Mcdonald Supply Chain

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REV: APRIL 16, 2007

RAY A. GOLDBERG
JESSICA DROSTE YAGAN

McDonald’s Corporation: Managing a Sustainable
Supply Chain
In January 2007, Frank Muschetto, McDonald’s Senior Vice President of Worldwide Supply Chain, returned to his office from a meeting with Bob Langert, Vice President of Corporate Social Responsibility (CSR). Muschetto had approved the formation of an internal Sustainable Supply Chain Working Group (SSCWG) in the summer of 2006 to “develop the strategies and tools necessary to accomplish McDonald’s vision of sustainable sourcing.” Langert, a co-leader of the SSCWG, had just discussed the group’s preliminary findings with Muschetto. As described in its latest Worldwide Corporate Responsibility Report and internal documents, McDonald’s envisioned a sustainable supply chain “that profitably yields high-quality, safe products without supply interruption while creating a net benefit for employees, their communities, biodiversity and the environment.” The SSCWG believed that McDonald’s existing sustainable supply chain efforts led the restaurant industry; however, it also identified many issues McDonald’s still needed to address in order to achieve its vision.

Muschetto agreed with the SSCWG’s assessment. He knew that McDonald’s had successfully influenced many of its suppliers to improve their social, environmental, and animal welfare impacts. In particular, he took pride in the steps McDonald’s had recently taken with Cargill, a major supplier, to protect the Amazon rain forest in Brazil from destruction by soya farming. He and others in the company hoped that by understanding the relevant challenges and opportunities, McDonald’s could build on that success and proactively pursue leadership of other sustainability efforts. In the process, he and his worldwide supply chain management team would have to answer some difficult questions: −

How should McDonald’s prioritize sustainability relative to other supply chain goals (e.g., ensuring food safety and minimizing costs)?



How should McDonald’s reconcile different sustainability expectations and priorities around the world with the understanding that local practices sometimes impact the global brand?



How should McDonald’s engage suppliers, activists, and other stakeholders in its sustainable supply chain efforts?

________________________________________________________________________________________________________________ Professor Ray A. Goldberg and Jessica Droste Yagan (KSG 2007) prepared this case. HBS cases are developed solely as the basis for class discussion. Cases are not intended to serve as endorsements, sources of primary data, or illustrations of effective or ineffective management. Copyright © 2007 President and Fellows of Harvard College. To order copies or request permission to reproduce materials, call 1-800-545-7685, write Harvard Business School Publishing, Boston, MA 02163, or go to http://www.hbsp.harvard.edu. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means—electronic, mechanical, photocopying, recording, or otherwise—without the permission of Harvard Business School.

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McDonald's Corporation: Managing a Sustainable Supply Chain

As Muschetto gazed out his window on an unusually warm January day, he pondered these questions and remembered founder Ray Kroc’s directive: “Whatever we are doing today, we can do better tomorrow.”1

McDonald’s Supply Chain
History2
Ray Kroc, founder and first CEO of the McDonald’s Corporation, opened the original McDonald’s franchise in Des Plaines, Illinois in 1955. From the beginning, he sought to build an innovative supply chain system for his growing restaurant business. Unlike most contemporary fast-food franchisers who profited significantly by marking up the goods they required their franchisees to buy, Kroc aligned McDonald’s interests with its franchisees’...
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