GLM Project on McDonalds India Supply Chain

8/3/2019 GLM Project on McDonalds India Supply Chain

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Submitted To:

Ms Rajkumari Mittal

Submitted By:

Dinesh Kumar

Kratika Mahendra

Rupesh Kumar Chaturvedi

Sushobh S Unnithan

Swati Kumar

GLM Project Report on McDonald


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GLMProject onMc Donald

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Contents

Company Profile: ..................................................................................................................................... 3

History:.................................................................................................................................................... 3

Cold Chain Concept:................................................................................................................................. 5

Vendor Selection:..................................................................................................................................... 5

Vendors: .................................................................................................................................................. 6

Dynamix Dairy Industries (Supplier of Cheese): ........................................................................................ 6

Trikaya Agriculture (Supplier of Iceberg Lettuce): ..................................................................................... 7

Vista Processed Foods Pvt. Ltd. (Supplier of Chicken and Vegetable range of products including Fruit Pies)

................................................................................................................................................................ 8

Radha Krishna Foodland (Distribution Centres for Delhi and Mumbai)...................................................... 9

Amrit Food (Supplier of long life UH

T Milk and Milk Products for Frozen Desserts) ................................. 10Logistics Management........................................................................................................................... 11

ACTIONS SPEAK LOUDER THAN WORDS ............................................................................................. 12

Packaging Material................................................................................................................................ 14

KEEPING SCORE - SUSTAINABLE PACKAGING FROM THE OUTSET ....................................................... 14

Environmental Management................................................................................................................. 16

Conclusion ............................................................................................................................................. 18

References ......................................................................................................................................... 19


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Company Profile:McDonald's is the world's leading fast-food retail service organization. They operate more than

32,000 restaurants in 117 countries on six continents. It is one of the worlds most recognized

and respected food brands. They have an unparalleled global infrastructure and competencies

in restaurant operations, marketing and franchising. There are 32000 retail store serves more

than 60 million people each day. More than 75% of McDonald restaurants worldwide are

owned and operated by independent local men and women. Nine major markets for McDonald

are Australia, Brazil, Canada, China, France, Germany, Japan, the United Kingdom, and the

United States--accounts for 80 percent of the restaurants and 75 percent of overall sales. Thevast majority of the company's restaurants are of the flagship McDonald's hamburger joint

variety. Two other wholly owned chains, Boston Market (rotisserie chicken) and Chipotle

Mexican Grill (Mexican fast casual), along with Pret A Manger (upscale prepared sandwiches),

in which McDonald's owns a 33 percent stake, account for about 1,000 of the units.

History:McDonald is worlds most successful fast food retail chain; head quarter in Oak Brooks, IIinois,

US. It has one philosophy that is One world, one Burger by which they wants to serve samequality of Burger all over the world. They are known as a very efficient fast-food delivery system

and customized delivery. It has an excellent supply chain system throughout the glob and they

called it is Cold chain.

McDonald restaurants incorporated in the year of 1954 when Ray Kroc a 52 years old

distributor of milk shake maker multimixer went to see MacDonalds brothers hamburger stall

in California and he got to know that they were searching for worldwide franchisee for their

store. He opens his first store at IIinois, USA. In the year of 1996 McDonald opened their first

restaurants at Vasant Vihar, South Delhi. Starting with a joint venture with two Indians, now

McDonald has more than 160 restaurants across the country.

McDonalds India Supply Chain:


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Supply Chain is one of the critical factors for the smooth functioning of any business. McDonald

has unmatched Supply Chain Structure, which not just ensures on time delivery of raw

materials and supplies to McDonalds but also enables it to cut down on its cost and maximize

profitability along with maintaining highest quality standards of its products worldwide.

McDonalds initiative to set up an efficient supply chain and deploy state-of-art technologychanged the entire Indian fast food industry and raised the standards of performance to

international levels.

, McDonalds had been working on its supply chain even before it opened its first joint in the

country. McDonalds, an international brand which was trying to make inroads into the country,

developed its Indian partners in such a manner that they stayed with the company from the

beginning. The success of McDonalds India was achieved by sourcing all its required products

from within the country. To ensure this, McDonalds developed local businesses, which can

supply it highest quality products. Today, McDonalds India works with 38 different suppliers on

a long term basis and several other standalone restaurants for its various other requirements.McDonalds distribution centers in India are:

y Noida and Kalamboli (Mumbai) in 1996y Bangalore in 2004y Kolkata (2007). (It is the latest one).

Supplier Purchasing Production Distribution

EndCustomer


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This is the process how McDonald Supply chain works. Suppliers who supply the raw material

for the restaurants bring their products to the internal supply chain of McDonald. Then the

internal supply chain department buys that product and processed it and distribute to the

distributors. The end customers get the processed food form the retailer.

McDonald entered with its first distribution partnership agreement with Radha KrishnaFoodland, a part of the Radha Krishna Group engaged in food-related service businesses. The

association with Radha Krishna Foods happened in the month of July 1993, when it studied the

nuances of McDonald's operations and requirements for the Indian market. As distribution

centers, the company was responsible for procurement, the quality inspection program,

storage, inventory management, deliveries to the restaurants and data collection, recording

and reporting. Value-added services like shredding of lettuce, re-packing of promotional items

continued since then at the centers playing a vital role in maintaining the integrity of the

products throughout the entire 'cold chain'.

Cold Chain Concept:Cold Chain was one of the unique concepts of McDonalds supply chain in India, on which it had

spent more than six years to get the system into place. This system brought about the integrity

between the supplier of raw material and the end consumers. It helps the farmers at one end

who supplies the raw material required for the restaurants chain and customers at retail

counters to get the highest quality food products, absolutely fresh and at great value. Through

its unique cold chain, McDonalds has been able to cut down on its operational wastage, as well

as maintain the freshness and nutritional value of raw and processed food products. This hasinvolved procurement, warehousing, transportation and retailing of perishable food products,

all under controlled temperatures.

Vendor Selection:To maintain an efficient supply chain process selection of vendor is the foremost priority for

any company. But in the case of food business it is very important to identify the right kind of

vendors. McDonalds has some requirement for their vendors. McDonalds operates Cold Chain

here for their entire supply chain system. Before getting a vendor they looked for some specificspecialties of each vendor. They looked for:

y Vendors quality management systemy Cold storage facilityy Transpiration facility


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y Technology and infrastructure used by their suppliersy Capability of meet their requirementy Research and development center

These are the parameter by which they selected their vendors for their Restaurant chain in

India. These are the very important factor to maintain the cold chain concept. There are other

concern also associated with their vendors that is Safety and hygiene. McDonald has their own

quality control department which controls the hygiene related issue of their vendors.

Vendors:

Dynamix

Dairy Industries (Supplier of

Cheese):Dynamix has brought immense benefits to farmers in Baramati, Maharashtra by setting up a

network of milk collection centers equipped with bulk coolers. Easy accessibility of that milk

collection center helps the farmers to earn some extra by market their surplus milk. The factory

has:

y Fully automatic international standard processing facility.y Capability to convert milk into cheese, butter/ghee, skimmed milk powder, lactose,

casein & whey protein and humanized baby food, Which is essential for the Burger

production.

y Stringent quality control measures and continuous Research & Developmenty From farm two degrees Celsius in 90 minutes is the first step to quality.

For example, the Rs 262-crore Dynamix Dairy Industries, located in Baramati in Pune district of

Maharashtra, manufactures cheese slices for McDonalds at 10 metric tonnes per month.

Dynamix has helped set up 15 bulk cooling centers throughout the district from which it

purchases milk. Each cooling center, which is equipped with modern measuring and testing

equipment and a large cooling tank, is not more than a few kilometers away from local dairy

farms. A farmer can deliver milk even twice a day on his bicycle and get a printed receipt on the

spot, which also lists the quality of the milk supplied by him as per fat content, color and solids

content. If the milk is sub-standard or adulterated, it is rejected on the spot. A batch of milk can

vary from one liter to 10 liters, or more. Each batch is mixed in one large stainless steel cooler

and chilled immediately to two degrees Celsius to stop bacterial growth and preserve freshness.

From this point onwards, until just before the burger is actually served in a McDonalds


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restaurant hundreds of kilometers away, the temperature is never allowed to increase. When

the refrigerated milk arrives at the Dynamix plant at Baramati, the milk in every single tanker is

thoroughly tested and rejected if found sub-standard, adulterated or contaminated. The

sophisticated testing lab can check fat content with an accuracy of 0.1 per cent. It can even

detect minute traces of pesticides or antibiotics administered to cows. This instant feedbackand the rejection of the entire tanker-load forces farmers to follow the best practices in terms

of animal husbandry, use proper feeds, cut down on the indiscriminate use of pesticides and

animal medicines and completely stop even the slightest attempts at adulteration.

Trikaya Agriculture (Supplier of Iceberg

Lettuce):

The implementation of advanced agricultural practices has enabled Trikaya to successfully grow

specialty crops like iceberg lettuce, special herbs and many oriental vegetables. These

vegetables are used in production of Burger. The organic foods or vegetables are directly used

in a process of burger. So the farm infrastructure and maintenance should be a big concern for

McDonald. Their green vegetable suppliers infrastructure includes:

y A specialized nursery with a team of agricultural experts.y Drip and sprinkler irrigation in raised farm beds with fertilizer mixing plant.y Pre-cooling room and a large cold room for post-harvest handling.y Refrigerated truck for transportation.

Trikaya Agriculture, a major supplier of iceberg lettuce to McDonald's India. It is one such

enterprise that is an intrinsic and very important part of the cold chain. Exposure to better

agricultural management practices and sharing of advanced agricultural technology by

McDonald's has made Trikaya Agriculture extremely conscious of delivering its products with

utmost care and quality. Initially lettuce could only be grown during the winter months but with

McDonald's expertise in the area of agriculture, Trikaya Farms in Talegaon, Maharashtra, is now

able to grow this crop all the year round. McDonald's has provided assistance in the selection of

high quality seeds, exposed the farms to advanced drip-irrigation technology, and helped

develop a refrigerated transportation system. These assistance from McDonald helps a smallagri-business in Maharashtra to provide fresh, high-quality lettuce to McDonald's urban

restaurant locations thousands of kilometers away. Post-harvest facilities at Trikaya include a

cold chain consisting of a pre-cooling room to remove field heat. A large cold room and a

refrigerated van for transportation where the temperature and the relative humidity of the

crop is maintained between 1 C and 4 C and 95% respectively. Vegetables are moved into the


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pre-cooling room within half an hour of harvesting. The pre-cooling room ensures rapid vacuum

cooling to 2 C within 90 minutes. The pack house, pre-cooling and cold room are located at the

farms itself, ensuring no delay between harvesting, pre-cooling, packaging and cold storage.

Trikaya Agriculture has also a plan to export this high value product to other international

markets, especially to McDonald's Middle East and Asia Pacific operations because of their highquality pre-cooling storage facility, extensive packaging and transportation system. McDonald's

expertise in packaging and long-distance transportation has helped Trikaya to do trial

shipments to the Gulf successfully. In addition to export, McDonald's assistance has enabled

Trikaya Agriculture to supply this crop to a number of star-rated hotels, clubs, flight kitchens

and offshore catering companies all over India.

Vista Processed Foods Pvt. Ltd. (Supplier of

Chicken andVegetable range of products

including Fruit Pies)

Vista processed foods pvt ltd is a joint venture with OSI Industries Inc., USA which is specialized

of raw chicken, beef, pork and frozen foods in USA. McDonald's India Pvt. Ltd. and Vista

Processed Foods Pvt. Ltd., produces a range of frozen chicken and vegetable foods. A world

class infrastructure at their plant at Taloja, Maharashtra, includes:

y Separate processing lines for chicken and vegetable foods.y Capability to produce frozen foods at temperature as low as -35 Degree Celsius to retain

total freshness.

y International standards, procedures and support services.Vista Processed Foods Pvt. Ltd., McDonald's suppliers for the chicken and vegetable range of

products, is another important player of this cold chain. Technical and financial support

extended by OSI Industries Inc., USA and McDonalds India Private Limited helps Vista to set up

world-class infrastructure and support services. This includes hi-tech refrigeration plants for

manufacture of frozen food at temperatures as low as - 35 C. This is vital to ensure that the

frozen food retains it freshness for a long time and the 'cold chain' is maintained. The frozen

product is immediately moved to cold storage rooms. With continued assistance from its

international partners, Vista has installed hi-tech equipment for both the chicken and vegetable

processing lines, which are reflects the latest food processing technology. They have the latest

food processing technology which helps them to processed de-boning, blending, forming,

coating, frying and freezing. For the vegetable range, the latest vegetable mixers and blenders


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are in operation. Also, keeping cultural sensitivities in mind, both processing lines are absolutely

separated from each other and utmost care is taken to ensure that the vegetable products do

not mix with the non-vegetarian products. Now, at Vista, a very wide range of frozen and

nutritious chicken and vegetable products is available. Ongoing research and development,

both locally and in the parent companies, work towards innovation in taste, nutritional valueand convenience. Vista foods Pvt ltd also supplies their products to the star-rated hotels,

hospitals, project sites, caterers, corporate canteens, schools and colleges, restaurants, food

service establishments and coffee shops apart from McDonald restaurants. Because of their

nutritious and freshness of their processed foods the company is highly appreciated across the

food industry.

Radha Krishna Foodland (Distribution Centres

for Delhi and Mumbai)Radhakrishna Foodland an integral part of the Cold chain supply process which is specializes in

handling large volumes, providing the entire range of services including procurement, quality

inspection, storage, inventory management, deliveries, data collection, recording and reporting.

The strengths of Radhakrishna food lad are:

y A one-stop shop for all distribution management services.y Dry and cold storage facility to store and transport perishable products at temperatures

up to -22 Degree Cel.

y Effective process control for minimum distribution cost.McDonald's local supply networks through Radhakrishna Foodland, which operates distributioncentres (DCs) for McDonald's restaurants in Mumbai and Delhi. The distribution centers have

focused all their resources to meet McDonald's expectation of 'Cold, Clean, and On-Time

Delivery. It also plays a very vital role in maintaining the integrity of the products throughout

the entire 'cold chain' process. Ranging from liquid products coming from Punjab to lettuce

from Pune, the distribution centers receives items from different parts of the country. These

items are stored in rooms with different temperature zones and are finally dispatched to the

McDonald's restaurants on the basis of their requirements and demands. The company has

both cold and dry storage facilities with capability to store products up to -22 C as well asdelivery trucks to transport products at temperatures ranging from room temperature to frozen

state.


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Amrit Food (Supplier of long life UHTMilk and

Milk Products for Frozen Desserts)Amrit Food, an ISO 9000 company, manufactures widely popular brands

Gagan Milk and Nandan Ghee at its factory at Ghaziabad, Uttar Pradesh.

The factory has:

y State-of-the-art fully automatic machinery requiring no human contact with product, fortotal hygiene.

y Installed capacity of 6000 liters/hr for producing homogenized UHT (Ultra HighTemperature) processed milk and milk products.

y Strict quality control supported by a fully equipped quality control laboratory.All suppliers adhere to Indian government regulations on food, health and hygiene while

continuously maintaining McDonald's recognized standards.

McDonald has very efficient Quality control program which certifies the products which comes

from their supplier to the distribution center. McDonald's Quality Inspection Programme (QIP)

carries out quality checks at over 20 different points in the Cold Chain system. Setting up of

the Cold Chain has also helps it to cut down on operational wastage.

Hazard Analysis Critical Control Point (HACCP) is a systematic approach to food safety that

emphasizes prevention within its suppliers' facility and restaurants. Based on HACCP guidelines,

control points and critical control points for all McDonald's major food processing plants and

restaurants in India have been identified. The limits have been established for those followed

by monitoring, recording and correcting any deviations. The HACCP verification is done at least

twice in a year and certified.


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Logistics Management

As we might imagine, Mc Donalds supply chain is extensive and complex. Its also very efficient,

which is why they are able to consistently offer their customers safe and quality food at an

affordable price. But theres more to the equation.

They strive to ensure that every step of the McDonalds supply chain contributes positively to

the safety, quality and availability of their final products. They also want their product

ingredients to be produced in ways that contribute positively to the development of sustainable

agricultural and food manufacturing practices.


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Since McDonalds does not actually produce any of the food they ultimately serve their

customers, its essential that they work with suppliers who share their values, and they do.

They have a large number of direct suppliers companies that make or deliver final products

for their restaurants as well as an even larger number of indirect suppliers companies and

farms that grow or process the ingredients that are eventually delivered to their directsuppliers.

They work closely with their direct suppliers to continuously improve the practices that impact

their employees, their communities, the environment, their own suppliers and, of course, their

customers. Examples of this type of work include their Social Accountability program and their

Environmental Scorecard. Reviews of adherence to these programs, and others related to

sustainable supply, are included in McDonalds Supplier Performance Index - the primary

evaluation tool used to evaluate their suppliers overall performance in serving McDonalds

needs.

Their suppliers are expected to share and apply their vision of sustainable supply to their own

suppliers (their indirect suppliers). They also ask them to help them understand industry-wide

sustainability challenges and opportunities related to the ingredients they use to make their

products.

They dont have direct control over those issues, but they can use their size and recognized

brand to be a positive influence by raising questions, bringing people to the table and

encouraging improvement.

ACTIONS SPEAK LOUDER THAN WORDS

They have been developing and implementing a range of sustainable practices in their supply

chains for manyyears. Some recent accomplishments include:

y Completion of a comprehensive Sustainable Land Management Commitment,developed in partnership with World Wildlife Fund, that summarizes their commitment

to work with suppliers toward the goal ensuring that agricultural raw materials for their

products originate from legal and sustainably managed land sources.

y In 2009, more than 98% of their fish was sourced from fisheries with favorablesustainability ratings. And 100% of the 500 approved abattoirs (animal handling

facilities) in their supply chain were audited for animal welfare in 2009, and 100% ofthose passed their audits.

y 2010 was a critical year in the development of their Supplier Environmental Scorecard.They transitioned from a manual process to one that uses a software database system

that is also used for their Supplier Workforce Accountability program. It was required


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that their suppliers for the top six categories (beef, poultry, packaging, toys, potatoes

and buns) would provide online data for the top nine markets.

y McDonalds Europe launched Flagship Farms, a program designed to share and promotebest practices in sustainable agriculture.

Other recent progress and best practices related to environmental sustainability are profiled on

their Best of Green and Best of Sustainable Supply website, including supplier leadershipexamples. Some of the most recent winners of local Sustainable Supplier Awards include:

y Canada: Pride Pak, McCainy U.S.: Smithfield, Keystone and Cargilly Europe: Seda, HAVI Global Logistics, McCain and Cargill

We also know there is much more to do. We will continue to work with our direct suppliers,

advisors and relevant industries to make sure our suppliers are aware of the importance of

sustainability. We also continue to support the development of multi-stakeholder efforts that

promote more sustainable raw material production.


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Packaging MaterialWhy not make it sustainable from the outset? Thats the goal with their packaging. McDonalds

is implementing a global packaging scorecard to better inform the decisions they make about

packaging. The scorecard builds on best practices from their European and North American

markets, as well as advice from outside experts and NGOs such as the Environmental Defense

Fund.

The scorecard framework focuses on their key environmental priorities for packaging:

y Minimizing weighty Maximizing use of recycled materialsy Preference for raw materials from third-party certified sourcesy Minimizing the amount of harmful chemicals used in productiony Reducing CO2 and other greenhouse gas emissionsy Maximizing end-of-life options such as recycling.

The McDonalds System is one of the worlds largest purchasers of recycled paper. They use it in

their tray liners, napkins, bags, sandwich containers and other restaurant materials such as

shipping containers. Today, approximately 80% of the consumer packaging used in their eight

largest markets is made from renewable (paper or wood-fiber) materials, and nearly 30% of

consumer packaging is made from recycled materials. This is down from 30.8% in 2008, due in

part due to their changing materials used for carryout bags in Europe. Also they improved the

graphic appearance of some sandwich clamshells in the U.S., which increased their weight

(thereby decreasing the overall percentage of recycled material), although the actual weight of

recycled materials was not reduced. In the U.S. alone, the McDonalds System purchased morethan $345 million in recycled materials in the U.S. for the consumer packaging category in 2009.

KEEPING SCORE - SUSTAINABLE PACKAGING FROM THE OUTSET

Across the McDonalds System, they continue to find ways to reduce the packaging impacts of

specific McDonalds menu items. Here are a few recent examples:

Brazil - An operational mandate of giving each customer two napkins was changed to providing

each customer with one. This resulted in a savings of approximately 1088 tons of napkin

materials.

Europe - In 2009, McDonalds France introduced its frappe cup and lid made out of 40%

recycled PET (rPET). By using recycled materials, this reduces the amount of virgin resin needed

by 123 metric tons, while at the same time, reducing waste land filled by an equivalent

amount.


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USA - McDonalds supply chain partner HAVI Global Solutions identified the potential to achieve

cost savings and deliver environmental benefits while maintaining performance and premium

product image by transitioning to a plastic material called Clarified Polypropylene (CPP) from

Polyethylene Terephthalate (PET). The CPP package delivers the same consumer experience

while using 20% less material as compared to PET. Less material use per cup drove cost

reduction of 15% as well as reduced inputs of raw materials and energy and generated 20% lesssolid waste. Cup transition began in 2009 and continued in 2010.

Australia - Currently, all PET cups contain a minimum of 35% recycled PET (rPET). In 2009,

McDonald's Australia introduced a lighter weight McFlurry spoon for use in Australia and New

Zealand. This reduced the amount of polypropylene resin needed by more than 31 tons.

Many other examples were captured in their catalog of environmental practices, the

McDonald's 2010 Global Best of Green e-book, including Japans unbleached bag, Frances

CrosillonMeal carrier, and Chinas Olympics promotional packaging.


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Environmental ManagementWeve long recognized the value of minimizing our environmental footprint. Its not only good

for the world in which we operate, its a strong contributor to our long-term financial success.

More than 30 years ago, we initiated energy conservation measures. In 1990, we formallyestablished our Global Environmental Commitment and forged a groundbreaking alliance with

the Environmental Defense Fund. During the 1990s alone, we eliminated 300 million pounds of

product packaging by redesigning and reducing materials.

Since then, weve continued to seek ways to improve our environmental performance.

Efficiency and innovation are natural byproducts of thinking green. After all, when we

conserve energy, produce less waste and minimize resources used by our suppliers, we use less

and spend less.

Given our decentralized structure, and the variability of environmental issues across regions,

there is no one size fits all approach. We see this as a benefit, because we have a virtual

laboratory of environmental initiatives across our marketplace that we can learn from, share

and scale when it makes sense. Given the breadth and scope of our business operations, we

also need to understand what is most important from a global standpoint. At the restaurant

level, we are focused on three areas:

Energy conservation Find further ways to increase energy efficiency in our restaurants in

order to save money and reduce our environmental impacts

Sustainable packaging and waste management Continue exploring ways to reduce the


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environmental impacts of our consumer packaging and waste in our restaurant operations

Green building design Enhance our strict building standards to incorporate further

opportunities for environmental efficiencies and innovation in the design and construction of

our restaurants

On all of these priorities, we continue to engage with experts and NGOs like World Wildlife

Fund, Conservation International, Environmental Defense Fund, the U.S. Green Building Council

and similar organizations around the world to get their best thinking on how we can improve

our environmental performance.


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ConclusionMcDonald operates an excellent supply chain system throughout the country. The supply chain

system not only helps the McDonald but it also improves the relationship between McDonald's

and its Indian suppliers. The supply chain system is equally beneficial of both the party

McDonald as well as its local suppliers. As McDonald's expands in India, the supplier gets the

opportunity to expand his business, have access to the latest in food technology, exposure to

advanced agricultural practices and the ability to grow or to export. There are many cases of

local suppliers operating out of small towns who have benefited from their association with

McDonald's India.


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Referenceshttp://www.articlesbase.com/

http://www.mcdonaldsindia.com/aboutus.html

GLM Project on McDonalds India Supply Chain

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