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AGRIBUSINESS SUPPLY
CHAIN MANAGEMENT
GROUP – 6 Amey | Abhilasha | SudeepJuly 2012
MCDONALD’S SCM IN INDIA
Presented to : Professor Jabir Ali
Agenda
Introduction Products Suppliers E- Procurement Logistics and Distribution Channel Designs Food Quality and Safety management IT infrastructure Current efforts towards a sustainable supply chain McDonald’s Supply chain challenges Recommendations
Introduction
Largest food service retailer in the world Present in 120 plus countries globally
40 Indian cities with 217 restaurants and serves 650,000 customers daily
Joint venture in India with two companies: Connaught Plaza Restaurants Pvt Ltd (master
franchisee for North and East India) Hardcastle Restaurants Pvt Ltd (master
franchisee for West and South India) Breakfast and Meals
Products
Burgers: McMuffin, McAloo Tikki, McVeggie, McMaharaja, McChicken, Fillet-o-fish, etc.
Salsa wraps: Paneer & Chicken French Fries, Potato wedges Beverages:
Soft Drinks: Coca Cola as beverage partner Coffee, Tea, etc
Others: Pancakes, Icecreams, Pizza McPuff, etc.
Suppliers
Sesame SeedsFrom Ghaziabad, UP
BunsFrom Cremica, Ludhiana and Shah Bector and Sons, Maharashtra
Fresh Iceberg LettuceFrom Trikaya Agriculture, Maharashtra and Meena Agritech, Delhi
Cheddar CheeseFrom Dynamix Dairy, Maharashtra
Vegetable Patty(made from fresh peas, carrots, green beans, red capsicum, potatoes and rice) from Kitran Foods Maharashtra
Geographically diverse suppliers: Ensuring stringent quality standards!
Suppliers
• Dynamix is a supplier of Cheese for McDonald in India• Network of milk collection centers equipped with bulk coolers• Dedicated R&D centre and quality assurance program
• Trikaya is a supplier of Iceberg Lettuce• Specialised nursery with a team of agricultural experts• Drip and sprinkler irrigation with fertilizer mixing plant• Pack house , pre-cooling and cold room are located at
the farms itself to ensure no delay
• Supplier of chicken and vegetable products• World class infrastructure and support services• Separate processing lines for chicken and vegetable foods• High tech refrigeration plants for manufacture of
frozen foods at temperatures as low as -35 degree celsius
Supply Chain Integration
Operational Excellence
How McDonald uses E-Procurement System ?
Emac Digital is an internet procurement site designed for McDonald Corporation’s 27000 franchises
Emac Digital Company is an e-procurement website jointly owned by McDonalds and Accel KKR Co.
It is a procurement hub ; allows all of McDonald’s franchises across globe to buy everything needed to run their restaurants – from Uniforms to Hamburgers!
Procurement site allows business owners to buy supplies at a discounted price
E- Procurement allows 85% cut in costs according to McDonald’s supply chief Edwards
Major Suppliers
Small Suppliers
Emac Digita
l
E- Procurement
Global Franchises
Place Order
Suppliers
Emac Digital
Logistics
Supply Received
Logistics and Distribution
Matching supplier production with deliveries to meet schedules and restaurant needs
3 centralized distribution centers at Mumbai, Delhi and Kochi
Strong emphasis on economies of scale- high storage volumes!
QIP – Quality Inspection Program HACCP – Food safety standards emphasizing
prevention of faults rather than detection through inspection
Cold Chain
Procurement WarehousingTransportati
onRetailing
Vital Links of McDonald’s Cold Chain
The Cold Chain is necessary to maintain the integrity of food products and retain their freshness and nutritional value
McDonalds took 4 years and around Rs 450 crores to setup the food supply chain even before opening its 1st restaurant
Cold Chain Management System provides assistance in - Selection of high quality seeds - Drip irrigation technology - Refrigerated transportation system
Distribution Systems
McDonalds uses three types of distribution strategy
o Franchising - Contractual Vertical Marketing Systemo Licensingo Joint Ventures
Channels (1/3)
Physical function
Title function
Suppliers
Transporters Warehouse
Manufacturer
Transporters Warehouse
DealersTransporte
rsCustomers
Suppliers
Manufacturer Dealer Customer
Channels (2/3)
Payment function
Information function
Suppliers
BanksManufactu
rerBanks
DealersBanksCustomers
Suppliers
Transporter
Warehouse Banks
Manufacturer
DealersTransporters Banks
Customers
Transporter
Warehouse Banks
Channels (3/3)
Promotion function
Three dimensions of variation in the channel are : - Number of levels in the channel - Number of intermediaries at each level - Types of intermediaries used at each level
Suppliers
Advertising Agency
Manufacturer
Advertising Agency
DealersCustomers
Radhakrishna Foodland Ltd
Distribution centers and cold storages Completely dedicated distribution and supply chain
Multi-temperature transportation trucks (-25O to 22OC) Dry and cold storage facilities ERP systems in place Specialized in providing services including
Forecasting demand and Procurement (31Q system) Quality Inspection (Quality Assurance Teams) Storage and Inventory management
Max. 10 days inventory Data collection Reporting and analysis
Food Safety and Quality
Food Safety HACCP Supplier Quality Management Systems
(SQMS) Distributor Quality Management Program
(DQMP) Food Quality
Sensory Analysis Quality Assurance Teams ‘Product Cutting’ by management Evaluation by central laboratory in Hong
Kong
IT Infrastructure
Suppliers: Connected to suppliers through ERP systems
through which direct store orders are uploaded
Next stage is to connect DCs to suppliers through ERP systems
Customers: McDelivery
Online customer orders Delivery of meals to the customers’ doorstep Currently in 7 cities in India
McDonald’s current efforts towards sustainability of the supply chain
Focus on three main areas: Environment Ethics Economics
Supply chain focus areas: Sustainable Land Management
Committment Animal Welfare Supplier workplace accountability Sustainable fisheries
McDonald’s Supply Chain Challenges
Burgeoning demand in near future Only 4 distribution centers (DCs) in India Managing a very elaborate supply chain
structure and need of up gradation in future No flexibility in product portfolio:
Competition from other fast food restaurants
Heavy dependence on a very few suppliers No written contracts with supply chain
partners
Recommendations
Foreseeing a 35-40 % growth every year in near future, it should add more DCs to cater to the growing demand in future
To manage and optimize its elaborate supply chain network, it should adopt more sophisticated software systems
Source from more suppliers to diversify their risk and reduce dependency on few suppliers
Increase the product portfolio to counter competition in market
THANK YOU