Program Batch PGDM 201820Term ThirdCourse Name Supply Chain ManagementName of the faculty Mr Suhas RaneTopic

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Program & Batch: PGDM 2018-20Term: ThirdCourse Name: Supply Chain ManagementName of the faculty: Mr. Suhas RaneTopic/ Company Chosen : McDonaldsGroup Number: 3Group Members: Sl. Roll No. Name 1 180103118 Parimi Lakshmi Tejaswi 2 180103100 Karan Sharma 3 180101064 Prachi Shukla 4 180103202 Shobhit Gupta 5 180103026 Abhishant 6 180102043 Jayesh Agarwal IntroductionMcDonald’s is an American fast food company, founded in 1940 as a restaurant operated by Richard and Maurice McDonald, in San Bernardino, California, United States. They rechristened their business as a hamburger stand, and later turned the company into a franchise, with the Golden Arches logo being introduced in 1953 at a location in Phoenix, Arizona. In 1955, Ray Kroc, a businessman, joined the company as a franchise agent and proceeded to purchase the chain from the McDonald brothers. McDonald’s had its original headquarters in Oak Brook, Illinois, but moved its global headquarters to Chicago in early 2018.McDonald’s is the world’s largest restaurant chain by revenue, serving over 69 million customers daily in over 120 countries. Although McDonald’s is best known for its hamburgers, cheeseburgers and French fries, they also feature chicken products, breakfast items, soft drinks, milkshakes, wraps, and desserts. In response to changing consumer tastes and a negative backlash because of the unhealthiness of their food, the company has added to its menu salads, fish, smoothies, and fruit. The McDonald’s Corporation revenues come from the rent, royalties, and fees paid by the franchisees, as well as sales in company-operated restaurants.McDonald’s in IndiaMcDonalds entered India in October 1996 with first outlet in Basant Lok, Vasant Vihar, New Delhi. McDonald’s in India is a 50-50 joint venture partnership between McDonald’s Corporation [USA] and two Indian businessmen. Amit Jatia’s company Hardcastle Restaurants Pvt. Ltd. owns and operates McDonald’s restaurants in Western India. While Connaught Plaza Restaurants Pvt. Ltd headed by Vikram Bakshi owns and operates the Northern operations.Partners and their management teams are extensively trained in Indonesia and the U.S. Approximately 75% of the menu in McDonald’s India is designed as per Indian tastes to woo Indian customers.Product MixVeg Menu: McVeggie, McAloo tikki, Paneer Salsa wrap, Crispy Chinese, Veg McCury Pan, Pizza McPuff, BigSpicy Paneer Wrap etc.Non- Veg Menu: Chicken Maharaja Mac, McChicken, Fiet-o-fish, BigSpicy Chicken Wrap, McEgg, Chicken McGrill, etc.Beverage: Cold coffee, Ice tea, soft drinks, Mc Shakes, Hot serves, etc.Frozen Desserts: Soft serve cone, Mc Swirl, soft serve, Flavor Burst, Floats, etc.COMPETITORSKFC KFC is the second largest fast-food chain after McDonald’s and one of the top McDonalds Competitors. Its specialty is in fried chicken and burgers. Founded in 1930, the brand has grown and expanded into other territories with close to 20,000 branches or locations in more than 120 countriesBurger KingA subsidiary of Restaurant Brands International, Burger King’s standing as one of the largest fast food restaurants cannot be disputed. Founded in 1953 and headquartered in Florida, USA, Burger King’s menu of soft drinks, hot dogs, desserts, hamburgers, chicken and French fries among others are delicacies loved worldwide.SubwaySubway is among the fastest growing fast food brands. Privately owned, Subway has close to 45,000 locations in over 110 countries as at 2017. As a single brand fast food restaurant chain and operator, Subway is the largest in the world. The primary fast food sold by Subway is the submarine sandwich popularly known as ‘sub’ although it also sells paninis, wraps, doughnuts, muffins, cookies, and salad. Subway also offers gluten-free bread as well as brownies as part of its menu.StarbucksStarbucks is a coffeehouse chain headquartered in Seattle, USA. It was founded in 1971 and as at 2016 had more than 23,700 operational locations in the world. These locations serve frappuccino beverages, hot and cold drinks, espresso, whole bean coffee among other drink. The stores also sell snacks and pre-packaged food such as crackers, chips, and sandwiches just to mention a few. Some selected stores also serve beer and wine to the customers. Suppliers:A whopping 96% of McDonald’s India products and supplies are sourced from Indian suppliers – be it those crisp, fresh lettuce or the golden French fries. And ensuring that products reach nice and fresh without the strain of the journey is a cold chain that McDonald’s India has set up over the years with its Indian partners. 1) Dynamic Dairy Industries (Supplier of Cheese)They are located in Baramati, Maharashtra. They have fully automatic international Standard Processing facility. Immense benefit to farmers by setting up a network of milk collection centers equipped with bulk coolers. They have stringent quality control measures and a dedicated R&D center.2) Trikaya Agriculture (Supplier of Iceberg Lettuce)They are located in Talegaon, Maharastra. They grow lettuce all the year round with the help of experts from McDonald’s. They have a specialized nursery with a team of agricultural expects. They have drip and sprinkler irrigation in raised far beds with fertilizer mixing plant. The pack house, pre-cooling and cold room are located at the farm itself to ensure no delay between harvesting, pre-cooling, packaging and cold storage. They have dedicated refrigerated trucks for transpotation3) Vista Processed Foods Pv. Ltd. (Supplier of Chicken and Vegetable range of products including Fruit pies)They are located in Taloja, Maharashtra. They produce a range of frozen chicken and vegetable foods. The technology includes Hi-tech refrigeration plant for manufacture of frozen food at as low as -35C. Cultural sensitivity is also observed as both chicken and vegetable are processed at different processing line separated by a washing area. They also have R&D facility for innovation in taste, nutritional value and convenience.4) Radhakrishna Foodland (Distribution centers for Delhi and Mumbai)They are located in Thane, Maharashtra. They handle large volumes for distribution. Service include procurement, Quality Inspection, storage, inventory management, deliveries, data collection, recording and reporting. They have dry and cold storage facility to store and transport perishable products at temperature up to -22C.5) Amrit Foods (Supplier of long life UHT milk products for frozen Desserts)They are located in Ghaziabad, Uttarpradesh. They manufacture widely popular brands- Nandan ghee and Gagan Milk. State of art facility of fully automatic machinery requiring no human contact with product to maintain total hygiene. They have strict quality control supported by fully equipped quality control laboratory.QSCV ModelQuality: McDonald’s strives to maintain its international quality standards. Strong supply chain efficiency promises to deliver fresh food right to the customer’s plates.Service:McDonald’s motto is to “serve with a smile”. It launched its new “one minute service delivery” to customers even during rush hours.Cleanliness: Sticking to its very strict code of decorum and cleanliness, McDonald’s ensures that hygiene plays a large role in the way food is served.Value:Value for money has always been McDonald’s greatest pride. McDonald’s menu gives the tastiest and most affordable food options to consumers with range of products starting at just Rs. 25. CRITICAL COMPONENTS OF McDONALD’s SUPPLY CHAIN Analysis of the keychain Drivers:FacilitiesMcDonald’s operates efficient storage facility network, comprising centralized high-volume storage facilities with the capacity to cover supplies for around 200 restaurants. Although McDonald’s has outsourced the majority of its production, backwards vertical integration is still fragmentally present. Production is mainly performed by suppliers, with postponement of final assembling of sandwiches or roasting of potatoes in outlets.With regards to outlets, McDonald’s is similarly partly forward integrated, by running a limited number of own stores, whereas the majority of outlets is franchised.InventoryMcDonald’s applies 20 days’ rolling horizon with its suppliers, whereas stores are replenished 3 times per week with cycle inventory not exceeding 100 SKUs. Unique centralized stock management system allows tracking historical store sales, promotions. Since the introduction of the system in 2004, forecast horizon reduced to 1 week in comparison with several weeks to months before its introduction. Continuous replenishment allows keeping cycle inventories at a low level, and adhering to the high quality standards of deliveries.TransportationUnlike the facilities, transportation network of McDonald’s runs through agile pipeline, given the continuous replenishment practice. Given that perishables require certain temperature limits, on one hand, and on the other, considering the strict operational standards of the company. 3PLs operate McDonald’s cold chain with special temperature adapted trucks.InformationMcDonald’s has integrated its entire global chain through the enterprise resource planning. This has drastically increased the transparency and visibility throughout the chain, allowing for reduced demand uncertainty. ERP has also contributed to the reduction of inventories, thus improving the “speedy service” and quality of service. E -procurement system is unique due to the possibility to aggregate the global procurement activities, on one hand, and facilitating the job of franchisees, as the system allows purchasing a wide variety of items, from uniform to menu items. IT management is outsourced to Fujitsu, which allows McDonald’s focusing on its core activities.SourcingMcDonald’s outsources the majority of its activities to 3PLs, including supplies of burger ingredients as, well as items, ready for consumption, such as salads. Storage and transport network is also outsourced. Relationships with suppliers are based on long-term cooperation and trust, built throughout the years of cooperation. McDonald’s has been building the capacities of its suppliers throughout the years. An example is Keystone, main supplier of meat that has further on extended its capacity to cover also the chicken. In order to facilitate its global procurement operations, McDonald’s has deployed an e-procurement software, which allowed for the aggregation of its global procurements, thus achieving the economies of scale.PricingThe initial focus of McDonald’s was the quality and speed of its service at a reasonable price. However, with the emerging low-cost competition McDonald’s was forced to revise its pricing by dropping the prices of main menu products and focusing on the economies of scale in order to justify the quality-related costs.In relation with suppliers, McDonald’s rarely argues their pricing; instead its focus is on the total cost of the chain. The relations with suppliers are based on trust and long -term partnership, which adds significant flexibility and responsiveness to the chain management. The founder, Ray Kroc, has introduced the practice of “handshake deals”, which are agreements based on mutual trust, which were sealed by the power of a handshake.SUPPLY CHAIN SERVICES FOR McDONALD’s Cold Chain Logistics A cold chain is a temperature controlled supply chain. It is used to extend and ensure the shelf life of the products such as fresh agricultural produce, processed food.McDonald’s entire network supply chain consists of Movement of goods through a cold chain. An interesting and innovative feature of this supply chain is that the same truck can carry the products at different temperatures ranging from frozen products at -18C to-25C, chilled products from 1C to 4C, and dry products at ambient temperatures. McDonald’s spent a few years setting up a unique cold chain. They took around 4 years and and Rs 450 crores to set up the food supply chain even before opening its first restaurant. PUSH AND PULL PROCESSSUGGESTIONS:Due to the shift in consumer preferences towards healthier foods, McDonald’s has been going through per store sales decline. To address this strategy drift, the following practices, exercised by Starbucks, may be adopted by McDonald’s:• Improving of corporate image by introducing an entirely healthy menu or a differentiated menu that would target different consumer groups.• Acquisition of a brand, offering healthy menu. In this sense, McDonald’s has made a tremendous mistake by selling off its equity in Chipotle. It’s worth mentioning that McDonald’s has initially invested in the development of this chain of fast food restaurants, transferring its knowledge, thus building a new strong competitor.• Possible differentiation of distribution channels that would imply the development of CPGs through alliances or development of an e-channel.• Further improvement of customer experience and store ambiance.KEY LEARNINGSAccording to McDonald’s, it is creating long-term supply chain success based on a “System” where everyone wins. University of Tennessee researchers studied McDonald’s System as part of its research into what is known as the Vested business model. McDonald’s relationships with its suppliers embodies the Vested mindset of expanding the pie and sharing the pie. Suppliers that help McDonald’s succeed also succeed by building their own businesses. Both McDonald’s and its suppliers create value rather than simply exchanging value, as in conventional transaction-based relationships. McDonald’s deep-seated culture for long-term, win-win relationships with suppliers dates back to McDonald’s inception, established a precedent of trust and loyalty with its business partners. • Organizations are transforming into web-like supply chain rather than end-to-end supply chain. • McDonalds India was the pioneer in establishing the cold supply chain. They have operated efficiently to reduce wastage of the perishable products and supply fresh food on the table for the customer. • The E-mac procurement website allows 85% reduction in costs. This website is also faster and more convenient for franchisees. • With introduction of Internet protocol, McDonalds can track purchases, and offer customer loyalty programs. This helped in replacing old dial-up networking and better flow of information for efficient supply chain