Transports and logistics management of McDonalds

This report focuses on the transport and logistics management process of McDonald considering the existing supply chain management. It investigates global factors that affect the supply chain of McDonalds and discusses the role of transport and logistics in greening the supply chain.

Transports and logistics management of McDonalds

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Contents
Introduction....................................................................................................................2
Organizational Background of McDonald.........................................................................2
Discussion......................................................................................................................3
Global factors that affected the supply chain of the McDonalds.................................3
Mapping various stages of supply chain to achieve sustainable competitive advantage
..................................................................................................................................6
Requirements of a system for transport logistics to support various supply chain that
exist in an airport environment..................................................................................8
Role of transport and logistics on greening of supply chain........................................9
Role of distribution channels and the role of transport modes on customer
expectations...............................................................................................................9
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Introduction
In this present scenario of business competition and rivalry, the organizations are trying hard
to survive with effective business management planning, development and implementation of
strategies, effective operation as well as incorporation of innovation and creativity. In all
those prospect effective strategies on certain areas such as value chain, operation,
administration and supply chain are important as the overall performance and management
can lead the organization to the height of success. This study focuses on the transport and
logistics management process of McDonald considering the existing supply chain
management. This report aims to investigate global factor that affecting supply chain of
McDonalds along with the contribution of transport logistics and green initiatives. This report
will discuss role of distribution channel for fulfilling consumer expectations.
Organizational Background of McDonald
McDonald is a leading brand in food chain sector and it has been incorporated in business
since the 1955. The organization is serving over 36,000 locations in 100s of different
countries now days. Approximately 70 million customers are enjoying the meal of McDonald
and the data shows its huge customer base along with its good brand image. Recently,
McDonald has been enlisted as the fourth larger organization in terms employment and the
estimation of employees of the organization is around 2 million (McDonalds, 2019). As the
organization is maintaining its business across the globe, the transportation and logistics is an
important factor for the betterment of its business process.
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Discussion
Global factors that affected the supply chain of the McDonalds
As the organization, McDonald is a Multinational Company and managing its business
process over 100 countries, the supply chain of the organization seems way complex
(McDonalds, 2019). On the other side, a number of global factors are affecting the supply
chain management system of the organization based on the socio-economic, political, legal,
commitment, strategy and policy of the suppliers as well as outsourcing process of the
procurement. As defined by Achillas et al. (2018), the affecting factors are being enumerated
below.
Trust: According to definition of McCorkle (2017), trust is the fundamental for processing
any business activities and in supply chain management the factor of trust between the
suppliers as well as the organizational management needs to be developed for effective
supply chain management of a business entity. Hence, this shared vision and notion of trust
played impeccable role in planning for the near future adequately, said Mr. James.
Furthermore, it is also identified that flexible and responsible relationship helped McDonald’s
to launch the All Day Breakfast (ADB) successfully, in which independent strategic and non-
strategic suppliers were selected on the ground of share trust from the management of this
enterprise.
Justification: trust is one of key global factor that could increase the profitability of
McDonalds by creating a solid relation with efficient suppliers who provide fresh vegetables
and other raw materials for preparing delicious food.
Evaluation: McDonalds could not offer hygienic and tasty food to their customers without
creating a trustworthy relation with the suppliers. In other sense, with trust, McDonalds can
rely on suppliers but without trust both the management and supply chain would be damaged.
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Without trust, supplier could delay transportation service by which food preparation process
of McDonalds.
Figure 1: Brand value of McDonald’s
(Source: McDonald’s, 2018)
Distance: McDonald is a global organization which is US based organization and the
business enterprise is conducting its business over 100 countries. It is difficult to manage a
business operation to the other countries from a single place. As per the definition of Vitasek
(2014), the supply chain of the organization is mainly franchise based, the operational
process of the organization is quiet difficult as the business entity is managing the overall
activities from United States of America. Thus, the factor of distance is affecting the supply
chain of McDonalds (Esmaeilikia et al. 2016).
Justification: distance is a major key global factor that affects the business expansion
process of McDonalds. McDonalds is currently applying franchising, joint venture and other
agreements with local businesses to reduce the distance with the consumers in foreign
market.
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Evaluation: long distance with the consumers drives to low profit and poor revenue
generation for McDonalds. With the help of close distance with the consumers and suppliers,
the service structure of McDonalds can be improved to earn more profit.
Cultural diversity: as per the definition of Martel and Klibi (2016), cultural diversity is an
unavoidable prospect for the global brands as the organizations are directly investing to other
countries in the process of Foreign Direct Investment. Hence, following statistics can be
given to justify this factor properly:
 73% of the workforce of this organisation consists women and people of colour. This
statistic is also effective for franchise staff (43%) and suppliers (55%) of this
organisation
 90% of the facilitators of McDonald’s are promoted through a transparent process,
which de-center the notion of workplace discrimination.
Justification: cultural diversity is one of the critical global factor that must be considered by
McDonalds because a strong relationship with local employees and foreign managers can
lead a successful organization.
Evaluation: with the help of language compatibility local employees from different cultural
can easily communicate with regional managers of McDonalds regarding any query or
feedback for making smooth operation management. Besides that, team conflict can be
occurred within the firm due to cultural gap of two or more community as a consequence of
cultural diversity.
Sustainability: according to the definition of Vitasek (2014), sustainability has become the
major factor for the organisation as the supply chain of McDonald’s is designed to become
effective, adaptive and collaborative. Therefore, the ‘three-legged stool’ philosophy helped
McDonald’s to absorb the market risk significantly. Simultaneously, this sustainable
approach helped McDonald’s is honored with “Best of Sustainable Supply 2014”.
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Justification: sustainability is a key global factor that influences the existence of an
organization in high competitive business environment.
Evaluation: with the help of sustainable business practice, McDonalds can sustain in high
competitive business fast food industry. Without sustainability practice, McDonalds cannot
survive in the competitive fast food industry across the world.
Mapping various stages of supply chain to achieve sustainable competitive advantage
Supply chain mapping is a process based on which the business organizations and suppliers
are getting engaged to the overall work process based on which the supply chain management
process of the organization has been established (Jakhar, Rathore and Mangla, 2018).
The organization, McDonalds is conducting a franchise-based business and has become a
global brand in last few years of globalization. Main aim of sustainable competitive
advantage is to create an asset or value, product attributes or the abilities based on which a
brand image can be developed effectively. In fact, the sustainable competitive advantage
factors cannot be copied based on which the business process of the organization has been
sustained (Raghavendra and Nijaguna, 2015).
The organizations operate its business over the business relationship development with the
suppliers from which the manufacturers are getting the raw materials. After manufacturing of
the product the distributor sends the final product to the retailer. After that the organization
sends it off to the franchise outlets which service the customers for completion of the supply
chain process (Raghavendra and Nijaguna, 2015). In the outlets the overall final products are
being customized as per the orientation of the customers.
However, such strong and efficient supply chain system helps McDonald’s to maintain the
advantages of a precise location. As commented by Mourdoukoutas (2015), to enhance the
sales of products McDonald’s should use its location wisely, which might provide
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competitive advantage of this organisation. On another hand, it can be said that traffic delays
the operational process, which in a way negate the notion of fast process significantly. In
addition, multiple driving regulations might also hamper the strong transport system of this
organisation. Hence, raw materials are transported through road ways and airports crucially.
The supply chain process of McDonald’s is illustrated below:
Requirements of a system for transport logistics to support various supply chain that
exist in an airport environment
McDonald’s uses airplane transportation method to supply raw materials for top notch
products of this company. Therefore, equipment, raw materials like secret ingredients are
transported through air. Transport and logistics are the vital part for managing the business
operation mainly the supply chain of many industries. Cargo is a transpiration and logistics
mode for supply chain which exists in an airport environment. Airports and airplanes are
separated and the industries need to select proper cargo for better mode of operation (Martel
and Klibi, 2016).
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For the organization, McDonald it can be stated that the business process and distribution
channel is being managed from USA to over 100s of countries and the franchises are
following the product design and basic products manufactured by the company only. In order
to meet the gap between the times and place the airplane mode of transportation is helping to
ship the products to the multiple franchises across the globe. On the other side, the
organization mainly provides the food products which has its own expiry dates which needs
to be deliver to the projected destinations as early as possible. Hence, following system is
used by the McDonald’s to deliver its foods:
1. Demand of a product is estimated and plans are made
2. Preparation and shipping of the parts in service sites
3. Products are supplied to external and internal consumers
Thus, the mode of airplane cargos needs to be adopted so that the organization can
effectively meet the demand of consumer base with quality products in fewer time instead of
huge geographical distance (Scott, Lundgren and Thompson, 2018).
Role of transport and logistics on greening of supply chain
Outsourcing of business has become a trend since 1990s and the prospect of global supply
has reshaped the global supply chain management process of the business organizations.
Supply chain revolves around the all activities which are processing flow to the transferring
raw material for delivering the final product to the consumers of the product within the
market. In the process the overall flow faces a cycle and the cycle possesses some potential
elements for greening the supply chain considering waste management, environmental
purchasing policies, vendor assessments, proper coordination between the suppliers and the
vendors as well as leveraging relationships between suppliers and customers (Mokhtar et al.
2019). Therefore, McDonald’s has announced a five-year joint plan with Scania to enhance
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its carbon footprint significantly. Therefore, the aim to reduce 70% of the carbon emission
can be interpreted as a great initiative of this organisation (McDonald’s, 2018). Hence,
renewable natural gases are used by McDonald’s to achieve this strategy developed by this
organisation (McDonald’s, 2018)
Role of distribution channels and the role of transport modes on customer expectations
Role of distribution channels: the distribution channel of McDonalds always fulfilling the
product stock in different outlets to meet the expectations of the consumers. In order to
provide tasty and delicious food predicts in continuous manner, the distribution channel of
McDonalds is playing a remarkable role. (Datta and Mitra, 2017).
Role of transport modes: (Morgan, Richey Jr. and Autry, 2016). There are mainly three
transportation modes have been applied by McDonalds to meet the customer’s expectations
such as below:
 Flight modes in emergency purposes
 Container trucks for large supply
 Small transportation for local outlet supply
All above mentioned transport modes of McDonalds is used to meet the expectations of the
consumers, for example, a consumer regularly purchases favorite chicken sandwich while
going to office and it is a responsibility of McDonald’s to meet the customer’s expectation by
effective transportation system (McDonald’s, 2018).
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Conclusion
From the above discussed artifact it can be concluded that in the business process transport
and logistics management is an important aspect as this is the core of supply chain
management of an organization. In this study the elements of transport and logistics
management have been discussed from the context of leading food chain brand McDonalds.
In order to develop the study accurately the factors affecting the existing supply chain of
McDonald has been described including a proper mapping of supply chain with mode of
transportation. Apart from that the requirement for transport logistics to support supply chain
in an airport environment. A discussion on how the transport and logistics can shape the
greening of supply chain has been made. Moreover, the distribution channel and role of
transport mode of McDonald has been added to this study for strengthen this study.
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