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Supply

Chain Management at McDonalds

How to manage the supply chain of one of the worlds biggest restaurants
Nanang Heru S.
Nur Itsna Fahmi A.
Putri Amandhari
Christoph Studeny

Overview
McDonalds history/now
Global supply chain strategy
Supplier partners
Supply chain in the fast food sector


McDonalds supply chain -> cold chain

McDonalds E-procurement
Sustainability at McDonalds

MC DONALDs TIMELINE
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 rst restaurant
outside U.S in Canada

McDonalds now

McDonald's is the world's leading global foodservice retailer


with over 35,000 locaVons
serving approximately 70 million customers in over 100 countries each day.
About 1.800.000 employees
More than 80% of McDonald's restaurants worldwide are owned and
operated by independent local business men and women
Over 57% are convenVonal franchisees

Nearly 24% are licensed to foreign aliates

19% are Company-operate

Global supply chain strategy


McDonalds global supply chain is world-class
Thousands of supply partners globally

purchase food, packaging, equipment and other goods

Handshake agreementsno complicated contracts

Focus on building long-term relaVonships with suppliers

Strict guidelines ensure stores get the best products


High quality standards and product specicaVons

Global supply chain strategy


A quality leadership board (technical, safety and supply
chain specialists) provide guidance for all aspects of
quality
Enforce compliance, quality centers & spot inspecVons
Supplier Workplace Accountability
Supplier Code of Conduct

Corporate publishes a list of approved suppliers stores


choose local suppliers whenever possible
Product freshness is assured
Minimize transport cost and Vme

Supplier partners

McDonalds denes six supplier ahributes:


Assured supply of product
Low cost and best value
Technical competencies
System player
Shared values
Management excellence

Supplier partners
Mutual transparency is a success factor
builds trust

InformaVon is openly shared between stores


and vendors

Partnership culture
The three-legged stool

Corporate sta (McDonalds)


Franchisees (Individuals)
Supplier base

McDonalds works closely with suppliers


Food safety is directly linked to traceability

Supply Chain in the Fast Food Sector


Two key components:

1. Raw materials are essenVal to


the ulVmate product - value
added component.
2. Quick, convenient, and quality
food.

The industry supply chain is


that it is driven by the
consumer.
Many dierent compeVtors

McDonalds Supply Chain Management


Supply chain is extensive and complex
Ecient, safe and quality food at an aordable price
Large number of direct suppliers -> companies that
make or deliver nal products to their restaurants
Large number of indirect suppliers -> companies and
farms that grow or process the ingredients that are
eventually delivered to their direct suppliers.

Cold Chain
Procurement

Warehousing

Transporta;on

Retailing of
food product

McDonalds supply chain


has an entire cold chain
network for the movement
of perishable goods

They also employ hygiene regulations; product handling


standards; emergency and contingency plans; risk and crisis
management

McDonalds E-Procurement
McDonalds E-Procurement System is basically a main
reason for their successful supply chain management.

It is so ecient that it provides the backbone not only to all
the logisVcs but the whole McDonalds supply chain
management.
E-MAC Digital:
(Internet procurement site designed for McDonald's
CorporaVon's 35,000 franchises)

E-MAC Digital Company is E-Procurement website which is
jointly owned by McDonalds and Accel-KKR Internet Co.
It is a procurement hub launched in 2001 allow all of
McDonald's franchises across the globe to buy everything
needed to run their restaurants.

Major Supplier

Small Suppliers

E-MAC Digital

McDonalds E-Procurement
In the process of procuring a product, a
typical McDonalds franchise restaurant
places an order through E-MAC digital
website.

The order is sent to the suppliers. Suppliers
order is processed and managed by the
logisVcs.

The logisVcs sends the order of the
products to the franchise restaurants. It is
the responsibility of the E-MAC and
logisVcs that the products are sent to the
restaurant.

All the above, steps are handled and
executed by the E-MAC digital.

Global sustainability vision

protability yields high-quality safe products without supply


interrupVon while leveraging our leadership posiVon to create an net
benet by improving ethical, environmental, and economic
outcomes.
Jessica Droste Yagan
Senior Manager for Sustainable Supply

Sustainability at Mc Donalds
Green Restaurant Design Enhance
current building standards to
incorporate further opportuniVes
for eciency and innovaVon in
the design
All of McDonalds sh product is cerVed sustainable by the
Marine Stewardship Council

Sustainability at McDonalds
Global governance structureSustainable Supply Steering Commihee
Comprised of world-wide SCM reps; social responsibility; and corporate communicaVons
Energy eciency Increase energy eciency in restaurants to reduce costs and be more
ecofriendly
Sustainable Packaging & Waste Management Explore ways to reduce impact of our
consumer packaging and waste82% recycled products used in packaging
McDonald's Europe Sustainable Supply: Our Story so Far

Result of Supply Chain Integration:


Signicant business benets to both the customer and the supply chain
Enablers
One stop shopping concept
Inventory management
Central le management
Restaurant SimplicaVon
synchronizing the perishable supply chain
Demand forecasVng
Supply planning
Visibility and collaboraVon across the chain

THANK YOU FOR YOUR ATTENTION

References:

Earley, et al. (2004) McDonalds Restaurant


(2012) McDonalds CorporaVon 10K
(2010) Inside the McDonalds Empire. CNBC. hhp://www.youtube.com/watch?v=MNtludhRh8
hhp://www.aboutmcdonalds.com/mcd/sustainability/our_focus_areas/sustainable_supply_chain.html
hhp://www.aboutmcdonalds.com/mcd/investors/company_prole.html
hhp://www.supplychainbrain.com/content/industry-verVcals/food-beverage/single-arVcle-page/arVcle/
mcdonalds-ahributes-much-of-its-success-to-working-closely-with-suppliers/
Arnseth, L. (2011). Supplying the golden arches.
hhp://www.ism.ws/pubs/ISMMag/ismarVcle.cfm?ItemNumber=21980
hhp://www.ism.ws/pubs/ISMMag/ismarVcle.cfm?ItemNumber=10959
Cheema, P. (2012) The Big Idea; McDonalds Unravels its Supply Chain
www.mcdonalds.com
hhps://www.youtube.com/watch?v=OPrvgReNrWI
hhp://www.mcdonalds.co.uk/content/dam/McDonaldsUK/People/Schools-and-students/mcd_markeVng.pdf
Shlideshare (2014): hhp://de.slideshare.net/mariakerawala/mc-donalds-scm-ppt