mc d suppy chain

8/6/2019 Mc D Suppy Chain

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Mc DONALDSMc DONALDSSUPPLYSUPPLY

CHAINCHAIN


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AgendaAgenda

Company OverviewCompany Overview

The McDonalds Supply ChainThe McDonalds Supply Chain

Supply Chain IntegrationSupply Chain Integration ResultsResults


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The McDonalds SystemThe McDonalds System the Worlds Best QSRthe Worlds Best QSR

experienceexperience

World Market LeaderWorld Market Leader in the QSR area (Quick Servicein the QSR area (Quick Service

Restaurant)Restaurant)

Franchise System (72%)Franchise System (72%)

SystemSystem employeesemployees: 1: 1.6.6 mmillionillion

CustomersCustomers PerPer DayDay: 4: 477 mmillionillion

Corporate Strategy:Corporate Strategy:

QSC&V:QSC&V: QQuality,uality, SService,ervice, CCleanliness andleanliness and VValuealue

Ray Kroc: None of us is as good as all of usRay Kroc: None of us is as good as all of us

Plan ToWinPlan ToWin --> Successful business revitalization> Successful business revitalization

Growth by getting betterGrowth by getting better


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One global Marketing Strategy One global Marketing Strategy


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New Products New Products


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and on and on--going innovationsgoing innovations


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QQ

SS

RR

QQuickuick SServiceervice RRestaurantestaurant

QQuickuick

SServiceervice

RRestaurantestaurant


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"Our growth plan for the next three"Our growth plan for the next three

years is more a function of getting ouryears is more a function of getting our

logistics and cold chain right ratherlogistics and cold chain right rather

than going to far off places."than going to far off places."

-- Amit Jetia, managing director, McDonald's India,Amit Jetia, managing director, McDonald's India,

Mumbai Joint Venture, in 2000.Mumbai Joint Venture, in 2000.


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PurchasingPurchasing The 3 legged stool: CorporationThe 3 legged stool: Corporation FranchiseesFranchisees

SuppliersSuppliers

Exclusive, certified facilitiesExclusive, certified facilities Handshake agreements, TrustHandshake agreements, Trust

Long term winLong term win--win partnership, risk sharingwin partnership, risk sharing

Rigorous product and service specificationsRigorous product and service specifications

Strong focus on quality, product specification andStrong focus on quality, product specification andenvironmental auditsenvironmental audits

Distributor is wholesaler for RestaurantsDistributor is wholesaler for Restaurants



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LogisticsLogistics ~100 sales items in the restaurant~100 sales items in the restaurant

~400 SKUs in the warehouse (Hubs: up to 1,500)~400 SKUs in the warehouse (Hubs: up to 1,500)

~200 restaurants per DC (~180 DCs globally)~200 restaurants per DC (~180 DCs globally) Delivery frequency: ~3/wk, higher in urban areasDelivery frequency: ~3/wk, higher in urban areas

22--3 stops per route3 stops per route

Exclusive distributors (3PL)Exclusive distributors (3PL)

Long term partnerships with service providers,Long term partnerships with service providers,risk sharingrisk sharing

Strong quality focus (Cold Chain, HACCP, QIP)Strong quality focus (Cold Chain, HACCP, QIP)



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Mc D India supply chainMc D India supply chain

Before it set up its firstBefore it set up its first restaurant in the country it infusedin the country it infused

Rs 400 Crore to set up its delivery mechanism.Rs 400 Crore to set up its delivery mechanism.

McDonalds initiative to set up an efficient supply chainMcDonalds initiative to set up an efficient supply chain

and deploy stateand deploy state--ofof--art technology changed the entireart technology changed the entire

Indian fast food industryIndian fast food industry

McDonalds distribution centres in India came in theMcDonalds distribution centres in India came in the

following order: Noida and Kalamboli (Mumbai) in 1996,following order: Noida and Kalamboli (Mumbai) in 1996,

Bangalore in 2004, and the latest one in Kolkata (2007).Bangalore in 2004, and the latest one in Kolkata (2007).


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Between 1992 and 1996, when McDonald's opened its first outlet inBetween 1992 and 1996, when McDonald's opened its first outlet in

India, it worked frenetically to put the perfect supply chain in place. ItIndia, it worked frenetically to put the perfect supply chain in place. It

trained the local farmers to produce lettuces or potatoes totrained the local farmers to produce lettuces or potatoes to

specifications and worked with a vendor to get the perfect cold chainspecifications and worked with a vendor to get the perfect cold chain

in place. And explained to th

e suppliers precisely wh

y only onein place. And explained to th

e suppliers precisely wh

y only oneparticular size of peas was acceptable These efforts paid off in theparticular size of peas was acceptable These efforts paid off in the

form of joint ventures between McDonald's India (a 100% whollyform of joint ventures between McDonald's India (a 100% wholly--

owned subsidiary of McDonald's USA) and Hardcastle Restaurantsowned subsidiary of McDonald's USA) and Hardcastle Restaurants

Pvt. Ltd, (Mumbai) and Connaught Plaza Restaurant (New Delhi).Pvt. Ltd, (Mumbai) and Connaught Plaza Restaurant (New Delhi).


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COLD CHAIN PartnersCOLD CHAIN Partners

1.1. Dynamix Dairy Industries (Supplier of Cheese)Dynamix Dairy Industries (Supplier of Cheese)

2.2. Trikaya Agriculture (Supplier of Iceberg Lettuce)Trikaya Agriculture (Supplier of Iceberg Lettuce)

3.3. Vista Processed Foods Pvt. Ltd. (Supplier of Chicken andVista Processed Foods Pvt. Ltd. (Supplier of Chicken and

Vegetable range of products including Fruit Pies)Vegetable range of products including Fruit Pies)

4.4. Radhakrishna Foodland (Distribution Centres for Delhi andRadhakrishna Foodland (Distribution Centres for Delhi andMumbai)Mumbai)

5.5. Amrit Food (Supplier of long life UHT Milk and Milk ProductsAmrit Food (Supplier of long life UHT Milk and Milk Products

for Frozen Desserts)for Frozen Desserts)


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1.1. Dynamix Dairy Industries (Supplier of Cheese)Dynamix Dairy Industries (Supplier of Cheese)

Fully automatic international standard processing facility.Fully automatic international standard processing facility.

Capability to convert milk into cheese, butter/ghee, skimmed milkCapability to convert milk into cheese, butter/ghee, skimmed milk

powder, lactose, casein & whey protein and humanized baby foodpowder, lactose, casein & whey protein and humanized baby food

Stringent quality control measures and continuous Research &Stringent quality control measures and continuous Research &

DevelopmentDevelopmentEach batch is mixed in one large stainless steel cooler and chilledEach batch is mixed in one large stainless steel cooler and chilled

immediately to two degrees Celsius to stop bacterial growth andimmediately to two degrees Celsius to stop bacterial growth and

preserve freshness. From this point onwards, until just before thepreserve freshness. From this point onwards, until just before the

burger is actually served in a McDonalds restaurant hundreds ofburger is actually served in a McDonalds restaurant hundreds of

kilometers away, the temperature is never allowed to increase.kilometers away, the temperature is never allowed to increase.


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2. Trikaya Agriculture (Supplier of Iceberg Lettuce)2. Trikaya Agriculture (Supplier of Iceberg Lettuce)

A specialized nursery with a team of agricultural expertsA specialized nursery with a team of agricultural experts

Drip and sprinkler irrigation in raised farm beds with fertilizer mixingDrip and sprinkler irrigation in raised farm beds with fertilizer mixing

plant.plant.

PrePre--cooling room and a large cold room for post harvest handling.cooling room and a large cold room for post harvest handling.

Refrigerated truck for transportation.Refrigerated truck for transportation.

Vegetables are moved into the preVegetables are moved into the pre--cooling room within half an hourcooling room within half an hour

ofharvesting.ofharvesting.

The preThe pre--cooling room ensures rapid vacuum cooling to 2 C withincooling room ensures rapid vacuum cooling to 2 C within

90 minutes.90 minutes.

The pack house, preThe pack house, pre--cooling and cold room are located at the farmscooling and cold room are located at the farms

itself, ensuring no delay between harvesting, preitself, ensuring no delay between harvesting, pre--cooling, packagingcooling, packaging

and cold storageand cold storage


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3) Vista Processed Foods Pvt. Ltd.3) Vista Processed Foods Pvt. Ltd. (Supplier of Chicken and(Supplier of Chicken andVegetable range of products including Fruit Pies)Vegetable range of products including Fruit Pies)

A joint venture with OSI Industries Inc., USA, McDonald's India Pvt. Ltd. andA joint venture with OSI Industries Inc., USA, McDonald's India Pvt. Ltd. and

Vista Processed Foods Pvt. Ltd., produces a range of frozen chicken andVista Processed Foods Pvt. Ltd., produces a range of frozen chicken and

vegetable foods. A world class infrastructure at their plant at Taloja,vegetable foods. A world class infrastructure at their plant at Taloja,

Maharashtra, has:Maharashtra, has:

The technology includes hiThe technology includes hi--tech refrigeration plants for manufacture of frozentech refrigeration plants for manufacture of frozen

food at temperatures as low asfood at temperatures as low as -- 3535 C. This is vital to ensure that the frozenC. This is vital to ensure that the frozen

food retains it freshness for a long time and the 'cold chain' is maintained.food retains it freshness for a long time and the 'cold chain' is maintained.

The frozen product is immediately moved to cold storage roomsThe frozen product is immediately moved to cold storage rooms..


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3. Radhakrishna Foodland3. Radhakrishna Foodland(Distribution Centres for Delhi and Mumbai)(Distribution Centres for Delhi and Mumbai)

An integral part of the Radhakrishna Group, Foodland specializes inAn integral part of the Radhakrishna Group, Foodland specializes in

handling large volumes, providing the entire range of services includinghandling large volumes, providing the entire range of services including

procurement, quality inspection, storage, inventory management, deliveries,procurement, quality inspection, storage, inventory management, deliveries,

data collection, recording and reporting.data collection, recording and reporting.

1.1. A oneA one--stop shop for all distribution management services.stop shop for all distribution management services.

2.2. Dry and cold storage facility to store and transport perishable products atDry and cold storage facility to store and transport perishable products at

temperatures uptotemperatures upto --22 Degree Cel.22 Degree Cel.

3.3. Effective process control for minimum distribution cost.Effective process control for minimum distribution cost.

'Cold, Clean, and On'Cold, Clean, and On--Time Delivery'Time Delivery'Plays a very vital role in maintaining the integrity of the products throughout thePlays a very vital role in maintaining the integrity of the products throughout theentire 'cold chain'.entire 'cold chain'.


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Mc D India supply chainMc D India supply chain

Quality Inspection ProgrammeQuality Inspection Programme (QIP(QIP) carries out quality checks at) carries out quality checks at

over 20 different points in the Cold Chain system. Setting up of theover 20 different points in the Cold Chain system. Setting up of the

Cold Chain has also enabled it to cut down on operational wastageCold Chain has also enabled it to cut down on operational wastage

Hazard Analysis Critical Control PointHazard Analysis Critical Control Point (HACCP)(HACCP) is a systematicis a systematic

approach to food safetyapproach to food safety Based on HACCP guidelines, control points and critical controlBased on HACCP guidelines, control points and critical control

points for all McDonald's major food processing plants andpoints for all McDonald's major food processing plants and

restaurants in India have been identifiedrestaurants in India have been identified


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McDonalds Supply Chain ChallengesMcDonalds Supply Chain Challenges Even stronger focus on freshness and qualityEven stronger focus on freshness and quality

OnOn--going product innovationsgoing product innovations

Strong customer demand fluctuationsStrong customer demand fluctuations

based on promotionsbased on promotions

OrderOrder-- and inventory managementand inventory management

restaurantrestaurant DCDC suppliersupplier --

raw material supplierraw material supplier

Bull Whip effectBull Whip effect

Change Management in a deChange Management in a de--centralized structurecentralized structure



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Future orientated strategiesFuture orientated strategies


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Supply Chain IntegrationSupply Chain Integration


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but they need not carewhere the goods come from!

As demand arises oncustomers side ...

... supply turns on and off

automatically, ...

The McDonalds Supply Chain One Stop Shopping processes

and an automated water supply have a lot in common:

One Stop ShoppingOne Stop Shopping


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OneOne--StopStop--Shopping Lean Logistics SolutionShopping Lean Logistics Solution


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Supply Chain Services for McDonaldsSupply Chain Services for McDonalds

restaurantsrestaurants


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ResultsResults


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Achievements:Yield Improvement

Gross Margin improvement > 0.15%

RawWaste Reduced

Reduced by 30%

Average Inventory Reduced

Reduced by 30%

Store Transfers Halved

Order Time Halved

Goals:Yield Improvement

0.15% increase in Gross Margin

RawWaste Reduction

Not included in Business Case

Inventory Reduction

15% decrease on the Inventory Level

Store Transfers Reduction

Simplification of Order Process

ResultsResults


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EnablersEnablers

One stop shopping conceptOne stop shopping concept -- Central file managementCentral file management

Inventory managementInventory management -- Restaurant simplificationRestaurant simplification

Synchronizing the perishable Supply ChainSynchronizing the perishable Supply Chain

Demand forecastingDemand forecasting

Promotional + Continuous SupplyPromotional + Continuous Supply

Supplier and DC levelSupplier and DC level

Supply PlanningSupply Planning

Restaurant and DC levelRestaurant and DC level

Visibility and Collaboration across the chainVisibility and Collaboration across the chain

Synchronization delivers significant businessSynchronization delivers significant business

benefits to both the customer and the supplybenefits to both the customer and the supply

chainchain


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hank youhank you

ery muchery much

for yourfor your

indindttentionttention

mc d suppy chain

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