McDonald’s Serving Hot and Fresh (Supply Chain)

1. Discuss the process followed by McDonald’s to establish supply chain in India.

Unique and intricate supply chain network which is managed by five people across the whole country.
Including the Quality Assurance people, this figure rises to just eight people who are all responsible for its
efficient supply chain Indian territory.

The Supply-chain network of McDonald’s is of its own kinds

 100 percent outsourced

 Lean with no back-up staff and no frills.

MULTI-LAYERED SUPPLY-CHAIN
The McDonald’s supply chain is both critical and multi-layered. There are two categories in food ingredients
supply

 Tier-I and Tier-2 suppliers

With four Distribution Centers across the country all restaurants and every new outlet addition is capably
handled by these Distribution Centers.
The Noida and Mumbai Distribution Centers are primary Distribution Centers owned by the company.
The other two Distribution Centers are in Bengaluru and Kolkata are housed in leased properties. The system
that is used to manage link between Restaurant and Distribution Centers is a hub-and-spoke model where the
Distribution Centers act as hubs. McDonald’s transportation has been completely outsourced and since 80
percent is refrigerated truck movement, the company has a dedicated fleet which transports their goods.

2. Discuss the role and advantage of centralized distribution system and tiering of suppliers at
McDonald’s?
The entire distribution of McDonalds‟ products in India is handled by Radhakrishna Foodland
Pvt. Ltd,
 It has a transport division, handles the truck movement in the supply-chain right through the country.

 McDonald’s exhibits control on its distribution partner to meet its standards of cold clean and on-time
delivery.

With its suppliers, McDonald‟s has no legally documented Service Level Agreements (SLAs) with RKFL. The
Distribution Centers are assessed on several factors like
 Administration efficiency
 The total number of cases managed per man hour
 Warehouse efficiency
 Overtime as a percentage of the total number of hours worked and in the case of transportation
 The number of cases handled per trip
 Truck utilization, etc.

The structure of supply chain at McDonald above indicates the inclusion of two tier suppliers who transports the
products to the centralized distribution centers and they are then transported to McDonald outlet via
transportation and tracking mechanism. In these ways, the management of supply chain is ensured at McDonald
with a view to achieving timely delivery of finished products to final consumers. In this process, the centralized
management accounts for managing the distribution centers but they are not owned by the company as well.
Although the supply chain management above indicates about the process that is being followed in performing
its management, yet an analysis of McDonald indicates that this supply chain is not applicable in respect to all
the materials that are required by the company. As for instance, materials such as buns and coke are being
transported to the retail outlets directly by the suppliers.

3. How McDonald’s does ensures that standards are maintained across its suppliers?
McDonald is delivering technology to its suppliers by introducing new farming practices.
Example: Trikaya Agriculture
McDopnald is also practices Hazard Analysis Critical Control Point Certification (HACCP) which ensure food
quality from all its suppliers.
Other safety practices that all its suppliers adhere to are Suppliers Quality Management Systems (SQMS) and
Distributor Quality Maintenance Program (DQMPS)

4. Explain the concept of Pull Supply and Made to Order in the context of this case.
The entire effectiveness of supply-chain is based on the concept of “pull-supply chain”. The restaurant
issues orders to the Distribution Center which in turn routes the order to the supplier and only then does the
supplier produce it. The concept is also known as “made to order”. The supplier thus maintains barely any
extra stocks; only if there is a contingency like the overhaul or servicing of machinery the supplier will
produce surplus stocks.