TASK

PERFORMANCE
IN
SUPPLY CHAIN
MANAGEMENT

Prepared by:
Gomez Camille
Adalia Maica
Toling Ricky
 The Framework in the Supply Chain of Mc Donald

Primary Activities
1. Inbound Logistics
1) “McDonald’s purchases raw vegetables and other raw materials from its fixed,
pre- defined suppliers only, therefore by increasing capital and labor, their production will
increase proportionately.”
Source and further information:
“McDonald’s has practiced a backward vertical integration,
by replacing most of its suppliers. It has done so for two reasons, 1) To reduce
costs, and 2) To ensure that its products are of top quality. These supplies
include beef and milk to be used in its products, which it gets from its farms.
Other suppliers include local grocery stores that supply McDonald’s with fresh
vegetables. Soft drinks are supplied exclusively by Coca-Cola, which is also its
ally. McDonald’s supplies also include raw material such as flour, sugar, yeast,
etc.”
 McDonald’s own information:
“We import some beef raw materials from Australia and New Zealand. And those
plants have to meet all our same requirements that we hold our U.S. plants to; which
includes animal welfare and food safety, testing — everything.”
2. Operations
McDonald’s Backgrounds for Operation Management
Before the McDonald’s brothers invented their fast-food operations system, some
restaurants did make food pretty quickly. These restaurants employed short-order cooks,
who specialized in making food that didn’t require a lot of preparation time.
Being a short-order cook took skill and training, and good cooks are in high
demand. These speeded system, however, was completely different. Instead of using a
skilled cook to make food quickly, it used lot of unskilled workers.

The Process
The mass-production process requires each restaurant chain to have a distribution
network to carry the food to every restaurant. Warehouses store enormous amounts of
everything a restaurant needs. Including foods, paper products and cleaning supplies.
The warehouses the ship supplies to each restaurant by truck. Warehousing and
distribution, just like the management of chain, is centralized rather than handled by each
restaurant.
In some chains, managers track the restaurants’ inventories of food, wrappers, cups, and
other necessary items. They often order everything the restaurant need from the
distribution center, which ships it to them.
In other chains, it is automated, which means, a computer keeps track of what the
restaurants have and should have on hand, or the distribution center ships the necessary
items on a regular schedule instead of waiting a request from the restaurant.
This had been done with the view to increase efficiency of the supply chain in terms of

capacity, technology selections, and buying policies.

3. Outbound Logistics

McDonald’s is committed to providing the highest quality food and superior service, at a

great value, in a clean and welcoming environment. That’s why we work with our
employees, franchisees, and suppliers to serve a balanced array of food choices and

provide the nutrition information needed for customers to make sound decisions.

4. Marketing and Sales

McDonald’s restaurants are found in 119 countries and territories around the world and

serve 58 million customers each day. McDonald’s operates over 31,000 restaurants

worldwide, employing more than 1.5 million people. The company also operates other

restaurant brands, such as Piles Café.

Advertising

McDonald’s has for decades maintained an extensive advertising campaign. In addition

to the usual media (television, radio, and newspaper), the company makes significant use

of billboards and signage, sponsors sporting events ranging from Little League to the

Olympic Games, and makes coolers of orange drink with its logo available for local events

of all kinds. Nonetheless, television has always played a central role in the company’s

advertising strategy.

5. Procurement

McDonalds E-Procurement System 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.
Advantage
 One of the clear advantages to their supply chain system is that they have control,
although according to the people in charge, McDonalds does not want to control
their suppliers. However, this system does give them a lot of control over supplies.
 Suppliers do not have to worry about asking for increases for products, that is
already built into the contract. As the restaurants do well, so do the suppliers.
Instead of viewing producers as simple suppliers, they are viewed as business
partners and collaborators.
 The entire supply chain is a “we”. Everyone works together toward one common
goal, success.
 McDonalds has developed a supply system that is efficient, effective and the
backbone to their organization it is based less on business smarts and more on
people smarts and core values that depend on treating people fairly. It is a model
that is worthy of close study.
Disadvantages
 The biggest disadvantage of supply chain management is that it can work only if
there is proper coordination between all the departments of the company and if
departments are at loggerheads than this system will be a failure.
 The biggest disadvantage of supply chain management is that it can work only if
there is proper coordination between all the departments of the company and if
departments are at loggerheads than this system will be a failure. Hence for
example, if the marketing department does not inform the production department
about the possible order than the production department will not be able to produce
the desired order on time.
 Since it involves multiple departments sometimes it can be complicated and may
hamper the normal working of the company besides workers as well as employees
may feel insecure and demotivated because human beings by nature resist new
things and to them the concept of supply chain management may appear very
complicated resulting in them accepting this management half-heartedly.
 It requires professional and trained staff in order to properly execute supply chain
management and in order to hire professional staff company will need to pay
money which is an expensive proposition which is the reason why small companies
seldom go for supply chain management as expenses of implementing this system
outweighs its benefits.
 Action to Take
Efficient Communication
It is important to define organizational goals and the methods to achieve those goals
through clear and concise communication to employees. This is critical to a supply chain’s
operations and productivity. One way to maintain efficient communication is by scheduling
daily and weekly meetings dedicated to co-operative problem-solving. In this way, the
management is able to take the necessary actions to improve performance. Such
measures ensure unity and understanding of productivity and operations that will ease
open communication between employees and management.

Be socially responsible
Social responsibility is also becoming more and more significant in branch estimation
when making purchase decisions. A best-in-class supply chain organization should have
a measureable framework of policies and procedures designed to improve the workplace
for the greater good of employees, the organization itself, and also its community.

Opt for a Powerful Training Program

Better supply chain productivity is reached through a top down approach; it’s all about
leadership. It is the responsibility of leaders to communicate effectively, set procedure
standards, define a hierarchy of importance, empower employees, and derive an efficient
training program. Together, the management and employees can create a performance-
based culture within the company and its supply chain.

Maintain healthy supplier relationships.

An important indicator of success in this industry is the health of your supplier
relationships. These connections should be maintained and cultivated on an ongoing
basis, beyond the finalization of your deal. The best supplier relationships are the ones
with two-way communication between the buyer and seller. Your objectives should
include mechanism(s) to maintain the health of your relationship, goals for continuing
improvement and value, performance measurement and a platform for conflict resolution.