Behind McDonald's supply chain success

    Welcome back Readers! I’m Sivakami - A final year MBA student from Amrita School Of Business majoring in Marketing and operations. I have found my space to explore on the various verticals in the area of  Logistics and supply chain and of course not limited to theories and  empirical studies 😅. So come lets discover on our never ending territory 😇 

I read an article which said, 'in the year 2018, McDonald's was inducted into the Gartner’s ‘Masters’ category along with other supply giants such as Amazon, P&G and Apple'. Questions like how did a fast-food chain achieve the most successful supply chain in the world popped up in my mind. I was overwhelmed to know that each day McDonald’s serves almost 1% of the global population. Moreover, the company sells over 75 hamburgers a second.  I was very curious to know what were the factors and strategies which drove their supply chain success

Win-win strategy for all the echelons

    With its large-scale operations, McDonald’s suppliers were numerous. Firstly, the key factor is its skillful alignment across the vast network of suppliers, service providers, and franchise owners. This paid-off in catering to approximately 69 million customers daily in over 37,000 restaurants across 100 countries. Dwelling into their supply chain players, they hold a very complex web of direct and indirect suppliers who adhere to clear quality and efficiency standards. Direct supplies coordinate in procurement and inbound logistics. Their indirect suppliers operate the facilities such as grain mills and abattoirs. Through partnerships with contracted producers, McDonald’s processes and transports its own raw materials.They use special vehicles equipped with temperature control mechanisms. Then the processing facilities produce finished products like beverages, buns, and meat patties. Infact, by taking full control of the distribution, the company delivers products to its restaurants at a lower cost and achieves supply chain efficiency. 

    They also create a win-win strategy for all the echelons i.e. mutually positive outcomes for franchisees, suppliers and employees, which they call it as ‘3-legged stool’. Both McDonald’s and its suppliers help create value for each other rather than simply exchanging value, leading to more beneficial, long-term partnerships. 

Shift from frozen to fresh burgers

    Secondly they have become more responsive to modern consumer demand. For instance, with reference to the insights from research which stated millennial consumers were willing to pay more for fresh foods that are organic, sustainable, and healthy. McDonald's started rolling out fresh beef patties at 300 US locations. The company relies on its prodigious Supply Chain to innovate and turn things around since they lost 500 million footfalls in the year 2012. This bold move gave McDonald's a strong competitive advantage. McDonald’s also plans to use AI technology in its self-order kiosks and mobile applications which will help reduce service times, making the ordering process more efficient and improving the overall customer experience. On the whole, it is very interesting to know that, McDonald's supply chain strategies constantly tries to balance out responsiveness and efficiency.

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Happy reading from Sivakami :)