McDonald's Supply Chain Management

This essay analyzes the supply chain management practices of McDonald's Corporation, a US-based fast food giant operating in 119 countries. It examines the company's tiered supplier network, reliance on distribution centers managed by partners, and utilization of technology for efficient inventory management. The analysis highlights the crucial role of intermediaries and strong relationships in McDonald's supply chain, enabling them to meet customer demand effectively.

SUPPLY CHAIN MANAGEMENT AT MCDONALD’S

Supply chain management is the most important feature of a firm’s operational strategy.
It deals with the control of material flow in the organization right from the procurement of
raw materials to processing and final distribution to consumers. The supply chain function of
multinational organizations becomes increasingly complex due to higher level of
globalization. However, the advancement in technology has resulted in more efficient
management of supply chain functions in an organization. This essay provide an analysis of
the supply chain management in McDonald’s Corporation, a US based fast food retail chain.
The company operates in 119 countries across the world with more than 30000 retail stores.
The role of emerging technology would be analysed after initial discussion on supply chain
management practices of the company (McDonald’s Corporation, 2008).
McDonald’s prime business is to provide fast food products like hamburgers, French
fries, soft drinks, sandwiches, deserts and others to its customers. Management of a large
number of materials is required for delivering these items. McDonalds has chief distribution
centres across several locations in different countries which can meet the demand of materials
for 250 to 500 McDonald’s outlets so that branches need not to stock these raw materials.
These distribution centres are not owned by the company but managed by distribution
partners which turns out to be an efficient management of supply chain (SHARMA, 2013).
The supply chain structure of the company has core suppliers which can be categorised into
two tiers. Tier 1 suppliers provide processed products e.g. vegetables, potato etc. and tier 2
suppliers are growers. Distribution centres receive shipment of these materials through
logistics services and upon requirements at restaurants, transportation of these materials is
carried out through logistics management systems across the company which also have
racking mechanism. Some of the materials like soft drinks and buns are directly brought to
restaurants by suppliers.
It can be inferred that the role of intermediaries like suppliers, logistic companies,
distribution centres etc. is crucial in timely supply of required materials. The highly efficient
material management provides a competitive advantage to the company where the company
can focus on its core business of serving high quality fast food items. The distribution centres
approach provide economies of scale to the company and accounts for reasonable cost
savings which boost the profitability of the company. Further, the role of relationship is
significantly higher in supply chain management where a strong network of distribution
centres and franchise outlets is being managed by McDonalds (Bisk, 2016).
Emerging technologies plays significant role in McDonald’s supply chain which
ensures that sufficient level of stocks are maintained to meet the demand and requirement of

customers. The highly efficient technological system has specialised software which
automatically process the store orders in timely manner. The information system work as a
strong back bone for the outsourcing proves of materials procurement through distribution
centres. Thus, higher level of effectiveness is achieved through the application of technology
at McDonald in meeting out the requirements of inventory. The analysis in the essay
indicates that supply chain is an important function of organizations which especially have
global operations and the prime concern of this function is to meet out the needs and
requirements of customers in an efficient and timely manner (Fristedt and et.al., n.d).

References
Bisk. 2016. What are the Ingredients in a McDonald's Supply Chain. [Online]. Available
through: <http://www.usanfranonline.com/resources/supply-chain-management/what-
are-the-ingredients-in-a-mcdonalds-supply-chain/#.WD3JutV97IU>. [Accessed on 30
November 2016].
Fristedt, M. and et.al., n.d. Supply Chain Management in practice - A Case study of
McDonald’s Sweden. [Online]. Available through:
<http://liu.diva-portal.org/smash/get/diva2:571437/FULLTEXT01.pdf>. [Accessed on
30 November 2016].
McDonald’s Corporation. 2008. [Online]. Available through:
<http://www.mcdpressoffice.eu/downloads/McD_CR_Report_08.pdf>. [Accessed on
30 November 2016].
SHARMA, K., 2013. A CASE STUDY ON MCDONALD’S SUPPLY-CHAIN IN INDIA.
Asia Pacific Journal of Marketing & Management Review, 2(1). pp.112-120.