Sustainable Operations & Supply Chain Management at McDonald's

This document explores the sustainable operations and supply chain management practices at McDonald's. It discusses the company's product quality, use of ICT, and supply chain management strategies. The document also analyzes the performance of McDonald's in terms of quality, speed, dependability, flexibility, and cost. Additionally, it highlights the challenges faced by McDonald's in the industry.

SUSTAINABLE
OPERATIONS &
SUPPLY CHAIN
MANAGEMENT
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Table of Contents
INTRODUCTION- McDonald’s.....................................................................................................3
Section 1. OPERATIONS & SUPPLY CHAIN MANAGEMENT................................................3
 PRODUCT, QUALITY & SERVICE..................................................................................3
 USE OF ICT.........................................................................................................................4
 SUPPLY CHAIN MANAGEMENT....................................................................................4
Section 2. PERFORMANCE ANALYSIS......................................................................................5
 QUALITY.............................................................................................................................5
 SPEED..................................................................................................................................6
 DEPENDABILITY...............................................................................................................6
 FLEXIBILITY......................................................................................................................6
 COST....................................................................................................................................6
Section 3. ANALYSIS.....................................................................................................................7
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8
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INTRODUCTION- McDonald’s
McDonald’s is one of the largest fast food chains across the world famous for its hamburgers. It
started back in the year 1948 by two brother, Maurice & Richard from just a small hamburger
restaurant and gradually developed by the year 1963. Initially, it became the most famous
restaurant, providing affordable food with fun & flavours to children and adults. The key
operational plan of McDonald’s is to provide its customers food at a competitive low price with
the best quality but by making profits through reducing costs of the production and expanding its
operations globally. Its key stakeholders are the employees and customers. By analysing market
demand and changes required it identifies the needs of its customers and by giving fair wages
and career development, it prioritizes the needs of employees.
The aim of making the report is to understand the need & importance of sustainable and supply
chain management for the successful operations of the company (Pagare, 2020). The structure
will include the process of delivery, quality standards and the use of ICT in the organization.
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Section 1. OPERATIONS & SUPPLY CHAIN MANAGEMENT
 PRODUCT, QUALITY & SERVICE
McDonald’s works at a very large scale and deals with millions of customers every day. Dealing
in such large numbers is not an easy task. So it has adopted a three way operational strategy: 3
v’s (value, varieties and variations) through which it can maintain its product quality, and
providing advanced services to its customers (Pribadi, 2018).
i) Added Value :
McDonald’s sells large quantity of products daily. To serve every customer, the best quality
products, it assigned particular jobs to it employees to avoid losses and makes sure that the taste
and quality of the products, it offers remains consistent throughout (Rajawat and et. al., 2020).
ii) Varieties offered :
McDonald’s offers a variety of products to its customers including salads, fruits, breakfasts and
meals for kids to meet customer demands. The main ingredients consists of chicken, bread, beef,
milk and potatoes. The bestselling items are burgers, French fries, MC Wraps, smoothies. The
company enhances its menu accordingly to the changing demands of the customers.
iii) Creating Variations :
The process of McDonald’s is so well designed and developed that it can adapt to the
requirements of the customers very flexibly and dynamically. The demands of the products is
created to with the help of product mix, surveys, promotions from specific located stores and
other external factors.
 USE OF ICT
McDonald’s moved a great way from just providing fast food to good food fast. It got into much
personalised approach though digital technology by adopting various new strategies. The way
ICT can change the outlook can be stated as under:
i) Introduction of Kiosks
It allowed the customers to have food in a less stressed way. It introduces kiosks at every French
store through which customers can easily access food (Mathur, 2017). They don’t have to wait in
long queues for their orders to get placed and they also can get feedback easily. It is not new for
the restaurants yet it gives an opportunity to the customers to get their food served directly on
their tables (Raduzzi and Massey, 2019).
ii) Online orders
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The ultimate power lies in the hands of customers. McDonald’s provides its customer the ease of
ordering the food online via mobile phones through internet which is a simplest way to get food
at the doorstep and also the customers can check through kiosks whether their order is prepared
or not.
This way through the use of technology the customers can communicate with them through
feedbacks. This boosts up the customer relationship services that overall contributes to the
goodwill of the company.
 SUPPLY CHAIN MANAGEMENT
Supply chain management is an entire process which includes production, flow of information,
shift and storage of goods from one business location to other to maximize profitability,
enhanced customer experience, and maintaining best quality throughout the business cycle. The
supply chain control and planning involves time, quality and quantity of products. The demands
of the market, supply, customer requirements and resources is been checked and measured under
supply chain management.
McDonald’s have set standards for their supplier for the best quality and value of products. The
main focus is kept on ingredients to be used so it have a greater control on the supply chain
system. Mainly the suppliers are from UK but they too, have to meet the quality standards for it.
An indicator has been developed by McDonald’s to check and monitor the performance of
suppliers across different products and services called “Supplier Quality Index”. There is also a
special Restaurant planning department which communicates with the restaurant supervisors on a
daily basis to check out any events or deviations that helps in forecasting and planning for the
various innovative products. The ongoing communication between the departments helps to
manage stock appropriately (Dekkers, 2020). The arriving time of customers checking in is also
being calculated so that the supply of raw materials is done on the basis of the demand to avoid
wastage. The data should be accurate enough so that future forecasting can also be done.
McDonald’s follows first in first out strategy for its raw materials to keep the stock fresh and
new as the raw materials are been consumed in the order just after receiving and been sold. The
network processes followed by McDonald’s backward vertical integration for reducing the cost
and ensuring the best quality products. This way McDonald’s manages the supply and control
over its internal operations to increase efficiency & productivity.
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Section 2. PERFORMANCE ANALYSIS
There are certain parameters through which the performance can be checked and measured. It
includes: Quality, speed, dependability, flexibility and cost (QSDFC).
 QUALITY
The first preference of the customers is the Quality. Organization strive towards making products
with no defects to gain market advantage. This can lead to adoption of better work policies that is
needed by customers. McDonald’s just not provide fast food but also nutritious food products
such as salads, fruits etc. The employees follow specific rules and procedures for the preparation
of food keeping in mind the hygiene standards (Schramade, 2019). If the serving time is
increased by the time of preparation, the order is rejected. By following such strict protocols to
maintain quality and hygiene, it succeeds on the feedback of the customers to improve its quality
and services.
 SPEED
The waiting time of customers from the time they place orders till the time they get their orders
places comes under speed (Tien, 2019). This can managed by increasing the product’s
availability in the store. At McDonald’s, the customers are served their orders on time with the
least waiting hours. Every process is defined in such a way that the preparation starts just as the
order is been placed. They make sure even in busy hours that the order is delivered on time.
 DEPENDABILITY
The process of an organization needs to systematically meet a secure time of delivery for a
product or service. McDonald’s provides a systematic method for the buyers by giving food on
time. They have trained employees who delivers the orders on time having their own specified
job. There is never a shortage of products during off days or weekends, the products are available
throughout the days.
 FLEXIBILITY
Flexibility is a method which defines the way to which organisations are able to adapt changes
according the needs of the customer (Boyar and Davis-Friday, 2019). The preferences of the
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customers can change anytime so the organisation should be dynamic enough to make such
changes. McDonald’s offers a wide variety of products to its customers giving them flexibility to
choose among them. Not just customers, but it provides flexibility to its workers through shift
based work system.
 COST
This refers to minimizing cost and maximising profits. The best possible way to minimise cost is
to fulfil the customer’s needs by designing the products in a creative way. It should also benefit
the company also. McDonald’s have a well-developed cost control strategy as they have better
over its supply chains which reduces the wastage of resources and unnecessary accumulation of
products. It ensures efficiency with speedy distribution methods through a technically strong
processing system. It also developed an affordable meal strategy for its customers.
Thus, it is seen that every element is connected with each other and it is properly been
coordinated at McDonald’s.
Section 3. ANALYSIS
From the above discussions, it is clear that McDonald’s is giving the best services to its
customers as well a better work environment to its employees. But despite of such a good and
flexible climate, it faces the some challenges. It is seen that it is facing a risk at leadership
because of the paradigm shift in its business in recent past years. Rival companies are also
targeting customers who are health conscious by providing them with fresh and natural food
products (Ferreira and Ferreira, 2018). Another backdrop for McDonald’s its worldwide protests
related to the increase in wages of the labourers. The company was also defamed stating that
their employees were not treated by the franchisees. It is one of the challenging tasks for the
company to be consistent with the market as the competition has been at its strongest level and if
any risks or mistakes took place, it can blow down the entire franchisee model.
CONCLUSION
McDonald's Corp. & franchisee is perhaps the most famous company worldwide. It comes under
the highest operating food chains having its franchisee operating around at every corner of the
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world. In its operations and supply chain processes, the company opts to improve product
quality, lessen cost and on time delivery of its products and consistent execution of all
operational parts of organization. All branches of association and each worker need to cooperate
to guarantee that the technique arrives at its targets. Every process showcases the needs of the
customer keeping in mind the quality, speed, service and cost. McDonald’s also coordinates with
the suppliers to fulfil the quality standards of the company. The performance analysis done
shows the positive side of the company as it complies too every aspect of consumer’s needs. The
just in time system also reduces the waiting time and helps to serve fresh food in less time. At the
end, it was found that instead McDonald’s had such less negative impacts, it still faced many
challenges such as strikes, competitor’s rivalries etc. at the place where it operates.
REFERENCES
Books and journal
Pagare, A., 2020. Supply Chain Management and Its Tools Used by McDonald’s in
US. Available at SSRN 3719680.
Rajawat, A., and et. al., 2020. Factors: Responsible for McDonald's Performance. Journal of the
Community Development in Asia, 3(2), pp.11-17.
Ferreira, J. and Ferreira, C., 2018. Challenges and opportunities of new retail horizons in
emerging markets: The case of a rising coffee culture in China. Business Horizons, 61(5). pp.
783-796.
Mathur, S., 2017. Globalization in fast food chains glocalization in fast food chains: A case study
of McDonald’s. In Strategic Marketing Management and Tactics in the Service Industry .pp.
330-347. IGI Global.
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Raduzzi, A. and Massey, J.E., 2019. Customer’s satisfaction and brand loyalty at McDonalds
Maroc. African Journal of Marketing Management, 11(3). pp. 21-34.
Pribadi, S.E., 2018. THE INFLUENCE OF FOOD QUALITY, ATMOSPHERE, SERVICE
QUALITY AND PRICE ON CUSTOMER SATISFACTION AND ITS IMPACT ON RETURN
INTENTION (A CASE OF MCDONALDS CIKARANG) (Doctoral dissertation, President
University).
Dekkers, J., 2020. From servant to driving force: Transforming the role of the supply chain in
McDonald’s The Netherlands. Journal of Supply Chain Management, Logistics and
Procurement, 3(1). pp. 6-17.
Schramade, W., 2019. McDonald's: a sustainable finance case study. Erasmus Platform for
Sustainable Value Creation.
Boyar, L. B. and Davis-Friday, P., 2019. Assessing a golden opportunity: CEO performance at
McDonald’s. The CASE Journal.
Tien, N. H., 2019. Customization and Standardization of the Business Strategy of Foreign
Enterprises in Vietnam–the McDonald’s Case and the Fast Food Sector. “International Journal of
Research in Marketing Management and Sales, 1(2). pp. 44-50.
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