Supply Chain Management

A Project On

“Mc Donalds”

ACKNOWLEDGEMENT

This Supply Chain Management project on McDonalds is the outcome of sincere and

positive contribution of various individuals. We can not justifiably translate there help, cooperation

and guidance extended to us in completing this project work in words. However we shall be failing

in our duty if we don’t express our thanks to a few people in particular.

We would like to thank Mr. Akhilesh Mishra(floor manager) at McDonalds for his cooperation

and it has been high privilege to work under the able supervision of our respected teacher,

prof. Rita Chatterji

Table of Contents

1. Introduction to McDonalds.

1.1 History.

1.2 Corporate overview.

1.3 Why the Project?

1.4 Types of Restaurants.

2. Methodology used.

3. Business model.

4. Advertising.

5. Global operations and locations.

6. McDonalds in India.

7. Understanding Supply Chain Management.

8. Inventory Management.

9. How Purchasing cycle works?

10. Understanding Supply Chain at McDonalds.

11. Suppliers and Distributors of McDonalds.

12. findings of study conducted.

McDonald's

Is the leading global foodservice retailer with more than 30,000 local restaurants serving 52 million people in more than 100 countries each day. More than 70% of McDonald's restaurants worldwide are owned and operated by independent local men and

women

History

1957 Quality, Service, Cleanliness and Value (QSC& V) becomes the company motto.

1959 The 100th McDonald's opens in Chicago.1961 Hamburger University opens in Elk Grove, near Chicago.1963 One billion hamburgers sold.

Ronald McDonald makes his debut.1964 Filet-O-Fish sandwich is introduced.1965 McDonald's Corporation goes public.1967 The first restaurants outside of the USA open in Canada and Puerto Rico.1968 The Big Mac is introduced.

The 1,000th restaurant opens in Des Plaines, Illinois.1972 A new McDonald's restaurant opens every day.

The Quarter Pounder is introduced.1973 Egg McMuffin is introduced.1974 The first Ronald McDonald House opens in Philadelphia.

The Happy Meal is launched.1983

Chicken McNuggets is introduced.New Hamburger University campus opens in Oak Brook, Illinois. Set in 80 wooded acres. Training is provided for every level of McDonald's management worldwide.50 billionth hamburger sold.

1984 Ronald McDonald Children's Charities is founded in Ray Kroc’s memory to raise funds in support of child welfare.1989 McDonald's is listed on the Frankfurt, Munich, Paris and Tokyo stock exchanges. 1990 McDonald's opens in Pushkin Square and Gorky Street, Moscow. 1993 The first McDonald's at sea opens aboard the Silja Europa, the world's largest ferry sailing between Stockholm and Helsinki.1994 Restaurants open in Bahrain, Bulgaria, Egypt, Kuwait, Latvia, Oman, New Caledonia, Trinidad and United Arab Emirates,

bringing the total to over 15,000 in 79 countries on 6 continents. 1996 McDonald's opens in India – the 95th country.

The business began in 1940, with a restaurant opened by siblings Dick and Mac McDonald in San Bernardino, California. Their introduction of the "Speedee Service System" in 1948 established the principles of the modern fast-food restaurant. The present corporation dates its founding to the opening of a franchised restaurant by Ray Kroc, in Des Plaines, Illinois on April 15, 1955, the ninth McDonald's restaurant overall. Kroc later purchased the McDonald brothers' equity in the company and led its worldwide expansion.

With the successful expansion of McDonald's into many international markets, the company has become a symbol of globalization and the spread of the American way of life. Its prominence has also made it a frequent topic of public debates about obesity, corporate ethics and consumer responsibility.

Corporate overview

Facts and figures

A McDonald's restaurant in Times Square.

McDonald's restaurants are found in 120 countries and territories around the world and serve nearly 54 million customers each day. The company also operates other restaurant brands, such as Piles Café, and has a minority stake in Pret a Manger. The company owned a majority stake in Chipotle Mexican Grill until completing its divestment in October 2006. Until December 2003, it also owned Donatos Pizza. On August 27, 2007, McDonald's sold Boston Market to Sun Capital Partners. It also has a subsidiary, Redbox, which started in 2003 as 18-foot (5.5 m) wide automated convenience stores, but as of 2005, has focused on DVD rental machines.

WHY THE PROJECT

To strengthen our knowledge

To develop practical approach

To understand real supply chain practices

To know the cold chain system

Methodology Used

Through Questioners

Personal interviews

Types of restaurants

A McDonald's restaurant in Kristiansand, Norway.

Inside a Dublin McCafé.

Most standalone McDonald's restaurants offer both counter service and drive-through service, with indoor and sometimes outdoor seating. Drive-Thru, Auto-Mac, Pay and Drive, or McDrive as it is known in many countries, often has separate stations for placing, paying for, and picking up orders, though the latter two steps are frequently combined; it was first introduced in Arizona in 1975, following the lead of other fast-food chains. In some countries "McDrive" locations near highways offer no counter service or seating. In contrast, locations in high-density city neighborhoods often omit drive-through service. There are also a few locations, located mostly in downtown districts, that offer Walk-Thru service in place of Drive-Thru.Specially themed restaurants also exist, such as the "Solid Gold McDonald's," a 1950s rock-and-roll themed restaurant. In Victoria, British Columbia, there is also a McDonald's with a 24 carat (100%) gold chandelier and similar light fixtures.

The site of the first McDonald's to be franchised by Ray Kroc is now a museum in Des Plaines, Illinois. The building is a replica of the original, which was the ninth McDonald's restaurant opened.To accommodate the current trend for high quality coffee and the popularity of coffee shops in general, McDonald's introduced McCafés. The McCafé concept is a café-style accompaniment to McDonald's restaurants. McCafé is a concept of McDonald's Australia, starting with Melbourne in 1993. Today, most McDonald's in Australia have McCafés located within the existing McDonald's restaurant. In Tasmania there are McCafés in every store, with the rest of the states quickly following suite. After upgrading to the new McCafe look and feel, some Australian stores have noticed up to a 60% increase in sales.As of the end of 2003 there were over 600 McCafés worldwide.

Some locations are connected to BP gas stations/convenience stores, while others called McDonald's Express have limited seating and/or menu or may be located in a shopping mall. Other McDonald's are located in Wal-Mart stores. McStop is a location targeted at truckers and travelers which may have services found at truck stops.

Playgrounds

Some McDonald's in suburban areas and certain cities feature large indoor or outdoor playgrounds, called "McDonald's PlayPlace" (if indoors) or "Playland" (outdoors. The first PlayPlace with the familiar crawl-tube design with ball pits and slides was introduced in 1987 in the USA, with many more being constructed soon after. Some PlayPlace playgrounds have been renovated into "R Gym" areas."R Gyms" are in-restaurant play area that features interactive game zones designed for children aged 4 to 12. Equipped with stationary bicycles attached to video games, dance pads, basketball hoops, monkey bars, an obstacle course, and other games which emphasize physical activity. The "R Gym" features the Toddler Zone, an active play environment with age appropriate games that develop physical coordination and social skills; the Active Zone, designed for children aged four-to-eight that promotes physical fitness through fun play; the Sports Zone which features a series of sport oriented activities to promote aerobic exercise for children

aged 9-to-12; the Parent Zone which features seating and provides a monitoring area for their children; and the Dining Area which allows families to eat.

Redesign

In 2006, McDonald's introduced its "Forever Young" brand by redesigning all of their restaurants, the first major redesign since the 1970s. The new design will include the traditional McDonald's yellow and red colors, but the red will be muted to terra cotta, the yellow will turn golden for a more "sunny" look, and olive and sage green will be added. To warm up their look, the restaurants will have less plastic and more brick and wood, with modern hanging lights to produce a softer glow. Contemporary art or framed photographs will hang on the walls.The exterior will have golden awnings and a "swish brow" instead of the traditional double-slanted mansard roof.

The new restaurants will feature areas:

The "linger" zone will offer armchairs, sofas, and Wi-Fi connections.

The "grab and go" zone will feature tall counters with bar stools for customers who eat alone; Plasma TVs will offer them news and weather reports.

The "flexible" zone will be targeted toward families and will have booths featuring fabric cushions with colorful patterns and flexible seating.

Different music will be targeted to each zone.

Business model

The McDonald's Corporation's business model is slightly different from that of most other fast-food chains. In addition to ordinary franchise fees, supplies, and percentage of sales, McDonald's also collects rent, partially linked to sales. As a condition of the franchise agreement, the Corporation owns the properties on which most McDonald's franchises are located. The UK business model is different, in that fewer than 30% of restaurants are franchised, with the majority under the ownership of the company. McDonald's

trains its franchisees and others at Hamburger University in Oak Brook, Illinois.According to Fast Food Nation by Eric Schlosser (2001), nearly one in eight workers in the U.S. have at some time been employed by McDonald's. (According to a news piece on Fox News this figure is one in ten). The book also states that McDonald's is the largest private operator of playgrounds in the U.S., as well as the single largest purchaser of beef, pork, potatoes, and apples. The selection of meats McDonald's uses varies with the culture of the host country.

Products

McDonald's predominantly sells hamburgers, various types of chicken sandwiches and products, french fries, soft drinks, breakfast items, and desserts. In most markets, McDonald's offers salads and vegetarian items, wraps and other localized fare. This local deviation from the standard menu is a characteristic for which the chain is particularly known, and one which is employed either to abide by regional food taboos (such as the religious prohibition of beef consumption in India) or to make available foods with which the regional market is more familiar (such as the sale of McRice in Indonesia).

Advertising

Ronald McDonald

McDonald's has for decades maintained an extensive advertising campaign. In addition to the usual media (television, radio, and newspaper), the company makes significant use of billboards and signage, sponsors sporting events from ranging from Little League to the Olympic Games, and makes coolers of orange drink with their logo available for local events of all kinds. Nonetheless, television has always played a central role in the company's advertising strategy.To date, McDonald's has used 23 different slogans in United States advertising, as well as a few other slogans for select countries and regions. At times, it has run into trouble with its campaigns.

Global operations

Countries with McDonald's stores

McDonald's has become emblematic of globalization, sometimes referred as the "McDonaldization" of society. The Economist magazine uses the "Big Mac Index": the comparison of a Big Mac's cost in various world currencies can be used to informally judge these currencies' purchasing power parity.The EFTA countries are leading the Big Mac Index with the top 3 most expensive Big Mac's. Iceland has the most expensive Big Mac, followed by Norway and Switzerland.The brand is known informally as "Mickey D's" (in the US and Canada), "Macky D's" (in the UK), "Mäkkäri" (in Finland), "McDo" (in France, Quebec, the Philippines, and the Kansai region of Japan), "Maccer's" (in Ireland), "Macarrannis" (in Mexico), "Maccas" (in New Zealand and Australia), "McD's" (in New Zealand), "Donken" (in Sweden), "de Mac" (in the Netherlands), or "Mac" (in Brazil).Thomas Friedman once said that no country with a McDonald's had gone to war with another.[14] However, the "Golden Arches Theory of Conflict Prevention" is not strictly true. Careful historians point to the 1989 United States invasion of Panama, NATO's bombing of Serbia in 1999, and the 2006 Lebanon War as exceptions.Some observers have suggested that the company should be given credit for increasing the standard of service in markets that it enters. A group of anthropologists in a study entitled Golden Arches East (Stanford University Press, 1998, edited by James L. Watson) looked at the impact McDonald's had on East Asia, and Hong Kong in particular. When it opened in Hong Kong in 1975, McDonald's was the first restaurant to consistently offer clean restrooms, driving customers to demand the same of

other restaurants and institutions. In East Asia in particular, McDonald's have become a symbol for the desire to embrace Western cultural norms. McDonald's have recently taken to partnering up with Sinopec, China's second largest oil company, in the People's Republic of China, as it begins to take advantage of China's growing use of personal vehicles by opening numerous drive-thru restaurants.

McDonalds IN INDIA

McDonald's opened its doors in India in October 1996. Ever since then, our family restaurants in Mumbai, Delhi, Pune, Ahmedabad, Vadodara, Ludhiana, Jaipur, Noida Faridabad, Doraha, Manesar and Gurgaon have proceeded to demonstrate, much to the delight of all our customers, what the McDonald's experience is all about.

Locally Owned McDonald’s in India is a 50-50 joint venture partnership between McDonald’s Corporation [USA] and two Indian businessmen. Amit Jatia’s company Hardcastle Restaurants Pvt. Ltd. owns and operates McDonald's restaurants in Western India. While Connaught Plaza Restaurants Pvt. Ltd headed by Vikram Bakshi owns and operates the Northern operations.Amit Jatia and Vikram Bakshi are like-minded visionaries who share McDonald's complete commitment to Quality, Service, Cleanliness and Value (QSC&V). Having signed their joint-venture agreements with McDonald's in April 1995, they trained extensively, along with their Indian management team, in McDonald's restaurants in Indonesia and the U.S.A. before opening the first McDonald’s restaurant in India.

Respect for local culture

McDonald's India has developed a special menu with vegetarian selections to suit Indian tastes and preferences. McDonald's does not offer any beef or pork items in India. Only the freshest chicken, fish and vegetable products find their way into our Indian restaurants

In addition, they have re-formulated some of their products using spices favoured by Indians. Among these are McVeggie™ burger, McAloo Tikki™ burger, Veg. Pizza McPuff™ and Chicken McGrill™ burger. They have also created eggless sandwich sauces for vegetarian customers. Even the soft serves and McShakes™ are egg-less, offering a larger variety to vegetarian consumers.

International Standards

McDonald's India's local suppliers provide them with the highest quality, freshest ingredients. Complete adherence to the Indian Government regulations on food, health and hygiene is ensured, while maintaining company’s own recognized international standards. Fast, friendly service - the hallmark of McDonald's restaurants the world over is the mantra they abide by. Stringent cleaning standards ensure that all tables, chairs, highchairs and trays are sanitised several times each hour. Such meticulous attention to cleanliness extends beyond the lobby and kitchen to even the pavement and immediate areas outside the restaurant.

Company Philosophy

"We take the burger business more seriously than anyone else." When McDonald's founder, Ray Kroc made that memorable statement, he was letting the world in on the philosophy and secret behind McDonald's phenomenal success.

The principles that guide McDonalds are …

Quality, Service, Cleanliness & Value - It is an unflinching McDonald's ideology that our customers must always get quality products, served quickly and with a smile, in a clean and pleasant environment; and all at a fair price

We are committed to exceeding our customers' expectations in every restaurant every time.

We have a passion and a responsibility for enhancing and protecting the McDonald's brand.

We believe in a collaborative management approach, employing a mutually respectful business philosophy,

We will seize every opportunity to innovate and lead the industry on behalf of our customers.

It was early evening and one of the 25 McDonald's outlets in India was bustling with activity with hungry souls trooping in all the time. No matter what one ordered - a hot Maharaja Mac or an apple pie - the very best was served every time.  But did anyone ever wonder as to how this US giant managed the show so perfectly? The answer seemed to lie in a brilliantly articulated food chain, which extended from these outlets right up to farms all across India.

US-based fast food giant, McDonald's success in India had been built on four pillars:

limited menu,

fresh food,

fast service and

affordable price.

Intense competition and demands for a wider menu, drive-through and sit-down meals - encouraged the fast food giant to customize product variety without hampering the efficacy of its supply chain.Around the world (including India), approximately 85% of McDonald's restaurants were owned and operated by independent franchisees. Yet, McDonald's was able to run the show seamlessly by outsourcing nine different ingredients used in making a burger from over 35 suppliers spread all over India through a massive value chain. Between 1992 and 1996, when McDonald's opened its first outlet in India, it worked frenetically to put the perfect supply chain in place. It trained the local farmers to produce lettuces or potatoes to specifications and worked with a vendor to get the perfect cold chain in place. And explained to the suppliers precisely why only one particular size of peas was acceptable (if they were too large, they would pop out of the patty and get burnt). These efforts paid off in the form of joint ventures between McDonald's India (a 100% wholly-owned subsidiary of McDonald's

Supply chain management at McDonalds (India)

Did you know that every year, Rs. 50,000 crore worth of food produce is wasted in India? This is mainly because of the lack of proper infrastructure for storage and transportation under controlled conditions. McDonald's is committed to providing quality products while supporting other Indian businesses. And so, we spent a few years setting up a unique Supply Chain, even before we opened our first restaurant in India.A Supply Chain is a network of facilities including - material flow from suppliers and their "upstream" suppliers at all levels, transformation of materials into semi-finished and finished products, and distribution of products to customers and their "downstream" customers at all levels. So, raw material flows as follows: supplier - manufacturer – distributor – retailer – consumer.

Information and money flows in the reverse direction. The balance between these 3 flows is what a Supply Chain is all about. When there is a balance in the finished product ordering, the Supply Chain operates at its best. Any major fluctuation in the product ordering pattern causes excess / fluctuating inventories, shortages / stock outs, longer lead times, higher transportation and manufacturing costs, and mistrust between supply chain partners. This is called the Bullwhip Effect. Depending on the situation, the Supply Chain may include major product elements, various suppliers, geographically dispersed activities, and both upstream and downstream activities. It is critical to go beyond one’s immediate suppliers and customers to encompass the entire chain, since hidden value often emerges once the entire chain is visualized. For example, a diesel engine manufacturer may be able to integrate a GPS locator system into its engine control system. Its immediate customer, a heavy truck manufacturer, may see no need for this functionality. However, the downstream customer, a trucking company with a large fleet, may be very interested in a locator system. Understanding the value to the downstream customer is part of the supply chain management processBig Mac's supply chain success

The seed of McDonald's success was sown in 1990 - six years before it started its actual operations. Sanjeev Bhar traces its supply chain management that played a vital role in its growth.

About two decades ago, the QSR wouldn't have meant much to the Indian F&B segment. Today, the acronym has been seamlessly absorbed in the industry lingo. McDonald's, arguably, one of the first brands that left a strong imprint on the Indian QSR history, has much to do with this. And its success is credited to its well-established supply management chain.

According to Vikram Bakshi, managing director and joint venture partner of McDonald's India (North & East), the company

invested about Rs 400 crore even before its first restaurant commenced operations in October 1996. "We had to ensure that we had the back-end linked up to the farm level for delivery commitment."

The company also deployed the latest state-of-the-art food processing technology for having a sound supply chain. The transition towards the latest technology, which has been subsequently noticed in other QSRs as well, changed the Indian fast food scenario to match international standards.

Tracing its success path

McDonald's had been working critically on its supply chain part. Considering, an international brand trying to make inroads into the Indian consciousness, its Indian supplier partners were developed in such a manner that made them stay with the company from the beginning. Bakshi explains, "The success of McDonald's India is a result of its commitment to sourcing almost all its products from within the country. For this purpose, it has developed local Indian businesses, which can supply them the highest quality products required for their Indian operations." As per today's standings, McDonald's India works with as many as 38 Indian suppliers on a long-term basis, besides several others standalone restaurants working with it, for various requirements.

In the supply chain management for a QSR, the distribution centres hold special place for bringing food right to the outlet counters. For McDonald's India, the distribution centres came in the following order: Noida and Kalamboli (Mumbai) in 1996, Bangalore in 2004, and the latest one in Kolkata (2007).

McDonald's entered its first distribution partnership agreement with Radha Krishna Foodland, a part of the Radha Krishna Group engaged in food-related service businesses. The association goes back to July 1993, when it studied the nuances of McDonald's operations and requirements for the Indian market. Recalling the association, Bakshi remarks, "Better facilities and infrastructures were created along with new systems by them to satisfy McDonald's high demands, which finally culminated into an agreement with McDonald's India, for Radha Krishna Foodland to serve as distribution centres for our restaurants in Delhi and Mumbai." As distribution centres, the company was responsible for procurement, the quality inspection programme, 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 centres playing a vital role in maintaining the integrity of the products throughout the entire 'cold chain'. The operations and accounting is totally transparent and is subject to regular audits.

"McDonald's had worked aggressively to attain the right suppliers and systems that ensured that 90 per cent of yield was indigenous before the doors were opened to consumers. The only products that we used to import were oil and fries, for which we have had made arrangements to manufacture the oil in India. We ensured that the products developed locally abide by global McDonald's standards," informs Bakshi.

Over the last 10 years, the company has gained experience and adopted procedures that helped in maintaining a continuous supply of food products irrespective of the climatic conditions. Bakshi proclaims, "Our logistics and warehousing system is robust that prepares us to deliver products at the same temperature throughout, without a single break in the cold chain."

McDonald's suppliers in India

Amrit Foods: Amrit Foods, a division of Amrit Banaspati, has been associated with McDonald's India as a supplier of Dairy Mixes, Soft Serve Mix and Milk Shake Mix for over a decade now

Cremica Industries: Cremica Industries was started in 1980 as small ice-cream unit run by Mrs Bector out of her backyard in Ludhiana. However after its initial success Cremica added buns and biscuits to its product line and in 1996 McDonald's selected Cremica to be its supplier for buns, liquid condiments, batter and breading in collaboration with its international partners

Dynamix Dairies: McDonald's India has approved Dynamix Dairies, Baramati (Maharashtra) for supply of cheese to its restaurants. Dynamix has a modern

automated plant that is fully computer controlled

Trikaya Agriculture: Trikaya Agriculture is McDonald's supplier of fresh iceberg lettuce. The farms at Talegaon, Maharashtra produce the crop throughout the year

Strengthening the backbone

Suppliers are proclaimed to be the backbone of any good business as they are the individual units that build supply chain. On them depends the health of the overall business cycle. Highlighting McDonald's role in developing its supply chain network, Bakshi says, "Cremica Industries (which provide liquid condiments, batter and breading), for example, worked with another McDonald's supplier from Europe to develop technology and expertise that allowed the company to expand it business from baking to providing breading and batters to McDonald's India and other companies as well."

Another benefit in the company's favour was its expertise in the areas of agriculture, which allowed it, along with its suppliers, to work with farmers in Ooty, Pune, Dehradun and other regions to cultivate high quality iceberg lettuce. Bakshi says, "There has been a substantial effort on sharing advanced agricultural technology and expertise with farmers/suppliers like utilisation of drip irrigation systems (for less water consumption), better seeds and agricultural management practices for greater yields."

Another area of concern is the sensitive price indexes of the food materials that McDonald's uses and to tackle price fluctuations, the company goes with yearly rate agreements with suppliers. McDonald's took special care in identifying the positives of their suppliers and added their expertise to improve on their existing standard. Trikaya Agriculture, a major supplier of iceberg lettuce to McDonald's India, is one such enterprise that is an intrinsic part of the cold chain. "Initially, lettuce could only be grown during the winter months but with McDonald's intervention, it is now able to grow the crop throughout the year," says Bakshi. Also, some of its suppliers with concerns over cultural sensitivities, segregated with a separate work force for the vegetarian and non-vegetarian processing lines.

Refrigerated vans for McDonald's

National inbound - Supplier to DC: 20 vehicles + 2 for Kolkata

Outbound north - DC to restaurant: 13 vehicles Outbound west - DC to restaurant: 11 vehicles Outbound south - DC to restaurant: 1 vehicle

Proposed Kolkata - DC to restaurant: 1 vehicle

Incorporating chill zones

Setting up extensive cold chain distribution system forms the lifeline of any fast food business. In this regard, McDonald's incorporated state-of-the-art food processing technology along with its international suppliers to pioneering Indian entrepreneurs, who are today an integral part of the cold chain, avers Bakshi. He says, "We have imparted technical training to all our suppliers on how to operate the imported machineries, educated them on the McDonald's philosophy of Quality, Service, Cleanliness and Value (QSCV) in order to provide standardised food to our customers."

The 'cold chain', on which the QSR major has spent more than six years for setting up the same in India, has brought about a veritable revolution, immensely benefiting the farmers at one end and enabling customers at retail counters. McDonald's finding the factor of cold room being vital ensured that even before vegetable from farms enters the refrigerated zones, they are locked in a pre-cooling room to remove field heat. Vegetables are placed in the pre-cooling room within half an hour of harvesting where rapid cooling decreases the field temperature of vegetables to 2ºC within 90 minutes. Then a large cold room (a refrigerated van) is used for transportation to the distribution centers. In the van, the temperature and relative humidity of crop is maintained at 1-4ºC and 95 per cent, respectively and the flavours and freshness are locked at -35°C.

Even in this field, McDonald's takes the big pie of credit for developing the concept of cold chain. Bakshi claims, "Prior to McDonald's arrival in India, the concept of a cold chain for the distribution of food and dairy products from the farm to the end supplier, in predetermined and stringently enforced climactic and hygienic conditions, was at a very nascent stage of development. For five years prior to opening our first restaurant, McDonald's pioneered the effort to develop this aforementioned cold chain so that our high standards would be assured. Various Indian and international players later adopted this system to deliver quality fresh

produce to consumers."

McDonald's also kept a tab on quality control. McDonald's, as a rule, throws away burger puffs kept for more than 30 minutes after the final preparation during service. To avoid any wastage, Bakshi says, "The crew is trained and equipped to forecast the requirements at various stages of the day. At the suppliers' level, care is taken to guard against any possible contamination or interruption in the cold chain that can break the link and have a detrimental effect on the quality of our product."

  Vital Links in McDonald’s Cold Chain

All suppliers adhere to Indian government regulations on food, health and hygiene while continuously maintaining McDonald's recognised standards. As the ingredients move from farms to processing plants to the restaurant, 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 enabled us to cut down on operational wastage

Hazard Analysis Critical Control Point (HACCP) is a systematic approach to food safety that emphasizes prevention within our suppliers' facility and restaurants rather than detection through inspection of illness or presence of microbiological data. Based on HACCP guidelines, control points and critical control points for all McDonald's major food processing plands and restaurants in India have ben 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.

The relationship between McDonald's and its Indian suppliers is mutually beneficial. 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.

Trikaya Agriculture

Suppier of Iceberg LettuceImplementation of advancved agricultural practices has enabled Trikaya to successfully grow speciality crops like iceberg lettuce, special herbs and many oriental vegetables. Farm infrastructure features:

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

Vista Processed Foods Pvt. Ltd.

Supplier of Chicken and Vegetable range of products (including Fruit Pies)A joint venture with OSI Industries Inc., 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, has :

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

International stardards, procedures and support services.

Dynamix Diary

Supplier of CheeseDynamix has brought immense benefits to farmers in Baramati, Maharashtra by setting up a network of milk collection centres equipped with bulk coolers. Easy accessibility has enabled farmers augment their income by finding a new market for surplus milk. The factory has:

Fully automatic international stardard processing facility.

Capability to convert milk into cheese, butter/ghee, skimmed milk powder, lactose, casein & whey protein and humanised baby food.

Stringent quality control measures and continuous Research & Development

Amrit Food

Supplier of long life UHT Milk and Milk Products for Frozen DessertsAmrit Food, an ISO 9000 company, manufactures widely popular brands - Gagan Milk and Nandan Ghee at its factory at Ghaziabad, Uttar Pradesh. The factory has:

State-of-the-art fully automatic machinery requiring no human contact with product, for total hygiene. Installed capacity of 6000 ltrs/hr for producing homegenised UHT (Ultra High Temperature) processed milk and milk

products. Strict quality control supported by a fully equipped quality control laboratory.

Radhakrishna Foodland

Distribution Centres for Delhi and MumbaiAn integral part of the Radhakrishna Group, Foodland specialises in handling large volumes, providing the entire range of services

including procurement, quality inspection, storage, inventory management, deliveries, data collection, recording and reporting. Salient strenghts are :

A one-stop shop for all distribution management services. Dry and cold storage facility to store and transport perishable products at temperatures upto -22 Degree Cel.

Local Sourcing McDonald's has always been committed to sourcing its requirements from local suppliers and farmers. This assurance is rooted in the philosophy of our company's founder, Ray Kroc. He firmly believed in mutual benefits arising from a partnership between McDonald's and the local businesses, thus ensuring that McDonald's commitment to growth was mirrored by that of its partners.In keeping with this belief, we have carefully identified local Indian businesses that take pride in satisfying customers by presenting them with the highest quality products. Adherence to Indian Government regulations on food, health and hygiene were a top priority.McDonald's India today purchases more than 96% of its products and supplies from Indian suppliers. Even our restaurants are constructed using local architects, contractors, labour and maximum local content in materials.The relationship between McDonald's and its Indian suppliers is mutually beneficial. As McDonald's expands in India, the supplier gets the opportunity to expand his business, have access to the latest in food technology, get 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.All suppliers adhere to Indian government regulations on food, health and hygiene while continuously maintaining McDonald's recognised standards. As the ingredients move from farms to processing plants to the restaurant, 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 enabled us to cut down on operational wastageHazard Analysis Critical Control Point (HACCP) is a systematic approach to food safety that emphasizes prevention of illness or presence of microbiological data within our suppliers' facilities and our restaurants rather than its detection through inspection. 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 HACCP verification is done at least twice in a year and certified.

Trikaya Agriculture - Supplier of Iceberg LettuceImplementation of advanced agricultural practices has enabled Trikaya to successfully grow speciality crops like iceberg lettuce, special herbs and many oriental vegetables.  Farm infrastructure features:

A specialised nursery with a team of agricultural experts.

Drip and sprinkler irrigation in raised farm beds with fertiliser mixing plant.

Pre-cooling room and a large cold room for post harvest handling.

Refrigerated truck for transportation.

Vista Processed Foods Pvt. Ltd. - Supplier of Chicken and Vegetable range of products A joint venture with OSI Industries Inc., USA, and McDonald's India Pvt. Ltd. Vista Processed Foods Pvt. Ltd. produces a range of frozen chicken and vegetable foods.  A world class infrastructure at its plant at Taloja, Maharashtra, has :

Separate processing lines for chicken and vegetable foods.

Capability to produce frozen foods at temperature as low as -35 Degree Celsius to retain total freshness.

International standards, procedures and support services.

Dynamix Diary - Supplier of CheeseDynamix has brought immense benefits to farmers in Baramati, Maharashtra by setting up a network of milk collection centres equipped with bulk coolers. Easy accessibility has enabled farmers augment their income by finding a new market for surplus milk. The factory has:

Fully automatic international standard processing facility.

Capability to convert milk into cheese, butter/ghee, skimmed milk powder, lactose, casein & whey protein and humanised baby food.

Stringent quality control measures and continuous Research & Development

Amrit Food - Supplier of long life UHT Milk and Milk Products for Frozen DessertsAmrit Food, an ISO 9000 company, manufactures widely popular brands - Gagan Milk and Nandan Ghee at its factory at Ghaziabad, Uttar Pradesh. Its plant has:

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

Installed capacity of 6000 litres / hour for producing homogenised UHT (Ultra High Temperature) processed milk and milk products.

Strict quality control supported by a fully equipped quality control laboratory.

Radhakrishna Foodland - Distribution CentreAn integral part of the Radhakrishna Group, Foodland specialises in handling large volumes, providing the entire range of services including procurement, quality inspection, storage, inventory management, deliveries, data collection, recording and reporting.  Salient strengths are :

A one-stop shop for all distribution management services.

Dry and cold storage facility to store and transport perishable products at temperatures up to - 22 Degrees Celsius.

Effective process control for minimum distribution cost.

McDonald's opened its first store in India in October, 1996 and currently has 113 stores, spread across the North, West & South of the country.

We have the sole responsibility of McDonald's entire supply chain all across India. We handle their entire range of services including procurement, quality inspection, storage, inventory management, deliveries,

data collection, recording and reporting.

Over the years, subsequent to the commencement of our relationship, Foodland has regularly won the Best Supplier Award from McDonald's.

McDonald's - Challenges

Full Supply Chain responsibility Multi Temp. Products - Over 65 % temperature controlled Stores as far as 500 – 1000 kms

Drops per month - Over 1000 Movement mainly by road Regular movement of perishables by air Routing Challenges No margin for error – Operations critical client No Stock Outs at store On time delivery record – above 97 % Clean delivery record – above 99 % Unfailing inbound supply chain

Foodland : how it helps in supply chain of McDonalds?

Foodland provides Customized Distribution & Logistics services encompassing the entire supply chain, such as storage, handling and distribution solutions to various clients. The services are tailor made to suit each client’s requirements, which include organisations such as

McDonald's and Radhakrishna Hospitality Services Pvt. Ltd. (RKHS)

Objective

To provide a cost effective solution to our customers ensuring product integrity throughout the supply chain.

Platter Of Services

Supply Chain Structuring Inventory Planning & Replenishment Management Warehouse Management

Customer Order Fulfillment Logistics – Temperature Controlled

It handles bulk transportation of temperature sensitive products.

Key Features:

1. Dedicated to ‘cold chain’ movement2. The only logistics solution provider with expertise in handling agri – produce3. Total kilometer run per month is – 7,00,000 km4. Perishable tonnage handled per month – 7,000 tons5. Robust quality systems & processes6. First in the country to use multi temperature vehicles7. Use of innovative methods to ensure temperature integrity during transit8. Experienced staff – The BEST in the industry.

Its experience of over a decade in the logistics & distribution industry has led us to believe that there is still one area which remains poorly serviced – that of

movement of small volumes of perishable items

across the country.

Our experience also tells us that many companies, for want of a cost-effective and reliable logistics solution, end up deciding not to market their products which are of a perishable nature in certain markets, thus losing out on potential revenue opportunities. And because currently, there is no reliable service provider to cater to this need, companies have to move goods either by air, which is expensive, or through bulk carriers with very little control on the delivery schedule. Given the current scenario, combined with our domain expertise in the logistics & distribution area, we have launched a new service - Fresh Rush. Fresh Rush is a temperature controlled transportation service addressing the needs of small volume cargo.

Fresh Rush – Features

Multi temperature products, such as Frozen (below –18ºC) and Chilled (1ºC to 4ºC) can be transported Flexibility of load movement - A minimum of 500 kgs to maximum of 5000 kgs can be transported In transit temperature tracking Fixed schedule of pickup and delivery Well trained and experienced manpower

Adherence to strict hygiene standards Consignment can be tracked through GPS system

1. Food Park, Kalamboli

First of its kind in India Designed as per global standards The centre procures, value adds, stores and distributes various kinds of perishable and non-perishable food

products

Food Park – Features

Spread over 33,000 sq meters Multi Temperature Zones Integrated Facility – Storage and Value Addition capabilities under one roof Ensured / Guaranteed Food Safety Paradigm shift in the way food is handled in the supply chain in India First of its kind in the region Benchmarked against global standards Codex / USDA / PFA compliant Scalable Dedicated storage for specific categories Sanitation / Hygiene standards – Trash handling Air / Water Quality – Treatment Plant / ETP Ripening Rooms, Crate Wash Facilities, Blast Freezer, Flake Ice Machine Value Added Services – Processing of Vegetables & Fruits, Meat, Sea Food and Poultry

Controls – Building Management System (BMS) 100 % Power Back Up

Food Park – Capacity

Capacity to manage over 6000 SKUs Can store 70,000 cases with 1,700 pallet positions and over 4,000 pick faces Processing

o  o Vegetable & Fruits – 21 tonnes per dayo Meat – 3 tonnes per dayo Fish – 3 tonnes per day

Blast Freezing – 6 tonnes – per day Ice Machine – 2.4 tonnes per day

2. Kanjur Marg DC

Spread over 3,500 sq meters Dry Provisions DC Capacity to manage over 9000 SKUs Can store 80,000 cases with 1400 pallet position and 3,600 pick faces

3. Delhi DC (Noida)

Dedicated to operations in the North Highly functional DC Chiller / Freezer / Dry Storage

Capacity to manage 576 pallet positions

Findings of study conducted

1. Every organisation, no matter how big or small in size,has its own forecasting techniques.This is because without forecasting the demand and supply requirements, the orders cant be fulfilled. Similarly, for order processing, Mc Donalds forecast its requirements on a daily basis.The study that we did in Indore, where there are three outlets of Mc Donalds, each one in a multiplex, revealed that their forecasting depends on a few factors like the upcoming movie release in that week and its response.Likewise, we conducted this study in the month of March and the demand during this time is affected by the school and college examinations.The demand for different departments also vary from one outlet to another.

2.Mc Donalds has its outlets in different parts of the globe.In India too, Mc Donalds has numerous outletsin different cities, but they do not have any local vendor.They have a fixed vendor, that is The Radhakrishna Foodland, which caters the range of 230 products that Mc Donalds require.The Radhakrishna Foodland not only process the fooditems but also handle the logistics partially.The delivery center is at Mumbaiwhere from the required stock is transported to different locations.The concerned person told us, that due to the ephimeral shelf-life of tomatoes, it i sthe only commodity that they make purchase from local markets; specifically of four to five inches diameter which undergoes a thorough sanitization process, only after which it is used.

3.Every organisation has its inventory cycle.The Mc Donalds outlets do keep a safety inventory.They keep the buffer stock for a period of three days,and their stock is stored at the outlets itself. Every product used in preparing the menu items come with an expiry date, like the French-fries served in Mc Donalds has a life of two hundred and seventy days. But once the menu items are cooked,they are not kept for more thanten minutes, after which they are dumped as waste.There are daily product safety checklist which is maintained manually as well as with the help of computer softwares too,helping the staff in assessing the stock quantity at the end of each day.

4.Radhakrishna Foodland had been working with Mc Donalds for the past ten yearsand the trems abd conditions for choosing the network design was decided by the headquarters of Mc Donalds itself.The food items are transported via air conditioned trucks having different chambers.Each chamber is designed for the different kind of stock at different temperature levels,as per the suitability and requirements of the stock.All the raw material comes in a frozen form.The trucks have pre-defined destinations to reach each day.The sources at Mc Donalds told u sthat the trucks from Mumbai reach Indore on Monday,Pune on tuesday, Hyderabad on wednesday and so on at Bangalore and Gujarat too.The items which are to be procured from foreign territories comes to India via ships, like the french fries are obtained from new Zealand via shipments.

5.They do assess their daily requirements via safety checklists.The rounding and scheduling of ouput and input is done manually and through computer based softwares too.

6.Mc Donalds does not have any third party logistics.

7.With the evolvement of the new technologies and convenient softwares, the conventional methods of maintaining suplly chain records are now a passe`.Mc Donalds too use a standardized visual Foxpro based program via which the outlets are linked with the head office and the Radhakrishna Foodland too.

8.Mc Donalds believe in the saying "Customer is the King" and thus the the complaints , if any, from the customers end are duly heard and resolved as per the need of the situation.