The McDonald's Corporation, headquartered in the United States, is the world's largest chain of quick service fast food restaurants operating in around 119 countries with a customer base of 68 million. A McDonald's restaurant operates either through a franchisee or the corporation itself and its revenue stream includes rent, royalties and fees or the sales of products respectively.
McDonald's came to India in 1996. McDonald’s India has collaboration with local companies who manage the outlets. Vikram Bakshi, under Connaught Plaza Restaurants Pvt. Ltd (CPRL) manages the outlets in the Northern and Eastern Region through a joint venture, Smita Jatia, under Hardcastle Restaurants Pvt. Ltd., manages in the Western and Southern Region, as a development licensee.
Before coming to India, McDonald’s spent close to 5 years in vendor development so as to get the best menu suited to the needs and fitted to the cultural aspects in India. It also established the “cold chain supply system” across India to maintain the nutrition and freshness of the products. This was in conjunction with their philosophy of QSQV (Quality, Service, Cleanliness and Value) which still works as the primary philosophy through which it operates in India. After ensuring a strong supply chain network it opened its first outlet in Delhi in 1996.
After 10 years of operation, there are 242 McDonald restaurants in India which serves around 5 lakh customers every day. The McDonald’s burger served in India has 9 different ingredients. These are sourced from 35 suppliers across the country. It also ensures Vegetarian and Non- Vegetarian segregation right from the processing and only uses 100 % vegetable oil.
Not only did they establish the cold chain network, McDonald’s brought about a number of other innovative ways to enhance their SC capabilities. It got into oil alliances with Oil companies like BPCL and HPCL to procure cooking oil from them. It developed novel menus which provided on limited products on the menu, most of them requiring similar ingredients and hence was able to increase SC efficiencies.
Challenges faced by McDonald’s before 1996
We will study a few unique features they adopted to develop vendor relationships in order to build the existing supply chain that would meet the demands customer expectation and internal quality standards.
Managing the Supply Chain
Multilayered Network of Suppliers
The McDonald’s supply chain consists of food suppliers, distribution Centers for storage and distribution to outlets and a fleet of refrigerated trucks for transport of products.
Tier-I supplier provide processed products both vegetarian and chicken. There are 14 such core suppliers, one of them being OSI Vista Processed foods Pvt Ltd. that provides veg, chicken patties and lettuce.
Tier-2 suppliers comprise growers and processors and they provide organic food like lettuce and potato and other poultry items. The ingredients flow from Tier-2 suppliers to...