Supply chain management of McDonalds Presentation Transcript

1. SUPPLY CHAIN MANAGEMENT& DISTRIBUTION MANAGEMENT Perishable Products (Restaurant Chain) 2. Presented by: P. Saravanan SS10-12/Finance IIPM, Chennai 3. McDonalds History It started as a drive-in-restaurant in the late 1940s. In 1966, McDonalds was listed on the New York Stock Exchange. In June 1967, McDonalds opened its first restaurant outside U.S in Canada In 1996, McDonalds entered India in a joint venture.

4. McDonalds In India 1996 - First restaurant opens in India, at Basant Lok ,Vasant Vihar, New Delhi. McDonalds India is a 50 50 JV partnership between McDonalds Corporation (U.S.A) and two Indian businessmen Amit Jatia (Hard castle Restaurants Private Limited, Mumbai)and Vikram Bakshi (Connaught Plaza Restaurants Private Limited, Delhi). Two separate operations in Northern & southern India. Partners and their management teams trained extensively in Indonesia & the U.S. Approximately 75% of the menu available in McDonalds in India is Indian ized and specifically designed to woo Indian customers.

5. PLACE Location Tier 1 cities Big family size restaurants: High density marketplaces Shopping Malls Railway Stations/Metro Stations Tier 2 Cities National Highways (Drive Ins)Channels Franchise Model Company Owned Flagship Outlets Coverage Pan India Presence

6. Co -BRANDING McDonalds has major tie-ups with various companies as their co-branding strategy Few are: Coco-cola Barbie Cadbury Hot wheels 7. Supply Chain Management 8. McDonalds SUPPLY CHAIN McDonalds Supply chain is based on the three-legged stool concept : Suppliers Company Franchisees 9. Vital links of Mc Donalds cold chain. Procurement McDonalds spent a few years setting up a unique Cold Chain. warehousing The Cold Chain is necessary to maintain the integrity of food products and retain their freshness and Transportation nutritional value. Retailing of food product

10. McDonalds took 4 years and around Rs 450crores to set up the food supply chain even before opening its 1st restaurant. McD India has pioneered the cold chain management system. They provided assistance in the Selection of high quality seeds Drip-irrigation technology Refrigerated transportation system

11. E-Procurement E-procurement (electronic procurement) is the purchase and sale of supplies, Work and services through the Internet as well as other information Enterprise Resource Planning. e-procurement is a Web site that allows qualified and registered users to look for buyers or sellers of goods and services. Buyers or sellers may specify costs or invite bids online. Customers can Qualify for volume discounts or special offers on the web.

12. How McDonalds Uses E- procurement Systems Emac Digital: (Internet procurement site designed for McDonalds Corporations 27,000 franchises ) Emac Digital Company is E-Procurement website which is jointly owned by McDonalds and Accel-KKR Internet Co.

13. It is a procurement hub launched in 2001 allow all of McDonalds franchises across the globe to buy everything needed to run their restaurants. From uniform to Ham Burger 14. Aside from being faster and more convenient for franchisees, the procurement site also allow business owners to buy supplies and materials at a discounted price, ultimately reducing costs for McDonalds. EProcurement allows 85% cut in costs according to McDonalds supply chief Edwards.

15. Benefits For the Suppliers McDonalds works with two types of suppliers. Major Suppliers Small Suppliers 16. Major Small Supplier Suppliers Emac Digital 17. McDonalds E-Procurement Model Global Franchises Place Orders Supply Received Emac Digital Suppliers Logistics 18. IP (Internet protocol) technology The quicker connection would also allow McDonalds to track purchases and offer customer loyalty programs. it will connect headquarters with stores. Replacing traditional and old Dial-up Networking. McDonalds can collect data much faster

19. SUPPLY CHAIN INTEGRATION 20. Geographically Diverse suppliers: Ensuring stringent quality standards Dedicated R Dedicated quality program. Network of milk collection centres equipped with bulk coolers. Fully automatic international standard processing facility. 21. SUPPLIERS1.Dynamix Dairy Industries (Supplier of Cheese) &D centre

22. 2.Trikaya Agriculture (Supplier of Iceberg Lettuce) Specialized nursery with a team of agricultural experts Drip and sprinkler irrigation in raised farm beds with fertilizer mixing plant. The pack house, precooling and cold room are located at the farms itself to ensure no delay.

23. 3.Vista Processed Foods Pvt. Ltd(Supplier of Chicken and Vegetable products) World class infrastructure and support services. Separate processing lines for chicken and vegetable foods. Hi-tech refrigeration plants for manufacture of frozen food at temperatures as low as -35C.

24. 4. Amrit Food Supplier of long life UHT Milk and Milk Products for Frozen Desserts 25. OUTSOURCING THE INGREDIENTS ITEM PLACE Cheese Dynamix Dairy Industries Ltd., Pune Dehydrated onions Jain Foods, Jalgaon Iceberg lettuce Trikaya Agriculture, Pune Chicken patty Vista Foods, Taloja Veg. Patty, Veg. Nuggets, Pies Kitran Foods, Taloja Chicken (dressed) Riverdale, Talega on Buns Cremica Industries, Phillaur Eggless mayonnaise Quaker Cremica Pvt. Ltd., Phillaur Sesame seeds Ghaziabad Fish fillet patties Amalgam Foods Ltd., Kochi. Finns Frozen Foods, Nasik and Jain Vegetable for the patties Foods, Jalgaon Mutton and Mutton Patties Al Kabeer, Hyderabad

26. Logistics AFL Logistics 50:50 JV between Air Freight and FX Coughlin of USA- McDonalds international logistics partner 100 sales items in the restaurant 400 SKUs in the warehouse 200 restaurants per DC (~180 DCs globally) Delivery frequency: ~3/wk, higher in urban areas 2-3 stops per route Exclusive distributors (3PL) Strong quality focus (Cold Chain, HACCP, QIP)

27. Transportation The DC receives items from different parts of the country. The items are stored in rooms with different temperature zones and are finally dispatched to the McDonalds restaurants on the basis of their requirements.

28. Transportation The company has both cold and dry storage facilities with capability to store products up to -22 C as well as delivery trucks to transport products at temperatures ranging from room temperature to frozen state. The specially designed trucks maintained the temperature in the storage chamber throughout the journey.

29. Distribution Matching supplier production with deliveries to meet schedules and restaurant needs 3 centralized distribution centers at Mumbai, Delhi and Kochi Emphasis on economies of scale High storage volumes QIP (Quality Inspection Program)

30. Distribution HACCP (Hazard Analysis Critical Control Point) Food safety standards emphasizing prevention of faults rather than detection through inspection No Knife in restaurants 31. Radhakrishna Foodland Ltd Distribution Centres and cold storages. Completely dedicated distribution and supply chain. Specialized in providing services procurement quality inspection storage inventory management deliveries data collection recording and reporting

32. Radhakrishna Foodland Ltd Dry and cold storage facility Transportation trucks maintained at 22 C Implemented ERP software.

33. McDonalds Distribution systems McDonald uses three types of Distribution strategy Franchising Licensing Joint ventures 34. Franchising McDonald require franchising from countries on conditions like this The entrepreneur should be trained. 45000$ in franchise fees which is higher than other fast-food companies Total investment would range from 1 million to 1.8 million After setting the entrepreneur will have to pay 12.5 % as royalty tax Contract wll be for 20 years Cash liquidity should be around 250000

35. McDonalds Distribution systems Samsung Corby Crave Hit McDonalds: The joint promotion aims to generate excitement among the youth and providing them a feel of the touch phones and boosting their comprehension. McDonalds have license on Airports, Railways etc.

36. McDonalds Distribution systems Joint venture GAM Corp (Private) Ltd is a joint venture company of McDonalds Corporation USA. Mc Donalds is worlds leading Fast Food chain having over 30,000 restaurants world wide Other than this TOYS R US is another joint venture

ACKNOWLEDGEMENT
The 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 Mrs. SNEH P. DANIEL , 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.