Executive Summary
McDonald’s is one of the leading fast food brands worldwide. The first McDonald’s restaurant was opened in 1955 in Illinois, USA. The restaurant has since grown and expanded its operations to more than 119 countries in the world. The number of outlets has also grown to more than 31,000 serving an estimated 47 million customers (Yang et al. 2010).
McDonald’s serves a variety of fast food cuisines such as hamburger, chicken products, French fries, cream deserts and coffee, just to name but a few (Rtel and Härtel 2012, p.6). The company is today viewed as a symbol of globalization, as well as the American way of life.
Introduction
McDonald’s is the first ever first food restaurant whose origin dates back to 1955. The restaurant has since emerged as the restaurant of choice among many customers going by its presence in many countries and the number of customers it serves.
However, the success of the restaurant has mainly been attributed to its best operation practices and supply chain management, which has given it a competitive edge over its rivals in the industry. This paper seeks to explore ways in which McDonald’s operations and supply chain management has given it an edge over its competitors.
To begin with, McDonald’s is a restaurant synonymous with famous hamburgers and other cuisines such as chicken McNuggest, Egg McMuffin, Quarter Pounder, Big Mac, French Fries and the recently introduced McCafe coffee (Boyer and Verma 2009, p.507). Despite the fact that other restaurants have also come up that serves similar cuisines, McDonald’s has since remained the most preferred restaurant of choice for many.
This is because its food and drinks and prepared based on quality and value for money. In this regard, the company has always ensured that its food meet the quality standards expected by customers. McDonald’s has been able to achieve this by employing professional chefs that ensure that quality standards are maintained (Boyer and Verma 2009, p.507).
Additionally, McDonald’s always seek for customer feedback as regards the quality and the manner they have been served so that adjustments can be made where necessary. Moreover, McDonald’s ensures that its food meet the health standards, which is one of the pillars in which the restaurant operates.
McDonald’s also ensures that its customers are served on time and not kept waiting for too long, as is the case among some of its competitors. This is because the management of the restaurant ensures that all foods are available all the time, and no customer is turned away for lack of food. The waiters and chefs of the restaurant are also very customer-friendly something that has made many customers prefers the restaurant to others that serve similar cuisines (Li 2007, p.216).
The success of McDonald’s restaurant is also attributed to its supply chain, which is arguably the best. This is because, despite selling millions of items on a daily basis, McDonald’s has always ensured that all its customers get what they want. It is worth noting that all the supply chain of McDonald’s are outsourced since the company owns neither a factory nor a distribution center. In addition, McDonald’s owns about 30% of the restaurant while the rest are franchised (Raj 2013).
Singh 2012 reveals that McDonald’s has 16 major suppliers for its raw materials. However, the company has been able to ensure that all items are available based on its supply chain principle which states that no items need to be out of stock (Vitasek, Manrodt and Tillman 2012).
However, to ensure that this is achieved, the company has developed supply chain strategies, which ensures that enough stock is available all the time. The company has been doing this through the application of JDA Manugistics 7, as well as conducting regular analysis of its stock levels.
In this regard, McDonald’s has instituted a daily point-of-sale (POS) data at the product list, item level, and inventory level (Singh 2012). The POS is also used shipment so as to aid in forecasting. The application of this supply chain principle has ensured that McDonald’s do not run out of stock, which might affect the operation of its restaurants.
McDonald’s supply chain also focuses much on understanding how their supplies are brought to the restaurant. To ensure that this becomes a success, McDonald’s has maintained a close relationship with its suppliers by trusting them to the extent that the company finds no need of signing contracts with them (Saravanan 2011, p.4).
Report indicates that, despite the fact that McDonald’s currently operate about 14,000 restaurants in the U.S., it has not signed any contract with its suppliers to ensure that the restaurant gets what it orders from its suppliers every day (Saravanan 2011, p.4). Indeed this is a very good strategy since it has given McDonald’s a competitive edge over other companies operating in the same industry.
In addition, McDonald’s ensures that the supplier’s products are not completely knocked out as this will make it hard working with such suppliers again. However, McDonald’s has been striving to ensure that it builds a positive and lasting relationship based on ethics, environment, and economies (Cheema 2010).
Another striking feature of McDonald’s supply chain pertains to how the company decides the menu items on offer. For instance, McGrath (2011) noted that McDonald’s served Blueberry Banana Nut Oatmeal over the summer as a breakfast choice. This is despite the fact that oatmeal has not been on offer for quite some time.
However, before this menu item could be adopted by other restaurants, McDonald’s sourced enough suppliers to plant blueberries, which was to be used in the restaurant during the summer. The adoption of this approach gave it an edge over other restaurants that were in short of the blueberries (McGrath 2011).
McDonald’s, unlike many other restaurants, have developed a peculiar Cold Chain, which ensures the integrity of food products are maintained, as well as ensuring that freshness and nutritional value of products are retained (Relph 2012). In addition, McDonald’s has also set up e-procurement, which allows the company to purchase and sell its products online.
The e-procurement has also made it easy for McDonald’s to find buyers and suppliers of its products with ease. Saravanan (2011, p.6) observed that the Emac Digital launched in 2001has given McDonald’s franchises all over the world the opportunity to purchase everything they need for the effective running of the restaurants, be it uniforms or hamburgers.
Edwards, the chief executive of McDonald’s argues that the installation of e-procurement has enabled the restaurant cut down its operation cost by over 85% (Saravanan 2011, p.6). This has also given McDonald’s a competitive edge over its competitors in the fast food industry.
Conclusion
The world has experienced unprecedented upsurge of restaurants in recent time. The high growth has mainly been experienced in fast food industry that has flooded many cities across the world today. Nevertheless, McDonald’s, being the first ever fist food restaurant has maintained a competitive edge over the rest of the restaurants that have come after it.
This is attributable to its strong operation and supply chain management principles that have helped in building customer loyalty, as well as ensuring that the company maintains a close relationship with its suppliers. Based on these principles, it will be very hard for any restaurant to edge out McDonald’s in terms of operation and supply chain management.
References
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Boyer, K. K., & Verma, R 2009, Operations & supply chain management for the 21st century [with access code]. Cengage Learning, London.
Li, L. 2007, Supply Chain management: concepts, techniques, and practices enhancing the value through collaboration. World Scientific, Oxford.
McGrath, J. 2011 How McDonald’s Works. Web.
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Relph, K. 2012, McDonald’s Entry into India. Web.
Rtel, M., & Härtel, M. 2012, McDonald’s supply chain management. GRIN Verlag, New York, NY.
Saravanan P. 2011, Supply chain management & distribution management. Perishable products (Restaurant Chain). McDonald’s, SS10-12/FinanceIIPM, Chennai. Pp.1-41.
Singh, A. K. 2012, McDonalds: Supply Chain Management. Jaipuria Institute of Management, Lucknow. Pp.1-17.
Vitasek, K., Manrodt, K., & Tillman, J. 2012, Compete: McDonald’s Suppliers are Vested for Success. Web.
Yang, L. Y., Heng, Z., Bo, L., & Jie, L. 2010. Supply chain management of MacDonald. Web.