The McDonald’s supply chain is a complex web of direct and indirect suppliers. They manage this complex system by working with direct suppliers who share their values and vision for sustainable supply. They hold them to clear standards for quality, safety, efficiency and sustainability. They expect them to extend those requirements to their suppliers and also partner with them to identify, understand and address industry-wide sustainability challenges and achieve continuous improvement. Overall, McDonald’s and their suppliers are collectively focused on three areas of responsibility: ethics, environment, and economics. Their supply chain focus areas include:
- Sustainable Land Management Commitment
- Animal Welfare
- Supplier Workplace Accountability
- Sustainable Fisheries
Sustainable Supply Chain Vision:
They envision a supply chain that profitably yields high-quality, safe products without supply interruption while leveraging their leadership position to create a net benefit by improving ethical, environmental and economic outcomes.
- Ethics – They envision purchasing from suppliers that follow practices that ensure the health and safety of their employees and the welfare and humane treatment of animals in their supply chain
- Environment – They envision influencing the sourcing of materials and ensuring the design of products, their manufacture, distribution and use to minimize life-cycle impacts on the environment.
- Economics – They envision delivering affordable food, engaging in equitable trade practices, limiting the spread of agricultural diseases, and positively impacting the communities where their suppliers operate. They view this vision and their responsibilities holistically. As sourcing decisions are made, they consider their priorities for food safety, quality and costs, as well as ethical, environmental and economic responsibilities. Their global progress on beef and coffee sustainability illustrate
Forecasting at McDonald A forecast is an estimate of future sales of finished products. Forecasts are calculated using: · store-specific historic product mix data from the last two years · Store-specific and national causal factors. These specify dates for events such as national promotions and school holidays · Information from store managers about factors that might affect demand, e.g. road closures or local events and promotions.
Supply Planners working for McDonald’s include a range of causal factors in the calculation of the forecasts, so that based on past performance they can predict future demand for each restaurant. For example, Big Mac sales increase during a ‘Buy One Get One Free (BOGOF)’ promotion. The planners use this data in the forecasts for all stores that took part in that promotion. Analyzing how weather affects demand for particular products, such as McFlurrys and salads, can also be built into the model. The forecasts then become more accurate, decreasing costs and improving customer satisfaction. Qualitative Forecasting Expert Opinion and Market Research McDonald’s uses
Methods to help in predicting the future growth of the organization. Developing a strong customer focus, McDonald’s relies heavily upon gathering information from customers, employees, and other experts in the field to assist in the decision- making process. Within the qualitative approach, McDonald’s focuses attention on utilizing expert judgment. Expert judgment is important because it provides significant insight into different aspects of the organization. When seeking expert’s opinions, a technique known as Delphi is used to ensure quality opinions are formed. The Delphi technique allows McDonald’s to gather expert’s opinions on predictions of future behavior.
Stock Control Charts:
A stock control chart shows the balance of orders for new stocks against sales. The system is dependent on figures for expected sales. For example, if sales of burgers are going out of the system, then stocks of beef patties need to be coming into the system. Manugistics uses two years’ worth of product mix history to produce forecasts for each restaurant. This uses time series analysis. The planner will apply a causal factor (the blue blocks in the example) to the time series for the start and end date of this promotion. Using complex calculations, the graph then produces a forecast – seen below circled red.
Any system is only as good as the data that is provided. Therefore, McDonald’s Restaurant Managers need to ensure that the data they enter into the system is as accurate as possible. For example, each day, Restaurant Managers record opening and closing stocks of key food items. They record all other items weekly. The store computer system identifies any stock count deviations from the last stock count so managers can investigate. For example, the manager may have missed off a box of organic milk whilst counting them earlier on in the shift.
Restaurants hold a small buffer stock. This is an extra quantity of stock held to meet unexpected higher demand. It is also the point at which more goods are ordered the re-order level.
McDonald’s store managers use a simple web-based communication tool called ‘WebLog’ to view and amend store Order Proposals. Every day WebLog creates a proposed order for the manager to analyze and demand if necessary. Weblog enables managers and central planners to see what quantities have been ordered, what the current stock levels are and exactly how much stock is due to be delivered at a particular time. In the past, managers would have had to check their delivery for any shortages and input every item they had received. The system now automatically generates a delivery note that gives the exact quantities and descriptions of the delivery. All managers need to do is simply click ‘confirm’ on Weblog. This saves valuable time and makes the process more cost-effective.