Supply chain management and it's Role in Success of Mcdonalds in India and Walmarts.

7/23/2019 Supply chain management and it's Role in Success of Mcdonalds in India and Walmarts.

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Aditya Gupta

B.Tech NIT-Bhopal [email protected]

+91-8517869472

A presentation on

With McDonald's and Walmart as Examp
mailto:[email protected]:[email protected]


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A supply chain is a system of organizations,people, technology, activities, information andresources involved in moving a product orservice from supplier to customer.

Supply Chain includes:

1. Material Flows

2. Information Flows

3. Financial Flows


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Supply Chain for Denim Jeans


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The planning and management of all activities

involved in sourcing and procurement, conversion,and all logistics management activities also

includes coordination with channel partners, whichcan be suppliers, intermediaries, third party serviceproviders, and customers. -- By Council of Supply chainManagement Professionals

Managing supply and demand, sourcing rawmaterials and parts, manufacturing and assembly,warehousing and inventory tracking, order entry

and order management, distribution across allchannels, and delivery to the customer. -- The SupplyChain Council

The design and management of seamless, value-added processes across organizational boundariesto meet the real needs of the end customer. -- Institute


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Old Vs New SCM Approaches Old paradigm-Firm gained synergy as a vertically

integrated firm encompassing the ownership and coordinationof several supply chain activities. Organizational culturesemphasized short-term, company focused performance.

New paradigm-Firm in a supply chain focuses activities inits area of specialization and enters into voluntary and trust-based relationships with supplier and customer firms.

All participants in the supply chain benefit.

Boundaries are dynamic and extend from the firms

suppliers suppliers to its customers customers (i.e.,second tier suppliers and customers).

Supply chains now deal with reverse logistics to handlereturned products, warranty repairs, and recycling.


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The ability to meet customer requirements, for everythingfrom coffee beans to Crocs, is built upon the expectation thateverything is done correctly in the supply chain. And thatmeans doing it right the first time no mulligan's, no mistakesare allowed. In the quest to provide quality service and satisfy

customers, world-class companies along the supply chain areguided by the Seven Rights of Fulfillment.

Right Product

Right Customer

Right Time

Right Place

Right Condition

Right Quantity

Right Cost


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Waste Reduction :

Reduction in Duplication

Enhancing the Quality and Harmonizing theOperation

Cycle Time Compression

Production

Logistics Flexible Responses

Cost Reduction

Customer Benefit


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Cooperation Trust and Commitment, Informationsharing, Common Objectives and Proper Integration

Coordination- Standardization, expertise, Removal ofBullwhip effect, tight management

Collaboration : when two or more people work togetherto create or achieve the same thing. Important inGlobal supply chain

Agility and Flexibility Quick and Responsive, For any

supply chain to be agile, it must be flexible first Cost Efficiency Cost Cutting through better

purchasing, production, transport and storage

Quality of Product TQM Technique, Continuous

Improvement Technique, Zero defect concept, ISOStandard


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Bull Whip Effect


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Postulates from Philip Crosby's "Absolutes of Quality Management"


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Delivery Performance : Delivery Reliability, Leadtime reduction, on time delivery

Mass Customization: Mass customisation is a

production process that combines elements ofmass production with those of bespoke tailoring.Products are adapted to meet a customer'sindividual needs, so no two items are the same.

Customer Service : Service Quality or Quality ofService (Q.S), Customer Satisfaction, CustomerResponse, Rapid redressel

Integration of Key Element : One of the majorEnablers of SCM after Cooperation and

coordination. Integration through IT techniques (Demand, Supply, Purchasing, Distribution)

Demand Management :Demand management is aplanning methodology used to manage andforecast the demand of products and services.


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A.) Custom and Mass/Standard Production B.) MassCustomization


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Product Management : It is an organizationallifecycle function within a company dealing with theplanning, forecasting, or marketing of a product or

products at all stages of the product lifecycle. Marketing & Sales : In Modern age of tough

competion, Sales, Promotion, advertisement,Introductory compaigns, concession & Discount

Logistic Management : It plans, implements, andcontrols the efficient, effective, forward, and reverseflow and storage of goods, services, and relatedinformation between the point of origin and the pointof consumption in order to meet customer'srequirements.Shortest Route Decision, Transport selection,Warehousing, Materials Handling & Packaging


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Research & Devlopement : Innovative & newproduct important in new turbulent highly uncertainmarket, Multinational companies can get benifited

by setting up a gloabal R&D unit and collaberatingwith global partners, R&D team in contact withcustomers and supplier can result in betterproducts with greater flexibility which result in easyincorporation of changing customer tastes,

Environment friendly products meeting govt. & diff.agencies Norms


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Facilities Economies of Scale : Large number of facilities,

Location i.e. Proximity to customers, Market,Resources, Raw material.

Capacity of Supplier, organization and distributors

Overall trade off b/w Responsiveness (Morenumber of Inventory) and cost effectiveness(Centralization)

Plant layout : 1.) Line/Product type Layout2.) Process Type layout3.) Fixed Position Layout


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PROCESS LAYOUT

Lathe 1

Lathe 2

Lathe 3

MillingMachine

Fitting Table 1

Fitting Table 2

Fitting Table 3

Welding M/C - 1

Welding M/C - 2Paint Shop

Side Entry

Main Entry

Work Shop OfficeAir

Compressor

Product A

Product B

Flow of work is not standardized Plant produces a variety of products Some of the processes / operations

might be common.


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Fixed Layout : An Airplane Construction


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Inventory : helps in smooth nad efficient running of enterprise,provide service to customer at sort notice, may result in earningprice discounts, saves enterprise from paying high pricesbecause of piecemeal purchasing, acts as buffer stock when

raw material received late.

Classification of Inventories :a.) Direct Inventory : They include items that are directly usedfor production.

Ex. Production Inventory : Items such as raw material,components and subassemblies used for final product.Work-in-Process Inventory : This includes semi-finishedproducts and goods requiring further operation.Finished Goods Inventory : This includes the finished goods

ready for dispatch.

b.) Indirect Inventory : Are not associated with the production.Ex. Transit or Pipeline Inventory : Consists of items currently intransportation.Buffer Inventory : They are required for protection againstuncertainties of supply & Demand


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Transportation : Between the stages1.) Modes of Transportation2.) Impact on Responsiveness and Efficiency3.) Route and Network Selection

4.) Inbound & Outbound Transportation

Information : It is the connection b/w various stages.

1.) Allow coordination b/w different stages2.) Crucial to daily operation of each stages in supply chainManagement3.) Use of IT Capabilities like Executive Information System(EIS), Internet Information system (IIS), Decision Support

system (DSS)4.) Considered as a Resource in Organization because itrequires cost to purchase information, share and transfer it.


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Planning : Operational Plans, Strategic Plans, Longterm plans

Scheduling

Inventory Management

Sourcing/Procurement

Material Handling

Product Design & Devlopment

WareHousing Order Processing

Transportation ( Inbound/Outbound)


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Production scheduling

Customer Service

Manufacturing

Supply Chain Flow Cycles1.) Material flow2.) Information flow3.) Financial and Funds flow


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Traditional ApproachLack of Coordination, Information and every considered asExternel Entity


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MRP Age of SCM ( Level-1)(Material Requirement Planning)

Customers & Suppliers treated as External Entities

Departments as Separate functionalities

Purchase & Production Planning combined to form one Entity

MRP-II Age of SCM(Manufacturing Resource Planning)

Purchase, Planning & production-Integrated MRP II focused on materials & Capacity integration

Customers,Suppliers-external

ERP Age of SCM(Enterprise Resource Planning) All departments as one entity

Integrated Internal supply chain


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Modern Approach Colloborative Planning

Manufacturing organisation closely workswith all trading

partners Global E Biz Consumers can have directlink with the

manufacturing firm

Global Approach Each entity a supplier at one or other level know Tiers like Tier

3 Suppliers, Tier 2 suppliers. Tier 1 or First Level Suppliers areconnected to different Manufacturing License holder which areconnected to Logistics Suppliers which supply product at last to

consumer. Just like Modern Approach, Here too there is full Information

sharing through sophisticated IT tools.


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Global Supply Chain for bear


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Expanding the Supply Chain Firms are expanding partnerships and

building facilities in foreign markets

The expansion involves: breadth- foreign manufacturing, office & retail

sites, foreign suppliers & customers

depth- second and third tier suppliers &

customers


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Increasing Supply ChainResponsiveness

Firms will increasingly need to be moreflexible and responsive to customer needs

Supply chains will need to benchmarkindustry performance and meet and

improve on a continuous basis Responsiveness improvement will come

from more effective and faster product &

service delivery systems


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The Greening of Supply Chains

- Producing, packaging, moving, storing,

delivering and other supply chainactivities can be harmful to theenvironment

Supply chains will work harder to reduce

environmental degradation Large majority (75%) of U.S. consumers

influenced by a firms environmental

friendliness reputation

Recycling and conservation are agrowing alternative in response to highcost of natural resources


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Reducing Supply Chain Costs

Cost reduction achieved through:

Reduced purchasing costs Reducing waste

Reducing excess inventory, and

Reducing non-value added activities

Continuous Improvement through Benchmarking-improve over competitors

performance

Trial & error

Increased knowledge of supply chain processes


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By Aditya Gupta

[email protected]


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Vision

To be the best & leading fast foodproviders around the globe

Mission To be the world's best quick service

restaurant experience. Being the bestmeans providing outstanding quality,service, cleanliness, and value, so thatwe make every customer in everyrestaurant smile."

Values

Our values summarized in Q.S.C & V.Provide good quality, services tocustomer . Have cleanlinessenvironment when customer enjoystheir meal .The value of food product

makes every customer is smiling.

Supply Chain is one of the critical factors for the smooth


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Supply Chain is one of the critical factors for the smoothfunctioning of any business but When We talk of fast foodGiant Mcdonalds, then we can SCM to be of Highest precisionand accuracy.

It is this unmatched Supply Chain Structure, which not justensures on time delivery of raw materials and supplies toMcDonalds but also enables it to cut down on its cost andmaximize profitability along with maintaining highest qualitystandards of its products.

The level of commitment of McDonalds can be gauged fromthe fact that even before it set up its first restaurant in thecountry it infused Rs 400 Crore to set up its deliverymechanism.

McDonald's initiative to set up an efficient supply chain anddeploy state-of-art technology changed the entire Indian fastfood industry and raised the standards of performance tointernational levels.

The success of McDonalds India was achieved by sourcing all

C ld Ch i A U i C t f M D ld I di


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Cold Chain A Unique Concept of McDonalds India

Procurement

warehousin

g

Transportation

Retailing offood

product

McDonald's spent a few yearssetting up a unique Cold Chain.

The Cold Chain is necessary tomaintain the integrity of foodproducts and retain their freshnessand nutritional value.

It immensely benefited Farmers at

one end and enabling customers atretail counters get the highestquality food products, absolutelyfresh and at great value

McDonalds has been able to bothcut down on its operational wastage,

as well as maintain the freshnessand nutritional value of raw andprocessed food products. This hasinvolved procurement, warehousing,transportation and retailing ofperishable food products, all under

controlled temperatures

Contributors in Success of Mcdonalds


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Contributors in Success ofMcdonalds

Suppliers : Coming in 1990s, When India was missing alot for a Successful entry of Fooding giant.

In such a Scenario, Local partners and suppliers identifiedand encouraged them to come in JV with InternationalSuppliers. Formation of Entirely Trust based relationship, nosigned paper document but just what we call Handshakeagreements.

Another Unique think is sharing of Best practices among

Suppliers, Distributors and franchises.

India Centric R & D : Large investment in India, relying onlocal supplies. Not just Infrastructure, Mcdonalds helpedsupplier in improving productivity by R & D.

Standardization : Standardized products according toindian needs like going veggie. Now 60% Products that Mcdoffers are Veggie Indian R&D Products.

CRM : Discounts and gifts for children, students. FreeDiscount coupons to regular customers. Encouraging

customers to take part in surveys. Helped a lot in


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By Aditya [email protected]

A Success Story of SCM


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The companys founder is Sam Walton.

He was born in 1918 at Oklahoma. In 1940, he

worked for the famous retailer, J C Penney.

When it comes to Supply chain management

Wal-Marts is boss of all, its phenomenal growthto a billion dollar revenue generating company isall attributed to worlds best and most efficient

SCM Practices


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In the early 1970s, Wal-Mart became one of the first retailing companies inthe world to centralize its distribution system, pioneering the retail hub-and-spoke system.

Under the system, goods were centrally ordered, assembled at a massivewarehouse, known as distribution center (hub), from where they weredispatched to the individual stores (spoke).

Hub and Spoke System

Procurement

Wal-Mart emphasized the need to reduce purchasing costs and offer the bestprice to the customer.

The company directly procured from manufacturers, by passing allintermediaries.

Using EDI for Procurement : The computer systems of Wal-Mart wereconnected to those of its suppliers. EDI enabled the suppliers to downloadpurchase orders along with store-to-store sales information relating to their

products sold resulting faster deliveries.


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Hiring of only dedicated and experienced drivers with history of 3 Lakhs Kmaccident-free driving.

Logistics Management

InventoryManagement

Wal-Mart invested heavily in IT and communication systems to effectively tracksales and merchandise inventories in stores across the country.

The order management and store replenishment of goods were entirely executedwith the help of computers through the Point-of-Sales (POS) system.

Through this system, it was possible to monitor and track the sales andmerchandise stock levels on the store shelves.

Better floor area utilization with advanced material handling equipments and IT.

CPFR

By the mid 1990s, Retail Link had emerged into an Internet-enabled SCMsystem whose functions were not confined to inventory management alone,

but also covered collaborative planning, forecasting and replenishment(CPFR).


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Latest is implementation of Radio frequency Identifiaction by Walmarts in itsall stores in 2003 by a huge investment of 20 Million $ which reduce ditssupply chain management costs and enhanced efficiency.

RFID


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Walmarts entry in India. Bharti Enterprises tied-up with Walmart foropening a chain of retail stores all over India.

Thank you


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For any Constructive comments, plz Contactat

[email protected]+91-8517869472

Bhopal India
mailto:[email protected]:[email protected]

Supply chain management and it's Role in Success of Mcdonalds in India and Walmarts.

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