McDonalds: Supply Chain Management

JAIPURIA INSTITUTE
OF
MANAGEMENT, LUCKNOW

McDonalds:
Supply Chain Management

Submitted To: Submitted By:

Mr. Ashish Trivedi Ashutosh Kumar Singh
JIML-09-038

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 McDonalds: Supply Chain Management

ACKNOWLEDGEMENT

sThe satisfaction and euphoria that accompany the successful

completion of any work would be incomplete unless we mention
some of the persons, as an expression of gratitude, which made it
possible, whose constant guidance and encouragement served as a
beckon light and crowned the efforts and success.

We take this opportunity of expressing our gratitude to Mr. Ashish

Trivedi, who has always been of immense help during the making of
this project, which helped us a great deal in enhancing our knowledge
by virtue of practical application. Her guidance and support carried us
all through the preparation of this project.

We regret any inadvertent omissions.

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 McDonalds: Supply Chain Management

TABLE OF CONTENTS

• Introduction…………………………………………………….01

• It starts with……………………………………………………01

• Some important facts…………………………………………02

• Indian markets…………………………………………………02

• Supply chain is………………………………………………...03

• Supply chain in mc donalds india……………………………04

• Mc donalds distribution centre……………………………….04

• Concepts of cold chain………………………………………..05

• Steps involved in cold chain concept………………………..06

• List of suppliers and how cold chain concept works……….07

• Different items are sourced from………………………….…09

• Three logistical drivers………………………………………..10

• Three cross functional drivers………………………………..10

• Pull/push process………………………………………………11

• Supply chain process………………………………………….12

• In lucknow we are at…………………………………………...13

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 McDonalds: Supply Chain Management

INTRODUCTION

McDONALDS IS …….

McDonalds is a name which is today synonymous with the fast food. McDonald's
is a fast food chain with restaurants all over the world with headquarters in oak
brooks, Illinois, US. It serves burgers and other fast food customized to local
tastes. Its philosophy has been 'one world, one burger;' which meant that the
burger must be consistent in terms of cost and quality. To meet such high
standards, it was essential to have an excellent supply chain management
system. In India, McDonald's had a very well orchestrated supply chain, called
the 'Cold Chain'.

IT STARTS WITH…….
• In 1954, Ray Kroc, 52, distributor of milk shake maker- multimixer, went to
see Mcdonalds brothers hamburger stall in California.
• With an opportunity, he thought to open several of such restaurants so as
to sell his multimixer milk shake machine.

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 McDonalds: Supply Chain Management

SOME IMPORTANT FACTS……

• In year 2004, mcdonalds was the largest marketer of fast food in the
world.
• 31000+ restaurants.
• 47 million customers served daily.
• 1999- 8th most valueable brand.
• 2000- ranked amoung top 100 firms in the world.

INDIAN MARKET………
• It’s a huge sub-continent.
• India is 4 times more populated than the US.
• India has 300 million strong middle class people.
• India is one of the largest economy.
• Incorporated in 1993, MIPL is Mcdonalds india’s wholly owned
subsidery.
• In India, Mcdonalds open its first restaurant in vasant vihar, South Delhi.
• 50:50 joint venture with-
(1) North- Connaught plaza restaurants( owned by Mr. Vikram Bakshi)
and
(2) West- Hardcastle restaurants ( owned by Mr. Amit Jatia).

World map showing the presence of McDonalds and the year when it
started. In India it started in year 1996.

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 McDonalds: Supply Chain Management

A SUPPLY CHAIN IS ……

A supply chain is a system of organizations, people, technology, activities,

information and resources involved in moving a product or service
from supplier to customer. Supply chain activities transform natural
resources, raw materials and components into a finished product that is delivered
to the end customer.

Supply Chain Management involves the planning and management of all

activities involved in sourcing and procurement, conversion, and all logistics
management activities. Importantly, it also includes coordination and
collaboration with channel partners, which can be suppliers, intermediaries, and
customers. Supply chain management integrates supply and demand
management within and across companies. Supply Chain Management is an
integrating function with primary responsibility for linking major business
functions and business processes within and across companies into a cohesive
and high-performing business model. It includes all of the logistics management
activities noted above, as well as manufacturing operations, and it drives
coordination of processes and activities with and across marketing, sales,
product design, finance and information technology.”

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 McDonalds: Supply Chain Management

The primary objective of supply chain management is to fulfill customer demands

through the most efficient use of resources, including distribution
capacity, inventory and labor.

SUPPLY CHAIN IN MC DONALDS INDIA…….

In a fast food business, supply chain is of highest importance. It helps in

minimizing cost, cut down the delivery time, improve the profits and at the same
time 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
supply and delivery chain.
Mc donalds india source all its products and its raw materials from India only. Mc
donalds develops local businesses that supply them the products and that too of
highest standards. Today mc donalds have around 38 suppliers and that too on
the long term basis.

MC DONALDS DISTRIBUTION CENTRES……

• Noida and kalamboli(Mumbai)……………..1996

• Bengaluru……………………………………..2004
• Kolkata…………………………………………2007

1st distribution agreement was done by Radhakrishana group, a group engaged

in food business in the year 1993 and it was their 1st distribution centre.

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 McDonalds: Supply Chain Management

CONCEPT OF COLD CHAIN ………………

A cold chain is a temperature-controlled supply chain. An unbroken cold chain is

an uninterrupted series of storage and distribution activities which maintain a
given temperature range. It is used help extend and ensure the shelf life of
products such as fresh agricultural produce, processed foods, photographic film,
chemicals and pharmaceutical drugs.
This concept of cold chain in food industry and that too on such a large scale was
started by mc donalds only.
This concept was unique in India and to start this concept, it took around 6 years.
It benefited both farmers as wella s the consumers, as they are getting the fresh,
best quality and great value food. With this concept mc donalds cut down its
wastage and able to maintain its freshness and nutritional value of raw material.

STEPS INVOLVED IN COLD CHAIN CONCEPT…….

• Procurement
• Warehousing
• Transportation
• Retailing

All the above activities took place in tempreture controlled atmosphere.

• picture of a temperature
controlled truck.
STEPS INVOLVED IN
COLD CHAIN
CONCEPT……

McDonald's finding the factor of

cold room being vital ensured that
even before vegetables from farms
entered the refrigerated zones,
they were locked in a pre-cooling
room to remove field heat.
Vegetables were placed in the pre-
cooling room within half an hour of
harvesting where rapid cooling
decreased the field temperature of

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 McDonalds: Supply Chain Management

vegetables to 2ºC within 90 minutes. Then a large cold room (a refrigerated van)
was used for transportation to the distribution centers. In the van, the
temperature and relative humidity of crop was maintained at 1-4ºC and 95
per cent, respectively and the flavors and freshness are locked

At the suppliers' level, care was taken to guard against any possible
contamination or interruption in the cold chain that can break the link and have a
detrimental effect on the quality of our product.

The iceberg lettuce from Ooty, mutton patties from Hyderabad and sesame seed
buns from Punjab were all delivered to Radhakrishna Foodland Private Limited
(RFPL) distribution centre (cold storage) in its refrigerated vans. RFPL stored the
products in controlled conditions in Mumbai and New Delhi and supplied them to
McDonald's outlets on a daily basis.

By transporting the semi-finished products at a particular temperature, the cold

chain ensured freshness and adequate moisture content of the food. The
specially designed trucks maintained the temperature in the storage chamber
throughout the journey. Drivers were instructed specifically not to switch off the
chilling system to save electricity, even in the event of traffic jam.

LIST OF SUPPLIERS AND THE DISCRIPTION SHOWING HOW

COLD CHIN CONCEPT WORKS AND CONTRIBUTE TOWARDS
EFFICIENCY…….

• Dynamix dairy industry (cheese)

• Trikaya agriculture (iceburg lettuce)
• Vista processed food pvt ltd. (chicken and veg range of products)

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 McDonalds: Supply Chain Management

• Radhakishana food land(distribution centre- delhi and mumbai)

• Amrit food(long life UHT milk and milk products for frozen desserts)

Below mentioned is the data about Refrigerated vans for McDonald's distribution

Type Route Quantity

National inbound Suppliers to Distribution Center 20 vehicles
Outbound North Distribution Center to restaurant 13 vehicles
Outbound West Distribution Center to restaurant 11 vehicles
Outbound South Distribution Center to restaurant 1 Vehicle

DYNAMIX DAIRY INDUSTRY (SUPPLYING CHEESE)

• Firm from baramati, maharashtra

• Milk collection centres with bulk coolers
• International standard and processing facilities
• Stringent quality control measures

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 McDonalds: Supply Chain Management

• All activities from procurement of milk to changing it into cheese and then
to serve that cheese in the restaurant is all under temperature control
atmosphere

TRIKAYA AGRICULTURE (SUPPLYING ICEBURG LETTUCE)

• Advanced agricultural practices helps them to grow speciality crops like

lettuce and herbs.
• Pre cooling room and large cold room for post harvest.
• Refrigerated transportation.

VISTA PROCESSED FOOD PVT. LTD. (FOR SUPPLYING FROZEN

CHICKEN AND VEG PRODUCTS)

• For chicken, temperature maintained is -35 degrees Celsius.

• Refrigerated transportation.

RADHA KRISHNA FOODLAND (DISTRIBUTION CENTRE)

• Specialized in handling large volumes.

• Activities involved are procurement, quality inspection, storage, inventory
management, deliveries, data collection, recording and reporting.
• One stop shop for all distribution management services.
• Both dry and cold storage facility.

AMRIT FOODS

• An ISO 9000 firm

• Supplies long life UHT milk/ milk products for desserts.
DIFFERENT ITEMS ARE SOURCED FROM DIFEERENT
GEOGRAPHY IN INDIA……..

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 McDonalds: Supply Chain Management

• BUNS-shah bector &sons, Maharashtra and cermica, ludhiyana

• BATTER & BREADING- cremica, ludhiyana
• VEGETABLE PATTY- kitran foods, taloja, Maharashtra
• CHEDDAR CHEESE- dynamix dairy, baramati, Maharashtra
• SEASAME SEED- Gaziabad, UP
• SPL VEG EGGLESS SAUCE- Quaker, cermica, ludhiyana

THREE LOGISTICAL DRIVERS…….

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 McDonalds: Supply Chain Management

1. Facilities- they are the actual physical location in the supply chain network
where the product is stored, assembled, or fabricated. The two main
facilities are production sites and the storage sites.
In McDonalds, because the products are perishable, storage time was
minimal so as to reduce the wastage.

2. Transportation- it is the process where the inventory is moving from place

to place. Refrigerated vans are used here in this case.

3. Inventory- it includes raw materials, work in progress, and finished goods

within a supply chain.

THREE CROSS-FUNCTIONAL DRIVERS……

1. sourcing- who will perform which activity( production, storage,

transportation, and distribution) in a supply chain.
This activity was taken care by mcdonalds corporation.

2. information- it includes data and analysis related to facilities, inventory,

transportation, cost, prices and customers in the whole supply chain.
This activity was done by Radhakrishana food land that acts as their
distribution centre.

3. pricing- how much a firm could charge for a particular goods and services
that it makes available in the supply chain.
Here it was done by the mcdonalds only.

PULL/PUSH PROCESS

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 McDonalds: Supply Chain Management

Pull processes are initiated by a customer order while the push processes are
initiated by the anticipation of customer order.

Mcdonalds use both pull as well as push process, to a certain extent push is
created and after that level the pull created by the firm did its task. One important
question can be asked to what level that push can be applied.The products will
be pushed to the restaurants where the customers automatically demand that
product and hence a pull is created.

Various Suppliers supplies the materials

Products delivered to Distribution centres

Products delivered to restaurant

Push stops ,
pull starts here

Customer order at restaurant,

Fig. showing the boundry of pull and push, push last till the product reaches the
restaurant and pull starts when a customer orders the product.

SUPPLY CHAIN PROCESS CYCLE……..

The processes in the supply chain are divided into a series of cycles, each
performed at the interface between 2 successive stages of supply chain

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 McDonalds: Supply Chain Management

customers

Customer order cycle

Retailer/ McDonalds restaurants

Replenishment cycle

distributor

Procurement cycle

suppliers

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 McDonalds: Supply Chain Management

IN LUCKNOW WE ARE AT……..

• fun republic
• west gate mall
• sahara ganj

21 IN UTTAR PRADESH
• Noida (5),
• Ghaziabad (4),
• Mathura (1) (Highway and Drive
Thru),
• Kanpur (2),
• Meerut (2),
• Lucknow (3),
• Agra (1),
• Allahabad (1),
• Varanasi (2)

79 IN NORTH AND EAST

• 33 in Delhi
• 22 in Uttar Pradesh
• 11 in Haryana - Faridabad (3), Manesar
(1) (Highway and Drive - Thru),
Gurgaon (5), Karnal (1) (Highway and
Drive - Thru), Panipat (1)
• 7 in Punjab - Chandigarh (2), Ludhiana
(2), Doraha (1) (Highway and Drive -
Thru), Jalandhar (1), Patarsi (1)
(Highway and Drive - Thru)
• 3 in Rajasthan - Jaipur (3)
• 1 in Uttaranchal - Dehradun (1)
• 1 in West Bengal – Kolkata (1)
• 1 in Himachal Pradesh- Jabli (1).

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53 IN WEST AND SOUTH

• 32 in Maharashtra – Mumbai (23), Pune (8), Nasik (1)

• 7 in Gujarat – Ahmedabad (4), Vadodara (2), Surat (1)
• 7 in Karnataka – Bangalore(7)
• 4 in Andhra Pradesh – Hyderabad (4)
• 3 in Madhya Pradesh – Indore (3)

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