Logistic and Supply Chain Management Mc Donalds

Question: Discuss about theLogistic and Supply Chain Managementfor Mc Donald's. Answer: Introduction Globalization has forced every corporation to integrate and maximize its value from supply chain(Folinas, 2006). Supply chain can help a business generate tremendous amount of value by integration of key functions and maximizing their efficiency. The scope of this report is to study and analyze Mc Donalds supply chain management. Mc Donalds is a world renowned fast food chain company with its headquarters in Oak Brook, Illinois is USA. The report highlights manufacturing, production processes along with supply chain forecasting method that is used by the company to be a leading company in the industry(Ottenbacher, 2009). The company operates through franchise model and is based on economic, ethics and environment for creating sustainability for its business. The production processes of the company are depicted by aggregate production plan and master production schedule(Stadtler, 2015). Make processes of the company includes formally prepared plan so as to provide proper production sc heduling for catering diversified customer products. Though the company has integrated and dynamic supply chain but it needs to further enhance processes to be able to emerge as a leader in fast food chain business(Bosona, 2013). The report concludes with certain recommendations that the company can apply in order to maximize its efficiency further. The Key Flows in Supply Chain Mc Donalds is worlds largest fast food chain comprising of over 34,000 restaurants across 119 countries. The company formed in 940 as a barbecue restaurant by Richard and Maurice Mc Donald. Later the company business model was revolutionized using production and supply management principles. It was later in 1955 that Ray Kroc introduced the franchise business concept that greatly impacted revenue generation and return on capital. Figure 1: Key operators within McDonald's Supply Chain Source:(Marketrealist.com, Retrieved on 18th November 2016) The key flows in supply chain consist of suppliers, who provide necessary raw materials which are then processed by employees to provide finished products. Key flows that are necessities in supply chain comprises of product flow, information flow, cash flow and return flow. The description of each type of flow for the company is provided below; Product flow: In order to ensure that customers gets readily available food products at franchise stores of the fast food chain, the company has an integrated material, component, supplies and services(Walker, 2008). Each store has their designated suppliers who meet the requirements of the company. As quality of cheese, chicken, ham, bread and other raw materials is not made and is sourced; it needs to be of the highest quality. The system constitutes machineries that can fry potatoes and cutlets for its burgers and make other necessary fries of chicken, ham and so on. Service personnel within Mc Donalds team are trained for processes to handle the machineries and provide service to customers(Gold, 2010). Information flow: Stores of Mac Donalds provide necessary quotation for each type of raw material that it requires. Suppliers who are able to meet and deliver such requirements as provided by the company at requisite prices do so and deliver bills on monthly basis. There is a fixed quotation provided by each store according to their prerogatives so as to meet adequate customer demands. Post raw materials are processed on the machineries in the stores, they are delivered to their customers over the counter upon ordering. Some stores of Mc Donalds also provide home delivery systems to cater to additional number of customers(Ketchen, 2007). Cash flow: Stores of the company needs to make frequent payments to its suppliers for the raw materials and products they purchases. Customers at the company mostly pay in cash or by credit card transactions which gets diverted into bank account of the company. Every day after sales of its various products and from incoming raw materials a bill is raised, thereafter maintained in proper formats or software(Bevilacqua, 2009). Suppliers are generally paid in frequency on weeks, quarterly or monthly so as to maintain even flow of raw materials to the stores. Return flow: Return flow is a very important aspect at Mc Donalds stores across every franchise as tremendous amounts of food gets wasted. Wastage amounts to significant losses for the business and its processes are directed at reducing them so as to increase process efficiency. Wastages from production are generally recycled but wastages from customers are disposed. Mc Donalds supply chain follows stringent environmental norms in regards to treating waste and hence avoids any processes that might add significantly to pollution levels in soil, air or water(Carter, 2008). The Make Process Mc Donalds arranges raw materials from several suppliers according to their requirements and then processes the same. The make process of the company can be understood by its aggregate production plan (APP), master production schedule (MPS) and material requirement plan (MRP). Mc Donalds supply chain consists of direct and indirect suppliers. While direct suppliers supply necessary items to the stores. Indirect suppliers are the ones who supply through suppliers of distributors to the stores. While each type of supplier in the process is equally important for maintaining a smooth flow of products, to make them available and to supply customers better. Every step within the system of the stores or suppliers is customer driven, meaning regular feedback is received from customers regarding the quality of foods. The food served is hot and fresh which is also a prerequisite by the company, which increase customer loyalty to the brand name. Aggregate Production Plan (APP): It includes the various operational activities for the production in advance. Each franchise operated business of Mc Donalds are provided with a complete know-how in regards to various functioning of the business(Li, 2006). The APP of such reflects and provides idea to the management regarding quantities to order, resources to be used and procured, costs arising from operations, cost of labor and so on. This is a broad ranged plan that also includes inventory or stock levels for stores to be maintained over a time period and so on. Drawing upon this plan requires certain information regarding demand forecast in that particular area, information availability regarding resources, costs of resources and organizational policies. Thus, each store has their APP to help them function their businesses effectively(Fawcett, 2008). Figure 2 :Mc Donald's Supply Chain Source : (Marketrealist.com, Retrieved on 18th November 2016) Master Production Schedule (MPS): It is a schedule that depicts planning process for production related to individual commodities. It demonstrates demand related to each and every product, hence includes resources and processes that can optimize productions. It helps business take necessary steps to avoid bottlenecks. MPS includes processes and factors that have immense importance in production and can significantly improve profitability for the business. Every store and product of Mc Donalds has its standardized procedures that have pre determine MPS(Ganesan, 2009). Though it greatly varies across countries and franchise but there is a standard set which the business needs to comply with to maintain stabilize profitability and growth. Material Requirement Plan (MRP): It involves production planning, scheduling and inventory control systems. Stores and outlets of Mc Donalds determine their material requirement depends on basis of weekend or weekdays, festivals or carnival or regular timings. Demand at Mc Donalds store in airports is deemed to be higher than that in a regular store located at a highway. Similarly raw materials need to be planned, which is demonstrated in MRP(Maloni, 2006). Deviation in order quantities can occur and can significantly alter processes. But a standardized MRP helps in attaining of desired objectives for the company. The Supply Chain Forecasting Mc Donalds has a highly effective and efficient supply chain processes and capabilities which renders value and increases business more. It has a dynamic process of supply chain forecasting for catering to demand of the stores. Key processes of the business include product, process, cash and information flow is integrated into its business processes. The company serves around 70 million customers daily with their menu comprises of hamburgers, French fries, chicken, soft drinks, smoothies, breakfast items, deserts and so on(Folinas, 2006). The company has three legged structure with owner, supplier and employees. Suppliers have been provided appropriate and permissible levels for each type of food category. Every store has similar machineries and production processes throughout that is utilized to process food materials. The brand has immense focus on serving customers fresh and hot food at counters and chilled cold drinks. This is only possible due to its supply chain efficiency and production processes. The machineries are well maintained and the staff are highly trained that renders effectiveness to the system. The staffs have highest possible type of training in meeting customers with a smile and their valued product proposition. Each staff greets the customer every time he arrives at the counter. All stores of Mc Donalds is mostly self-serviced to further impact on customer service deliveries. The company boasts of its highly integrated and effective supply chain management systems and it claims to serve a 1% of global population every day. The key processes within the company are aligned to meet suppliers products such that production can function smoothly and effectively. Customers have high demand for high-quality in services; hence they will prefer a product more that meets their requirements(Tseng, 2009). Inability to predict supply chain forecasting can have financial catastrophic results. Customers at Mc Donalds do not expect to wait in long queues for their meals to be served. Hence, Mc Donalds needs to schedule enough stock of food and supplies for food production for a high-quality service. Inability to forecast and predict might lead to breakdown of systems. Mc Donalds has a high efficient quantitative forecasting method. It has been ranked number 3 in Gartner Supply Chain Top 25. The restaurant chain maintains a fine balance in new product development and existing complexities in supply chain planning. With no factories or distribution centers, it has outsourced productions to the tune of 100%(Seuring, 2008). It consists of 16 major suppliers, with KPI being, no item may ever be out of stock. The company uses JDA Manugistic 7 application for forecasting. The software uses relevant data pertaining to point-of-sale (POS) data, stock levels, product list, and inventory and shipment information to forecast measures. Supply chain methods at various restaurants include proper inventory management. Inventory of the company is expected to store both perishable as well as non-perishable goods such that it can maintain steady flow of customer demands. Through proper inventory management the company is able to meet its forecasting targets. It has one of the most effective strategies in regards to its inventory and entire suppliers. The software helps predict accurately required quantities of raw materials for catering to demands at a particular point in time. The software also allows forecasting demand which is ordered accordingly. Often combined effort from service staffs as well as the software is used to attend to demand specifics and make appropriate forecasting solutions. Conclusion Mc Donalds maintains a highly effective and efficient supply chain management functions which is demonstrated by their capabilities to make adequate forecasting. With totally outsourced processes and techniques it is able to achieve immense efficiency in its various production processes and systems. It operates with its steady and fixed suppliers, vendors and manufacturers such that quality of its product remains uncompromised. It attains to quality standards as specified by industry and caters to highest service quality. Thus, the company is one of the largest and most profitable fast food business chains. The best methods that is followed and adopted by Mc Donalds is in regards to its forecasting methods apart from production and other processes. But it needs to further improvise its lean manufacturing techniques to reduce any sort of redundancies in production. Wastage is a major issue that impacts its business processes lowering its profitability. With proper scheduling and inven tory management systems it is possible to overcome any issues related to supply chain. But even with current processes and systems there is a tremendous value that is derived from its supply chain processes. References Bevilacqua, M. C. (2009). 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