MC DONALD'S SUPPLY CHAIN

FAST FOOD INDUSTRY ANALYSIS

The Global Fast Food Restaurants industry has managed to grow over the past five years despite being battered by a weakened global economy and society's increasing awareness of the health risks associated with a diet high in fat, salt and sugar. The industry experienced steady and growing demand from emerging economies The industry's attempts to respond to changes in consumer preferences have also supported revenue growth.

Contd..
Over the five years to 2013, revenue is expected to grow at an average rate of 2.5% per year. Industry revenue declined 2.6% in 2009, but bounced back 4.4% in 2010 and continued growing through 2011 and 2012. In 2013, revenue is expected to grow an additional 3.6% to total $526.2 billion.

INDUSTRY SHARE

GROWING FIRMS

FOUNDED & FOUNDER

May 15, 1940 in San Bernardino, California McDonald's

Corporation, April 15, 1955 in Des Plaines, Illinois. Richard and Maurice McDonald, McDonald's restaurant concept Ray Kroc, McDonald's Corporation founder.

McDonalds IN INDIA
Entered India in 1996 through a joint venture with
Hardcastle Restaurants Pvt. Ltd. and Connaught Plaza Restaurants Pvt. Ltd. Special menu with vegetarian selection, no beef Products using Indian spices - McVeggieburger, McAloo

Tikki burger
Indian local suppliers provide McD with highest quality freshest ingredients

BASIC INFORMATION
Number of locations Revenue Operating income Net income Total assets Total equity Employees 34,000+ worldwide US$ 27.56 billion (2012) US$ 8.60 billion (2012) US$ 5.46 billion (2012) US$ 35.39 billion (2012 US$ 15.29 billion (2012) 1,800,000 (2013)

McDonalds FOUR PILLARS OF SUCCESS

Limited Menu

Fresh Food
Fast Service

Affordable Price

MC DONALDS SUPPLY CHAIN IN INDIA

Source all its requirements from within India
Developed local business Works with 38 different local suppliers Trained local farmers to produce according to their specification Worked with vendor to get the perfect cold chain in place

Distribution centers Noida, Kalamboli, Bangalore, Kolkata

Cold chain Unique concept of McD supply chain in India

Mc Donalds SUPPLY CHAIN CHALLENGES

Full Supply Chain responsibility Multi Temp. Products - Over 65 % temperature controlled Stores as far as 500 1000 kms Drops per month - Over 1000 - Movement mainly by road Regular movement of perishables by air No margin for error Operations critical client

Mc Donalds SUPPLY CHAIN CHALLENGES (cont.)

No Stock Outs at store On time delivery record above 97 %

Clean delivery record above 99 %

Unfailing inbound supply chain Bull whip effect Cannibalization

SUPPLY CHAIN STRATEGY

SUPPLY CHAIN SERVICES FOR McDONALDS RESTAURANTS

COLD CHAIN LIFELINE OF FAST FOOD BUSINESS

Temperature controlled supply chain Series of storage and distribution activities which maintain a given temperature range Extend and ensure the shelf life of food products
2oc Locked in precooling room to remove field heat after harvesting 1 to 4o c -18 to 4 o c McDonalds store products to be used on daily basis

Transportation to distribution centers in refrigerated vans

VALIDATION OF COLD CHAIN

Component Qualification
Qualification check
on packaging components

Operational Qualification
To demonstrate that
the process performs at the operational extremes

Performance Qualification
To demonstrate that
what happens in the real world is within the limits of what was demonstrated in the Operational Qualification limits

COLD CHAIN PARTNERS BEHIND THE Big McD

Source: http://www.rediff.com/business/1999/apr/29mac5.jpg

COLD CHAIN PARTNERS

Baramati, Maharashtra
Immense benefit to farmers by setting up a network of milk collection centres equipped with bulk coolers

From farm two degrees Celsius in 90 minutes

Fully automatic international standard processing facility Capability to convert milk into cheese, butter/ghee, skimmed milk powder, lactose, casein & whey protein and humanized baby food Stringent quality control measures and continuous Research

& Development

COLD CHAIN PARTNERS

Trikaya Agriculture-Supplier of Iceberg Lettuce
Grow lettuce all year round with the help of experts from Mc Donalds A specialized nursery with a team of agricultural experts Vegetables are moved into the pre-cooling room within half an hour of harvesting. The pre-cooling room ensures rapid vacuum cooling to 2 C within 90 minutes. The pack house, post-cooling and cold room are located at the farms itself, ensuring no delay between harvesting, precooling, packaging and cold storage Refrigerated truck for transportation.

COLD CHAIN PARTNERS

Vista Processed Foods Pvt. Ltd. -Supplier of Chicken and Vegetable range of products including Fruit Pies
Produces a range of frozen chicken and vegetable foods The technology includes hi-tech refrigeration plants manufacture of frozen food at temperatures as low as - 35 c. for

Cultural sensitivity: Vegetable & chicken manufactured at different processing lines separated by a shower (washing) area. Utmost care to ensure no mixing up. R&D facility for innovation in taste, nutritional value and convenience

COLD CHAIN PARTNERS

Radhakrishna Foodland -Distribution centers
Handles large volumes Services include procurement, quality inspection, storage, inventory management, deliveries, data collection, recording and reporting Dry and cold storage facility to store and transport perishable products at temperatures upto -22 Degree Cel. Effective process control for minimum distribution cost Very vital role in maintaining the integrity of the products

COLD CHAIN PARTNERS

Amrit Food- Supplier of long life UHT Milk and Milk Products for Frozen Desserts
ISO 9000 company Manufacture widely popular brands Gagan Milk and Nandan Ghee State-of-the-art fully automatic machinery requiring no human contact with product, for total hygiene.

Installed capacity of 6000 ltrs/hr for producing homogenized UHT (Ultra High Temperature) processed milk and milk products.
Strict quality control supported by a fully equipped quality control laboratory.

LOGISTICS
Handled by AFL Logistics Ltd.
~100 sales items in the restaurant ~400 SKUs in the warehouse (Hubs: up to 1,500) ~200 restaurants per DC (~180 DCs globally) Delivery frequency: ~3/wk, higher in urban areas 2-3 stops per route , Exclusive distributors (3PL)

Freight consolidation (via freight forwarders)

Long term partnerships with service providers, risk sharing Strong quality focus (Cold Chain, HACCP, QIP)

SUPPLY CHAIN INTEGRATION

TYPES OF SCM PACKAGES

JDA RED PRAIRIE I2 MANUGISTICS INTACTIX ARTHUR WARE HOUSE MANAGEMENT SYSTEMS ERP MANUFACTURING EXECUTION SYSTEM

RESULT OF SUPPLY CHAIN INTEGRATION

Significant business benefits to both the customer and the supply cha Enables
One stop shopping concept - Central file management Inventory management - Restaurant simplification

SYNCHRONIZING THE PERISHABLE SUPPLY CHAIN

Demand forecasting
Promotional + Continuous Supply Supplier and DC level

Supply Planning
Restaurant and DC level

Visibility and Collaboration across the chain

SHANMUGA NANDA R

MITHUN MV
NAGESH R SRIDHAR R SHASHI KUMAR M R