N.G.Bedekar College Thane (W) T.Y.B.M.

S A Project study on Logistics of McDonalds

Submitted by:Darius D’souza Prathamesh Patil Pratiksha Deshmukh 121 131 134

Submitted to:Prof. Murlidharan

Contents
 Introduction  History of McDonald  Company overview  Supply Chain  Porter Value chain analysis  Distribution Strategy  Distribution Process

Improving Logistics at McDonalds

 Conclusion

useful Murlidharan suggestions that proved very useful in this project.ACKNOWLEDGEMENT On the completion of this project. Lastly. we wish to great fully acknowledge. we sincerely thank all our friends who have always given their encouraging support and have been a great help all the time at various stages of development of this project. . Once again we thank all the people who have directly or indirectly helped us in this project. by taking this opportunity to express our sincere for his gratitude guidance to and Prof.

History of McDonald’s .

1983 Chicken McNuggets is introduce New Hamburger University campus opens in Oak Brook. Paris and Tokyo stock exchanges. Munich. 1965 McDonald's Corporation goes public. The Quarter Pounder is introduced. 1993 The first McDonald's at sea open aboard the Silja Europa. the world's largest ferry sailing between Stockholm and Helsink 1994 Restaurants open in Bahrain. 1957 Quality. Latvia. bringing the total to over 15. Ronald McDonald makes his debut. 1972 A new McDonald's restaurant opens every day. Illinois. Illinois.McDonald's has come a long way ever since it’s beginning in 1955. 1984 50 billionth hamburger sold. Kuwait. 1959 The 100th McDonald's opens in Chicago. Service. Cleanliness and Value (QSC& V) becomes the company motto. near Chicago. . 1963 One billion hamburgers sold. Here are a few milestones of the McDonald's journey .. The 1. 1989 McDonald's is listed on the Frankfurt. 1968 The Big Mac is introduced. Bulgaria.000th restaurant opens in Des Plaines.000 in 79 countries on 6 continents. Trinidad and United Arab Emirates. 1964 Filet-O-Fish sandwich is introduced. Illinois and the McDonald's Corporation is created. New Caledonia. 1961 Hamburger University opens in Elk Grove. Set in 80 wooded acres Training is provided for every level of McDonald's managemen worldwide. 1967 The first restaurants outside of the USA open in Canada and Puerto Rico. Moscow. Ronald McDonald Children's Charities is founded in Ray Kroc’ memory to raise funds in suppor of child welfare. 1955 Ray Kroc opens his first restaurant in Des Plaines.. Oman. 1990 McDonald's opens in Pushkin Square and Gorky Street. Egypt.

1996 McDonald's opens in India – the 95th country. The Happy Meal is launched.1973 Egg McMuffin is introduced. Doraha. Ever since then. 1974 The first Ronald McDonald House opens in Philadelphia. Jaipur. Ahmedabad. Company Overview McDonald's . Delhi.A Global Phenomenon McDonald's opened its doors in India in October 1996. Vadodara. Manesar and . their family restaurants in Mumbai. Ludhiana. Noida Faridabad. Pune.

Veg. Illinois. along with their Indian management team. we are the world's largest food service system with more than 30. Having signed their joint-venture agreements with McDonald's in April 1995. Ltd headed by Vikram Bakshi owns and operates the Northern operations.Gurgaon have proceeded to demonstrate. much to the delight of all our customers. While Connaught Plaza Restaurants Pvt. they've re-formulated some of their products using spices favoured by Indians. in McDonald's restaurants in Indonesia and the U. Locally Owned McDonald’s in India is a 50-50 joint venture partnership between McDonald’s Corporation [USA] and two Indian businessmen. offering a larger variety to their vegetarian consumers.A. Amit Jatia’s company Hardcastle Restaurants Pvt. Their first restaurant opened on 15th April 1955 in Des Plaines.S. fish and vegetable products find their way into their Indian restaurants.In addition. what the McDonald's experience is all about. Pizza McPuff™ and Chicken McGrill™ burger. Service. Amit Jatia and Vikram Bakshi are like-minded visionaries who share McDonald's complete commitment to Quality. McDonald's does not offer any beef or pork items in India. serving more than 46 million customers every day. Cleanliness and Value (QSC&V). they trained extensively. Among these are McVeggie™ burger. McAloo Tikki™ burger.000 restaurants in 100 countries.S. U.A. Even their soft serves and McShakes™ are egg-less. Ltd. Respect for local culture McDonald's India has developed a special menu with vegetarian selections to suit Indian tastes and preferences. before opening the first McDonald’s restaurant in India. Almost 50 years down the line. owns and operates McDonald's restaurants in Western India. . Only the freshest chicken. They've also created eggless sandwich sauces for their vegetarian customers.

chairs. while maintaining their own recognized international standards. health and hygiene is ensured. Complete adherence to the Indian Government regulations on food. Supply Chain . Ray Kroc made that memorable statement. friendly service . They believe in a collaborative management approach. Service. Cleanliness & Value .It is an unflinching McDonald's ideology that our customers must always get quality products. and all at a fair price They are committed to exceeding our customers' expectations in every restaurant every time. employing a mutually respectful business philosophy. Their Philosophy "They take the burger business more seriously than anyone else. The principles that guide them … • • • • • Quality." When McDonald's founder. in a clean and pleasant environment. Such meticulous attention to cleanliness extends beyond the lobby and kitchen to even the pavement and immediate areas outside the restaurant. highchairs and trays are sanitized several times each hour. he was letting the world in on the philosophy and secret behind McDonald's phenomenal success.International Standards McDonald's India's local suppliers provide them with the highest quality.the hallmark of McDonald's restaurants the world over is the mantra they abide by. freshest ingredients. served quickly and with a smile. Fast. Their vision to be India’s "best" quick service restaurant experience is supported by a set of principles and core value. They have a passion and a responsibility for enhancing and protecting the McDonald's brand. They will seize every opportunity to innovate and lead the industry on behalf of their customers. Stringent cleaning standards ensure that all tables.

000 crore worth of food produce is wasted in India? This is mainly because of the lack of proper infrastructure for storage and transportation under controlled conditions. So. various suppliers. and mistrust between supply chain partners.manufacturer – distributor – retailer – consumer. McDonald's is committed to providing quality products while supporting other Indian businesses.Supply Chain Overview Cold Chain LocalSourcing Suppliers Overview Did you know that every year. since hidden value often emerges once the entire chain is visualized. transformation of materials into semi-finished and finished products. higher transportation and manufacturing costs. When there is a balance in the finished product ordering. Rs. shortages / stock outs. This is called the Bullwhip Effect.material flow from suppliers and their "upstream" suppliers at all levels. It is critical to go beyond one’s immediate suppliers and customers to encompass the entire chain. geographically dispersed activities. and both upstream and downstream activities. they spent a few years setting up a unique Supply Chain. Any major fluctuation in the product ordering pattern causes excess / fluctuating inventories. Information and money flows in the reverse direction. even before they opened their first restaurant in India. The balance between these 3 flows is what a Supply Chain is all about. A Supply Chain is a network of facilities including . the Supply Chain operates at its best. . 50. and distribution of products to customers and their "downstream" customers at all levels. longer lead times. raw material flows as follows: supplier . the Supply Chain may include major product elements. Depending on the situation. And so.

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. McDonald’s restaurants store products to be used on a daily basis. the cold chain ensured freshness and adequate moisture content of the food. within a temperature range of –18ºC to 4ºC. who have now become an integral part of the Cold Chain. Drivers were instructed specifically not to switch off the chilling system to save electricity. they were locked in a pre-cooling room to remove field heat. In the van. respectively and the flavors and freshness are locked at -35°C. The Cold Chain is an integral part of the Supply Chain. warehousing. 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 their product. McDonald's finding the factor of cold room being vital ensured that even before vegetables from farms entered the refrigerated zones. Vegetables were placed in the pre-cooling room within half an hour of harvesting where rapid cooling decreased the field temperature of vegetables to 2ºC within 90 minutes. At the suppliers' level. The iceberg lettuce from Ooty. Setting up the Cold Chain has involved the transfer of state-of-theart food processing technology by McDonald's and its international suppliers to pioneering Indian entrepreneurs. transportation and retailing of food products under controlled temperatures.Cold Chain The Cold Chain is necessary to maintain the integrity of food products and retain their freshness and nutritional value. the temperature and relative humidity of crop was maintained at 1-4ºC and 95 per cent. The term Cold Chain describes the network for the procurement. About 52% of our food products need to be stored under these conditions before they are used. Then a large cold room (a refrigerated van) was used for transportation to the distribution centers. 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. . even in the event of traffic jam. The specially designed trucks maintained the temperature in the storage chamber throughout the journey.

Setting up of the Cold Chain has also enabled us to cut down on operational wastage Hazard Analysis Critical Control Point (HACCP) is a systematic approach to food safety that emphasizes prevention of illness or presence of microbiological data within our suppliers' facilities and our restaurants rather than its detection through inspection. Ray Kroc. In keeping with this belief. The HACCP verification is done at least twice in a year and certified. McDonald's Quality Inspection Programme (QIP) carries out quality checks at over 20 different points in the Cold Chain system. This assurance is rooted in the philosophy of our company's founder. control points and critical control points for all McDonald's major food processing plants and restaurants in India have been identified. Local Sourcing McDonald's has always been committed to sourcing its requirements from local suppliers and farmers. we have carefully identified local Indian businesses that take pride in satisfying customers by presenting them with the highest quality products. health and hygiene while continuously maintaining McDonald's recognised standards. Adherence to Indian Government regulations on food. health and hygiene were a top priority. As the ingredients move from farms to processing plants to the restaurant.Below mentioned is the data about Refrigerated vans for McDonald's distribution Type National inbound Outbound North Outbound West Outbound South Route Suppliers to Distribution Center Distribution Center to restaurant Distribution Center to restaurant Distribution Center to restaurant Quantity 20 vehicles 13 vehicles 11 vehicles 1 Vehicle Vital Links in our Cold Chain All suppliers adhere to Indian government regulations on food. thus ensuring that McDonald's commitment to growth was mirrored by that of its partners. Based on HACCP guidelines. He firmly believed in mutual benefits arising from a partnership between McDonald's and the local businesses. .

Drip and sprinkler irrigation in raised farm beds with fertilizer mixing plant. contractors.McDonald's India today purchases more than 96% of its products and supplies from Indian suppliers. As McDonald's expands in India. the supplier gets the opportunity to expand his business.Supplier of Iceberg Lettuce. Suppliers Trikaya Agriculture . have access to the latest in food technology. There are many cases of local suppliers operating out of small towns who have benefited from their association with McDonald's India. Farm infrastructure features: ♦ ♦ ♦ ♦ A specialized nursery with a team of agricultural experts. Pre-cooling room and a large cold room for post harvest handling. labour and maximum local content in materials. special herbs and many oriental vegetables. A large cold room and a refrigerated van for transportation where the temperature and the relative humidity of this crop is maintained between 1º C and 4º C and 95% respectively. . Successfully grows speciality crops like iceberg lettuce. get exposure to advanced agricultural practices and the ability to grow or to export. The relationship between McDonald's and its Indian suppliers is mutually beneficial. Even their restaurants are constructed using local architects.

has: Separate processing lines for chicken and vegetable foods. butter/ghee. Ltd. manufactures widely . A joint venture with OSI Industries Inc. Easy accessibility has enabled farmers augment their income by finding a new market for surplus milk. Amrit Food. ♦ Capability to convert milk into cheese. ♦ ♦ ♦ Dynamix Diary .. and McDonald's India Pvt. produces a range of frozen chicken and vegetable foods.Supplier of long life UHT Milk and Milk Products for Frozen Desserts.Supplier of Cheese Dynamix has brought immense benefits to farmers in Baramati. procedures and support services. Vista Processed Foods Pvt. Capability to produce frozen foods at temperature as low as -35 Degree Celsius to retain total freshness. Stringent quality control measures and continuous Research & Development. A world class infrastructure at its plant at Taloja. Supplier of Chicken and Vegetable range of products. USA. International standards. Ltd. Ltd. skimmed milk powder. casein & whey protein and humanised baby food.Vista Processed Foods Pvt. an ISO 9000 company. ♦ ♦ Amrit Food . The factory has Fully automatic international standard processing facility. lactose. Maharashtra. Maharashtra by setting up a network of milk collection centres equipped with bulk coolers.

providing the entire range of services including procurement. quality inspection. Uttar Pradesh. Its plant has: ♦ ♦ ♦ State-of-the-art fully automatic machinery requiring no human contact with product. Installed capacity of 6000 litres / hour for producing homogenised UHT (Ultra High Temperature) processed milk and milk products.Distribution Centre. Effective process control for minimum distribution cost. Dry and cold storage facility to store and transport perishable products at temperatures up to – 22 C. • The primary value chain activities are: Inbound Logistics: the receiving and warehousing of raw materials and their distribution to manufacturing as they are required. Strict quality control supported by a fully equipped quality control laboratory. An integral part of the Radhakrishna Group. Radhakrishna Foodland . Foodland specialises in handling large volumes. . deliveries.popular brands . Salient strengths are: A one-stop shop for all distribution management services. thereby resulting in a profit margin for McDonalds.Gagan Milk and Nandan Ghee at its factory at Ghaziabad. data collection. recording and reporting. for total hygiene. inventory management. storage. ♦ ♦ ♦ Porter Value Chain Analysis of McDonald’s The goal of these activities is to offer the customer a level of value that exceeds the cost of the activities.

Service: the support of customers after the products and services are soldto them. the forces inside the McDonalds influences the way in which the firms compete. A business has to understand the dynamics of its industries and markets in order to compete effectively in the marketplace. • As Per the Porter's 5 Forces analysis McDonalds deals with factors outside an industry that influence the nature of competition within it. Marketing & Sales: the identification of customer needs and the generation of sales. • These primary activities are supported by: Technology development: technologies to support valuecreating activities.Operations: the processes of transforming inputs into finished products and services. .The value chain model is a useful analysis tool for defining a firm's corecompetencies and the activities in which it can pursue a competitive advantage as follows: Cost advantage: by better understanding costs and squeezing them out of the value-adding activities. and so the industry’s likely profitability is conducted in Porter’s five forces model. Outbound Logistics: the warehousing and distribution of finished goods. So McDonald’s rivalry in this competitive market is blooming.

better seeds and agricultural management practices for greater yields. . Dehradun and other regions to cultivate high quality iceberg lettuce.Distribution Process at McDonalds Suppliers are proclaimed to be the backbone of any good business as they are the individual units that build supply chain. Benefit in McDonald’s favor was its expertise in the areas of agriculture. along with its suppliers. Service. which allowed it. educated them on the McDonald's philosophy of Quality. There was substantial effort on sharing advanced agricultural technology and expertise with farmers/suppliers like utilization of drip irrigation systems (for less water consumption). They had imparted technical training to all their suppliers on operation the imported machineries. to work with farmers in Ooty. McDonald's incorporated state-of-the-art food processing technology along with its international suppliers to pioneering Indian entrepreneurs. Pune. On them depends the health of the overall business cycle. Cleanliness and Value (QSCV) in order to provide standardized food to our customers.

its Indian supplier partners were developed in such a manner that made them stay with the company from the beginning. For this purpose. the company was responsible for procurement. 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'. storage. the distribution centers hold special place for bringing food right to the outlet counters. a part of the Radha Krishna Group engaged in food-related service businesses.Distribution Strategy at McDonald’s India McDonald's had been working critically on its supply chain part. which can supply them the highest quality products required for their Indian operations. As distribution centres. McDonald's worked aggressively to attain the right suppliers and systems that ensured that 90 per cent of yield was indigenous before the doors were opened to consumers. The only products that they used to import were oil and fries. In the supply chain management. The operations and accounting is totally transparent and is subject to regular audits. Considering. Better facilities and infrastructures were created along with new systems by them to satisfy McDonald's high demands. and the latest one in Kolkata (2007). Bangalore in 2004. for which they had made arrangements to manufacture the oil in India. the quality inspection program. for Radha Krishna Foodland to serve as distribution centres for their restaurants in Delhi and Mumbai. McDonald's entered its first distribution partnership agreement with Radha Krishna Foodland. an international brand trying to make inroads into the Indian consciousness. Value-added services like shredding of lettuce. For McDonald's India. . They ensured that the products developed locally abide by global McDonald's standards. recording and reporting. it has developed local Indian businesses. which finally culminated into an agreement with McDonald's India. the distribution centres came in the following order: Noida and Kalamboli (Mumbai) in 1996. inventory management. deliveries to the restaurants and data collection.

inventory. For the fast food industry. For such a system to work. For a firm as large as McDonald’s logistics is an area where proper planning results in increased efficiency. an effective procurement strategy is vital. the cost of purchases as a percentage of sales is often substantial. Ordering huge quantities of beef. little improvements in the way it handles materials adds up. Because of its size. a system of just-in-time ordering and delivery is most effective for the company. Because of the perishable nature of food. logistics managers are responsible for the right goods being where they need to be at the right time. and deliver them to customers. The company stands to gain the most with improvements in production – the actual preparation of food. Because the cost and quality of goods sold is directly related to the cost and quality of goods purchased. Purchasing is the most costly activity in most firms. chicken. Because such a huge portion of revenue is devoted to purchasing. transform them into intermediate goods and final products through manufacturing and assembly. hamburger patties. and vegetables and expecting them to arrive at the shortest possible time requires coordination with capable suppliers. production and the final delivery to consumers. solid ties must be forged with a lot of suppliers.Improving Logistics At Mcdonalds Logistics is the integration of the activities that procure materials. McDonald's must examine a number of strategies for effective purchasing. french fries and McNuggets™ with minimal . Purchasing provides a major opportunity for management to reduce costs and increase contribution margins. seemingly simple lapses can cost the company millions. a few. Conversely. Raw agricultural materials arriving at its commissary must be turned into buns. Comprising all movement of materials from incoming shipments.

And more products reaching the market fresher and quicker not only benefit the economy but also help the farmer earn more.. Also. At their level. every care is taken to guard against any interruptions in the cold chain which can break the link and have a detrimental effect on the quality of the product..waste. They worked cohesively to ensure that the final product reached the customer consistently each time and every time. managers at McDonald's must decide. Conclusion All the suppliers shared McDonald's commitment and dedication for satisfying customers by supplying them the highest quality products. . It must then carry over this practice of efficiency into its outlets.