Supply Chain Management

A Project On

Mc Donalds

SUBMITTED TO: Dr.Jayant Sonwalkar

SUBMITTED BY: MUGDHA BIYANI PANKAJ SINGH

ACKNOWLEDGEMENT
This Supply Chain Management project on McDonalds is the outcome of sincere and positive contribution of various individuals. We can not justifiably translate there help, cooperation and guidance extended to us in completing this project work in words. However we shall be failing in our duty if we dont express our thanks to a few people in particular. We would like to thank Mr. Akhilesh Mishra(floor manager) at McDonalds for his cooperation and it has been high privilege to work under the able supervision of our respected teacher, Dr. Jayant Sonwalkar
Mugdha Biyani Pankaj Singh Parihar

Table of Contents
Introduction to McDonalds . 1.1 History. 1.2 Corporate overview. 1.3 Why the Project? 1.4 Types of Restaurants . 2. Methodology used.
3. 4. 5. 6. 7.

1.

Business model. Advertising. Global operations and locations. McDonalds in India. Understanding Supply Chain Management.

8. Inventory Management. 9. How Purchasing cycle works?

10. Understanding Supply Chain

at McDonalds.

11. Suppliers and Distributors of McDonalds. 12. findings of study conducted.

McDonald's

Is the leading global foodservice retailer with more than 30,000 local restaurants serving 52 million people in more than 100 countries each day. More than 70% of McDonald's restaurants worldwide are owned and operated by independent local men and women. Is one of the world's most well-known and valuable brands and holds a leading share in the globally branded quick service restaurant segment of the informal eating-out market in virtually every country in which we do business. Serves the world some of its favorite foods - World Famous French Fries, Big Mac, Quarter Pounder, Chicken McNuggets and Egg McMuffin. Our rich history began with our founder, Ray Kroc. The strong foundation that he built continues today with McDonald's vision and the commitment of our talented executives to keep the shine on McDonald's arches for years to come.

History

1955 1957 1959 1961 1963 1964 1965 1967 1968 1972 1973 1974 1983

Ray Kroc opens his first restaurant in Des Plaines, Illinois and the McDonald's Corporation is created. Quality, Service, Cleanliness and Value (QSC& V) becomes the company motto. The 100th McDonald's opens in Chicago. Hamburger University opens in Elk Grove, near Chicago. One billion hamburgers sold. Ronald McDonald makes his debut. Filet-O-Fish sandwich is introduced. McDonald's Corporation goes public. The first restaurants outside of the USA open in Canada and Puerto Rico. The Big Mac is introduced. The 1,000th restaurant opens in Des Plaines, Illinois. A new McDonald's restaurant opens every day. The Quarter Pounder is introduced. Egg McMuffin is introduced. The first Ronald McDonald House opens in Philadelphia. The Happy Meal is launched. Chicken McNuggets is introduced. New Hamburger University campus opens in Oak Brook, Illinois. Set in 80 wooded acres. Training is provided for every level of McDonald's management worldwide. 50 billionth hamburger sold.

1984 1989 1990 1993 1994

Ronald McDonald Children's Charities is founded in Ray Krocs memory to raise funds in support of child welfare. McDonald's is listed on the Frankfurt, Munich, Paris and Tokyo stock exchanges. McDonald's opens in Pushkin Square and Gorky Street, Moscow. The first McDonald's at sea opens aboard the Silja Europa, the world's largest ferry sailing between Stockholm and Helsinki. Restaurants open in Bahrain, Bulgaria, Egypt, Kuwait, Latvia, Oman, New Caledonia, Trinidad and United Arab Emirates, bringing the total to over 15,000 in 79 countries on 6 continents. McDonald's opens in India the 95th country.

1996

The business began in 1940, with a restaurant opened by siblings Dick and Mac McDonald in San Bernardino, California. Their introduction of the "Speedee Service

System" in 1948 established the principles of the modern fast-food restaurant. The present corporation dates its founding to the opening of a franchised restaurant by Ray Kroc, in Des Plaines, Illinois on April 15, 1955, the ninth McDonald's restaurant overall. Kroc later purchased the McDonald brothers' equity in the company and led its worldwide expansion. With the successful expansion of McDonald's into many international markets, the company has become a symbol of globalization and the spread of the American way of life. Its prominence has also made it a frequent topic of public debates about obesity, corporate ethics and consumer responsibility.

Corporate overview

Facts and figures

A McDonald's restaurant in Times Square. McDonald's restaurants are found in 120 countries and territories around the world and serve nearly 54 million customers each day. The company also operates other restaurant brands, such as Piles Caf, and has a minority stake in Pret a Manger. The company owned a majority stake in Chipotle Mexican Grill until completing its divestment in October 2006. Until December 2003, it also owned Donatos Pizza. On August 27, 2007, McDonald's sold Boston Market to Sun Capital Partners. It also has a subsidiary, Redbox, which started in 2003 as 18-foot (5.5 m) wide automated convenience stores, but as of 2005, has focused on DVD rental machines.

Objectives:
To strengthen our knowledge To develop practical approach To understand real supply chain practices To know the cold chain system

Methodology:
Through Questioners Personal interviews

Types of restaurants

A McDonald's restaurant in Kristiansand, Norway.

Inside a Dublin McCaf. Most standalone McDonald's restaurants offer both counter service and drive-through service, with indoor and sometimes outdoor seating. Drive-Thru, Auto-Mac, Pay and Drive, or McDrive as it is known in many countries, often has separate stations for placing, paying for, and picking up orders, though the latter two steps are frequently

combined; it was first introduced in Arizona in 1975, following the lead of other fastfood chains. In some countries "McDrive" locations near highways offer no counter service or seating. In contrast, locations in high-density city neighborhoods often omit drive-through service. There are also a few locations, located mostly in downtown districts, that offer Walk-Thru service in place of Drive-Thru. Specially themed restaurants also exist, such as the "Solid Gold McDonald's," a 1950s rock-and-roll themed restaurant. In Victoria, British Columbia, there is also a McDonald's with a 24 carat (100%) gold chandelier and similar light fixtures.

The site of the first McDonald's to be franchised by Ray Kroc is now a museum in Des Plaines, Illinois. The building is a replica of the original, which was the ninth McDonald's restaurant opened. To accommodate the current trend for high quality coffee and the popularity of coffee shops in general, McDonald's introduced McCafs. The McCaf concept is a caf-style accompaniment to McDonald's restaurants. McCaf is a concept of McDonald's Australia, starting with Melbourne in 1993. Today, most McDonald's in Australia have McCafs located within the existing McDonald's restaurant. In Tasmania there are McCafs in every store, with the rest of the states quickly following suite. After upgrading to the new McCafe look and feel, some Australian stores have noticed up to a 60% increase in sales. As of the end of 2003 there were over 600 McCafs worldwide. Some locations are connected to BP gas stations/convenience stores,[4] while others called McDonald's Express have limited seating and/or menu or may be located in a shopping

mall. Other McDonald's are located in Wal-Mart stores. McStop is a location targeted at truckers and travelers which may have services found at truck stops.

Playgrounds
Some McDonald's in suburban areas and certain cities feature large indoor or outdoor playgrounds, called "McDonald's PlayPlace" (if indoors) or "Playland" (outdoors). The first PlayPlace with the familiar crawl-tube design with ball pits and slides was introduced in 1987 in the USA, with many more being constructed soon after. Some PlayPlace playgrounds have been renovated into "R Gym" areas. "R Gyms" are in-restaurant play area that features interactive game zones designed for children aged 4 to 12. Equipped with stationary bicycles attached to video games, dance pads, basketball hoops, monkey bars, an obstacle course, and other games which emphasize physical activity. The "R Gym" features the Toddler Zone, an active play environment with age appropriate games that develop physical coordination and social skills; the Active Zone, designed for children aged four-to-eight that promotes physical fitness through fun play; the Sports Zone which features a series of sport oriented activities to promote aerobic exercise for children aged 9-to-12; the Parent Zone which features seating and provides a monitoring area for their children; and the Dining Area which allows families to eat.

Redesign

A UK McDonald's before the redesign, August 2006

The same McDonald's after the redesign, August 2007 In 2006, McDonald's introduced its "Forever Young" brand by redesigning all of their restaurants, the first major redesign since the 1970s. The new design will include the traditional McDonald's yellow and red colors, but the red will be muted to terra cotta, the yellow will turn golden for a more "sunny" look, and

olive and sage green will be added. To warm up their look, the restaurants will have less plastic and more brick and wood, with modern hanging lights to produce a softer glow. Contemporary art or framed photographs will hang on the walls. The exterior will have golden awnings and a "swish brow" instead of the traditional double-slanted mansard roof. The new restaurants will feature areas:

The "linger" zone will offer armchairs, sofas, and Wi-Fi connections. The "grab and go" zone will feature tall counters with bar stools for customers who eat alone; Plasma TVs will offer them news and weather reports.

The "flexible" zone will be targeted toward families and will have booths featuring fabric cushions with colorful patterns and flexible seating.

Different music will be targeted to each zone.

Business model

The McDonald's Corporation's business model is slightly different from that of most other fast-food chains. In addition to ordinary franchise fees, supplies, and percentage of sales, McDonald's also collects rent, partially linked to sales. As a condition of the franchise agreement, the Corporation owns the properties on which most McDonald's franchises are located. The UK business model is different, in that fewer than 30% of restaurants are franchised, with the majority under the ownership of the company. McDonald's trains its franchisees and others at Hamburger University in Oak Brook, Illinois.

According to Fast Food Nation by Eric Schlosser (2001), nearly one in eight workers in the U.S. have at some time been employed by McDonald's. (According to a news piece on Fox News this figure is one in ten). The book also states that McDonald's is the largest private operator of playgrounds in the U.S., as well as the single largest purchaser of beef, pork, potatoes, and apples. The selection of meats McDonald's uses varies with the culture of the host country.

Products

McDonald's predominantly sells hamburgers, various types of chicken sandwiches and products, french fries, soft drinks, breakfast items, and desserts. In most markets, McDonald's offers salads and vegetarian items, wraps and other localized fare. This local deviation from the standard menu is a characteristic for which the chain is particularly known, and one which is employed either to abide by regional food taboos (such as the religious prohibition of beef consumption in India) or to make available foods with which the regional market is more familiar (such as the sale of McRice in Indonesia).

Advertising

Ronald McDonald

McDonald's has for decades maintained an extensive advertising campaign. In addition to the usual media (television, radio, and newspaper), the company makes significant use of billboards and signage, sponsors sporting events from ranging from Little League to the Olympic Games, and makes coolers of orange drink with their logo available for local events of all kinds. Nonetheless, television has always played a central role in the company's advertising strategy. To date, McDonald's has used 23 different slogans in United States advertising, as well as a few other slogans for select countries and regions. At times, it has run into trouble with its campaigns.

Global operations

Countries with McDonald's stores McDonald's has become emblematic of globalization, sometimes referred as the "McDonaldization" of society. The Economist magazine uses the "Big Mac Index": the comparison of a Big Mac's cost in various world currencies can be used to informally judge these currencies' purchasing power parity. The EFTA countries are leading the Big Mac Index with the top 3 most expensive Big Mac's. Iceland has the most expensive Big Mac, followed by Norway and Switzerland. The brand is known informally as "Mickey D's" (in the US and Canada), "Macky D's" (in the UK), "Mkkri" (in Finland), "McDo" (in France, Quebec, the Philippines, and the Kansai region of Japan), "Maccer's" (in Ireland), "Macarrannis" (in Mexico), "Maccas" (in New Zealand and Australia), "McD's" (in New Zealand), "Donken" (in Sweden), "de Mac" (in the Netherlands), or "Mac" (in Brazil).

Thomas Friedman once said that no country with a McDonald's had gone to war with another.[14] However, the "Golden Arches Theory of Conflict Prevention" is not strictly true. Careful historians point to the 1989 United States invasion of Panama, NATO's bombing of Serbia in 1999, and the 2006 Lebanon War as exceptions. Some observers have suggested that the company should be given credit for increasing the standard of service in markets that it enters. A group of anthropologists in a study entitled Golden Arches East (Stanford University Press, 1998, edited by James L. Watson) looked at the impact McDonald's had on East Asia, and Hong Kong in particular. When it opened in Hong Kong in 1975, McDonald's was the first restaurant to consistently offer clean restrooms, driving customers to demand the same of other restaurants and institutions. In East Asia in particular, McDonald's have become a symbol for the desire to embrace Western cultural norms. McDonald's have recently taken to partnering up with Sinopec, China's second largest oil company, in the People's Republic of China, as it begins to take advantage of China's growing use of personal vehicles by opening numerous drive-thru restaurants.

Global locations

Argentina Aruba Australia Austria Azerbaijan Bahamas Bahrain Bangladesh Barbados Belgium Bermuda Botswana Brazil Bulgaria Canada Cayman Islands Chile People's Republic of China o Hong Kong o Macau Colombia Costa Rica Croatia Cyprus Czech Republic Denmark Dominica

Dominican Republic Ecuador Egypt El Salvador Estonia Fiji Finland France Georgia Germany Greece Grenada Guatemala Guyana Honduras Hungary Iceland Italy India Indonesia Ireland Israel Jamaica Japan Jordan Kuwait

Latvia Lebanon Lithuania Malaysia Malta Mauritius Mexico Moldova Morocco Netherlan ds New Zealand Nicaragua Oman Pakistan Panama Peru Paraguay Philippine s Poland Portugal Qatar Romania Russia Saint Lucia Saudi Arabia Serbia

Singapore Slovakia Slovenia South Africa South Korea Spain Sri Lanka Sweden Switzerland Syria Taiwan Thailand Trinidad and Tobago Turkey Ukraine United Arab Emirates United Kingdom United States o Guam o Puerto Rico o United States Virgin Islands Uruguay Venezuela Yemen

MCDONALDS IN INDIA

McDonald's opened its doors in India in October 1996. Ever since then, our family restaurants in Mumbai, Delhi, Pune, Ahmedabad, Vadodara, Ludhiana, Jaipur, Noida Faridabad, Doraha, Manesar and Gurgaon have proceeded to demonstrate, much to the delight of all our customers, what the McDonald's experience is all about. Our first restaurant opened on 15th April 1955 in Des Plaines, Illinois, U.S.A. Almost 50 years down the line, we are the world's largest food service system with more than 30,000 restaurants in 100 countries, serving more than 46 million customers every day.

Locally Owned

McDonalds in India is a 50-50 joint venture partnership between McDonalds Corporation [USA] and two Indian businessmen. Amit Jatias company Hardcastle Restaurants Pvt. Ltd. owns and operates McDonald's restaurants in Western India. While Connaught Plaza Restaurants Pvt. Ltd headed by Vikram Bakshi owns and operates the Northern operations. Amit Jatia and Vikram Bakshi are like-minded visionaries who share McDonald's complete commitment to Quality, Service, Cleanliness and Value (QSC&V). Having signed their joint-venture agreements with McDonald's in April 1995, they trained

extensively, along with their Indian management team, in McDonald's restaurants in Indonesia and the U.S.A. before opening the first McDonalds restaurant in India.

Respect for local culture

McDonald's India has developed a special menu with vegetarian selections to suit Indian tastes and preferences. McDonald's does not offer any beef or pork items in India. Only the freshest chicken, fish and vegetable products find their way into our Indian restaurants. In addition, we've re-formulated some of our products using spices favoured by Indians. Among these are McVeggie burger, McAloo Tikki burger, Veg. Pizza McPuff and Chicken McGrill burger. We've also created eggless sandwich sauces for our vegetarian customers. Even our soft serves and McShakes are egg-less, offering a larger variety to our vegetarian consumers. International Standards

McDonald's India's local suppliers provide us with the highest quality, freshest ingredients. Complete adherence to the Indian Government regulations on food, health and hygiene is ensured, while maintaining our own recognized international standards. Fast, friendly service - the hallmark of McDonald's restaurants the world over is the mantra we abide by. Stringent cleaning standards ensure that all tables, chairs, highchairs and trays are sanitised several times each hour. Such meticulous attention to cleanliness extends beyond the lobby and kitchen to even the pavement and immediate areas outside the restaurant.

Our Philosophy

"We take the burger business more seriously than anyone else." When McDonald's founder, Ray Kroc made that memorable statement, he was letting the world in on the philosophy and secret behind McDonald's phenomenal success. Our vision to be Indias "best" quick service restaurant experience is supported by a set of principles and core values [McDonalds Way] The principles that guide us

Quality, Service, Cleanliness & Value - It is an unflinching McDonald's ideology that our customers must always get quality products, served quickly and with a smile, in a clean and pleasant environment; and all at a fair price

We are committed to exceeding our customers' expectations in every restaurant every time.

We have a passion and a responsibility for enhancing and protecting the McDonald's brand.

We believe in a collaborative management approach, employing a mutually respectful business philosophy,

We will seize every opportunity to innovate and lead the industry on behalf of our customers.

It was early evening and one of the 25 McDonald's outlets in India was bustling with activity with hungry souls trooping in all the time. No matter what one ordered - a hot Maharaja Mac or an apple pie - the very best was served every time. But did anyone ever wonder as to how this US giant managed the show so perfectly? The answer seemed to lie in a brilliantly articulated food chain, which extended from these outlets right up to farms all across India. US-based fast food giant, McDonald's success in India had been built on four pillars: limited menu, fresh food, fast service and affordable price. Intense competition and demands for a wider menu, drive-through and sit-down meals - encouraged the fast food giant to customize product variety without hampering the efficacy of its supply chain. Around the world (including India), approximately 85% of McDonald's restaurants were owned and operated by independent franchisees. Yet, McDonald's was able to run the show seamlessly by outsourcing nine different ingredients used in making a burger from over 35 suppliers spread all over India through a massive value chain. Between 1992 and 1996, when McDonald's opened its first outlet in India, it worked frenetically to put the perfect supply chain in place. It trained the local farmers to produce lettuces or potatoes to specifications and worked with a vendor to get the perfect cold chain1 in place. And explained to the suppliers precisely why only one particular size of peas was acceptable (if they were too large, they would pop out of the patty and get burnt). These efforts paid off in the form of joint ventures between McDonald's India (a 100% wholly-owned subsidiary of McDonald's

Supply chain management at McDonalds (India)

Did you know that every year, Rs. 50,000 crore worth of food produce is wasted in India? This is mainly because of the lack of proper infrastructure for storage and transportation under controlled conditions. McDonald's is committed to providing quality products while supporting other Indian businesses. And so, we spent a few years setting up a unique Supply Chain, even before we opened our first restaurant in India. A Supply Chain is a network of facilities including - material flow from suppliers and their "upstream" suppliers at all levels, transformation of materials into semi-finished and finished products, and distribution of products to customers and their "downstream" customers at all levels. So, raw material flows as follows: supplier - manufacturer distributor retailer consumer. Information and money flows in the reverse direction. The balance between these 3 flows is what a Supply Chain is all about. When there is a balance in the finished product ordering, the Supply Chain operates at its best. Any major fluctuation in the product ordering pattern causes excess / fluctuating inventories, shortages / stock outs, longer lead times, higher transportation and manufacturing costs, and mistrust between supply chain partners. This is called the Bullwhip Effect. Depending on the situation, the Supply Chain may include major product elements, various suppliers, geographically dispersed activities, and both upstream and downstream activities. It is critical to go beyond ones immediate suppliers and customers to encompass the entire chain, since hidden value often emerges once the entire chain is visualized. For example, a diesel engine manufacturer may be able to integrate a GPS

locator system into its engine control system. Its immediate customer, a heavy truck manufacturer, may see no need for this functionality. However, the downstream customer, a trucking company with a large fleet, may be very interested in a locator system. Understanding the value to the downstream customer is part of the supply chain management process.

Big Mac's supply chain success

The seed of McDonald's success was sown in 1990 - six years before it started its actual operations. Sanjeev Bhar traces its supply chain management that played a vital role in its growth. About two decades ago, the QSR wouldn't have meant much to the Indian F&B segment. Today, the acronym has been seamlessly absorbed in the industry lingo. McDonald's, arguably, one of the first brands that left a strong imprint on the Indian QSR history, has much to do with this. And its success is credited to its well-established supply management chain. According to Vikram Bakshi, managing director and joint venture partner of McDonald's India (North & East), the company invested about Rs 400 crore even before its first restaurant commenced operations in October 1996. "We had to ensure that we had the back-end linked up to the farm level for delivery commitment." The company also deployed the latest state-of-the-art food processing technology for having a sound supply chain. The transition towards the latest technology, which has been subsequently noticed in other QSRs as well, changed the Indian fast food scenario to match international standards. Tracing its success path McDonald's had been working critically on its supply chain part. Considering, an international brand trying to make inroads into the Indian consciousness, its Indian supplier partners were developed in such a manner that made them stay with the company from the beginning. Bakshi explains, "The success of McDonald's India is a result of its commitment to sourcing almost all its products from within the country. For this purpose, it has developed local Indian businesses, which can supply them the highest quality products required for their Indian operations." As per today's standings, McDonald's India works with as many as 38 Indian suppliers on a long-term basis, besides several others standalone restaurants working with it, for various requirements.

Vital Links in McDonalds Cold Chain

All suppliers adhere to Indian government regulations on food, health and hygiene while continuously maintaining McDonald's recognised standards. As the ingredients move from farms to processing plants to the restaurant, McDonald's Quality Inspection Programme (QIP) carries out quality checks at over 20 different points in the Cold Chain system. Setting up of the Cold Chain has also enabled us to cut down on operational wastage Hazard Analysis Critical Control Point (HACCP) is a systematic approach to food safety that emphasizes prevention within our suppliers' facility and restaurants rather than detection through inspection of illness or presence of microbiological data. Based on HACCP guidelines, control points and critical control points for all McDonald's major food processing plands and restaurants in India have ben identified. The limits have been established for those followed by monitoring, recording and correcting any deviations. The HACCP verification is done at least twice in a year and certified. The relationship between McDonald's and its Indian suppliers is mutually beneficial. As McDonald's expands in India, the supplier gets the opportunity to expand his business, have access to the latest in food technology, exposure to advanced agricultural practices and the ability to grow or to export. There are many cases of local suppliers operating out of small towns who have benefited from their association with McDonald's India.

Trikaya Agriculture

Supplier of Iceberg Lettuce Implementation of advancved agricultural practices has enabled Trikaya to successfully grow speciality crops like iceberg lettuce, special herbs and many oriental vegetables. Farm infrastructure features:

A specialised nursery with a team of agricultural experts. Drip and sprinkler irrigation in raised farm beds with fertiliser mixing plant. Pre-cooling room and a large cold room for post harvest handling. Refrigerated truck for transportation.

Vista Processed Foods Pvt. Ltd. Supplier of Chicken and Vegetable range of products (including Fruit Pies) A joint venture with OSI Industries Inc., USA, McDonald's India Pvt. Ltd. and Vista Processed Foods Pvt. Ltd., produces a range of frozen chicken and vegetable foods. A world class infrastructure at their plant at Taloja, Maharashtra, has :

Separate processing lines for chicken and vegetable foods. Capability to produce frozen foods at temperature as low as -35 Degree Cel. to retain total freshness. International stardards, procedures and support services.

Dynamix Diary Supplier of Cheese Dynamix has brought immense benefits to farmers in Baramati, Maharashtra by setting up a network of milk collection centres equipped with bulk coolers. Easy accessibility has enabled farmers augment their income by finding a new market for surplus milk. The factory has:

Fully automatic international stardard processing facility. Capability to convert milk into cheese, butter/ghee, skimmed milk powder, lactose, casein & whey protein and humanised baby food. Stringent quality control measures and continuous Research & Development

Amrit Food Supplier of long life UHT Milk and Milk Products for Frozen Desserts Amrit Food, an ISO 9000 company, manufactures widely popular brands - Gagan Milk and Nandan Ghee at its factory at Ghaziabad, Uttar Pradesh. The factory has:

State-of-the-art fully automatic machinery requiring no human contact with product, for total hygiene. Installed capacity of 6000 ltrs/hr for producing homegenised UHT (Ultra High Temperature) processed milk and milk products. Strict quality control supported by a fully equipped quality control laboratory.

Radhakrishna Foodland Distribution Centres for Delhi and Mumbai An integral part of the Radhakrishna Group, Foodland specialises in handling large volumes, providing the entire range of services including procurement, quality

inspection, storage, inventory management, deliveries, data collection, recording and reporting. Salient strenghts are :

A one-stop shop for all distribution management services. Dry and cold storage facility to store and transport perishable products at temperatures upto -22 Degree Cel. Effective process control for minimum distribution cost.

Cold Chain
The Cold Chain is necessary to maintain the integrity of food products and retain their freshness and nutritional value. The Cold Chain is an integral part of the Supply Chain Setting up the Cold Chain has involved the transfer of state-of-the-art food processing technology by McDonald's and its international suppliers to pioneering Indian entrepreneurs, who have now become an integral part of the Cold Chain. The term Cold Chain describes the network for the procurement, warehousing, transportation and retailing of food products under controlled temperatures. McDonalds restaurants store products to be used on a daily basis, within a temperature range of 18C to 4C. About 52% of our food products need to be stored under these conditions before they are used.

Local Sourcing
McDonald's has always been committed to sourcing its requirements from local suppliers and farmers. This assurance is rooted in the philosophy of our company's founder, Ray Kroc. He firmly believed in mutual benefits arising from a partnership between

McDonald's and the local businesses, thus ensuring that McDonald's commitment to growth was mirrored by that of its partners. In keeping with this belief, we have carefully identified local Indian businesses that take pride in satisfying customers by presenting them with the highest quality products. Adherence to Indian Government regulations on food, health and hygiene were a top priority. McDonald's India today purchases more than 96% of its products and supplies from Indian suppliers. Even our restaurants are constructed using local architects, contractors, labour and maximum local content in materials. The relationship between McDonald's and its Indian suppliers is mutually beneficial. As McDonald's expands in India, the supplier gets the opportunity to expand his business, have access to the latest in food technology, get exposure to advanced agricultural practices and the ability to grow or to export. There are many cases of local suppliers operating out of small towns who have benefited from their association with McDonald's India. All suppliers adhere to Indian government regulations on food, health and hygiene while continuously maintaining McDonald's recognised standards. As the ingredients move from farms to processing plants to the restaurant, McDonald's Quality Inspection Programme (QIP) carries out quality checks at over 20 different points in the Cold Chain system. Setting up of the Cold Chain has also enabled us to cut down on operational wastage Hazard Analysis Critical Control Point (HACCP) is a systematic approach to food safety that emphasizes prevention of illness or presence of microbiological data within our suppliers' facilities and our restaurants rather than its detection through inspection. Based on HACCP guidelines, control points and critical control points for all McDonald's major food processing plants and restaurants in India have been identified. The HACCP verification is done at least twice in a year and certified.

Suppliers :
Trikaya Agriculture - Supplier of Iceberg Lettuce Implementation of advanced agricultural practices has enabled Trikaya to successfully grow speciality crops like iceberg lettuce, special herbs and many oriental vegetables. Farm infrastructure features:

A specialised nursery with a team of agricultural experts. Drip and sprinkler irrigation in raised farm beds with fertiliser mixing plant. Pre-cooling room and a large cold room for post harvest handling. Refrigerated truck for transportation.

Vista Processed Foods Pvt. Ltd. - Supplier of Chicken and Vegetable range of products A joint venture with OSI Industries Inc., USA, and McDonald's India Pvt. Ltd. Vista Processed Foods Pvt. Ltd. produces a range of frozen chicken and vegetable foods. A world class infrastructure at its plant at Taloja, Maharashtra, has :

Separate processing lines for chicken and vegetable foods. Capability to produce frozen foods at temperature as low as -35 Degree Celsius to retain total freshness. International standards, procedures and support services.

Dynamix Diary - Supplier of Cheese Dynamix has brought immense benefits to farmers in Baramati, Maharashtra by setting up a network of milk collection centres equipped with bulk coolers. Easy accessibility has enabled farmers augment their income by finding a new market for surplus milk. The factory has:

Fully automatic international standard processing facility. Capability to convert milk into cheese, butter/ghee, skimmed milk powder, lactose, casein & whey protein and humanised baby food. Stringent quality control measures and continuous Research & Development

Amrit Food - Supplier of long life UHT Milk and Milk Products for Frozen Desserts Amrit Food, an ISO 9000 company, manufactures widely popular brands - Gagan Milk and Nandan Ghee at its factory at Ghaziabad, Uttar Pradesh. Its plant has:

State-of-the-art fully automatic machinery requiring no human contact with product, for total hygiene. Installed capacity of 6000 litres / hour for producing homogenised UHT (Ultra High Temperature) processed milk and milk products. Strict quality control supported by a fully equipped quality control laboratory.

Radhakrishna Foodland - Distribution Centre An integral part of the Radhakrishna Group, Foodland specialises in handling large volumes, providing the entire range of services including procurement, quality inspection, storage, inventory management, deliveries, data collection, recording and reporting. Salient strengths are :

A one-stop shop for all distribution management services. Dry and cold storage facility to store and transport perishable products at temperatures up to - 22 Degrees Celsius.

Effective process control for minimum distribution cost. McDonald's opened its first store in India in October, 1996 and currently has 113 stores, spread across the North, West & South of the country. We have the sole responsibility of McDonald's entire supply chain all across India. We handle their entire range of services including procurement, quality inspection, storage, inventory management, deliveries, data collection, recording and reporting.

Over the years, subsequent to the commencement of our relationship, Foodland has regularly won the Best Supplier Award from McDonald's.

McDonald's - Challenges

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 Routing Challenges No margin for error Operations critical client No Stock Outs at store On time delivery record above 97 % Clean delivery record above 99 % Unfailing inbound supply chain

Foodland : how it helps in supply chain of McDonalds?

Foodland provides Customized Distribution & Logistics services encompassing the entire supply chain, such as storage, handling and distribution solutions to various clients. The services are tailor made to suit each clients requirements, which include organisations such as McDonald's and Radhakrishna Hospitality Services Pvt. Ltd. (RKHS) Objective To provide a cost effective solution to our customers ensuring product integrity throughout the supply chain.

Platter Of Services

Supply Chain Structuring Inventory Planning & Replenishment Management

Warehouse Management Customer Order Fulfillment Logistics Temperature Controlled

It handles bulk transportation of temperature sensitive products. Key Features: 1. 2. 3. 4. 5. 6. 7. 8. Dedicated to cold chain movement The only logistics solution provider with expertise in handling agri produce Total kilometer run per month is 7,00,000 km Perishable tonnage handled per month 7,000 tons Robust quality systems & processes First in the country to use multi temperature vehicles Use of innovative methods to ensure temperature integrity during transit Experienced staff The BEST in the industry.

Its experience of over a decade in the logistics & distribution industry has led us to believe that there is still one area which remains poorly serviced that of movement of small volumes of perishable items

across the country.

Our experience also tells us that many companies, for want of a cost-effective and reliable logistics solution, end up deciding not to market their products which are of a perishable nature in certain markets, thus losing out on potential revenue opportunities. And because currently, there is no reliable service provider to cater to this need, companies have to move goods either by air, which is expensive, or through bulk carriers with very little control on the delivery schedule. Given the current scenario, combined with our domain expertise in the logistics & distribution area, we have launched a new service - Fresh Rush. Fresh Rush is a temperature controlled transportation service addressing the needs of small volume cargo. Fresh Rush Features

Multi temperature products, such as Frozen (below 18C) and Chilled (1C to 4C) can be transported Flexibility of load movement - A minimum of 500 kgs to maximum of 5000 kgs can be transported In transit temperature tracking Fixed schedule of pickup and delivery Well trained and experienced manpower Adherence to strict hygiene standards Consignment can be tracked through GPS system

1. Food Park, Kalamboli

First of its kind in India Designed as per global standards The centre procures, value adds, stores and distributes various kinds of perishable and non-perishable food products

Food Park Features

Spread over 33,000 sq meters Multi Temperature Zones Integrated Facility Storage and Value Addition capabilities under one roof Ensured / Guaranteed Food Safety Paradigm shift in the way food is handled in the supply chain in India First of its kind in the region

Benchmarked against global standards Codex / USDA / PFA compliant Scalable Dedicated storage for specific categories Sanitation / Hygiene standards Trash handling Air / Water Quality Treatment Plant / ETP Ripening Rooms, Crate Wash Facilities, Blast Freezer, Flake Ice Machine Value Added Services Processing of Vegetables & Fruits, Meat, Sea Food and Poultry Controls Building Management System (BMS) 100 % Power Back Up

Food Park Capacity

Capacity to manage over 6000 SKUs Can store 70,000 cases with 1,700 pallet positions and over 4,000 pick faces Processing Vegetable & Fruits 21 tonnes per day Meat 3 tonnes per day Fish 3 tonnes per day Blast Freezing 6 tonnes per day Ice Machine 2.4 tonnes per day
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2. Kanjur Marg DC

Spread over 3,500 sq meters Dry Provisions DC Capacity to manage over 9000 SKUs

Can store 80,000 cases with 1400 pallet position and 3,600 pick faces

3. Delhi DC (Noida)

Dedicated to operations in the North Highly functional DC Chiller / Freezer / Dry Storage Capacity to manage 576 pallet positions

Findings of study conducted

1.Every organisation, no matter how big or small in size has its own forecasting techniques. This is because without forecasting the demand and supply requirements, the orders cant be fulfilled. Similarly, for order processing, McDonalds forecast its requirements on a daily basis.

2.McDonalds has its outlets in different parts of the globe. In India too, McDonalds has numerous outlets in different cities, but they do not have any local vendor. They have a fixed vendor, that is The Radhakrishna Foodland, which caters the range of 230 products that McDonalds require. The Radhakrishna Foodland not only process the food items but also handle the logistics partially.The delivery center is at Mumbai where from the required stock is transported to different locations. The concerned person told us, that due to the ephimeral shelf-life of tomatoes, it is the only commodity that they make purchase from local markets; specifically of four to five inches diameter which undergoes a thorough sanitization process, only after which it is used. 3.Every organisation has its inventory cycle. The McDonalds outlets do keep a safety inventory. They keep the buffer stock for a period of three days, and their stock is stored at the outlets itself. Every product used in preparing the menu items come with an expiry date, like the French-fries served in Mc Donalds has a life of two hundred and seventy days. But once the menu items are cooked, they are not kept for more than ten minutes, after which they are dumped as waste.There are daily product safety checklist which is maintained manually as well as with the help of computer softwares too,helping the staff in assessing the stock quantity at the end of each day. 4.Radhakrishna Foodland had been working with Mc Donalds for the past ten yearsand the trems abd conditions for choosing the network design was decided by the headquarters of McDonalds itself. The food items are transported via air conditioned

trucks having different chambers. Each chamber is designed for the different kind of stock at different temperature levels as per the suitability and requirements of the stock. All the raw material comes in a frozen form. The trucks have pre-defined destinations to reach each day. The sources at McDonalds told us that the trucks from Mumbai reach Indore on Monday, Pune on tuesday, Hyderabad on wednesday and so on at Bangalore and Gujarat too. The items which are to be procured from foreign territories comes to India via ships, like the french fries are obtained from new Zealand via shipments. 5.They do assess their daily requirements via safety checklists. The rounding and scheduling of ouput and input is done manually and through computer based softwares too. 6.McDonalds does not have any third party logistics. 7.With the evolvement of the new technologies and convenient softwares, the conventional methods of maintaining suplly chain records are now a passe`. Mc Donalds too use a standardized visual Foxpro based program via which the outlets are linked with the head office and the Radhakrishna Foodland too. 8.McDonalds believe in the saying "Customer is the King" and thus the complaints , if any, from the customers end are duly heard and resolved as per the need of the situation.