11 Case Studies - McDonalds Restaurants

8/8/2019 11 Case Studies - McDonalds Restaurants

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McDonalds Restaurants

McDonalds is the largest user of beef in Europe. 89000 cattle a weekare needed to satisfy their beef requirement in the UK.

The first McDonalds UK restaurant was opened in 1974 and theynow have over 1200.

McDonalds operates in the fiercely competitive burger market andyou might imagine that it purchases the lowest price beef fromanyone in the world. In fact, all of their European sold beef issupplied from Europe and the great majority of their British sold beef is sourced from Britain.

Reduce product variability 2

Better manage the problem of carcase balance 2

Improve product quality 2

Streamline administration 2

Reduce handling and movement 2

Our philosophy at McDonalds is to develop acollaborative approach with our suppliers. Weare committed to sharing best practice with allour suppliers including the beef farmers whobenefit from this commitment because it helps

improve quality and increase value.David Thomas, Senior Agricultural AssuranceManager, McDonalds

Red Meat

Produced in partnership with

Sept2003

CaseStudy


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Food Chain Centre at IGD Grange Lane Letchmore Heath Watford Herts WD25 8GDTel: 01923 857141 Fax: 01923 852531 Email: [email protected] www.foodchaincentre.com

PO Box 44 Winterhill House Snowdon Drive Milton Keynes MK6 1AXTel: 01908 844701 Fax: 01908 609221 Email: [email protected] www.mlc.org.uk/forum/

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Supplier Relationships

Esca Food Solutions Ltd. (formally known as McKey Food ServiceLtd) was founded in 1978 and is the exclusive supplier of beef pattiesto McDonalds UK. Production takes place at two plants located inMilton Keynes and Scunthorpe.

As a modern plant, dedicated to the needs of its customer, Escaquickly adopted Lean and efficient principles. It then translatedand applied these principles throughout its supply chain, provingthat Lean methods can reduce costs and enhance value to the benefitof all in the chain.

The BSE crisis of 1996 was a landmark for McDonalds and Esca.Traceability and product integrity became even more important.

They introduced a policy of information sharing and transparency,made possible by a sense of teamwork throughout the chain.

Re-enforcing the Lean and efficient strategy, Esca Food Solutionsreduced their abattoir supply base, helping to develop closerrelationships including with beef farmers.

Today, 14 abattoirs in the UK and Ireland provide all of McDonalds

British Isles beef. Forequarter and flank is used to produce thefamous hamburger patty. Each abattoir therefore also needs a goodoutlet for the hindquarter and this is mainly achieved through longterm relationships with multiple retailers. Carcase balance istherefore less of a problem for McDonalds suppliers.

Supplier Alliance programme

Esca Food Solutions has worked with the abattoirs to developindustry leading practices through a Supplier Alliance programme.


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Our beef patties are only as good as the meatthat goes into them and to ensure a consistentsupply of quality raw materials we have to haveknowledge and control of the supply chain back

to its origin. McDonalds and their customersexpect nothing less.Pete r Mitchell, Esca Food Solut ions Ltd.

Esca Food Solutions, as McKey Food Service have always had a closerelationship with their suppliers but following the BSE crisis of 1996 itdecided that much more was needed. Before 1996, traceability wasrudimentary and feed knowledge was basic.

The abattoirs and their supplying farmers must comply with the Escapolicy on:

l Animal Welfare Guidelines during Transport and Slaughter

l Code of Practice for Slaughterhouses and De-boning Plants

l Beef Raw Material Specification

l Code of Practice for the Supply of Cattle

Now, Escas suppliers build close relationships with farmers and holdtheir details on a computer database. All cattle are sourced directfrom the beef farmer rather than an agent or market. There is agenuine partnership feel to the relationship and openness is expectedat all levels.


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Each farmer complies with standards as part of the Code of Practicefor the Supply of Cattle:

l Minimum rearing standards

l Complete feed records on the finishing farm

l Traceability back to birth

l National Farm Assurance membershipl No more than 3 movements between birth and abattoir

In return, the farmers enjoy long-term security knowing they are apart of an efficient supply chain.

We are committed to long-term relationships with our suppliers.Through openness and trust we are developing a beef supply chain

that is sustainable and industry leading and most importantly, one from which all parties can achieve a realistic return.

Peter Mitchell, Esca Food Solutions Ltd

And this is endorsed by Ronnie Vincent, Goulds Farm, Wincanton,Somerset, a beef supplier to Southern Counties Fresh Food - Escaslargest single supplying abattoir.

The reason I joined the Southern Counties Producer Club is that I receive more information feedback which allows me to improve the quality of cattle finishing. I have a good relationship with SouthernCounties and I also benefit from regular feedback from the purchasing team who keep me informed of customer concerns and developments.

Ronnie Vincent

The Supplier Alliance programme also benefits abattoirs. Forexample, it has helped Southern Counties Fresh Foods, the largestsupplier to Esca in the UK, increase throughput by 50%.

Improving Performance

A key part of the McDonalds philosophy is continuous improvement,not only in the restaurants but with its primary and secondarysuppliers as well.


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McDonalds has developed a supplier quality index (SQI) by whichall suppliers are measured. It allows the company to monitorperformance of suppliers across the many agricultural and non-agricultural products and services purchased. There is a philosophyof sharing best practice across all suppliers where common issues arediscussed at regular meetings.

McDonalds also conducts regular audits of each supplier includingthe two plants of Esca Food Solutions Ltd. It has also commissionedthe European Food Safety Inspection Service (EFSIS) to audit andaccredit all meat suppliers.

All Esca Food Solutions suppliers in turn are subject to audits:

l One in-depth technical audit per year usually taking 2 full days.

l Traceability audits unannounced three times each year forevery supplier including farm visits.

l Animal welfare audits.

l SRM Audits.

l Product integrity audits.

l Third party audits, carried out by EFSIS.

As part of the McDonalds continuous improvement philosophy, Escahas introduced a sophisticated system of monitoring performance of its meat suppliers. Based on a number of Key Performance Indicators(KPIs) the system benchmarks quality performance both againstother suppliers and past performance.

The system operates in real-time, with all suppliers linked to Esca viaan Internet platform known as Osi-link (after Escas parent companythe OSI Group). It provides access to data showing the performanceof each delivery, including:

l Meat intake analysis

l Temperature on arrival

l Chemical Lean Content

l Microbiological Results

l Physical assessment

Suppliers receive a monthly summary report of performance with

supplier league tables.


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Performance trends prove the value of this approach. Through timethe best scores have not only improved but the range of scores hasnarrowed, showing that measurement and sharing of best practicehelps everyone to improve.

The long term commitment between SCFF and its suppliers has led toa substantial improvement in cattle achieving target specification.Those farmers who supply at least 92% of cattle in specification become part of the Southern Counties Gold Club. All members of their Producer Club receive a regular Newsletter and maintain closecontact through Southern Counties fieldsmen who help and advisewith cattle selection and more.

Food Animal Initiative

McDonalds with Tesco are also joint founders of the Food AnimalInitiative at Oxford. FAIs main objectives are:

l To develop sustainable farm systems that provide benefits toanimal welfare, the environment and human health.

l To demonstrate the success of these systems through practicaland commercial application.

l To supply knowledge and training to commercial farmers.

McDonalds also support the Blade Farming initiative (see separatecase study).

Conclusions

McDonalds operates in a famously competitive market and deliversgood value for consumers.

How does McDonalds achieve this?

l Not by searching on the commodity market for the lowest costsuppliers. It sources only from dedicated suppliers.

l Not at the expense of safety or quality. It operates an extremelystrict auditing regime.

l Not by pressurising suppliers. It believes in a policy of payingfor performance and long term sustainability for suppliers.

The secret is a Lean and efficient chain via rigorous measurement, thespreading of knowledge and a real sense of teamwork.

11 Case Studies - McDonalds Restaurants

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