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Mc donalds

McDonald's Corporation (NYSE: MCD) is the world's largest chain ofhamburger fast food restaurants, serving more than 58 millioncustomers daily.[4] In addition to its signature restaurant chain,

McDonalds Corporation held a minority interest in Pret A Mangeruntil 2008, was a major investor in the Chipotle Mexican Grill until

2006,[5] and owned the restaurant chain Boston Market until 2007.

McDonalds is present in 40 Indian cities with 217 restaurants andserves 650,000 customers daily.

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background

A McDonald's restaurant is operated by either a franchisee, an affiliate, orthe corporation itself.

The corporation's revenues come from the rent, royalties and fees paid bythe franchisees, as well as sales in company-operated restaurants.

McDonald's primarily sells hamburgers, cheeseburgers, chicken products,

french fries, breakfast items, soft drinks, shakes, and desserts. McDonalds is known for its beef burgers. But in India, which is known for

its religious sensitivities, a special effort was made to create new menuswithout beef and pork. About 60 percent of Indias population isvegetarian, so new vegetarian recipes were devised for this segment

This Quick Service Restaurant chain (QSR) promises its customers a one-minute guarantee of service, which is amply evident by the speed ofoperations at the outlet.

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Supply chain practices

Supply chain efficiency helps in:-

I. minimizing cost,

II. cut down the delivery time,

III. improve the profits

IV. maintain the highest standards. The importance of supply chain can be understood by the

fact that before setting up their first restaurant in India,mc donalds infused around Rs. 400 crores in the supplyand delivery chain.

Mc donalds india source all its products and its rawmaterials from India only.(localization).

It now has 38 suppliers across the country.

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History of mcdonalds supply chain.

The seed of McDonald's success was sown in1990 - six years before it started its actualoperations.

From 1990 onwards, special teams arrived fromthe United States to check the effectiveness ofIndias logistics industry, the reliability of itstransport sector, etc.

Work was done to put together a supple and

efficient supply-chain which, despite Indiascrumbling infrastructure, would work at anoptimal level.

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Effects used:- Bull Whip effect Cannibalization

Another benefit in the company's favour was its expertise in theareas of agriculture, which allowed it, along with its suppliers, towork with farmers in Ooty, Pune, Dehradun and other regions tocultivate high quality iceberg lettuce.

To take care of price fluctuations, the company goes with yearlyrate agreements with suppliers.

"McDonald's had worked aggressively to attain the right suppliers and systems that

ensured that 90 per cent of yield was indigenous before the doors were opened to

consumers. The only products that we used to import were oil and fries, for whichwe have had made arrangements to manufacture the oil in India. We ensured that

the products developed locally abide by global McDonald's standards,"

Suppliers like Coca Cola which is McDonalds beverage partner also, for instance,

take water management classes in its restaurants to ensure potable quality of

drinking water.

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SUPPLY CHAIN OVERVIEW OF

MCDONALDS

Source: www.personal.psu.edu/kzk107/McDonalds

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LOCAL SUPPLIERS

Continuing with its culture, McDonald has tied

up with various local supplier to carry out its

business in India.

McDonald's India works with as many as 38

Indian suppliers on a long-term basis, besides

several others standalone restaurants working

with it, for various requirements.

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MCDONALD'S SUPPLIERS IN INDIA Amrit Foods: Amrit Foods, a division of Amrit Banaspati, has been

associated with McDonald's India as a supplier of Dairy Mixes, Soft Serve

Mix and Milk Shake Mix for over a decade now.

Cremica Industries: Cremica Industries was started in 1980 as small ice-cream unit run by Mrs Bector out of her backyard in Ludhiana. Howeverafter its initial success Cremica added buns and biscuits to its product lineand in 1996 McDonald's selected Cremica to be its supplier for buns, liquid

condiments, batter and breading in collaboration with its internationalpartners.

Dynamix Dairies: McDonald's India has approved Dynamix Dairies,Baramati (Maharashtra) for supply of cheese to its restaurants. Dynamixhas a modern automated plant that is fully computer controlled.

Trikaya Agriculture: Trikaya Agriculture is McDonald's supplier of freshiceberg lettuce. The farms at Talegaon, Maharashtra produce the cropthroughout the year.

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suppliers

growers and processors who includeimportantly, lettuce and potatogrowers, poultry farms

companies which manufacture coatingsystems that coat the vegetable andchicken patties

Tier 2suppliers

process them, for instance, intovegetable and chicken patties done

by Vista Processed Foods Pvt. Ltd potato products like French fries,

potato wedges and hashbrowns doneby McCain Foods India Pvt. Ltd.

Tier 1suppliers

ingredients are supplied to Tier-I

suppliers

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DISTRIBUTION CENTERS

In the supply chain management for a QSR, the distribution centreshold special place for bringing food right to the outlet counters. ForMcDonald's India, the distribution centres came in the followingorder: Noida and Kalamboli (Mumbai) in 1996, Bangalore in 2004,and the latest one in Kolkata (2007).

The company owns DCs in Noida and Mumbai which are primaryDistribution Centers. The other two Distribution Centers are inBengaluru and Kolkata and are housed in leased properties.

The supply-chain of the fast food chain is in effect a hub-and-spokemodel because the DCs act as hubs.

The transportation of McDonalds has been completely outsourced

and since 80 percent is refrigerated truck movement, the companyhas a dedicated fleet which transports their goods.

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Outsourcing

the company has a 100 percentoutsourced supply chain.

the principles of trust andcollaboration between the brand,the owners or operators, and the

suppliers. Its like a three-legged stool, Each

leg (principle) has to be equallystrong so that theres nocollapsing foundation.McDonalds also believes in aculture of partnership andtransparency with its suppliers

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The 3 legged stool: Corporation FranchiseesSuppliers

Exclusive, certified facilities

Handshake agreements, Trust

Long term win-win partnership, risk sharing Rigorous product and service specifications

Strong focus on quality, product specification andenvironmental audits

Decentralized supplier structure, zone consolidation formultinational suppliers

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SOLE DISTRIBUTION PARTNER

RK Foodland manages the four DCs and since

it has a transport division, handles the truck

movement in the supply-chain right through

the country.

Foodland is the sole distribution partner for

McDonalds in tier-2.

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PLATTER OF SERVICES BY FOODLAND

Supply Chain Structuring

Inventory Planning & Replenishment

Management

Warehouse Management

Customer Order Fulfillment

Logistics Temperature Controlled

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KEY FEATURES OF FOODLAND

Dedicated to cold chain movement

The only logistics solution provider with expertise inhandling agri produce

Total kilometer run per month is 7,00,000 km Perishable tonnage handled per month 7,000 tons

Robust quality systems & processes

First in the country to use multi temperature vehicles

Use of innovative methods to ensure temperatureintegrity during transit

Experienced staff The BEST in the industry

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McDonalds carefully calibrates the performanceof foodland, measuring it against its own KPIs toensure its performance does not dip below itsown exacting standards.

The DCs are assessed on several factors like the total number of cases managed per man hour,

Warehouse efficiency,

overtime as a percentage of the total number of hours

worked the number of cases handled per trip

truck utilization, etc.

ONE STOP SHOPPING

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ONE-STOP-SHOPPING

LEAN LOGISTICS SOLUTION

Source: www.personal.psu.edu/kzk107/McDonalds

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THE COLD CHAIN

Prior to McDonald's arrival in India, the conceptof a cold chain for the distribution of food anddairy products from the farm to the end supplierwas at a very nascent stage of development.

For five years prior to opening our firstrestaurant, McDonald's pioneered the effort todevelop this cold chain so that the high standardswould be assured.

Various Indian and international players lateradopted this system to deliver quality freshproduce to consumers.

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THE COLD CHAIN (contd.)

The entire network of McDonalds consists ofmovement of goods through a cold chain. Thesuppliers are also a part of this.

The same truck can carry products at differenttemperatures, ranging from frozen products at -18C to -25C, chilled products from 1C-4C and dryproducts at ambient temperatures.

Apparently, McDonalds is the only companywhose supply-chain network is characterized bythis successful experimentation.

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THE PULL-SUPPLY SYSTEM

The supplier thus maintains barely any extra stocks;only if there is a contingency,

only then the supplier produces it

DC routes the order to the supplier

The restaurant issues orders to the distributionCenter

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DEMAND FORECAST

McDonalds has devised the 31Q system 3 stands for the three years that the fast food chain will keep

checking its plans,

1 represents the detailed forecast of the next year

Q symbolizes the quarterly monitoring of these forecasts.

Every restaurant manager knows the exact time of arrivalof each product SC team can work backwards to ensuretimely distribution Lead time can be predicted perfectly low inventory can be managed. With a maximum inventory of ten days in its system,

McDonalds maintains an efficient inventory turn ratio of 36.

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TECH PROWESS

McDonalds, is powered by various IT systems

which enhance its effectiveness.

Vista Processed Foods Pvt. Ltd, Tier-1 supplier of

the chain use SAP Foodland uses ERP implemented by RAMCO

Marshalls.

At the restaurant level, the fast food chain has in-

house developed technologies which track day-to-day sales, enables restaurants to schedule staffand send forecast orders to DCs.

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SYNCHRONIZATION OF SUPPLY CHAIN

Enablers One stop shopping concept - Central file management

Inventory management - Restaurant simplification

Synchronizing the perishable Supply Chain Demand forecasting

Promotional + Continuous Supply

Restaurant and DC level Supply Planning

Restaurant and DC level

Visibility and Collaboration across the chain

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REFERENCES

http://www.aboutmcdonalds.com/mcd/sustainability/our_focus_areas/sustainable_supply_chain.html

www.bestpractices.mcdonalds.com/sections/2-best-of-sustainable-supply

http://www.mcdonaldsindia.com/

www.personal.psu.edu/kzk107/McDonalds

http://logisticsweek.com/feature/2011/07/the-big-idea-mcdonalds-unravels-its-supply-chain/

http://www.aboutmcdonalds.com/mcd/sustainability/our_focus_areas/sustainable_supply_chain.htmlhttp://www.aboutmcdonalds.com/mcd/sustainability/our_focus_areas/sustainable_supply_chain.htmlhttp://www.aboutmcdonalds.com/mcd/sustainability/our_focus_areas/sustainable_supply_chain.htmlhttp://www.mcdonaldsindia.com/http://www.mcdonaldsindia.com/http://www.mcdonaldsindia.com/http://www.aboutmcdonalds.com/mcd/sustainability/our_focus_areas/sustainable_supply_chain.htmlhttp://www.aboutmcdonalds.com/mcd/sustainability/our_focus_areas/sustainable_supply_chain.htmlhttp://www.aboutmcdonalds.com/mcd/sustainability/our_focus_areas/sustainable_supply_chain.htmlhttp://www.aboutmcdonalds.com/mcd/sustainability/our_focus_areas/sustainable_supply_chain.html

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THANK YOU!!