Managing McDonald’s supply chain requires filling the needs of a corporation with more than 36,000 restaurants that serve 69 million customers daily in 100 countries along with meeting the company’s goal of never being out of an item a customer orders.
An effective supply chain management strategy is one reason the company evolved from its start in 1955 to a global institution. In addition to ensuring a staggering amount of items from beef to a restaurant’s operating supplies make it to each location, McDonald’s supply chain also must fill the company’s desire to customize menus according to preferences of local customers and source products locally.
McDonald’s supply chain ranked No. 2 in the 2015 Gartner Supply Chain Top 25 list, second only to Amazon. McDonald's has held the No. 2 spot for three years in a row.
Benefits of a Transparent Supply Chain
McDonald's has addressed recent challenges by making its supply chain more transparent. Documentary films such as "Fast Food Nation" and "Super Size Me" have taken the company to task, accusing it of promoting unhealthy eating habits as well as questioning its environmental practices.
McDonald's responded with campaigns calling attention to its supply chain. "Our Food/Your Questions" addressed consumer queries about McDonald's food. A series of pomotional films starring Grant Imahara, of the Discover Channel's "MythBusters" progran, traced the source of McDonald's products such as its McRib sandwich.
Increased transparancy scored McDonald's a major public relations victory in Europe. When several competing fast-food chains were found to have served horse meat labeled as beef, McDonald's was able to use its supply chain to prove its own beef was just that. The company's supply chain transparency was singled out for praise by the Elliott Review, the British government's official investigation into the horse meat scandal.
Serving Up a Successful Supply Chain Strategy
The company owns no factories or distribution centers so communication with suppliers is a necessity. The company constantly tracks everything from daily point-of-sale data for each item, restaurant stock levels and its marketing plans for promotional items or local menus to distribution center shipments and inventories. The company handles 16 major suppliers.
The operation requires knowing who is responsible for planning each task and carrying out those plans. The supply chain also needs to anticipate future demands and changes in sales volume.
McDonald’s Supply Chain Methodology
McDonald’s largest distributor, the Martin-Brower Company LLC, is tasked with delivering supplies to nearly all of the company’s 15,000 locations in North America. Each distribution center handles 250 to 700 restaurants, providing warehousing, transportation, and logistics services to each.
Most restaurants get two or three deliveries per week, with one delivery truck able to completely stock the establishment. Delivery times are coordinated to not interrupt breakfast or lunch service because customers may not pull in if they see the truck in the parking lot.
Drivers call in route to be sure the restaurant has workers there to take delivery when it arrives, reducing the time trucks are in the parking lot by up to 30%. The company also switched from roller and stand to delivery carts that move from the truck into the restaurant.
With its sprawling and complex supply chain, McDonald’s and Martin-Brower maintain plans to deal with disasters. Each summer, both companies plan for hurricanes and tornadoes and communicate emergency procedures.
Inventory is turned over every four days at a McDonald’s restaurant. The company can do this because of relationships they’ve formed with their suppliers, many of which still maintain the relationship that started with McDonald’s Corporation founder Ray Kroc.