McDonald's Supply Chain Management

This assignment delves into the intricate workings of McDonald's supply chain. It examines the process of transforming raw materials into finished products, highlighting key stages and logistical considerations. The analysis extends to encompass the ethical and environmental aspects of the supply chain, evaluating McDonald's efforts towards sustainability and its impact on various stakeholders.

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SUPPLY CHAIN MANAGEMENT

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Executive summary:
It is the report discusses about the supply chain of the company called McDonalds. It focuses on
the various factors and the elements that are involved in the supply chain along with the partners
that supports the company. Supply chain is the process to bring the raw materials to the company
to serving the people with the finished products. This discussion helps to understand this process.

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Table of Contents
Executive summary:....................................................................................................................................1
Introduction:...............................................................................................................................................1
Structure of supply chain management:.....................................................................................................1
Sustainability in supply chain:.....................................................................................................................2
Type of partners involved:...........................................................................................................................3
Value chain diagram of McDonalds Australia:.............................................................................................5
Recommendations:.....................................................................................................................................7
Conclusion:..................................................................................................................................................7
References:..................................................................................................................................................7

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Introduction:
McDonalds Australia is the company that deals with delivering the fast food products to the
customers. the food products that the company deals with are burgers, Mcpuff, Salads,
beverages, shakes etc. as the company operates at global level thus it is required to maintain a
great supply chain in order to have better delivery services. It has been analysed that McDonalds
Australia has a very unique supply chain structure that solely depends on partnership and
collaboration. McDonalds Australia believes in maintaining sustainability and thus it is required
by the company to practice such activities that provide benefits to the company as well as its
partners (Nadolny and Ryan, 2015). The company has to use ethical activities and practices in
order to source the materials for manufacturing the products.
Structure of supply chain management:
These are the elements that are involved in the supply chain system of the company called
McDonalds Australia. It has been analysed that the company consists of two types of suppliers
that is tier 1 supplier and tier 2 suppliers. Tier 1 suppliers are the suppliers that provides the
processed products to the company such as chicken, bread, vegetables etc. on the other hand the
tier 2 suppliers are those who grow the products or the materials required to be processed such
potatoes, poultry items etc (Goulding and Lim, 2014). Both these suppliers need to meet out the
requirements of the quality products by the company. The materials from the suppliers are
shipped to the distribution centre through logistic facilities of the company. These are inbound
transportation facility that supports these shipments. As per the requirements of the restaurant,
the material is distributed by the outbound transportation system from the distribution centre to
the restaurants. The refrigerated fleet trucks are used to transport the material from one place to

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another so that they can be kept in the required favourable temperature (Anaf, Baum, Fisher,
Harris and Friel, 2017).
As per the supply chain analysis of McDonalds Australia is considered. It has been analysed that
the proper flow of information and materials are being maintained between the different
intermediaries taking part in the system. It has been analysed that two types of suppliers’ are
involved and two types of transportation system are also there in order to transport the material
from one place to another (Zhu, Anagondahalli and Zhang, 2017). In order to timely deliver the
products, the company manage the accounts by the distribution centre, these centres are not
owned by the companies and they act as the partners. The babe supply chain that has been
analysed is not for all the materials that have been served by the company or supplier to the
company. This is because the material like Coke is directly suppliers by the manufacturer to the
company and thus no intermediaries of the company are involved in that. The above supply chain
also discusses about the reverse logistic hat deals with transporting the materials that are used by
the company such as plastic crates that needs to be reached back to the suppliers so that the next
delivery can be transported to the company in those crates (Christopher, 2016).
Sustainability in supply chain:
The company believes that they have responsibilities towards their suppliers and the community
in three areas such as
 Economic
 Ethical
 Environmental
Economic: McDonalds Australia prefers to support the partners and suppliers from Australia.
The company tries to source the products and the materials from Australia itself. It has been
analysed that McDonalds Australia has 94% of its functions of manufacturing and packaging
done in Australia only (Gil, et al, 2010). McDonalds Australia does not own any of the particular
business to provide them materials but the company maintain long term relationship with the
suppliers such as Inghams and Quality bakers since many years.

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Ethical: the company knows that only maintain the relationship and providing profits is not
enough. It is requited to e ethical in the practices so as to be sustainable. The company runs
social responsibility suppliers program. It is the program that deals with maintaining the
workplace safety environment and providing rights to the owners and the suppliers.
Environmental: the company only deals with the suppliers who provide them with quality
products so that they can reduce the impact of environment by their practices (Stadtler, 2015).
The company use the scoreboard practices to rate the suppliers on the environmental
performance of the supplier.
Type of partners involved:
There are many types of partners involved in the supply chain system of the company. It has
been analysed that different intermediaries are included in the whole supply chain that supports
the process of transportation of the material from one place to another. The major key partners
that are involved in the supply chain are suppliers, transporters, distribution centres and the
customers (Carter and Liane Easton,2011). Two of them are upstream partners and there are
downstream partners. It has been analysed that upstream partners are those partners or
intermediaries who are in opposition of the flow of material. Some of the major key partners and
the relationship of the partners with the company are discussed below:
1. Suppliers: Suppers are the one who supplies the materials or the processed material
towards the distribution centre. In the above case there are two types of suppliers such as
1 tire suppliers and 2 tire suppliers. It has been analysed that 1 tire suppliers are the
suppliers who provides the materials that are processed while the 2 tire suppliers provides
the material that are grown on the field by them (Gualandris, Klassen, Vachon and
Kalchschmidt, 2015). It has been identified that the company does not have any self-
owned company that provides the materials but depends in different suppliers for
sourcing the raw material. The company believes in maintaining long term relationships
with their suppliers. There are many suppliers in Australia on which McDonalds
Australia depends on. OSI is the supply partner for the company in order to supply

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chicken, beef and fish, Australian Food Corporation provides beef to the company,
Simplot, McCain, Fonterra also provides various bread products, fries, buns etc.
2. Distribution centres: These are the major partners of the company as most of the process
of the company is done here. Any issue at the distribution centre can affect the delivery
time of the products at the final destination that are the restaurants. It has been analysed
that distribution centre act as the partners for the company but are not owned by the
company (Hamprecht, Corsten, Noll and Meier, 2005). The approach of the company
towards its distribution centres is very positive and this helps the company to have timely
delivery of the products always. Although, the distribution centres are not owned by the
company but the company have partial control over the operations. The company
maintains an informal relationship with the distribution centres but the relationship sis
maintained in ethical manner. The administration of the company aims at maintains the
balance between the distribution centre delivery and the requirements of the products at
the restaurants so that the customers can get better quality products on time. In the whole
process, it has been analysed that the company has lesser role to manage the materials but
the distribution centres are majorly responsible for the same.
3. Customers: customers are the major part of the key partners that are involved the supply
chain system. This is because they are the one for whom this whole process is developed.
Supply chain management system starts with suppliers from the one end and stops to the
customers on another (Li, Ragu-Nathan, Ragu-Nathan and Rao, 2006). It has been
analysed that McDonalds Australia target almost all the customers from kids to adults,
from males to females, from high class to lower class people. It has been analysed that
the customers can get the food products by two ways. Either the customers can visit the
store or the restaurant to get the taste of the mouth eatery food products or they can use
the facility of take away (Sheffi and Rice Jr, 2005). There is one more medium these days
by which the okay can reach its customers that are through online ordering system. The
company has started that system on the company website and the customers can order to
order food online to get it delivered to their home.

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Value chain diagram of McDonalds Australia:
Value chain analysis of the company deals with analysing the business activities of the company
in order to identify the competitive advantage of the firm. Following is the discussion about the
value chain analysis of McDonalds Australia:
Primary activities:
Inbound logistics: it is the process of value chain system that involves the supply of the materials
from the suppliers to the distribution centre. It is logistic system that involves the transportation
of the raw materials from the 1 tier and 2 tier suppliers to the distribution centre of the company.
The fleet trucks or the refrigerated trucks are being used in this process so as to transport the
materials with favourable temperature.
Operations: The major operations of the company involve the restaurant business that involves
the food delivery and serves services at the store. It is the company that operates on the model of
franchise. There are different operation of the company among which own of them is supply
chain management (McDonald's AU.,2017). The company is very sustainable in terms of supply
chain system. It has been analysed that there are three types of franchise on which the
McDonalds Australia works. One of them is conventional franchise, developmental franchise
and affiliates.

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Outbound logistics: This is also the function that deals with transportation of the material from
the distribution centre to the store or the restaurants from where the customers can have the food.
The transportation also involves the food delivery system from the restaurant to the customers.
All these activities of logistics fall under the category of outbound logistics.
Marketing and sales: It has been analysed that McDonalds Australia use almost all the medium
to market its products. The company use advertising techniques, promotional campaigns, offers
and discounts etc. to market the products. As far as the sales of the product are considered, the
company make its sales through store, through drive thru facility for take way and for home
delivery services. All these methods allow the company to make the sales high.
Services: as far as the services of the company is considered, it has been analysed that
McDonalds Australia serves the market with many food products such as burgers, fries, shakes,
coke etc. the company serves the customers through take away, home delivery and in store sales.
Support activities:
Firm infrastructure: the infrastructure of the company is very much sophisticated can be liked by
kids as well as adults. The company is highly technologically advanced and thus provides the
online services as well (McDonald's AU.,2017).
Human resource management: The HRM of the company is very well managed. The sakes staff
of the dire are educated enough about the products and the services that the company offers.
Technology development: McDonalds Australia always focuses on maintaining the process with
technological updates. It has been analysed that the company is doing great in terms of
technology is updating its processes accordingly.
Procurement: McDonalds Australia uses the E-procurement method which supports its supply
chain management system. The procurement system for the company is so efficient that it
provides support to all the logistic as well as other functions of the company.
Recommendations:
It has been recommended to the company:

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 The supply chain should involve better technologies to make the process fast.
 International supplies should be cut down and local suppliers should be contacted to have
the raw materials.
Conclusion:
It has been concluded from the report that McDonalds is the company that serves the customers
with various fast food products. The company is very specific with the quality ns thus require
raw material from different places. They require the company to maintain a proper supply chain
that helps the company to complete the process of raw material to processing and make finish
products in order to serve the customers.

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References:
Anaf, J., Baum, F.E., Fisher, M., Harris, E. and Friel, S., 2017. Assessing the health impact of
transnational corporations: a case study on McDonald’s Australia. Globalization and
health, 13(1), p.7.
Carter, C.R. and Liane Easton, P., 2011. Sustainable supply chain management: evolution and
future directions. International journal of physical distribution & logistics management, 41(1),
pp.46-62.
Christopher, M., 2016. Logistics & supply chain management. Pearson UK.
Gil, R., Gangopadhyay, D., Zhou, J., Gordon, S. and Nayak, S., Click Acqusitions, Inc.,
2010. Supply chain management. U.S. Patent 7,761,319.
Goulding, E. and Lim, B., 2014. McDonald transvaginal cervical cerclage since 1957: from its
roots in Australia into worldwide contemporary practice. BJOG: An International Journal of
Obstetrics & Gynaecology, 121(9), pp.1107-1107.
Gualandris, J., Klassen, R.D., Vachon, S. and Kalchschmidt, M., 2015. Sustainable evaluation
and verification in supply chains: Aligning and leveraging accountability to
stakeholders. Journal of Operations Management, 38, pp.1-13.
Hamprecht, J., Corsten, D., Noll, M. and Meier, E., 2005. Controlling the sustainability of food
supply chains. Supply Chain Management: An International Journal, 10(1), pp.7-10.
Li, S., Ragu-Nathan, B., Ragu-Nathan, T.S. and Rao, S.S., 2006. The impact of supply chain
management practices on competitive advantage and organizational performance. Omega, 34(2),
pp.107-124.
Nadolny, A. and Ryan, S., 2015. McUniversities revisited: a comparison of university and
McDonald's casual employee experiences in Australia. Studies in Higher Education, 40(1),
pp.142-157.

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Our Supply Chain | About Macca's | McDonald's AU. (2017). Mcdonalds.com.au. Retrieved 10
October 2017, from https://mcdonalds.com.au/about-maccas/our-supply-chain/supply-partners
Sheffi, Y. and Rice Jr, J.B., 2005. A supply chain view of the resilient enterprise. MIT Sloan
management review, 47(1), p.41.
Stadtler, H., 2015. Supply chain management: An overview. In Supply chain management and
advanced planning (pp. 3-28). Springer Berlin Heidelberg.
Zhu, L., Anagondahalli, D. and Zhang, A., 2017. Social media and culture in crisis
communication: McDonald’s and KFC crises management in China. Public Relations Review.