Mcdonalds Supply Chain

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McDonald’s is the world’s largest hamburger fast food chain, operating in 119 countries. The company began in 1940 and is headquartered in Illinois. As one of the most powerful brands in the world, their signature golden arches are a symbol recognized immediately by most. Our group chose to do our report on McDonald’s because it is one of the most well-known corporations worldwide, and was listed as number three on Gartner’s Supply Chain Top 25 List for 2012. This was recently announced at Gartner Supply Chain Executive Conference in May of this year.

McDonald’s started in 1937 as a drive-in restaurant by two brothers, Richard and Maurice McDonald. Hamburgers were just ten cents. In 1948, after realizing that most of their profits came from hamburgers, they closed the drive-in and made it a self-serve operation. They set up their kitchen like an assembly line to ensure maximum efficiency. McDonald's continued to grow, change, and evolve, and in 1972 passed $1 billion in annual sales. In 1998 the company for the first time took a stake in another fast food chain, and purchased a minority interest in Chipotle Mexican Grill. That same month McDonald's announced they would overhaul its food preparation system in every restaurant, making a new “just-in-time” system that was aimed at delivering customers “fresher, hotter” food and special-order sandwiches. Since then it has continued to grow and expand, well known for setting up an unmatched supply chain in India.

McDonald’s primarily sells hamburgers, chicken sandwiches and chicken products, French fries, and soft drinks. However, their menu varies by country. It is not uncommon to find soup or McRice on the menu in countries in Asia, or even beer in Germany! McDonald’s is famous for their “Big Mac,” their signature hamburger consisting of two patties, three buns, cheese, pickles, onions, lettuce, and their “special sauce.” The Big Mac is so predominant around the world that the Economist introduced the “Big Mac Index” as an informal way to measure the purchasing power parity, or exchange rate, between two currencies.

McDonald's operation strategy is, “To provide unmatched consistency in operations in support of high product quality. This must be accomplished with adequate speed, low cost, and process innovation to accommodate changes in consumer tastes.” As we learned in class, order winners are those competitive characteristics that cause a firm's customers to choose that firm's goods and services over those of its competitors. Firms win a customer’s business by providing superior levels of performance on order winners. Order qualifiers are performance dimensions on which customers expect a minimum level of performance. Superior performance on an order qualifier will not by itself give a company a competitive advantage. Based on McDonald's operations strategy, both consistent and high-performance are considered to be order winners, while speed, cost, and innovation are considered to be order qualifiers.

McDonald's supply chain vision is made up of three E’s – Ethics, Environment, and Economics. They envision buying from suppliers that follow practices that ensure the health and safety of their employees, as well as the humane treatment of animals in their supply chain. They envision the design, manufacture, and distribution and use of their products to minimize life-cycle impacts on the environment. Their vision includes delivering affordable food, engaging in equitable trade practices, limiting the spread of agricultural diseases, and positively impacting the communities of their suppliers. The global governance structure, Sustainable Supply Steering Committee (SSSC), was created in 2007 to guide the creation and oversight of those issues related to sustainability. They are responsible for guiding McDonald's towards their vision by identifying global priorities and ensuring progress.

McDonald's entire supply...
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