Name of the company: Mcdonald's

Type of company: public

Company turnover:24.075bn $

P&L statement for 2009-10:Yes

http://finapps.forbes.com/finapps/jsp/finance/compinfo/FinancialIndustrial.jsp?
tkr=mcd&period=qtr

Expense in SCM/logistics/transportation cost:400 crore

 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)
Structure of supply chain in mcds:
Channels of distribution in mcds:

The entire supply distribution is the responsibility of AFL Logistics Ltd., a joint venture between
Airfreight and Coughlin in the U.S. And Radhakriahnan Foodland in Thane,maharashtra.

Distribution centres:
• Noida and kalamboli(mumbai) 1996
• Bengaluru 2004
• Kolkata 2007

COLD CHAIN CONCEPT STEPS:

• Procurement
• warehousing
• transportation
• Reatiling

1. All above activities take place in temperature controlled atmosphere.

2. A refrigerated van is used for transportation to the distribution centres.

Type Route Quantity

National inbound Suppliers to distribution center 20 vehicles
Outbound north Distribution center to restaurant 13vehicles
Outbound south Distribution center to restaurant 11vehicles
Outbound south Distribution center to restaurant 1 vehicles

VERTICAL MARKETING SYSTEM

• A contractual VMS is used.The frachisee signs an agreement with the frachisor

and has to agree to various stipulations.the franchisee,however gets training
and the right to use the name.
• The distribution centre is responsible for procurement,quality inspection
programme,storage,inventory management,deliveries to the restaurants and
data collection,recording and reporting.

Suppliers to the factory in the company:38 suppliers

ITEM PLACE
Cheese Dynamix Dairy Industries Pune
Ltd.
Dehydrated onions Jain Foods Jalgaon
Iceberg lettuce Trikaya Agriculture Pune
Chicken patty Vista Foods Taloja
Veg. Patty, Veg. Nuggets, Pie’s Kitran Taloja
Foods
Chicken (dressed) Riverdale Talegaon
Buns Cremica Industries Phillaur
Eggless mayonnaise Quaker Cremica Phillaur
Pvt. Ltd.
Sesame seeds Ghaziabad
Fish fillet patties Amalgam Foods Kochi
Ltd.
Vegetable for the patties Finns Frozen
Foods, Nasik
and Jain
Foods, Jalgaon
Mutton and Mutton Patties Al Kabeer Hyderabad

Lead time,safety stock,reorder level,inventory turnover for the stock reaching

the branches from the factory

Lead time,safety stock,reorder level,inventory turnover for the stock reaching

the retailers from the branch

Bullwhip effect:
It doesn't exist much as the optimum quatity is ordered and even if some raw
materials are left they are used the next day.Only on the condition when the order has
been placed and it gets cancelled after that,the product is dumped.

Warehouse design criterion:

• Each of the company’s delivery trucks has three degrees of refrigeration—a freezer section
for meats, a cold refrigerator section for vegetables, and a nonrefrigerated section for paper
cups, nap- kins, and plastic cutlery. This way, each truck delivers multiple items at one go
and saves the company and restaurants a huge sum of transportation cost.
• Dry and cold storage facility to store and transport perishabe products at temperatures up
to -22 degrees celcius.Effective process control for minimum distribuion cost.

Forecating tools/IT system being used:

The company has investedin ERP software to bring in efficienc,speed and accuracy
into the system.This way the company isable to anticipate the demand and deliver the
products at all the outlets for which Radhakrishna foodland in responsible.Foodland
is the first Indian company to have a customized software for running of smoother
operations.

SCM performance measure:

a)Total SCM cost,SCM as % of total cost
400 crore total SCM cost

b)% of orders flled by requested delivery data

Pull processes are initiated by a customer order,while push proccesses are initiated by
anticipation of customer order.
100%

c)% of orders that arrive on time,complete and damage free

94%

d)Average no. Of orders received electronically

home delivery:83%

Safety stock,reorder level,average inventory

Current SCM network(infrastructure,planning horizon and challenges)

The proccesses in the supply chain are divided into a series of cycles,each performed
at the interface between 2 successive stages of supply chain
 CUSTOMERS

Customer order cycle

RETAILER/McDONALD
S
RESTAURANTS

Replenishment cycle

DISTRIBUTOR
 Procurement cycle

SUPPLIERS

Challenges:
• Each Mcdonalds store has yet to make any net profit
• They take about 4-8 years to reach break even.
• Mcdonald's have continued to face opposition grom fundamentalists,animal
right activists,environmetalists etc
• Mcdonald's need to concentrate on expansion in various towns and tier-II
cities.
•

Comaprision:

Comparing Mcds with Dominos supply chain.

OVERVIEW
Founded in 1965 by Tom Monaghan.
Second-largest Pizza chain in the United
States.
about 8,500 corporate and franchised stores in 55
countries.
Domino's Pizza outlet in India opened in
1996.
Close to 274 outlets in 55 cities of India.
70 percent of its revenue comes from
home delivery service & around 30
percent is over-the-counter sales.
OPERATIONS
Indian operations are ranked number one
for the past 3 years.
Delivers an average of 1 million pizzas
per day.
Over the last 2 years, they opened stores
in 15 new cities.
The company operates in three
segments:
1. Domestic stores
2. Domestic supply chain
3. International

1. Domestic Stores
uses its company-owned stores as a
testing ground for new products and
technologies which may then be passed
onto franchisees.
generates income from company-owned
stores in the form of store profits.
2. Domestic Supply Chain
Vertically integrated supply system
automatic delivery of raw materials cuts
out a lot of the "back of-store" activities.
Helps in keeping down food costs.

3. International
consists of 3,469 franchised
stores outside the United States.
operates six supply chain centers
which manufacture dough and
distribute food and supplies.
International segment accounts
for about 41% of Domino's store
sales worldwide.
DOMINOS SUPPLY
CHAIN
1. Procurement of raw materials
Raw materials like wheat, baby corn,
tomatoes and spices are got, out of
which wheat was bought in from
jalandhar and then sent to the
commissaries in refrigerated trucks.
4 commissaries (Regional
Centralized Facilities)
1. Delhi
2.Bangalore
3.Kolkata
4.Mumbai

2.Distribution
Pizza dough processed from the wheat is
then sent to the retail outlets again in
refrigerated trucks.
Logistics requirement for sending frozen
foods, at a temperature of ₋18⁰C and of
refrigerated trucks in which food is sent
at a temperature range of between 1 to
4⁰C.

3. Retail Outlets
1. Regular stores
2. Super stores : High
traffic, More counters
3. Express stores : those
where people were
expected to walk in and
order rather than ask
for home delivery.

SUPPLY CHAIN DIAGRAM

WHEAT DOUGH WAREHOUSE

REFRIGERATED
TRUCK

RETAIL
OUTLET

Outsourcing the
Ingredients
ITEMS PLACE
Wheat Jalandhar (Punjab)
Spice South India
Baby Corn Nepal
Exotic Vegetables Sri Lanka

Pepperoni Australia

Jalapeno Spain
Cheese Karnal, Haryana
Tomatoes Bhubaneshwar

Optimal Supply Chain network