JAIPURIA INSTITUTE OF MANAGEMENT, LUCKNOW

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1 JAIPURIA INSTITUTE OF MANAGEMENT, LUCKNOW McDonalds: Supply Chain Management Submitted To: Mr. Ashish Trivedi Submitted By: Ashutosh Kumar Singh JIML Page 1 of 17

2 ACKNOWLEDGEMENT sthe satisfaction and euphoria that accompany the successful completion of any work would be incomplete unless we mention some of the persons, as an expression of gratitude, which made it possible, whose constant guidance and encouragement served as a beckon light and crowned the efforts and success. We take this opportunity of expressing our gratitude to Mr. Ashish Trivedi, who has always been of immense help during the making of this project, which helped us a great deal in enhancing our knowledge by virtue of practical application. Her guidance and support carried us all through the preparation of this project. We regret any inadvertent omissions. Page 2 of 17

3 TABLE OF CONTENTS Introduction.01 It starts with 01 Some important facts 02 Indian markets 02 Supply chain is...03 Supply chain in mc donalds india 04 Mc donalds distribution centre.04 Concepts of cold chain..05 Steps involved in cold chain concept..06 List of suppliers and how cold chain concept works.07 Different items are sourced from. 09 Three logistical drivers..10 Three cross functional drivers..10 Pull/push process 11 Supply chain process.12 In lucknow we are at...13 Page 3 of 17

4 INTRODUCTION McDONALDS IS. McDonalds is a name which is today synonymous with the fast food. McDonald's is a fast food chain with restaurants all over the world with headquarters in oak brooks, Illinois, US. It serves burgers and other fast food customized to local tastes. Its philosophy has been 'one world, one burger;' which meant that the burger must be consistent in terms of cost and quality. To meet such high standards, it was essential to have an excellent supply chain management system. In India, McDonald's had a very well orchestrated supply chain, called the 'Cold Chain'. IT STARTS WITH. In 1954, Ray Kroc, 52, distributor of milk shake maker- multimixer, went to see Mcdonalds brothers hamburger stall in California. With an opportunity, he thought to open several of such restaurants so as to sell his multimixer milk shake machine. Page 4 of 17

5 SOME IMPORTANT FACTS In year 2004, mcdonalds was the largest marketer of fast food in the world restaurants. 47 million customers served daily th most valueable brand ranked amoung top 100 firms in the world. INDIAN MARKET It s a huge sub-continent. India is 4 times more populated than the US. India has 300 million strong middle class people. India is one of the largest economy. Incorporated in 1993, MIPL is Mcdonalds india s wholly owned subsidery. In India, Mcdonalds open its first restaurant in vasant vihar, South Delhi. 50:50 joint venture with- (1) North- Connaught plaza restaurants( owned by Mr. Vikram Bakshi) and (2) West- Hardcastle restaurants ( owned by Mr. Amit Jatia). World map showing the presence of McDonalds and the year when it started. In India it started in year Page 5 of 17

A SUPPLY CHAIN IS A supply chain is a system of organizations, people, technology, activities, information and resources involved in moving a product or service from supplier to customer.

6 A SUPPLY CHAIN IS A supply chain is a system of organizations, people, technology, activities, information and resources involved in moving a product or service from supplier to customer. Supply chain activities transform natural resources, raw materials and components into a finished product that is delivered to the end customer. Supply Chain Management involves the planning and management of all activities involved in sourcing and procurement, conversion, and all logistics management activities. Importantly, it also includes coordination and collaboration with channel partners, which can be suppliers, intermediaries, and customers. Supply chain management integrates supply and demand management within and across companies. Supply Chain Management is an integrating function with primary responsibility for linking major business functions and business processes within and across companies into a cohesive and high-performing business model. It includes all of the logistics management activities noted above, as well as manufacturing operations, and it drives coordination of processes and activities with and across marketing, sales, product design, finance and information technology. Page 6 of 17

The primary objective of supply chain management is to fulfill customer demands through the most efficient use of resources, including distribution capacity, inventory and labor.

7 The primary objective of supply chain management is to fulfill customer demands through the most efficient use of resources, including distribution capacity, inventory and labor. SUPPLY CHAIN IN MC DONALDS INDIA. In a fast food business, supply chain is of highest importance. It helps in minimizing cost, cut down the delivery time, improve the profits and at the same time maintain the highest standards. The importance of supply chain can be understood by the fact that before setting up their first restaurant in India, mc donalds infused around Rs. 400 crores in the supply and delivery chain. Mc donalds india source all its products and its raw materials from India only. Mc donalds develops local businesses that supply them the products and that too of highest standards. Today mc donalds have around 38 suppliers and that too on the long term basis. MC DONALDS DISTRIBUTION CENTRES Noida and kalamboli(mumbai) Bengaluru Kolkata st distribution agreement was done by Radhakrishana group, a group engaged in food business in the year 1993 and it was their 1 st distribution centre. Page 7 of 17

8 CONCEPT OF COLD CHAIN A cold chain is a temperature-controlled supply chain. An unbroken cold chain is an uninterrupted series of storage and distribution activities which maintain a given temperature range. It is used help extend and ensure the shelf life of products such as fresh agricultural produce, processed foods, photographic film, chemicals and pharmaceutical drugs. This concept of cold chain in food industry and that too on such a large scale was started by mc donalds only. This concept was unique in India and to start this concept, it took around 6 years. It benefited both farmers as wella s the consumers, as they are getting the fresh, best quality and great value food. With this concept mc donalds cut down its wastage and able to maintain its freshness and nutritional value of raw material. STEPS INVOLVED IN COLD CHAIN CONCEPT. Procurement Warehousing Transportation Retailing All the above activities took place in tempreture controlled atmosphere. picture of a temperature controlled truck. STEPS INVOLVED IN COLD CHAIN CONCEPT McDonald's finding the factor of cold room being vital ensured that even before vegetables from farms entered the refrigerated zones, they were locked in a pre-cooling room to remove field heat. Vegetables were placed in the precooling room within half an hour of harvesting where rapid cooling decreased the field temperature of Page 8 of 17

9 vegetables to 2ºC within 90 minutes. Then a large cold room (a refrigerated van) was used for transportation to the distribution centers. In the van, the temperature and relative humidity of crop was maintained at 1-4ºC and 95 per cent, respectively and the flavors and freshness are locked At the suppliers' level, care was taken to guard against any possible contamination or interruption in the cold chain that can break the link and have a detrimental effect on the quality of our product. The iceberg lettuce from Ooty, mutton patties from Hyderabad and sesame seed buns from Punjab were all delivered to Radhakrishna Foodland Private Limited (RFPL) distribution centre (cold storage) in its refrigerated vans. RFPL stored the products in controlled conditions in Mumbai and New Delhi and supplied them to McDonald's outlets on a daily basis. By transporting the semi-finished products at a particular temperature, the cold chain ensured freshness and adequate moisture content of the food. The specially designed trucks maintained the temperature in the storage chamber throughout the journey. Drivers were instructed specifically not to switch off the chilling system to save electricity, even in the event of traffic jam. LIST OF SUPPLIERS AND THE DISCRIPTION SHOWING HOW COLD CHIN CONCEPT WORKS AND CONTRIBUTE TOWARDS EFFICIENCY. Dynamix dairy industry (cheese) Trikaya agriculture (iceburg lettuce) Vista processed food pvt ltd. (chicken and veg range of products) Page 9 of 17

Radhakishana food land(distribution centre- delhi and mumbai) Amrit food(long life UHT milk and milk products for frozen desserts) Below mentioned is the data about Refrigerated vans for McDonald's

10 Radhakishana food land(distribution centre- delhi and mumbai) Amrit food(long life UHT milk and milk products for frozen desserts) Below mentioned is the data about Refrigerated vans for McDonald's distribution Type Route Quantity National inbound Suppliers to Distribution Center 20 vehicles Outbound North Distribution Center to restaurant 13 vehicles Outbound West Distribution Center to restaurant 11 vehicles Outbound South Distribution Center to restaurant 1 Vehicle DYNAMIX DAIRY INDUSTRY (SUPPLYING CHEESE) Firm from baramati, maharashtra Milk collection centres with bulk coolers International standard and processing facilities Stringent quality control measures Page 10 of 17

11 All activities from procurement of milk to changing it into cheese and then to serve that cheese in the restaurant is all under temperature control atmosphere TRIKAYA AGRICULTURE (SUPPLYING ICEBURG LETTUCE) Advanced agricultural practices helps them to grow speciality crops like lettuce and herbs. Pre cooling room and large cold room for post harvest. Refrigerated transportation. VISTA PROCESSED FOOD PVT. LTD. (FOR SUPPLYING FROZEN CHICKEN AND VEG PRODUCTS) For chicken, temperature maintained is -35 degrees Celsius. Refrigerated transportation. RADHA KRISHNA FOODLAND (DISTRIBUTION CENTRE) Specialized in handling large volumes. Activities involved are procurement, quality inspection, storage, inventory management, deliveries, data collection, recording and reporting. One stop shop for all distribution management services. Both dry and cold storage facility. AMRIT FOODS An ISO 9000 firm Supplies long life UHT milk/ milk products for desserts. DIFFERENT ITEMS ARE SOURCED FROM DIFEERENT GEOGRAPHY IN INDIA.. Page 11 of 17

BUNS-shah bector &sons, Maharashtra and cermica, ludhiyana BATTER & BREADING- cremica, ludhiyana VEGETABLE PATTY- kitran foods, taloja, Maharashtra CHEDDAR

12 BUNS-shah bector &sons, Maharashtra and cermica, ludhiyana BATTER & BREADING- cremica, ludhiyana VEGETABLE PATTY- kitran foods, taloja, Maharashtra CHEDDAR CHEESE- dynamix dairy, baramati, Maharashtra SEASAME SEED- Gaziabad, UP SPL VEG EGGLESS SAUCE- Quaker, cermica, ludhiyana THREE LOGISTICAL DRIVERS. Page 12 of 17

13 1. Facilities- they are the actual physical location in the supply chain network where the product is stored, assembled, or fabricated. The two main facilities are production sites and the storage sites. In McDonalds, because the products are perishable, storage time was minimal so as to reduce the wastage. 2. Transportation- it is the process where the inventory is moving from place to place. Refrigerated vans are used here in this case. 3. Inventory- it includes raw materials, work in progress, and finished goods within a supply chain. THREE CROSS-FUNCTIONAL DRIVERS 1. sourcing- who will perform which activity( production, storage, transportation, and distribution) in a supply chain. This activity was taken care by mcdonalds corporation. 2. information- it includes data and analysis related to facilities, inventory, transportation, cost, prices and customers in the whole supply chain. This activity was done by Radhakrishana food land that acts as their distribution centre. 3. pricing- how much a firm could charge for a particular goods and services that it makes available in the supply chain. Here it was done by the mcdonalds only. PULL/PUSH PROCESS Page 13 of 17

14 Pull processes are initiated by a customer order while the push processes are initiated by the anticipation of customer order. Mcdonalds use both pull as well as push process, to a certain extent push is created and after that level the pull created by the firm did its task. One important question can be asked to what level that push can be applied.the products will be pushed to the restaurants where the customers automatically demand that product and hence a pull is created. Various Suppliers supplies the materials Products delivered to Distribution centres Products delivered to restaurant Push stops, pull starts here Customer order at restaurant, Fig. showing the boundry of pull and push, push last till the product reaches the restaurant and pull starts when a customer orders the product. SUPPLY CHAIN PROCESS CYCLE.. The processes in the supply chain are divided into a series of cycles, each performed at the interface between 2 successive stages of supply chain Page 14 of 17

15 customers Customer order cycle Retailer/ McDonalds restaurants Replenishment cycle distributor Procurement cycle suppliers Page 15 of 17

16 IN LUCKNOW WE ARE AT.. fun republic west gate mall sahara ganj 21 IN UTTAR PRADESH Noida (5), Ghaziabad (4), Mathura (1) (Highway and Drive Thru), Kanpur (2), Meerut (2), Lucknow (3), Agra (1), Allahabad (1), Varanasi (2) 79 IN NORTH AND EAST 33 in Delhi 22 in Uttar Pradesh 11 in Haryana - Faridabad (3), Manesar (1) (Highway and Drive - Thru), Gurgaon (5), Karnal (1) (Highway and Drive - Thru), Panipat (1) 7 in Punjab - Chandigarh (2), Ludhiana (2), Doraha (1) (Highway and Drive - Thru), Jalandhar (1), Patarsi (1) (Highway and Drive - Thru) 3 in Rajasthan - Jaipur (3) 1 in Uttaranchal - Dehradun (1) 1 in West Bengal Kolkata (1) 1 in Himachal Pradesh- Jabli (1). Page 16 of 17

17 53 IN WEST AND SOUTH 32 in Maharashtra Mumbai (23), Pune (8), Nasik (1) 7 in Gujarat Ahmedabad (4), Vadodara (2), Surat (1) 7 in Karnataka Bangalore(7) 4 in Andhra Pradesh Hyderabad (4) 3 in Madhya Pradesh Indore (3) Page 17 of 17

Challenges of Retailing in India (A Short Note)

World Bank From the SelectedWorks of Mohammad Amin February, 2010 Challenges of Retailing in India (A Short Note) Mohammad Amin Available at: https://works.bepress.com/mohammad_amin/23/ Challenges of Retailing