Strategic Sourcing in McDonald's: Role, Strategies, and Benefits

Strategic
Sourcing

STRATEGIC SOURCING 1
Introduction
Strategic Sourcing is said to be an institutional approach that helps in continuously enhancing
and re-evaluating the company’s activities of purchasing. In the production environment,
strategic sourcing is mostly considered as one of the most important components of supply
chain management. (Presley, Meade, & Sarkis, 2016). Strategic sourcing is different from
the conventional purchasing since it provides priority to the entire product life cycle, and not
just to the initial purchase price.
The intent of this report is to discuss the role played by strategic sourcing in one of the most
recognized fast food chains i.e. McDonald's. As it is known that McDonald's operates its
business at a global level, so the emphasis of the report is being shifted to its activities and
operations involved in the global supply chain management. Furthermore, to conclude the
report, the contribution of the strategic sourcing in the success of McDonald’s has been
discussed.
Overview of the organization
McDonald's is one of the familiar names of the fast-food chain since it operates its business at
a global level. The fast-food chain was introduced in the year 1940 in America. Maurice
McDonald and Richard McDonald founded McDonald’s as the hamburger stand, in San
Bernardino, California, United States., but it later converted into a franchise. Today,
McDonald’s is considered as the largest restaurant chain in the world by serving around 69
million consumers every day in around 100 nations with 37,855 outlets as of 2018. The
restaurant chain is best known in the market for its cheeseburgers, French fries, and
hamburgers. In addition to this, they also feature breakfast items, milkshakes, desserts,
chicken products, and wraps. Furthermore, due to negative marketing of the chain related to

STRATEGIC SOURCING 2
the quality of the product, the chain has added smoothies, fruit, fish, and salads in its menu as
the healthy options. The McDonald’s Corporation majorly earns its revenue from royalties,
fees by franchisees, rent and sales from the restaurants. Company is also one of the largest
employers in the world by employing around 1.7 million employees (McDonald, 2018).
Role of Strategic Sourcing
Strategic sourcing allows businesses to take advantage of a whole host of benefits and it is
presently becoming the most favoured model among different businesses that are looking to
concentrate on their aptitudes as well as decreasing risk, enhancing the food quality, timely
delivery of the services, reducing cost, establish better relationship with the suppliers and
enhance the effectiveness and efficiency of the services and goods provided by the company.
McDonald's is presently emphasizing towards strategic sourcing in order to get rid of the
negative reviews and marketing of the brand in the market related to the poor quality of its
food products. Strategic sourcing has played an important role in the company as it is
comprised of detailed auditing of the supply chain procedure of the company and identifying
the loopholes in the system. Through this sourcing, the company has successfully identified
those suppliers that deliver unhealthy as well as poor quality food products to the business
and then ending the relationship with these types of suppliers. The strategic sourcing has been
incorporated into the system to encourage suppliers to provide high-quality products. This is
slowly supporting company in enhancing its image among customers by letting suppliers
understand the laws against the poor quality products. In addition to this, the model of
strategic sourcing helps in maintaining a strong relationship with the supplier (Basu, 2018).
In the year 2014, the sustainability framework was adopted by McDonald's to set the
standards and objectives of some products that are packaging, beef, fish, coffee and palm oil.
For setting the standards and guiding principles the company comes under contact with the