McDonald's FOOD CHAIN

IN SEARCH OF PERFECT LOGISTICS - THE STORY OF THE COLD CHAIN contd...

Coughlin's task was to make sure that McDonald's had the proper amount of supplies and materials at each restaurant. The challenge was the physical movement of material and inventory control in a country with bad roads and basic infrastructure bottlenecks. To meet McDonald's high standards, Coughlin ensured that quality, temperature and packaging requirements were met.

At the same time, unused capacity in the vehicles was used to transport goods from other vendors. This helped Coughlin deliver the lowest cost with the highest quality. RFPL also handled in-city distribution to restaurants. “We make a projection of demand from each of the restaurants based on historical data and ask the suppliers to meet the demand. This information is also sent to the logistics company. The suppliers, in turn, give us feedback on their ability to meet the demand,” Shriram said.

FIGURE II
VITAL LINKS IN THE COLD CHAIN

Source: Business India, October 4, 1999.

According to Vinay Adhye (Adhye), director, RFPL, “Managing logistics for McDonald's is as complicated and demanding as rocket science.” To begin with, while the restaurants were not supposed to stock more than three days of inventory, the time limit for distribution centres or warehouses was a stringent 14 days to minimize costs and optimize quality control. This required round-the-clock monitoring of pick-ups and truck movements. Since most of the items were perishable, McDonald's standards covered the entire delivery schedules.

For in-city delivery, the truck was monitored from the time it left the distribution centre till the time it reached the restaurant. Not just that, the time taken in offloading was noted too. Adhye further added, “The restaurant gives us a strict 30-minute window in which time we have to complete the delivery. And in the last two and a half years we have missed the window only once.”

The products were transported from the suppliers'end to the distribution centre in refrigerated and insulated vehicles through a system of consolidation to ensure better utilization of vehicle capacity. While the temperature in the reefers ranged from -18º to -22º, that in chilled trucks ranged from 1 to 4º. “At no point is the cold chain disturbed, so much so that if any of the McDonald's restaurants face a power breakdown, reefer trucks are arranged to ensure that temperature is maintained”, said Shriram. He further added, “We have a contingency plan and a back-up at every point, in the event of a failure”.

RFPL was also responsible for cleanliness (including the personal hygiene of the drivers), and the packing and temperature control of the food (digital probes were inserted into items selected at random) it transported. There were also data logs to track the movement of each batch. This meant that in the case of a complaint from a restaurant, the batch could be identified, isolated, and dumped. To perfect the system, the RFPL team travelled to a number of countries, including Turkey, the Philippines, Australia, and the US. AFLL also followed similarly detailed procedures.

McDonald's insisted on standardization by its suppliers. Vista Processed Foods & Kitran Foods (Vista & Kitran Foods), which supplied the pies, nuggets, vegetable, and chicken patties, commissioned a new facility for the purpose in 1996, complete with insulated panels, temperature control, and chill rooms. McDonald's also assisted its suppliers with improvements. For instance, it helped Trikaya Agriculture develop a variety of iceberg lettuces (which is a winter crop) that would grow all year round. And for quality control, Trikaya's post-harvest facilities included a cold chain consisting of a pre-cooling room to remove field heat, a large cold room, and a refrigerated van with humidity controls.