Business
McDonalds’ Supply Chain Profitability
McDonald’s is one of the leading when it comes to food service. The company has 35,000 branches that serve almost 70 million customers throughout 100 countries each day (aboutmcdonalds.com). Such success may not be possible without well-managed supply chain strategies.
The effectiveness of the company’s supply chain management (SCM) strategy is the reason that it has been in operation since 1955 as an international company. In fact, its SCM ranked #2 last year (usfranonline.com). Since McDonalds do not own any distribution centers or factories, it tracks each and every supply from it point of sale. Extensive monitoring of stocks is also being done every day. Thus, the company uses its communication strategies as necessary. Moreover, the company’s largest distributor is tasked to deliver the supplies to almost all of the company’s 15,000 branches just in North America alone. Each of the distribution centers caters between 250 and 700 restaurants in which logistics, warehousing, and transportation are also being served by each center. As part of the SCM process, every delivery to each restaurant is ensured to be always on time in which calamities are included in the plans. The inventory is also being done every 4 days for each restaurant to keep the smooth process of their SCM.
Companies that use SCM have significant cycle and cost reduction (referenceforbusiness.com). Therefore, it will increase the time and costs that will be spent through poor managed supplies delivery. With McDonalds’ case, SCM enables the company to eliminate supply shortage. Thus, the inventory turns will increase and at the same time, decrease the occurrence of out-of-stock incidents. The company’s SCM process reduces the major costs in delivery, logistics, and warehousing. Therefore, it will increase their profits in addition to the constant supply that are being delivered and sold to their customers.
References
McDonald's Corporation. (n.d.). McDonald's The Leading Global Food Service Retailer. Retrieved from http://www.aboutmcdonalds.com/mcd/our_company.html
Reference for Business. (n.d.). Supply Chain Management - strategy, organization, levels, system, model, company, business, competitiveness, system. Retrieved from http://www.referenceforbusiness.com/management/Str-Ti/Supply-Chain-Management.html
