PROCUREMENT PROCESS OF

MCDONALD’S
ASSIGNMENT #01

Procurement process of Mc Donald’s:

In the foodservice industry, there are few better examples of great procurement management
than McDonald’s. Excellent procurement is part of the reason that McDonald’s has been able to
grow from a small family barbecue restaurant into a global conglomerate with more than
39,000 restaurants in over 120 countries and territories.
The success of Mc Donald’s lies in it’s supply chain process, specifically the procurement cycle.
The procurement cycle of Mc Donald’s starts with:
Identifying Need specifications
The first step in the procurement process is to identify the needs of the organization. In the
case of McDonald’s, this could involve identifying the products and services that need to be
procured, such as McDonald's menu includes a variety of food and beverage items, such as
burgers, fries, chicken sandwiches, salads, soft drinks, and coffee. The exact menu offerings may
vary by location and country. McDonald's also offers various promotions and limited-time items
throughout the year. It also include it’s quality control checks and requirements etc

Supplier identification:

McDonald’s procurement team then identifies potential suppliers that can meet the company’s
quality, price, and delivery requirements. McDonald’s works with a large number of suppliers
globally to source various products, including meat, poultry, vegetables, packaging materials,
and other food-related items.

Supplier selection

Supplier selection is a crucial aspect of McDonald’s procurement process, as it helps to ensure

that the company is able to source high-quality products at competitive prices from reliable
suppliers. Quality is a top priority for McDonald’s, and the company works with suppliers who
are able to consistently meet its quality standards. McDonald’s has a rigorous supplier approval
process that includes testing and evaluating products to ensure that they meet the company’s
specifications. Timely delivery is critical for McDonald’s, as it operates on a just-in-time inventory
system. The company works with suppliers who are able to reliably deliver products on time and
in the quantities required. Sustainability is becoming increasingly important to McDonald’s and
its customers. The company works with suppliers who are committed to sustainable practices,
such as reducing waste and greenhouse gas emissions etc.
Contract negotiation:

After selecting the supplier, McDonald’s procurement team negotiates a contract with them that
outlines the terms and conditions of the agreement. This includes details such as pricing,
delivery schedules, quality standards, and other specifications.

Supplier Relationships
Known as the 3-legged stool, the methodology is simple: When McDonalds succeeds so do its
suppliers. The model allows the fast-food giant and its suppliers to help create value for each
other rather than simply exchanging value. This therefore leads to more beneficial, long-term
partnerships.
For example, one of the company’s largest distributors, The Martin-Brower Company, began by
supplying paper napkins to the company’s Des Plaines, Illinois branch in 1956. Today, the
supplier delivers supplies to almost all 15,000 McDonald’s locations in North America.
A McDonald’s supplier that provides the company with 400 million pounds of chicken and 260
million pounds of beef each year, has been doing business with McDonald’s since the 1960s.
Great relationships with suppliers will help you get more favorable terms and partners who
have a deeper understanding of your business.
Order placement:
McDonald’s places orders with its suppliers based on the terms of the contract. The orders are
typically managed through a centralized system, which helps to ensure that the right products
are delivered to the right locations at the right time.

Challenges faced by Mc Donald’s in it’s procurement cycle:

Supply chain disruptions:
The COVID-19 pandemic has caused significant disruptions in the global supply chain, impacting
the availability of products and increasing costs. McDonald’s has had to adapt to these
disruptions by working closely with suppliers to ensure continuity of supply.
Managing a large supplier base:
McDonald’s works with a large number of suppliers, which can be challenging to manage
effectively. The company has implemented systems and processes to help manage its suppliers,
but there is always room for improvement.
Compliance:
Ensuring that suppliers comply with regulations related to food safety, labor practices, and
environmental impact is a key challenge for McDonald’s. The company has faced regulatory
scrutiny in the past, such as the 2015 investigation by the European Commission into its tax
arrangements in Luxembourg.
Quality control:
Ensuring consistent quality across a large number of suppliers is always a challenge, and any
issues with quality can impact customer satisfaction and the company’s reputation. McDonald’s
has faced quality control issues in the past, such as the 2014 scandal involving tainted meat
from a supplier in China.

Conclusion:
In conclusion, McDonald’s procurement process is a complex and critical part of the company’s
overall business operations. The company has developed a sophisticated system for selecting
and managing suppliers, which includes rigorous quality control measures, sustainability
standards, and compliance with regulations. However, there are several challenges that
McDonald’s faces in its procurement cycle, such as supply chain disruptions, managing a large
supplier base and quality controls. These challenges can impact the availability of products,
increase costs, and impact customer satisfaction and the company’s reputation. Despite these
challenges, McDonald’s continues to work closely with its suppliers and invest in its
procurement process to ensure the efficient and effective sourcing of products. By continuing
to monitor and adapt to these challenges, McDonald’s can continue to maintain its position as a
leading global fast-food chain.