With continued assistance from its international partners. USA. This resulted in joint venture and developing business with companies.

new agricultural practices and food processing methods and procedures." "McDonald's. Joint Venture Partner & Managing Director. McDonald's Corporation founder. in the areas of introduction of new crops. Oak Brook.Details Revealed!! Type Traded as Public NYSE: MCD Dow Jones Industrial Average Component Restaurants May 15. Skinner Page 10 . Group 6 local sourcing and imparting new skills and to generate local employment by being a part of the local culture. 1940 in San Bernardino. 50.Operations Management. "Every year. absolutely fresh and at great value. Explaining the concept. all under controlled temperatures." McDonald’s.I Section F. said. This has involved procurement. humidity and air-flow. Rs. U. as well as maintain the freshness and nutritional value of raw and processed food products. Ray Kroc. 1955 in Des Plaines. Mr.S.Western India. Illinois Richard and Maurice McDonald McDonald's restaurant concept. April 15. This commitment has translated into enduring benefits to the businesses at the grass root level. Illinois. California. has been able to both cut down on its operational wastage.000 Crore worth of food produce is wasted in India because of lack of proper infrastructure for storage and transportation under controlled conditions.000+ worldwide Key people IMT Ghaziabad James A. immensely benefiting the farmers at one end and enabling customers at retail counters get the highest quality food products. McDonald's unique 'cold chain' has brought about a veritable revolution. transportation and retailing of perishable food products. Amit Jatia. Industry Founded Founder(s) Headquarters Number of locations 33. McDonald's . warehousing. These range from physical damage and vermin infestation to improper temperature. through its unique cold chain. McDonald's Corporation.

Group 6 Fast food (hamburgers • chicken •French fries • soft drinks •coffee • milkshakes • salads •desserts • breakfast) US$ 24.I (Chairman & CEO) Products Section F.Operations Management.473 billion (2010) US$ 4.075 billion (2010) US$ 7.975 billion (2010) US$ 14.949 billion (2010) US$ 31.000 (January 2010) Revenue Operating income Net income Total assets Total equity Employees IMT Ghaziabad Page 11 .634 billion (2010) 400.

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