Date: 19/10/2023

Program/Term/Group: Supply Chain

Management – Term 1

1. How Suppliers are Identified and Their Impact on the Company

McDonald's is a fast-food franchise based in Chicago, known for its hamburgers, which can
be made from beef, chicken, or fish, as well as its French fries. To ensure a steady supply of
resources, McDonald's relies on long-term contracts with strategic suppliers. Factors such as food
quality, ethical and social responsibility, transparency, and traceability are considered to identify
these suppliers. Traceability ensures that the origins of ingredients can be tracked from their
source to McDonald's restaurants. Food safety is a top priority, as exemplified by McDonald's
supplier in Mexico, American Beef, which holds certifications such as TIF (SAGARPA's Federal
Inspection Type System), USDA (United States Department of Agriculture), HACCP (Hazard Analysis
and Critical Control Points), and Clean Industry Certification.

Similarly, OSI Food Solutions Spain S.L. has been a major supplier of beef, pork, and
poultry products for McDonald's restaurants in Spain and Portugal for over three decades. These
suppliers undergo a rigorous approval process supervised by OSI's technical team. For poultry, the
approval process extends from feed production to deboning facilities. Independent certification of
feed production, animal raising, and transportation is required, meeting globally recognized
standards such as Global GAP. All feed mills have detailed Hazard Analysis and Critical Control
Points (HACCP) manuals. Raw materials are subject to thorough physical-chemical, microbiological,
and residue analyses in compliance with ISO/IEC 17065:2012 standards. Documented procedures
for transport cleaning, hygiene during unloading, and batch acceptance/rejection criteria must
also be established.

2. Supplier Segmentation and Geographic Adaptation

As a multinational company, McDonald's has a global network of suppliers. One purpose is

to segment the market into various segments based on demographics and psychological
characteristics. This segmentation allows McDonald's to adapt its menu to satisfy local preferences
and ensures on-time deliveries while reducing logistical costs, thereby focusing on efficie
(Fourweekmba, s.f.)ncy and effectiveness.

3. Long-Term Strategy and Collaboration with Suppliers

Suppliers play a fundamental role in the growth of any company, especially in the food
industry, where product quality and consistency are essential to meet customer expectations.
McDonald's emphasizes collaboration with its suppliers, treating them as partners with a long-
term perspective. This approach extends to local suppliers in each country of operation. This
collaboration strengthens McDonald's position in the market and facilitates problem-solving for
the corporation.

The collaboration extends to franchise owners, who receive 12 to 18 months of training in

a restaurant, attend seminars and competitions, and receive ongoing support to maximize quality,
service, and cleanliness. This optimization leads to increased sales and profits.

4. Decentralized Structure and Supplier Collaboration

Given McDonald's highly decentralized structure, managers at all levels focus on

supporting those who interact with customers, such as restaurant managers and owner/operators.
This decentralization operates under the concept of "freedom within a framework," where global
guidelines are established for product ingredients, restaurant hygiene, and the use of the iconic
Golden Arches logo. However, operational decisions are left to those closer to the customers.

This freedom does not exempt global guidelines for compliance in areas like patent
agreements, costs of new product development, indemnification, and Supplier Code of Conduct.
The Supplier Code of Conduct summarizes expectations regarding employment practices, stating
that "McDonald's will refuse to approve or do business with those who do not follow the Code,
both in theory and practice." Since 1999 (Macdonald´s, s.f.), McDonald's has audited a "significant
and representative" number of suppliers to ensure Code compliance.
 (Fourweekmba, s.f.)
5. Innovation and Sustainability

Innovation is key to gaining market acceptance. McDonald's has achieved this through
interactive kiosks where customers can customize their orders, include desserts, detect potential
order errors, and make payments. Additionally, offering Wi-Fi service in all its restaurants lets
customers stay entertained while awaiting their orders.

(WAVETEC, s.f.)
 Sustainability projects have also contributed to McDonald's market acceptance. The
company has partnered with new suppliers to transition its restaurants to renewable energy
sources and introduce more sustainable packaging materials, eliminating single-use plastics from
certified recycled sources.

References

Ashfaq, M. (2023, July 18). The benefits of McDonald’s self service kiosk - restaurant self
service. Wavetec. https://www.wavetec.com/blog/mcdonalds-leveraging-self-service-
technologies/

Cuofano, G. (2023, September 29). What is the organizational structure of McDonald’s?

McDonald’s organizational structure. FourWeekMBA. https://fourweekmba.com/mcdonald-
organizational-structure/

McDonald’s. (n.d.). Forbes. Retrieved October 20, 2023, from

https://www.forbes.com/companies/mcdonalds/?sh=76fc344c1ac7

Our conduct. (n.d.). Mcd.com. Retrieved October 20, 2023, from https://sbc.mcd.com/our-
conduct

Our purpose and impact. (n.d.). Mcdonalds.com. Retrieved October 20, 2023, from
https://www.mcdonalds.com/ca/en-ca/our-purpose-and-impact.html