Mc DONALDS SUPPLY CHAIN

Deevanshu Saxena Deepti Goyal Nayandeep Kaur Rajesh Yadav Ridhi Poddar

Agenda
 Company Overview  The McDonald’s Supply Chain  Supply Chain Integration  Results

The McDonald’s System – the World’s Best QSR experience
 World Market Leader in the QSR area (Quick Service Restaurant)  Franchise System (72%)  System employees: 1.6 million  Customers Per Day: 47 million  Corporate Strategy:
    QSC&V: Quality, Service, Cleanliness and Value Ray Kroc: “None of us is as good as all of us” Plan To Win -> Successful business revitalization Growth by getting better

One global Marketing Strategy …

New Products …

… and on-going innovations

Q uick S ervice R estaurant

Quick Service Restaurant

The McDonald’s Supply Chain

 "Our growth plan for the next three years is more a function of getting our logistics and cold chain right rather than going to far off places."
- Amit Jetia, managing director, McDonald's India, Mumbai Joint Venture, in 2000.

The McDonald’s Supply Chain

 Purchasing
 “The 3 legged stool”: Corporation – Franchisees – Suppliers  Exclusive, certified facilities  Handshake agreements, Trust  Long term win-win partnership, risk sharing  Rigorous product and service specifications  Strong focus on quality, product specification and environmental audits  Distributor is wholesaler for Restaurants

The McDonald’s Supply Chain
 Logistics
~100 sales items in the restaurant ~400 SKUs in the warehouse (Hubs: up to 1,500) ~200 restaurants per DC (~180 DCs globally) Delivery frequency: ~3/wk, higher in urban areas 2-3 stops per route Exclusive distributors (3PL) Long term partnerships with service providers, risk sharing  Strong quality focus (Cold Chain, HACCP, QIP)       

Mc D India supply chain
 Before it set up its first restaurant in the country it infused Rs 400 Crore to set up its delivery mechanism. McDonald’s initiative to set up an efficient supply chain and deploy state-of-art technology changed the entire Indian fast food industry  McDonald’s distribution centres in India came in the following order: Noida and Kalamboli (Mumbai) in 1996, Bangalore in 2004, and the latest one in Kolkata (2007).

 Between 1992 and 1996, when McDonald's opened its first outlet in India, it worked frenetically to put the perfect supply chain in place. It trained the local farmers to produce lettuces or potatoes to specifications and worked with a vendor to get the perfect cold chain in place. And explained to the suppliers precisely why only one particular size of peas was acceptable These efforts paid off in the form of joint ventures between McDonald's India (a 100% wholly-owned subsidiary of McDonald's USA) and Hardcastle Restaurants Pvt. Ltd, (Mumbai) and Connaught Plaza Restaurant (New Delhi).

COLD CHAIN Partners
1. 2. 3. Dynamix Dairy Industries (Supplier of Cheese) Trikaya Agriculture (Supplier of Iceberg Lettuce) Vista Processed Foods Pvt. Ltd. (Supplier of Chicken and Vegetable range of products including Fruit Pies) 4. Radhakrishna Foodland (Distribution Centres for Delhi and Mumbai) 5. Amrit Food (Supplier of long life UHT Milk and Milk Products for Frozen Desserts)

1. Dynamix Dairy Industries (Supplier of Cheese)
 Fully automatic international standard processing facility.  Capability to convert milk into cheese, butter/ghee, skimmed milk powder, lactose, casein & whey protein and humanized baby food  Stringent quality control measures and continuous Research & Development Each batch is mixed in one large stainless steel cooler and chilled immediately to two degrees Celsius to stop bacterial growth and preserve freshness. From this point onwards, until just before the burger is actually served in a McDonald’s restaurant hundreds of kilometers away, the temperature is never allowed to increase.

2. Trikaya Agriculture (Supplier of Iceberg Lettuce)
 A specialized nursery with a team of agricultural experts  Drip and sprinkler irrigation in raised farm beds with fertilizer mixing plant.  Pre-cooling room and a large cold room for post harvest handling.  Refrigerated truck for transportation.  Vegetables are moved into the pre-cooling room within half an hour of harvesting.  The pre-cooling room ensures rapid vacuum cooling to 2º C within 90 minutes.  The pack house, pre-cooling and cold room are located at the farms itself, ensuring no delay between harvesting, pre-cooling, packaging and cold storage 

(Supplier of Chicken and Vegetable range of products including Fruit Pies)

3) Vista Processed Foods Pvt. Ltd.

A joint venture with OSI Industries Inc., USA, McDonald's India Pvt. Ltd. and Vista Processed Foods Pvt. Ltd., produces a range of frozen chicken and vegetable foods. A world class infrastructure at their plant at Taloja, Maharashtra, has: The technology includes hi-tech refrigeration plants for manufacture of frozen food at temperatures as low as - 35° C. This is vital to ensure that the frozen food retains it freshness for a long time and the 'cold chain' is maintained. The frozen product is immediately moved to cold storage rooms.

3. Radhakrishna Foodland
(Distribution Centres for Delhi and Mumbai)

An integral part of the Radhakrishna Group, Foodland specializes in handling large volumes, providing the entire range of services including procurement, quality inspection, storage, inventory management, deliveries, data collection, recording and reporting. 1. A one-stop shop for all distribution management services. 2. Dry and cold storage facility to store and transport perishable products at temperatures upto -22 Degree Cel. 3. Effective process control for minimum distribution cost. 

'Cold, Clean, and On-Time Delivery'
Plays a very vital role in maintaining the integrity of the products throughout the entire 'cold chain'.

Mc D India supply chain
 Quality Inspection Programme (QIP) carries out quality checks at over 20 different points in the Cold Chain system. Setting up of the Cold Chain has also enabled it to cut down on operational wastage  Hazard Analysis Critical Control Point (HACCP) is a systematic approach to food safety  Based on HACCP guidelines, control points and critical control points for all McDonald's major food processing plants and restaurants in India have been identified

The McDonald’s Supply Chain
 McDonald’s Supply Chain Challenges
 Even stronger focus on freshness and quality  On-going product innovations  Strong customer demand fluctuations based on promotions  Order- and inventory management restaurant – DC – supplier raw material supplier  Bull Whip effect  Change Management in a decentralized structure

Future orientated strategies

Supply Chain Integration

One Stop Shopping
The McDonald’s Supply Chain “One Stop Shopping” processes and an automated water supply have a lot in common:
“As demand arises on customers’ side ...

... supply turns on and off automatically, ... … but they need not care where the goods come from!”

“ One-Stop-Shopping“ Lean Logistics Solution

Supply Chain Services for McDonald‘s restaurants

Results

Results
Goals:
 Yield

Achievements:
 Yield

Improvement

Improvement

 0.15% increase in Gross Margin

 Gross Margin improvement > 0.15%

 Raw Waste Reduction
 Not included in Business Case

 Raw Waste Reduced
 Reduced by 30%

Inventory Reduction
 15% decrease on the Inventory Level

Average Inventory Reduced
 Reduced by 30%

Store Transfers Reduction Simplification of Order Process

Store Transfers Halved Order Time Halved

Synchronization delivers significant business benefits to both the customer and the supply chain
 Enablers
 One stop shopping concept  Inventory management - Central file management - Restaurant simplification

 Synchronizing the perishable Supply Chain
 Demand forecasting
 Promotional + Continuous Supply  Supplier and DC level

 Supply Planning
 Restaurant and DC level

 Visibility and Collaboration across the chain

Thank you very much for your kind attention

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