McDonalds Case Study
McDonald’s Case Study - Mayuresh Deodhar
Background:
McDonald’s are one of the biggest corporations in the fast food industry. Ray Kroc, founder and first CEO of McDonald’s Corporation, opened the first store in Del Plaines, Illinois in 1955. From the beginning, his aim was to build an innovative supply chain by focusing strictly on securing consistent supply, excellent quality and volume pricing. Kroc terminated those suppliers that could not consistently provide high quality and dedicated service but he rewarded those that did with loyalty and volume. Together with over 5,900 independent owner/operators (who own and operate more than 73% of all McDonald’s restaurants), McDonald’s serves more than 50 million people daily in over 30,700 restaurants in 118 countries. Total restaurant sales in 2005 of $54.3 billion made it the largest foodservice retailer in the world.
McDonald’s Supply Chain & Complexities:
1. Decentralized Supply Chain:
McDonald’s serves more than 50 million people daily in over 30,700 restaurants in 118 countries. McDonald’s supply chain has been an integral part of its success. As described by Honorary Chairman and former CEO Fred, operations in McDonald’s is a three-legged stool, with the employees, owner/operators, and suppliers as the three legs where all three are essential and have to be strong and balanced to be successful. A global supply chain of this size comes with not only significant purchasing power but also tremendous management complexity. McDonald’s have implemented a highly decentralized structure to manage the huge global supply chain efficiently. This decentralization is guided by a concept recently articulated by McDonald’s as “freedom within a framework.”
Handling such a vast global supply chain according to the same global principles adds as a major factor of the complexity.
Each AOW team oversees AOW standards and policies built at global level and set standards accordingly in their respective regions to
Background:
McDonald’s are one of the biggest corporations in the fast food industry. Ray Kroc, founder and first CEO of McDonald’s Corporation, opened the first store in Del Plaines, Illinois in 1955. From the beginning, his aim was to build an innovative supply chain by focusing strictly on securing consistent supply, excellent quality and volume pricing. Kroc terminated those suppliers that could not consistently provide high quality and dedicated service but he rewarded those that did with loyalty and volume. Together with over 5,900 independent owner/operators (who own and operate more than 73% of all McDonald’s restaurants), McDonald’s serves more than 50 million people daily in over 30,700 restaurants in 118 countries. Total restaurant sales in 2005 of $54.3 billion made it the largest foodservice retailer in the world.
McDonald’s Supply Chain & Complexities:
1. Decentralized Supply Chain:
McDonald’s serves more than 50 million people daily in over 30,700 restaurants in 118 countries. McDonald’s supply chain has been an integral part of its success. As described by Honorary Chairman and former CEO Fred, operations in McDonald’s is a three-legged stool, with the employees, owner/operators, and suppliers as the three legs where all three are essential and have to be strong and balanced to be successful. A global supply chain of this size comes with not only significant purchasing power but also tremendous management complexity. McDonald’s have implemented a highly decentralized structure to manage the huge global supply chain efficiently. This decentralization is guided by a concept recently articulated by McDonald’s as “freedom within a framework.”
Handling such a vast global supply chain according to the same global principles adds as a major factor of the complexity.
Each AOW team oversees AOW standards and policies built at global level and set standards accordingly in their respective regions to
References: 1. McDonald 's Corporation: Managing a Sustainable Supply Chain, Case pack, Harvard Business School 2. Supply+Chain+Management+A+Logistics+Perspective+9e 3. McDonald’s online report (http://www.mcdonalds.co.uk/ukhome/Ourworld/Environment.html) 4. McDonald’s Corporate responsibility and sustainability report https://mcdonalds.com.au/sites/mcdonalds.com.au/files/CH5_McDonalds_CR%26S_Environment.pdf 5. Youtube (McDonald’s corporate social responsibility) https://www.youtube.com/watch?v=S_bgP3ASUM4