CASE STUDY

ON

MCDONALDS

NAME
PRN

: PRIYAM MISHRA
:

BATCH : 2013 - 2017

1

Introduction
McDonalds is one of a few brands that succeed in inventory management in virtually
every country in the world. It owns more than 30.000 restaurants in 119 countries and
regions, with 50 million customers every day.
Inventory management, specifically stock management, is a challenging task for every
McDonalds manager. Stock management includes two parts, forecasting demand so
that products will not be thrown as waste, and controlling stock accurately for raw
materials.

Inventory Management
Between the central restaurant supply planning manager and individual restaurants,
there are constant communication which helps to manage the inventory more
accurately. A central team, including employees who have worked in the individual
restaurants as well as stock control specialists, serve as the regional planner.
Each regional planner works with 100 restaurants and communicates with them on a
daily basis via emails and tele-conferences. Any factors that would influent the inventory
level need to be discussed within the team. Regional planners also work with the new
ICT stock control system called Manugistics to ensure enough raw materials such as
beef, potato and bread.
The regional planner include a range of ad-hoc factors in calculation of the forecast for
inventory, so that they can predict future demand based on both past performance and
future sales campaigns. For example, the sales of Big Mac will increase during the Buy
one Get one Free campaign.

Stock Control Charts

A stock control chart shows the balance of orders for new inventory against sales. The
system is heavily dependent on figures for expected sales. For example, if sales of
McFlurry are running out of the system, then stocks of ice-cream would need to be
coming into the system.

The Manugistics system uses a couple years worth of product sales history to generate
time series forecasts for each restaurant. The regional planner team applies a specific
factor(the blue blocks in the graph above) to the time series analysis for the forecast.
After calculation, the graph can generate a forecast for future inventory level.

Closing Remarks

Effective and accurate inventory management is crucial to any business, particular chain
restaurants like McDonalds. Thanks to McDonalds effort in stock management, each
restaurant manager can spend more time focusing on delivering McDonalds high
quality service and cleanliness. The whole system is also optimized for reducing wastes.
With efficient use of raw materials and high throughput of work-in-progress, fewer
wastes are produced, which produces a win-win situation for McDonalds and the
environment.