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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. Dynamix Dairy Industries (Supplier of Cheese)
2. Trikaya Agriculture (Supplier of Iceberg Lettuce)
3. 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

3) Vista Processed Foods Pvt. Ltd.
(Supplier of Chicken and Vegetable range of products including Fruit
Pies)

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 de-
centralized 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: Achievements:
 Yield Improvement  Yield Improvement
 0.15% increase in Gross Margin  Gross Margin improvement > 0.15%
 Raw Waste Reduction  Raw Waste Reduced
 Not included in Business Case  Reduced by 30%
Inventory Reduction Average Inventory Reduced
 15% decrease on the Inventory Level  Reduced by 30%
Store Transfers Reduction Store Transfers Halved
Simplification of Order Process Order Time Halved
Synchronization delivers
significant business benefits to
both the customer and the supply
chain
 Enablers
 One stop shopping concept - Central file management
 Inventory 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