Analysis of McDonald's Supply Chain Management and Business Report

This report provides a comprehensive analysis of McDonald's supply chain management. It begins with an executive summary, outlining the company's global presence and operational structure, followed by an introduction emphasizing the increasing importance of supply chain efficiency in today's competitive market. The report then delves into a detailed supply chain analysis, exploring McDonald's strategies for productivity, cost reduction, and customer satisfaction, including its long-term supply chain strategy and relationship with key suppliers like Martin Brower. The report also identifies and discusses the strengths of the company, such as its strong brand image, leadership, attractive restaurants, and market diversification. It also examines the weaknesses, including negative publicity and high employee turnover. The report concludes with recommendations for improvement, such as training employees, maintaining affordability, redesigning restaurant interiors, increasing employee wages, and embracing healthy food options. The report emphasizes the importance of efficient supply chain skills in achieving the company's goals and maintaining its competitive advantage.

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Executive Summary
McDonald's company is the largest international fast food restaurant with more than 30,000
restaurants in 121 countries globally. Fourteen per cent of the stores are operated by affiliates,
twenty-eight by the company, and franchisees operate fifty-eight per cent. The company was
founded in 1955, and it serves over 70 million customers in a day (Anaf, et al., 2017). The
company has expanded into foreign markets through franchising and joint ventures. It uses a
centralized international structure in its operations to ensure top quality services are offered.
Its operating strategy relies on high consistency, relationship building with its franchises and
vendors innovatively to enhance the operating system and, the introduction of new goods.

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Table of Contents
Executive Summary.............................................................................................................................2
Introduction.........................................................................................................................................4
Supply Chain Analysis........................................................................................................................4
Strengths of The Company.................................................................................................................7
Strong Brand Image........................................................................................................................7
Strong Leadership...........................................................................................................................7
Attractive Restaurants....................................................................................................................7
Market Diversification....................................................................................................................8
Weaknesses..........................................................................................................................................8
Negative publicity............................................................................................................................8
High Employee Turnover................................................................................................................8
Responsiveness and Effectiveness of McDonald............................................................................8
Recommendations................................................................................................................................9
Conclusion..........................................................................................................................................10

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Introduction
Currently, competition is no longer based on the quality of goods and services but
also the efficiency and effectiveness of supply chain management. The role of supply chain
management has increased due to the economic crisis that faces the world today. The
company has been able to reduce costs and also deliver products to customers faster achieved
through tighter control of internal inventories. Through the improvement of productivity and
efficiency of the company, it has been able to reach a broader market and meet international
standards (Freiwald, et al., 2020). McDonald's supply chain is a web consisting of both
indirect and direct suppliers, and it uses direct suppliers to coordinate and distribute
commodities to restaurants globally. Despite the challenges arising from the Supply chain, it
has played a vital role in ensuring McDonald's company offers quality and on-time delivery
of its goods to customers globally.
Supply Chain Analysis
The main focus of supply chain management on McDonald's restaurant is aimed at
improving productivity, reducing costs and customer satisfaction. Through this, the restaurant
can attain a competitive advantage over its rivals. Dixit, (2017, pgs. 870-875), stated that
competition has posed a threat to the company and therefore through the use of supply chain
strategies the restaurant has been able to achieve international advantage to become one of
the best fast food’s restaurants in the world. For the organization to meet its objectives and
goals, it relies on the supply chain to facilitate productivity and improvements across
production and marketing. Cutting down on production costs and ethical marketing strategies
are the outcomes of an efficient supply chain. The upstream portion of the supply chain

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consists of the suppliers and their processes, while the downstream consists of the operations
of distribution and delivering products to consumers.
McDonald's supply chain success is based on long-term supply chain strategy created
by Ray Kroc, who was the founder of the company. He used a model known as the three legs
of stool which included the supply chain partners, employees and the owners of the
restaurant. The company has worked with the same suppliers since its beginning and have
established a good relationship between them, for example, the Martin Brower Company
which is the largest distributor since 1965 (Lee, 2019, pgs. 253-262). Each of the company’s
distribution sites provides transportation, warehousing and logistics services between several
restaurants. All are continually tracked, and all data is exchanged with suppliers and
franchisees, including regular point-of-sale details, restaurant inventories. In its claim,
Gartner referred to McDonald's second position. The Global Supply Chain Department of
McDonald overall is outstanding at orchestrating the upstream supply network. According to
Andari, et al., (2018), it supports and acts as the conduit for outsourced vendors,
manufacturers, companies and franchise partners. It uses meetings of councils to consult with
vendors on emerging technologies, innovative goods and the health of plants. A traditional
supplier success metric controls base requirement for suppliers. Still, the differentiator
becomes more contextual and behavioural because vendors strive mainly to share product and
service advances for McDonald's network and help teams with leading talent.
For the restaurant to fully optimize the supply chain, there are some elements to be
considered, such as outsourcing, operations and customer service strategies. For outsourcing,
the company has opened over 200 stores globally in different countries to ensure that it
reaches a broader market of consumers globally. The company is looking for vendors who
work on contract basis in the firms. Outsourcing helps in lowering costs hence saving. Firms
must develop strategies that will ensure the flow of services and products is efficient and that

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the customer’s needs are met. McDonald’s company uses the supplier management plan and
schedule stability to outsource its products. Outsourcing helps eliminate the length of lead
time in the supply chain. The company has established an electronic data exchange that
facilitates the management to plan for its inventories. Secondly, is that outsourcing has
assisted the company in offering their commodities on just in time basis. The firm can order
for products when needed. In some countries, they have low operational costs, thus setting up
a restaurant is cheap, leading to savings.
The fast foods restaurant has adopted modern technology in the production, marketing
and distribution of commodities. Recently, e-business is gaining ground in the market, and
many businesses are implementing and embracing technology in their current systems.
Petimar et al., (2019, pg. 9), stated that McDonald's company had created a website which
contains all information regarding the company. Prices of commodities and the shipment
costs are displayed on the site. The use of tracking devices by both the consumer and the
company has facilitated secure distribution of products. The organization uses trucks which
deliver the commodities to the consumer's location in a safe manner. Customers can share
feedback on the quality of services they receive and also offer information on the areas that
need to be improved. Communication is vital in business and therefore, should be embraced
in every company. Furthermore, stakeholders can make decisions on whether to invest in the
company or not based on the information provided on the website of the company. Customer
needs have been met through on-time delivery hence increasing customer loyalty (Wibowo
and Tielung, 2016).
McDonald has identified several critical areas that it aims to improve based on customer
feedback. This includes beef sustainability, packaging and recycling. The restaurant chain
offers balanced meals to its customers. Since the company is the biggest buyer of beef

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globally by volume, it backs natural beef production, guard’s animal health and advances on
the incomes of farmers.
Strengths of The Company
McDonald’s restaurant has maintained its position as the top restaurant in the global
fast foods through strategies that address the internal and external factors in the SWOT
analysis (Baron, et al., 2018 pgs. 363-377). The report helps in identification of both external
and internal factors that determine the success of the company. Besides, the company is faced
with issues that are based on emerging trends in the global market.
Strong Brand Image
The company has a sharp brand image that makes it compete strongly in the market. The
restaurant is known to offer quality services and products and on-time delivery of secure
goods. The restaurant has been able to reach a broader market of consumers globally who
increase annually. The company has a considerable number of restaurants located in different
countries globally. Over 80% of the restaurants belong to independent franchises (Thornton,
et al., 2016, pgs. 86-91).
Strong Leadership
The company has existed for over 75 years is the world best food restaurant. Excellent
leaders have played an essential role in ensuring the success of the firm and helped the
organization pass through different downturn points.
Attractive Restaurants
The head of the company has collaborated with a franchise to redesign the look and
atmosphere of the restaurant. They have invested n infrastructure, which has attracted
considerable number of customers globally. Also, many of its stores globally it has opened up
a playground for children. Children can visit and enjoy their holidays in restaurants.

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Market Diversification
The industry has considered outsourcing its products to other countries to reach a
large number of customers. The stores have provided quality services which have attracted
more consumers and also helped the company in outdoing its close competitors (Schmid and
Gombert, 2018, pgs. 155-171).
Weaknesses
Despite the company being the best restaurant, it is faced with weaknesses which
emerge from the current trends.
Negative publicity
The company back in 2013 was linked to selling unhealthy food to customers. The
food caused problems to customers .and many went ill. This negatively painted the image of
the company leading to loss of customers (Iaquinto, 2016, pgs. 479-486).
High Employee Turnover
The restaurant should consider increasing the pay of the employees. Many of the
employees leave their work due to the lower payments offered by the restaurant. For
employees to provide quality services that will attract consumer's they should consider
satisfying their employee's needs. Low pay results to poor quality service; whichin .turn
affects the operations of the company negatively (Burris, et al., 2019).
Responsiveness and Effectiveness of McDonald
McDonald's supply chain sensitivity is not only faster but much simpler and more
efficient. That is how restaurants around the globe are widely positioned. The mission of each
store is to make food that adapts to local people's cultures and needs. Questions and
suggestions are handled by the store manager more efficiently before they are escalated. The
system is also commonly used by the McDonald for corrective action taken against the

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manufacturer or staff immediately (Lee, 2019, pgs. 253-262). To promote coordination,
product assessments and payment collection, the organization implements an automated
supply chain management network. The business is actively advertised on the internet and
will put their orders electronically. The e-commerce website McDonald often uses to collect
and compensate. Customer-related McDonald initiatives allow the company not only to retain
the new model but also to sustain the established type. These include the special promotion of
the day for customers who want to dine in the restaurant and allow them to book their orders
online. The organization also sells the products to customers according to their locations and
times in a customized and tailored manner.
The McDonald addresses the client's desires for inexpensive, fast food, decent, secure
service and a safe atmosphere. To gain consumer satisfaction, the quality of food preparation
and the delivery of facilities must be enhanced. McDonald has to standardize the
manufacturing cycle and collaborate with its vendors closely, increase productivity by
growing costs and pricing while providing a product that satisfies consumer expectations and
good consistency (Razaka, 2016). Since the business likes the quality of its services, and the
productivity of the organization relies on its consumer’s quality of service, McDonald needs
to be on both sides in terms of service to retain its competitiveness (Duggal and Alexander,
2018).
Recommendations
Different strategies should be laid down by the company to ensure it achieves a
competitive advantage over its rivals, and they include:
 Training employees to ensure they offer quality and skilled services to customers.
 The restaurant should stay affordable to ensure every social class need are catered for.
 Redesign the interior pars of the restaurant

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 Increase the employee's wage rate
 Embrace junk food which is healthy
Conclusion
The last half of the twentieth century witnessed the development and growth of much fast
food, but none of them was successful as McDonald's company in the minimizing cost and
maximizing of profits. Through the use of efficient supply chain skills, the company was able
to become successful and achieve its set goals. The business practices of the company, for
example, low wage rates to workers and refrain from hiring full-time workers helped the
company save money.

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