The supply chain of Mcdonald's

1. Contents
Introduction3
History3
McDonald’sinIndia4
SupplyChainof McDonald’s5
Introduction5
IncorporatingChill Zones –The McDonaldsColdChain6
Validationof McDonaldsColdChain8
McDonaldsSuppliersandDistributors10
Outsourcingof Ingredients12
McDonald's SupplyChain –Challenges19
Conclusion20
References21
3
Introduction
McDonald's isthe leadingglobal foodservice retailerwithmore than32,000 local restaurants
servingmore than 60 millionpeople in117 countries eachday.More than75% of
McDonald's restaurantsworldwide are ownedandoperatedbyindependentlocal menand
women.
McDonald's predominantlysellshamburgers,varioustypesof chickensandwichesand
products,Frenchfries,softdrinks,breakfast items,anddesserts.Inmostmarkets,
McDonald's offerssaladsandvegetarianitems,wrapsandotherlocalizedfare.Thislocal
deviationfromthe standardmenuisacharacteristicfor whichthe chainisparticularly
known,andone whichisemployedeithertoabide byregional foodtaboos(suchasthe
religiousprohibitionof beefconsumptioninIndia) ortomake available foodswithwhichthe
regional marketismore familiar(suchasthe sale of McRice inIndonesia).
History

2. The businessbeganin 1940, witha restaurantopenedbysiblingsDickandMac McDonald in
San Bernardino,California.Theirintroductionof the "SpeedyService System"in1948
establishedthe principlesof the modernfast-foodrestaurant.The presentcorporationdates its
foundingtothe openingof afranchisedrestaurantbyRay Kroc,in DesPlaines,Illinoison
April 15, 1955, the ninthMcDonald's restaurantoverall.Kroclaterpurchasedthe McDonald
brothers' equityinthe companyandleditsworldwide expansion.
Withthe successful expansionof McDonald'sintomany international markets,the company
has become asymbol of globalization.Itsprominence hasalsomade ita frequenttopicof
publicdebatesaboutobesity,corporate ethicsandconsumerresponsibility.
4
McDonald’sinIndia
McDonald’senteredIndiain1996 throughjointventureswithtwoIndianentities,Hardcastle
RestaurantsPvt.Ltd.and ConnaughtPlazaRestaurantsPvt.Ltd.Hardcastle RestaurantsPvt.
Ltd. ownsand operatesMcDonald’srestaurantsinwesternIndiathrougha50-50 joint
venture withthe parentcompany.Througha similarpartnership,ConnaughtPlaza
RestaurantsPvt.Ltd.ownsand operatesMcDonald’soperationsinnorthernIndia.The
companyoperatesabout160 restaurantsinIndia.
McDonald's Indiahasdevelopedaspecial menuwithvegetarianselectionstosuitIndian
tastesand preferences.McDonald'sdoesnotofferanybeef orpork itemsinIndia.Onlythe
freshestchicken,fishandvegetable productsfindtheirwayintoourIndianrestaurants.
In addition,theyhave re-formulatedsome of theirproductsusingspicesfavoredbyIndians.
Amongthese are McVeggie™ burger,McAlooTikki™ burger,Veg.PizzaMcPuff™ and
ChickenMcGrill™ burger.Theyhave alsocreatedegglesssandwichsaucesforthe
vegetariancustomers.EventheirsoftservesandMcShakes™ are egg-less,offeringalarger
varietytothe vegetarianconsumers.
McDonald's India'slocal suppliersprovidethemwiththe highestquality,freshest
ingredients.
Complete adherence tothe IndianGovernmentregulationsonfood,healthandhygieneis
ensured,while maintainingtheirownrecognizedinternationalstandards.Fast,friendly

3. service - the hallmarkof McDonald's restaurantsthe worldoveris the mantra theyabide by.
Stringentcleaningstandardsensure thatall tables,chairs,highchairsandtraysare sanitized
several timeseachhour.Suchmeticulousattentiontocleanlinessextendsbeyondthe lobby
and kitchentoeventhe pavementandimmediate areas outside the restaurant.
5
SupplyChainof McDonald’s
Introduction
US-basedfastfoodgiant,McDonald's successin Indiahadbeenbuiltonfourpillars:
Intense competitionanddemands forwidermenus,drive-throughandsit-downmeals-
encouragedthe fastfoodgiantto customize productvarietywithouthamperingthe efficacy
of itssupplychain.
Aroundthe world(includingIndia),approximately85% of McDonald's restaurantswere
ownedandoperatedbyindependentfranchisees.Yet,McDonald'swas able torun the show
seamlesslybyoutsourcingnine differentingredientsusedinmakingaburgerfromover 38
suppliersspreadall overIndiathroughamassive value chain.
McDonaldshad beenworkingonitssupplychainevenbefore itopeneditsfirstjointinthe
country.Between1992 and 1996, whenMcDonald's openeditsfirstoutletinIndia,itworked
freneticallytoputthe perfectsupplychaininplace.ItdevelopeditsIndianpartnersinsucha
mannerthat theystayedwiththe companyfromthe beginning.The successof McDonalds
Indiawasachievedbysourcingall itsrequiredproductsfromwithinthe country.Toensure
this,McDonaldsdevelopedlocal businesses,whichcansupply ithighestqualityproducts.
Today,McDonalds Indiaworkswith38 differentsuppliersonalongterm basisandseveral
otherstand alone restaurantsforitsvariousotherrequirements.Ittrainedthe local farmersto
produce lettucesorpotatoestospecificationsandworkedwithavendortogetthe perfect

4. 6
coldchain inplace.Andexplainedtothe supplierspreciselywhyonlyone particularsize of
peaswas acceptable (if theywere toolarge,theywouldpopoutof the patty and getburnt).
These efforts paidoff inthe formof jointventuresbetweenMcDonald'sIndia(a100%
wholly-ownedsubsidiaryof McDonald's.McDonald’sdistributioncentresinIndiacame in
the followingorder:NoidaandKalamboli (Mumbai) in1996, Bangalore in2004, andin
Kolkatain2007.
McDonald's entereditsfirstdistributionpartnershipagreementwithRadhaKrishna
Foodland,apart of the Radha KrishnaGroupengagedinfood-relatedservice businesses.The
associationgoesbackto July1993, whenitstudiedthe nuancesof McDonald's operations
and requirementsforthe Indianmarket.Asdistributioncenters,the companywasresponsible
for procurement,the qualityinspectionprogramme,storage,inventorymanagement,
deliveriestothe restaurantsanddata collection, recordingandreporting.Value-added
serviceslike shreddingof lettuce,re-packingof promotionalitemscontinuedsince thenatthe
centersplayingavital role inmaintainingthe integrityof the productsthroughoutthe entire
'cold chain'.
ColdChainwasone of the unique conceptsof McDonaldssupplychaininIndia,onwhichit
had spentmore thansix yearsto get the systemintoplace.Thissystembroughtabouta
veritable revolution,immenselybenefitingthe farmersatone endandenablingcustomersat
retail countersgetthe highestqualityfoodproducts,absolutelyfreshandatgreat value.
Throughits unique coldchain,McDonaldshasbeenable tobothcut downonits operational
wastage,aswell asmaintainthe freshnessandnutritional valueof raw and processedfood
products.Thishas involvedprocurement,warehousing,transportationandretailingof
perishable foodproducts,all undercontrolledtemperatures.
IncorporatingChill Zones –The McDonaldsColdChain
7
A coldchainis a temperature-controlledsupplychain.Anunbrokencoldchainisan

5. uninterruptedseriesof storage anddistributionactivitieswhichmaintainagiventemperature
range.It isusedhelpextendandensure the shelflifeof productssuchas freshagricultural
produce,processedfoods,photographicfilm, chemicalsandpharmaceutical drugs.
Settingupextensive coldchaindistributionsystemformsthe lifeline of anyfastfood
business.Inthisregard,McDonald'sincorporatedstate-of- the-artfoodprocessing technology
alongwithitsinternational supplierstopioneeringIndianentrepreneurs,whoare todayan
integral partof the coldchain.
McDonald's findingthe factorof coldroom beingvital ensuredthatevenbefore vegetable
fromfarms entersthe refrigeratedzones,theyare lockedinapre-coolingroomtoremove
fieldheat.Vegetablesare placedinthe pre-coolingroomwithinhalf anhourof harvesting
where rapidcoolingdecreasesthe fieldtemperature of vegetablesto2ºC within90 minutes.
Thena large coldroom (arefrigeratedvan) isusedfortransportationtothe distribution
centers.Inthe van, the temperature andrelativehumidityof cropismaintainedat1-4ºC and
95 per cent,respectivelyandthe flavorsandfreshnessare lockedat -35°C. McDonald’s
restaurantsstore productsto be usedon a dailybasis,withinatemperature range of –18ºC to
4ºC. About52% of the foodproductsneedtobe storedunderthese conditionsbefore theyare
used.
8
Validationof McDonaldsColdChain
A coldchain can be managedbya qualitymanagementsystem.Itshouldbe analyzed,
measured,controlled,documented,andvalidated.The overall approachtovalidationof a
distributionprocessisbybuildingmore andmore qualificationsontopof each otherto getto
a validatedstate.Thisisdone byexecutingaComponentQualificationonthe packaging
components.Next,anOperational Qualificationthatdemonstratesthe processperformsatthe
operational extremes.The final piece isthe PerformanceQualificationthat demonstratesthat
whathappensinthe real worldis withinthe limitsof whatwasdemonstratedinthe
Operational Qualificationlimits.
All suppliersadhere toIndiangovernmentregulationsonfood,healthandhygiene while
continuouslymaintainingMcDonald'srecognizedstandards.Asthe ingredientsmove from

6. farmsto processingplantstothe restaurant,McDonald's QualityInspectionProgramme
(QIP) carriesoutqualitychecksat over20 differentpointsinthe ColdChainsystem.
9
10
Ingredients Supplier
Cheese Dynamix DairyIndustriesLtd.,Pune
DehydratedonionsJainFoods,Jalgaon
Iceberglettuce TrikayaAgriculture,Pune
ChickenpattyVistaFoods,Taloja
Veg.Patty,Veg.nuggets,
Pineapple/Apple pieKitranFoods,Taloja
Chicken(dressed) Riverdale,Talegaon
BunsCremicaIndustries,Phillaur
Egglessmayonnaise QuakerCremicaPvt.Ltd.,Phillaur
Sesame seedsGhaziabad
Iceberglettuce MeenaAgritech,Delhi
FishfilletpattiesAmalgamFoodsLtd.,Kochi.
Iceberglettuce OotyFarms&Orchards, Ooty
Vegetablesforthe patties
FinnsFrozenFoods&JainFoods(Nasik,
Jalgaon)
Mutton and muttonpattiesAl Kabeer,Hyderabad
Hazard AnalysisCritical Control Point(HACCP)isasystematicapproachto foodsafetythat
emphasizespreventionwithin McDonalds’suppliers'facilityandrestaurantsratherthan

7. detectionthroughinspectionof illnessorpresence of microbiological data.BasedonHACCP
guidelines,control pointsandcritical control pointsforall McDonald's majorfoodprocessing
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plantsand restaurantsinIndiahave beenidentified.The limitshave beenestablishedfor
those followedbymonitoring,recordingandcorrectinganydeviations.The HACCP
verificationisdone atleasttwice inayearand certified.
McDonaldsSuppliersandDistributors
Suppliersare proclaimedtobe the backbone of any goodbusinessastheyare the individual
unitsthat buildsupplychain.Onthemdependsthe healthof the overallbusinesscycle.
McDonald's sourcedingredientsfromall partsof India.Some of these are tabulatedbelow.
In 1996, whenMcDonald's enteredIndia,itwaslookingfora distributionagentwhowould
act as a hubfor all itsvendors.Mumbai-basedRadhakrishnaFoodlandPrivateLimited
(RFPL) waschosenfor the jobas it wasalreadya distributorforitssisterconcern,
RadhakrishnaHospitalityServices,acateringunitsupplyingtooffshore institutions.The
iceberglettuce fromOoty,muttonpattiesfromHyderabadandsesame seedbunsfromPunjab
were all deliveredtoRFPL'sdistributioncentre (coldstorage) initsrefrigeratedvans.
RFPL storedthe productsincontrolledconditionsinMumbai andNew Delhi andsupplied
themto McDonald's outletsona dailybasis.Bytransportingthe semi-finishedproductsata
particulartemperature,the coldchainensuredfreshnessandadequate moisture contentof the
food.The speciallydesignedtrucksmaintainedthe temperature inthe storage chamber
throughoutthe journey.Driverswere instructedspecificallynottoswitchoff the chilling
systemtosave electricity,eveninthe eventof trafficjam.
FJ Walkerof Australia,aMcDonald's partner,helpedRFPLbuildacoldstorage inThane.
Anothercoldstorage withequipmentworthaboutRs.75 lakhwasbuiltinDelhi in1998.
RFPL alsohandledMcDonald'sinventorymanagement.Ithadto anticipate future
requirementsandcontingenciesandplanforoptimumutilizationof the refrigeratedvehicles.
MeetingMcDonald's "cold,clean,on-time"deliverystandardswasnoeasytask
considering

8. that there were 30 supplierssituatedall overthe country.AFLLogisticsLtd(ALL),a joint
venture betweenandCoughlinof the US,and RFPL wasresponsible forensuringthese
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standards.Coughlin'staskwasto make sure that McDonald's had the properamountof
suppliesandmaterialsateachrestaurant.The challenge wasthe physical movementof
material andinventorycontrol inacountry withbadroads and basicinfrastructure
bottlenecks.
To meetMcDonald's high standards,Coughlinensuredthatquality,temperature and
packagingrequirementswere met.Atthe same time,unusedcapacityinthe vehicleswas
usedto transportgoodsfrom othervendors.ThishelpedCoughlindeliverthe lowestcost
withthe highestquality.RFPLalsohandledin-citydistributiontorestaurants.
The restaurantswere notsupposedtostock more thanthree days of inventory,the time limit
for distributioncentresorwarehouseswasastringent14 days to minimizecostsandoptimize
qualitycontrol.Thisrequiredround-the- clockmonitoringof pick-upsandtruckmovements.
Since mostof the itemswere perishable,McDonald'sstandardscoveredthe entire delivery
schedules.
For in-citydelivery,the truckwasmonitoredfromthe time itleft the distributioncentre till
the time itreachedthe restaurant.Notjust that,the time takeninoffloadingwasnotedtoo.
The products were transportedfromthe suppliers'endtothe distributioncentre in
refrigerated
and insulatedvehiclesthrough asystemof consolidationtoensure betterutilizationof vehicle
capacity.While the temperature inthe reefersrangedfrom -18º to -22º, that inchilledtrucks
rangedfrom1 to 4º
RFPL wasalso responsible forcleanliness(includingthe personal hygiene of the drivers),
and the packingand temperature control of the food(digitalprobeswere insertedintoitems
selectedatrandom) ittransported.There were alsodatalogstotrack the movementof each
batch. Thismeantthat inthe case of a complaintfrom a restaurant,the batchcouldbe
identified,isolated,anddumped.Toperfectthe system, the RFPLteamtravelledtoanumber
of countries,includingTurkey,the Philippines,Australia,andthe US.AFLL alsofollowed
similarlydetailedprocedures.

9. 13
McDonald's insistedonstandardizationbyitssuppliers.VistaProcessedFoods&Kitran
Foods(Vista&KitranFoods),whichsuppliedthe pies,nuggets,vegetable,andchicken
patties,commissionedanewfacilityforthe purpose in1996, complete withinsulatedpanels,
temperature control,andchill rooms.McDonald'salsoassisteditssupplierswith
improvements.Forinstance,ithelpedTrikayaAgriculture developavarietyof iceberg
lettuces(whichisawintercrop) thatwouldgrow all year round.Andfor qualitycontrol,
Trikaya's post-harvestfacilitiesincludedacoldchainconsistingof a pre-coolingroomto
remove fieldheat,alarge coldroom,anda refrigeratedvanwithhumiditycontrols.
Detailsof the suppliersandhowtheyoperatedtomeetMcDonald’sstandardsare giveninthe
followingpages.
Outsourcingof Ingredients
The followingsuppliers,whobuildupthe majorsupplychainof McDonalds,reveal how the
ColdChain worksand contributestowardsthe efficiencyof McDonalds.
Dynamix DairyIndustries(Supplierof Cheese)
Dynamix hasbroughtimmense benefitstofarmersinBaramati,Maharashtra bysettingup
a network of milkcollectioncentresequippedwithbulkcoolers.Easyaccessibilityhas
enabledfarmersaugmenttheirincome byfindinganew marketforsurplusmilk.The factory
has:
casein&wheyproteinandhumanizedbabyfood.
Development
From farmtwo degreesCelsiusin90minutesisthe firststepto quality.Forexample,the Rs
262-crore Dynamix DairyIndustries,locatedinBaramati inPune districtof Maharashtra,
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manufacturescheese slicesforMcDonald’sat10 metrictonnespermonth.Dynamix has

10. helpedsetup15 bulkcoolingcentresthroughoutthe districtfromwhichitpurchasesmilk.
Each coolingcentre,whichisequippedwithmodernmeasuringandtestingequipmentanda
large coolingtank,isnot more than a few kilometresawayfromlocal dairyfarms.A farmer
can delivermilkeventwice adayonhis bicycle andgeta printedreceiptonthe spot,which
alsoliststhe qualityof the milksuppliedby himasperfat content,colourand solidscontent.
If the milkissub-standardoradulterated,itisrejectedonthe spot.A batch of milkcan vary
fromone litre to 10 litres,ormore.Each batch is mixedinone large stainlesssteel coolerand
chilledimmediatelytotwodegreesCelsiustostopbacterial growthandpreserve freshness.
From thispointonwards,until justbeforethe burgerisactuallyservedinaMcDonald’s
restauranthundredsof kilometresaway,the temperature isneverallowedtoincrease. When
the refrigeratedmilkarrivesatthe Dynamix plantatBaramati,the milkineverysingle tanker
isthoroughlytestedandrejectedif foundsub-standard,adulteratedorcontaminated.The
sophisticatedtestinglabcancheckfat contentwithanaccuracy of 0.1 per cent.It can even
detectminute tracesof pesticidesorantibioticsadministeredtocows.Thisinstantfeedback
and the rejectionof the entire tanker-loadforcesfarmerstofollow the bestpracticesinterms
of animal husbandry,use properfeeds,cutdownonthe indiscriminate use of pesticidesand
animal medicinesandcompletelystopeventhe slightestattemptsatadulteration.
TrikayaAgriculture (Supplierof IcebergLettuce)
Implementationof advancedagricultural practiceshasenabledTrikayatosuccessfullygrow
specialtycropslike iceberglettuce,specialherbs andmanyoriental vegetables.Farm
infrastructure features:
gationinraisedfarmbedswithfertilizermixingplant.
-coolingroomanda large cold roomfor postharvesthandling.
15
TrikayaAgriculture,amajorsupplierof iceberglettucetoMcDonald's India,is one such
enterprise thatisanintrinsicpartof the coldchain.Exposure tobetteragricultural

11. managementpracticesandsharingof advancedagricultural technologybyMcDonald'shas
made TrikayaAgriculture extremelyconsciousof deliveringitsproductswithutmostcare
and quality.Initiallylettucecouldonlybe grownduringthe wintermonthsbutwith
McDonald's expertise inthe areaof agriculture,TrikayaFarmsinTalegaon,Maharashtra,is
nowable to grow thiscrop all the yearround.McDonald's has providedassistanceinthe
selectionof highqualityseeds,exposedthe farmstoadvanceddrip-irrigationtechnology,and
helpeddeveloparefrigeratedtransportationsystemallowingasmall agri-businessin
Maharashtra to provide fresh,high-qualitylettuce toMcDonald'surban restaurantlocations
thousandsof kilometresaway.PostharvestfacilitiesatTrikayainclude acoldchain
consistingof a pre-coolingroomtoremove fieldheat,alarge coldroomand a refrigerated
van fortransportationwhere the temperatureandthe relative humidityof the cropis
maintainedbetween1ºC and 4º C and 95% respectively.Vegetablesare movedintothe pre-
coolingroomwithinhalf anhourof harvesting.The pre-coolingroomensuresrapidvacuum
coolingto2º C within90 minutes.The packhouse,pre-coolingandcoldroomare locatedat
the farms itself,ensuringnodelaybetweenharvesting,pre-cooling,packagingandcold
storage.Withthiscold chaininfrastructure inplace,TrikayaAgriculturehasalso a planto
exportthishighvalue producttootherinternational markets,especiallytoMcDonald's
Middle Eastand AsiaPacificoperations.McDonald'sexpertise inpackaging,handlingand
long-distance transportationhashelpedTrikayatodotrial shipmentstothe Gulf successfully.
In additiontoexport,McDonald'sassistance hasenabledTrikayaAgriculturetosupplythis
crop to a numberof star-ratedhotels,clubs,flightkitchensandoffshore cateringcompanies
all overIndia.
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VistaProcessedFoodsPvt.Ltd.(Supplierof ChickenandVegetable range of products
includingFruitPies)
A jointventure withOSIIndustriesInc.,USA,McDonald'sIndiaPvt.Ltd. and Vista
ProcessedFoodsPvt.Ltd.,producesarange of frozenchickenandvegetable foods.A world
classinfrastructure attheirplantat Taloja,Maharashtra, has:
-35 Degree Celsiusto

12. retaintotal freshness.
International standards,proceduresandsupportservices.
VistaProcessedFoodsPvt.Ltd.,McDonald's suppliersforthe chickenandvegetable range of
products,isanotherimportantplayerinthiscoldchain.Technical andfinancial support
extendedby OSIIndustriesInc.,USA andMcDonald’sIndiaPrivate Limitedhave enabled
Vistato setup world-classinfrastructure andsupportservices.Thisincludeshi-tech
refrigerationplantsformanufactureof frozenfoodattemperaturesaslow as - 35° C. Thisis
vital to ensure thatthe frozenfoodretainsitfreshnessforalongtime andthe 'cold chain'
is
maintained.The frozenproductisimmediatelymovedtocoldstorage rooms.Withcontinued
assistance fromitsinternationalpartners,Vistahasinstalledhi-techequipmentforboththe
chickenandvegetable processinglines,whichreflectthe latestfoodprocessingtechnology
(de-boning,blending,forming,coating,fryingandfreezing).Forthe vegetablerange,the
latestvegetablemixersandblendersare inoperation.Also,keepingcultural sensitivitiesin
mind,bothprocessinglinesare absolutelysegregatedandutmostcare istakento ensure that
the vegetable productsdonotmix withthe non-vegetarianproducts.Now, atVista,avery
wide range of frozenandnutritiouschickenandvegetable productsisavailable.Ongoing
R&D,both locallyandinthe parentcompanies,worktowardsinnovationintaste,nutritional
value andconvenience.These products,besidesbeing suppliedtoMcDonald's,are also
offeredtoinstitutionslike star-ratedhotels,hospitals,projectsites,caterers,corporate
canteens,schoolsandcolleges,restaurants,foodserviceestablishmentsandcoffee shops.
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RadhakrishnaFoodland(DistributionCentresforDelhi andMumbai)
An integral partof the RadhakrishnaGroup,Foodlandspecializesinhandlinglarge volumes,
providingthe entire range of servicesincludingprocurement,qualityinspection,storage,
inventorymanagement,deliveries,datacollection,recordingandreporting.Salientstrengths
are :
-stopshopforall distributionmanagementservices.

13. upto-22 Degree Celsius.
esscontrol forminimumdistributioncost.
McDonald's local supplynetworksthroughRadhakrishnaFoodland,whichoperates
distributioncentres(DCs) forMcDonald'srestaurantsinMumbai andDelhi.The DCs have
focusedall theirresourcestomeetMcDonald'sexpectationof 'Cold,Clean,andOn-Time
Delivery'andplaysa veryvital role inmaintainingthe integrityof the productsthroughout
the entire 'cold chain'. RangingfromliquidproductscomingfromPunjabtolettuce from
Pune,the DC receivesitemsfromdifferentpartsof the country.These itemsare storedin
roomswithdifferenttemperaturezonesandare finallydispatchedtothe McDonald's
restaurants onthe basisof theirrequirements.The companyhasbothcoldand drystorage
facilitieswithcapabilitytostore productsupto -22º C as well asdeliverytruckstotransport
productsat temperaturesrangingfromroomtemperature tofrozenstate.
AmritFood(Supplierof longlifeUHTMilk andMilk ProductsforFrozenDesserts)
AmritFood,an ISO9000 company,manufactureswidelypopularbrands –Gagan Milk and
NandanGhee at itsfactory at Ghaziabad,Uttar Pradesh.
The factory has:
-of- the-artfullyautomaticmachineryrequiringnohumancontact withproduct,
for total hygiene.
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Temperature) processedmilkandmilkproducts.
lyequippedqualitycontrol laboratory.
ThisrelationshipbetweenMcDonald'sanditsIndiansuppliersismutuallybeneficial.As
McDonald's expandsinIndia,the suppliergetsthe opportunitytoexpandhisbusiness,have
access to the latestinfoodtechnology,exposure toadvancedagricultural practicesandthe
abilitytogrowor to export.There are many casesof local suppliersoperatingoutof small
townswhohave benefitedfromtheirassociationwithMcDonald'sIndia.
McDonald's convinceditssupplierstosetuptwoseparate productionlinesforchickenand
vegetable patties,keepinginthe mindthe linkbetweenfoodandreligioninIndia.Thiswasin

14. sharp contrastwithitsglobal practice,where McDonald'ssuppliersproducedall typesof
pattiesfromthe same line.These twoproductionlineswerehousedintwodifferentrooms
and the onlywaya workercouldcrossoverfrom one line tothe otherwas bypassingthrough
the showerroom.Thiseliminatedall chancesof contamination.However,fromasupplier's
pointof view,more linesmeantareductionincapacityutilisationandhighcostof
production.Tominimise costs,McDonald'shelpedVista&KitranFoodsproduce
derivatives
of chickenandvegetable nuggets(notbased onMcDonald'srecipe) forIndianhotelsand
restaurantsandtherebyreachnewmarkets.Vista&Kitran's highermarginandhigher
capacityutilizationfornon-McDonald'sproductshelpeditremaincostcompetitive.
McDonald's philosophyhadbeen'one world,one burger'i.e.the McDonald's
burgershould
be consistentintermsof cost and qualitythroughoutthe world.Toensure this,all of
McDonald's suppliersfollowedthe internationallyacclaimedHACCPsystems whereinboth
inputsandfinishedgoodswere subjectedtochemical andmicrobiological tests.
Thiskeptfoodfreshand free fromcontamination.Apartfromthis,the entire productionline
was automatedusingsophisticatedtechnology,barringonlythe final compilationof the bun,
cheese andpatty - whichwasdone by hand.
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20
McDonald's SupplyChain –Challenges
- Over65 % temperature controlled
– 1000 kms
month- Over1000
– Operationscritical client

15. –above 97 %
–above 99 %
21
The most importantchallenge inthe supplychainisitsintegration.McDonaldhasmanaged
it ina verydiligentway.
Conclusion
As a resultonthe efficientsupplychain,grossmarginimprovedbymore than15%. The reductionin
raw material wastage wasachievedtothe extentof 30%.So didthe average inventory.The store
transfersandthe order time alsoreducedtohalf.Hence we see thatoptimizingthe supplychaincan
increase the efficiencyof acompanyinmultiple ways.
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