Mcdonalds: Inventory Management Practice and Its Advantages

Topics: Hamburger, Business terms, Supply chain management terms Pages: 2 (833 words) Published: September 7, 2010
McDonalds: Inventory Management Practice and Its Advantages
By: Piyush Dewan
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 have ordered for it, with minimal delay between placing the order and getting it in hand. McDonalds doesn’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 wherein they 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. Hence customers 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 the finished product sitting in the inventory for as little as possible. This enables proper inventory management and reduces wastage while giving maximum satisfaction to the customer. The customer is made to wait for a very short period and this is a...
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