McDonald's has been facing difficulties in managing its stock. This case discusses about how McDonald's used to manage its stock earlier and how its implementation of new stock management systems benefitted the company.
To manage stock efficiently, a balance is needed between meeting customers' needs reducing wastage. The latter factor can be done by precisely forecasting demand so that food doesn't need to be thrown away frequently & also capably controlling the stock of the raw materials. However, this can be difficult as customer preferences change very often. This would create McDonald's the needs focus on product proliferation & so reducing the waste becomes more challenging.
Previously, stock was taken care by the restaurant managers by using prior information & knowledge. This caused the mangers to spend a considerable amount of time forecasting the demand. Also, this being to simple a method didn't take into account and other factors(seasonal change, holidays).
In the year 2004, McDonalds implemented a new stock management team which was called as the Restaurant Supply Planning Department. The team, after communicating with the local restaurant managers, including many factors which many affect the stock into forecasting system to predict the expected demand of the menu items.
To ensure that only fresh stock is always used, mangers at McDonald's used FIFO method to deal with the stock. The different types of stock that need to be managed were
a.Raw materials. Ex: vegetables, meat, packaging
b.Work in Progress. goods which are in the process of becoming finished goods
c.Finished products. These are goods which are ready for sale
Using the stock management system, McDonald's was able to ensure enough stock was available when needed at the same time...