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McDonald's Sustainable Supply Chain Management

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by

Angel Lau

on 2 December 2012

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Transcript of McDonald's Sustainable Supply Chain Management

Supply Chain History Supplier Measurement Recommendations McDonald's Sustainable Supply Chain Management Purchasing Process
buyers
suppliers
common system
shared information 1. History of SCM
2. Supplier Measurement
3. Connect Customers
4. Challenges
5. Recommendations McDonald’s addressed consumer demand in a variety of ways: providing healthy options and slowing down expansion to concentrate on quality
Long understood that linking demand and supply enables the constant reduction of waste while enabling the constant reduction of wasted opportunity Outsourcing "In business for yourself,
but not by yourself.”
-Ray Kroc- 100% Outsourced Supply Chain
1990-Special teams arrived from the United States to India (effectiveness of logistics industry & the reliability of transport sector
1996-Launched first outlets in India Multi-Layered Supply Chain Tier 1- Direct Suppliers
- Process ingredients (e.g.potato products
to French fries,and hash browns
Tier 2- Growers and processors,poultry farms and
companies that manufacture coating systems
that coat the vegetable and chicken patties
- Forward ingredients to the Tier-I Cold Chain Multi-temperature vehicles,carry all 3 temperature products (Frozen, Chilled & Dry)
Truck containers were made with two side doors in addition to the rear door. The side doors are used to unload products without disturbing the products in the other temperature zones Pull Supply Chain Issues orders to the Distribution Center --> routes the order to the supplier
--> supplier produce it
The supplier maintains barely any extra stocks Forecasting A three-day to one-week forecast to the DC
-->The DC has a three-month rolling
forecast with the suppliers
Long-term Planning
--> 31Q system
--> 3 = 3 years McDonald's keep checking its plans
--> 1 = the detailed forecast of the next year
--> Q = the quarterly monitoring of these forecasts Lead Time Reduction Fixed locations of suppliers and restaurants and own fleet of dedicated trucks and cleaners
McDonalds’ truck = non-stop running of the fleet
Enables the supply chain team to work backwards to ensure timely distribution
Lead times for trucks and deliveries is predictable
--> Efficient inventory turn ratio EDI (Electronic Data Interchange)
Identify and select the supplier
Create and approve the purchasing acquisitions
Placing purchase orders
Request product information and prices
Business communication I'm lovin' it! McDonalds V.P.
needed “a healthy mechanism to ensure its
vision of a fully sustainable global supply chain”
3 questions proceeding with a new supplier framework Based on framework McDonalds decided the reviewing system focus on sustainability of the company’s top 5 sourced commodities
1. Beef
2. Pork
3. Chicken
4. Buns
5. Potatoes
The company will need to continuously put the processes together and be able to respond quickly and efficiently to opportunities arising from market or customer demands Piloted Test Scorecard content Scorecard showed that most suppliers reduced environmental impact
McDonalds sought to expand use of the audit system to all direct suppliers in its top markets Encouraging McDonalds to create its own
SQI (Supplier Quality Index)
focus on social performance rather than environmental impact Distributor Quality Management Process
Measures responsiveness & efficiency of the distribution process
Performs unannounced internal & third party audits for the distribution center Challenges McDonald's Potato Supplier, Frank Martinez: "Dream Come True" Green Highlights - LEED certified McDonald's restaurant in Chicago, IL. McDonald's Commercial- Healthy Meal With Mom Freshness and Quality
Higher expectations from consumers
Quality has an effect on sales and stock price
Supply Chain
Most difficult areas to monitor
80-90% of influence from a social responsibility standpoint
Leads to quality control issues Product Innovation
May need encouragement to its suppliers
Trust and mutual respect with the suppliers during the business transaction
Longer lead times on the production line
Higher costs to tailor the specific product Bull Whip Effect
Higher costs and supply chain issues
Fluctuations in demand at a client level
Chain waits for orders to be made
Build-to-Stock (BTS) De-Centralized Structure
Three-legged stool concept: Company, Franchises, and Suppliers
Responsiveness to issues vs. time
Solution: Divided organization into 5 additional regions, and is meant to help them react quicker to issues in a time-sensitive matter Connect Customers Nutrition: Recycling Program: Reduce waste and replace with reusable or recycled materials.
Estimated 300 million lbs of packaging reduced.
Estimated savings of 6 million per year Products & Connecting: Environmental Strategy Online nutrition information
Full transcript