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Mc DONALD’SSUPPLY CHAIN

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AGENDA• Introduction• History of Mc Donald’s• Mc Donald’s in India• Mc Donald’s Supply chain

▫Supply Chain Challenges▫Supply Chain Strategy▫Cold Chain▫Validation of cold chain▫Cold chain partners▫Logistics ▫Result of Supply chain Integration

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INTRODUCTION

•Leading global food service retailer•32, 000 local restaurants, 60 million

people, more than 100 countries•Hamburgers, Chicken sandwich, French

fries, soft drinks, breakfast items and desserts

•Local deviation from the standard menu•Abide by regional taboos

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HISTORY

•1940 – Began as a restaurant opened by siblings Dick and Mac McDonald in California

•1948 – Introduction of “Speedy Service System”

•1955 - Opening of a franchised restaurant by Ray Kroc

•Post 1955 – Kroc purchased Mc brothers equity in the company and led to world wide expansion

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McDonald’s IN INDIA

•Entered India in 1996 through a joint venture with Hardcastle Restaurants Pvt. Ltd. and Connaught Plaza Restaurants Pvt. Ltd.

•160 restaurants in India•Special menu with vegetarian selection,

no beef•Products using Indian spices -

McVeggieburger, McAloo Tikki burger•Indian local suppliers provide McD with

highest quality freshest ingredients

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McDonald’s– FOUR PILLARS OF SUCCESS

Limited Menu

Fresh Food

Fast Service

Affordable Price

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Mc Donald’s SUPPLY CHAIN IN INDIA

• Source all its requirements from within India• Developed local business• Works with 38 different local suppliers• Trained local farmers to produce according to

their specification• Worked with vendor to get the perfect cold

chain in place• Distribution centers – Noida, Kalamboli,

Bangalore, Kolkata• Cold chain – Unique concept of McD supply

chain in India

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• Full Supply Chain responsibility• Multi Temp. Products - Over 65 % temperature

controlled• Stores as far as 500 – 1000 kms• Drops per month - Over 1000 - Movement mainly

by road• Regular movement of perishables by air• No margin for error – Operations critical client

Mc Donald’s SUPPLY CHAIN CHALLENGES

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Mc Donald’s SUPPLY CHAIN CHALLENGES (cont.)

• No Stock Outs at store• On time delivery record – above 97 %• Clean delivery record – above 99 %• Unfailing inbound supply chain• Bull whip effect• Cannibalization

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SUPPLY CHAIN STRATEGY

SUPPLY CHAIN SERVICES FOR McDONALD‘S RESTAURANTS

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COLD CHAIN – LIFELINE OF FAST FOOD BUSINESS

•Temperature controlled supply chain•Series of storage and distribution

activities which maintain a given temperature range

•Extend and ensure the shelf life of food products

Locked in pre-cooling room to

remove field heat after harvesting

Transportation to distribution centers in

refrigerated vans

McDonald’s store products to be used on

daily basis

2 o c 1 to 4 o c

-18 to 4 o c

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VALIDATION OF COLD CHAIN

Component Qualification

•Qualification check

on packaging componen

ts

Operational Qualification

• To demonstrate

that the process

performs at the

operational extremes

Performance Qualification• To demonstrate

that what happens in the real world is

within the limits of what was

demonstrated in the Operational

Qualification limits

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COLD CHAIN PARTNERS BEHIND THE Big Mac

Source: http://www.rediff.com/business/1999/apr/29mac5.jpg

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COLD CHAIN PARTNERS1. Dynamic Dairy Industries - Supplier of Cheese

▫ Baramati, Maharashtra▫ Immense benefit to farmers by setting up a network of

milk collection centres equipped with bulk coolers▫ From farm two degrees Celsius in 90 minutes▫ Fully automatic international standard processing

facility▫ Capability to convert milk into cheese, butter/ghee,

skimmed milk powder, lactose, casein & whey protein and humanized baby food

▫ Stringent quality control measures and continuous Research & Development

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COLD CHAIN PARTNERS (Cont.)

2. Trikaya Agriculture-Supplier of Iceberg Lettuce

▫ Talegaon, Maharashtra▫ Grow lettuce all year round with the help of experts from Mc

Donalds▫ A specialized nursery with a team of agricultural experts▫ Vegetables are moved into the pre-cooling room within half an

hour of harvesting. ▫ The pre-cooling room ensures rapid vacuum cooling to 2º C

within 90 minutes. ▫ The pack house, post-cooling and cold room are located at the

farms itself, ensuring no delay between harvesting, pre-cooling, packaging and cold storage

▫ Refrigerated truck for transportation.

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COLD CHAIN PARTNERS (Cont.)

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

▫ Taloja, Maharashtra.▫ Produces a range of frozen chicken and vegetable foods▫ The technology includes hi-tech refrigeration plants for

manufacture of frozen food at temperatures as low as - 35° c.

▫ Cultural sensitivity: Vegetable & chicken manufactured at different processing lines separated by a shower (washing) area. Utmost care to ensure no mixing up.

▫ R&D facility for innovation in taste, nutritional value and convenience

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COLD CHAIN PARTNERS (Cont.)

4. Radhakrishna Foodland -Distribution centers for Delhi and Mumbai

▫ Thane, Maharashtra▫ Handles large volumes▫ Services include procurement, quality inspection, storage,

inventory management, deliveries, data collection, recording and reporting

▫ Dry and cold storage facility to store and transport perishable products at temperatures upto -22 Degree Cel.

▫ Effective process control for minimum distribution cost▫ Variety of items coming from across India, stored in rooms

with different temperature zones and are finally dispatched to the McDonald's restaurants on the basis of their requirements

▫ Very vital role in maintaining the integrity of the products

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COLD CHAIN PARTNERS (Cont.)5. Amrit Food- Supplier of long life UHT Milk and Milk Products

for Frozen Desserts

▫ Ghaziabad, Uttar Pradesh▫ ISO 9000 company▫ Manufacture widely popular brands – Gagan Milk and

Nandan Ghee▫ State-of-the-art fully automatic machinery requiring no

human contact with product, for total hygiene.▫ Installed capacity of 6000 ltrs/hr for producing homogenized

UHT (Ultra High Temperature) processed milk and milk products.

▫ Strict quality control supported by a fully equipped quality control laboratory.

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LOGISTICS• Handled by AFL Logistics Ltd.• ~100 sales items in the restaurant• ~400 SKUs in the warehouse (Hubs: up to 1,500)• ~200 restaurants per DC (~180 DCs globally)• Delivery frequency: ~3/wk, higher in urban areas• 2-3 stops per route• Exclusive distributors (3PL)• Freight consolidation (via freight forwarders)• Long term partnerships with service providers,

risk sharing• Strong quality focus (Cold Chain, HACCP, QIP)

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SUPPLY CHAIN INTEGRATION

Significant business benefits to both the customer and the supply chain

Enablers One stop shopping concept - Central file

management Inventory management - Restaurant simplification

Synchronizing the perishable Supply Chain Demand forecasting

Promotional + Continuous Supply Supplier and DC level

Supply Planning Restaurant and DC level

Visibility and Collaboration across the chain

RESULT OF SUPPLY CHAIN INTEGRATION

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REFRENCES• http://www.icmrindia.org/free%20resources/case

studies/McDonald%20food%20chain-7.htm• http://www.articlesbase.com/marketing-articles/

mcdonalds-india-supply-chain-729402.html• www.expresshospitality.com/20070315/managem

ent06.shtml• www.mcdonaldsindia.com• www.nrf.com/Attachments.asp?id=9504