AGRIBUSINESS SUPPLY CHAIN MANAGEMENT MCDONALDS SCM IN INDIA

Presented to : Professor Jabir Ali

July 2012

GROUP 6 Sudeep

Amey | Abhilasha |

Agenda

Introduction Products Suppliers E- Procurement Logistics and Distribution Channel Designs Food Quality and Safety management IT infrastructure Current efforts towards a sustainable supply chain McDonalds Supply chain challenges Recommendations

Introduction

Largest food service retailer in the world

Present

in 120 plus countries globally

40 Indian cities with 217 restaurants and serves 650,000 customers daily Joint venture in India with two companies:
Connaught

Plaza Restaurants Pvt Ltd (master franchisee for North and East India) Hardcastle Restaurants Pvt Ltd (master franchisee for West and South India)

Breakfast and Meals

Products

Burgers: McMuffin, McAloo Tikki, McVeggie, McMaharaja, McChicken, Fillet-o-fish, etc. Salsa wraps: Paneer & Chicken French Fries, Potato wedges Beverages:
Soft

Drinks: Coca Cola as beverage partner Coffee, Tea, etc

Others: Pancakes, Icecreams, Pizza McPuff, etc.

Suppliers
Sesame Seeds From Ghaziabad, UP Fresh Iceberg Lettuce From Trikaya Agriculture, Maharashtra and Meena Agritech, Delhi Cheddar Cheese From Dynamix Dairy, Maharashtra Buns From Cremica, Ludhiana and Shah Bector and Sons, Maharashtra

Vegetable Patty (made from fresh peas, carrots, green beans, red capsicum, potatoes and rice) from Kitran Foods Maharashtra

Geographically diverse suppliers: Ensuring stringent quality standards!

Suppliers
Dynamix is a supplier of Cheese for McDonald in India Network of milk collection centers equipped with bulk coolers Dedicated R&D centre and quality assurance program Trikaya is a supplier of Iceberg Lettuce Specialised nursery with a team of agricultural experts Drip and sprinkler irrigation with fertilizer mixing plant Pack house , pre-cooling and cold room are located at the farms itself to ensure no delay Supplier of chicken and vegetable products World class infrastructure and support services Separate processing lines for chicken and vegetable foods High tech refrigeration plants for manufacture of frozen foods at temperatures as low as -35 degree celsius

Supply Chain Integration

Operational Excellence

How McDonald uses EProcurement System ?

Emac Digital is an internet procurement site designed for McDonald Corporations 27000 franchises Emac Digital Company is an e-procurement website jointly owned by McDonalds and Accel KKR Co. It is a procurement hub ; allows all of McDonalds franchises across globe to buy everything needed to run their restaurants from Uniforms to Hamburgers! Procurement site allows business owners to buy supplies at a discounted price E- Procurement allows 85% cut in costs according to McDonalds supply chief Edwards
Major Suppliers Small Suppliers

Emac Digital

E- Procurement
Global Franchises

Place Order
Emac Digital

Supply Received

Suppliers

Logistics

Logistics and Distribution

Matching supplier production with deliveries to meet schedules and restaurant needs 3 centralized distribution centers at Mumbai, Delhi and Kochi Strong emphasis on economies of scale- high storage volumes! QIP Quality Inspection Program HACCP Food safety standards emphasizing prevention of faults rather than detection through inspection

Cold Chain
Procurement Warehousing Transportation Retailing

Vital Links of McDonalds Cold Chain

The Cold Chain is necessary to maintain the integrity of food products and retain their freshness and nutritional value
McDonalds took 4 years and around Rs 450 crores to setup the food supply chain even before opening its 1st restaurant Cold Chain Management System provides assistance in - Selection of high quality seeds - Drip irrigation technology - Refrigerated transportation system

Distribution Systems

o o

McDonalds uses three types of distribution strategy Franchising - Contractual Vertical Marketing System Licensing Joint Ventures

Channels (1/3)

Physical function
Suppliers Transporters Warehouse Manufacturer Transporters Warehouse

Customers

Transporters

Dealers

Title function
Suppliers Manufacturer Dealer Customer

Channels (2/3)

Payment function
Banks
Manufacturer

Suppliers

Banks

Customers

Banks

Dealers

Information function
Supplie rs Transport er Warehous e Banks Customers Manufactur er Transport er Warehous e Banks Dealers

Transporters Banks

Channels (3/3)

Promotion function
Suppliers Advertising Agency Manufacturer Advertising Agency

Customers

Dealers

Three dimensions of variation in the channel are : - Number of levels in the channel - Number of intermediaries at each level - Types of intermediaries used at each level

Radhakrishna Foodland Ltd

Distribution centers and cold storages Completely dedicated distribution and supply chain

Multi-temperature transportation trucks (-25O to 22OC)

Dry and cold storage facilities ERP systems in place Specialized in providing services including

Forecasting demand and Procurement (31Q system) Quality Inspection (Quality Assurance Teams) Storage and Inventory management

Max. 10 days inventory

Data collection Reporting and analysis

Food Safety and Quality

Food Safety
HACCP
Supplier

Quality Management Systems (SQMS) Distributor Quality Management Program (DQMP)

Food Quality
Sensory

Analysis Quality Assurance Teams Product Cutting by management Evaluation by central laboratory in Hong Kong

IT Infrastructure

Suppliers:
Connected

to suppliers through ERP systems through which direct store orders are uploaded Next stage is to connect DCs to suppliers through ERP systems

Customers:
McDelivery
Online

customer orders Delivery of meals to the customers doorstep Currently in 7 cities in India

McDonalds current efforts towards sustainability of the supply chain

Focus on three main areas:

Environment
Ethics Economics

Supply chain focus areas:

Sustainable

Land Management Committment Animal Welfare Supplier workplace accountability Sustainable fisheries

McDonalds Supply Chain Challenges

Burgeoning demand in near future Only 4 distribution centers (DCs) in India Managing a very elaborate supply chain structure and need of up gradation in future No flexibility in product portfolio: Competition from other fast food restaurants Heavy dependence on a very few suppliers No written contracts with supply chain partners

Recommendations

Foreseeing a 35-40 % growth every year in near future, it should add more DCs to cater to the growing demand in future To manage and optimize its elaborate supply chain network, it should adopt more sophisticated software systems Source from more suppliers to diversify their risk and reduce dependency on few suppliers Increase the product portfolio to counter competition in market

THANK YOU