Most people know Mcdonald’s as a fast food restaurant, but not many people know about the fantastic supply chain management that keeps it running. This blog post will explore how McDonald’s manages its supply chain. You will also learn how this ties in with online management courses offered by IIM Kozhikode. Here are critical strategies behind McDonald’s supply chain and how it contributes to creating one of the world’s most popular fast food chains.
The Strategy Behind McDonald’s Supply Chain Success
McDonald’s has long been hailed as a supply chain management success story. The company’s supply chain is a well-oiled machine that efficiently delivers burgers and fries to its customers around the globe. McDonald’s has achieved this success through careful strategic planning and execution. Here are two critical insights behind their supply chain:
Optimizing Relationships with Suppliers in the Long Term
In order to have a successful business, it is essential to have positive relationships with your suppliers. By optimising these relationships, you can ensure that you are getting the best possible products and services from your vendors, which can, in turn, help improve your bottom line. McDonald’s did this successfully by offering value to its long-term suppliers to ensure that both grow together mutually, making it a staple part of supply chain management. This differs from traditional supply chain models, wherein the two parties exchange values.Â
For instance, The Martin-Brower Company has been supplying napkins to McDonald’s restaurants since 1956. What started as a simple partnership with one restaurant in Des Plaines, Iowa, is now a super-beneficial long-term partnership as the company now supplies napkins to over 15,000 McDonald’s restaurants all across North America.
Full Control of Supply Chain via Vertical Integration
McDonald’s has been studied intensively in supply chain management courses and has vertically integrated its supply chain since the early 1990s. By owning more supply chain elements, McDonald’s has more control over its product quality and cost. By owning livestock farms, McDonald’s can better control its beef patties. And by operating its own distribution centres, McDonald’s can deliver food to restaurants faster and at a lower cost.
Vertical integration has helped McDonald’s keep a tight grip on its costs. By controlling more of the supply chain, McDonald’s can reduce waste and inefficiencies. For example, by owning livestock farms, McDonald’s can avoid the volatility of meat prices.Â
Therefore, the company is now involved in almost all stages of the supply chain instead of traditional restaurants, wherein the eatery is only the tip of the chain. Looking at its success, it’s no surprise that their case study is an integral part of many online management courses.
Future Supply Chain Plans For McDonald’s
As the world’s largest restaurant chain, McDonald’s constantly innovates its supply chain to keep up with customer demand. The company plans to further streamline its supply chain in the future to provide even faster service and fresher food. Here are two ways the fast-food giant is planning to achieve the same:
Pledging Towards Sustainability
The fast food industry has been under immense pressure to become more sustainable in recent years. One of the most iconic brands in fast food, McDonald’s, has made huge strides in this area in recent years. In 2015, they set a goal to source all their fibre-based packaging from recycled or certified sources by 2025. They’ve also pledged to reduce their greenhouse gas emissions by 2030 as per the 1.5°C climate scenario pathway for their supplier, restaurants and offices. To ensure this, the company has partnered with a few reputable environmental organisations, such as the Forest Stewardship Council (FSC) and the Program for the Endorsement of Forest Certification (PEFC).
Integrating Drive-Thru With AI
In recent years, McDonald’s has been working on integrating artificial intelligence (AI) into its drive-thru experience. The goal is to provide customers with a more personalised experience and increase accuracy and efficiency.
McDonald’s promises this innovation by partnering with an Israel-based AI company known as Dynamic Yield. Apart from better automation, AI will also increase the accuracy of real-time suggestions by analyzing the past ordering trends of its customers.
McDonald’s is also testing AI-enabled ordering kiosks in the US. So far, McDonald’s has found that AI can help improve orders’ accuracy and reduce waiting times. The company is still working on ways to use AI to further personalize the customer experience.
How Can Advanced Supply Chain Management and Role of Analytics Program Offer Similar Insights?
Advanced supply chain management and analytics program, offered by IIM Kozhikode can offer similar insights into how a company operates. With ever-changing industrial trends, it is vital to remain on top of supply chain management, as it impacts customer satisfaction as well as the profit margins of an organisation. Thus, by using the latest technologies to leverage supply chains, like McDonald’s has done and continues to do, you can take away key insights to boost any organisation’s supply chain. This online management course does this by integrating basics such as what is supply chain management with various analytic tools such as Descriptive Analysis, Cognitive Analysis, Prescriptive Analysis, and more.
Conclusion
The McDonald’s supply chain is indeed a fascinating and well-oiled machine. From the humble beginnings of one man’s fast food restaurant to a global empire supplying millions of customers daily, the supply chain has had to adapt and evolve to meet the demands of a growing business. By joining the Advanced Supply Chain Management and Role of Analytics Program offered by IIM Kozhikode, you can also learn key industrial insights on supply chain management.
