McDonalds: Inventory Management Practice and Its Advantages
By: Piyush Dewan (MBA Core-Div A: I Trimester)
McDonalds is one of the most popular fast food chains with a worldwide presence. It can be found in 119 countries and has about 31,000 restaurants. It employs about 1.5 million people and is one of the largest fast food chains, serving 47 million customers daily (2)
. Most restaurants offer both counter service and drive through service with indoor seating (and sometimes outdoor seating too!). McDonalds has become a emblem of globalization. It¶s main line of business is hamburgers.
It primarily sells cheeseburgers, hamburgers, French fries, chicken products, ice-creams and soft drinks.Inventory management in McDonalds: McDonalds follows a Just in Time (JIT) system of inventory management.JIT, as the name suggests, is the system of supplying products to customers as soon as they haveordered for it, with minimal delay between placing the order and getting it in hand. McDonaldsdoesn¶t begin to cook or assemble or preheat their stuff until they receive a customer order (1)
.This was not the case earlier. They had a different approach to inventory management whereinthey used to pre-cook a batch of hamburgers and sit under heat lamps. It used to keep them under the lamps for as long as possible and eventually discard whatever they couldn¶t sell. Hencecustomers couldn¶t enjoy freshly made food. The only way it could happen was by the customer giving a special order.Hence McDonalds moved to the JIT system of inventory management. This shift was possible because of the new burger making technology that enabled them to make burgers faster and keep
the time between placing an order and receiving it as miniscule as possible. This results in thefinished product sitting in the inventory for as little as possible. This enables proper inventorymanagement and reduces wastage while giving maximum satisfaction to the customer. Thecustomer is made to wait for a very...
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