McDonald's FOOD CHAIN
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OUTSOURCING AT ITS BEST contd..
McDonald's convinced its suppliers to set up two
separate production lines for chicken and vegetable patties, keeping in the
mind the link between food and religion in India. This was in sharp contrast
with its global practice, where McDonald's suppliers produced all types of
patties from the same line. These two production lines were housed in two
different rooms and the only way a worker could cross over from one line to
the other was by passing through the shower room.
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This eliminated all chances of contamination. However,
from a supplier's point of view, more lines meant a reduction in
capacity utilisation and high cost of production. To minimise costs,
McDonald's helped Vista & Kitran Foods produce derivatives of chicken
and vegetable nuggets (not based on McDonald's recipe) for Indian hotels
and restaurants and thereby reach new markets. Vista & Kitran's higher
margin and higher capacity utilization for non-McDonald's products
helped it remain cost competitive.
McDonald's philosophy had been ‘one world, one burger'i.e. the
McDonald's burger should be consistent in terms of cost and quality
throughout the world. To ensure this, all of McDonald's suppliers
followed the internationally acclaimed HACCP systems wherein both inputs
and finished goods were subjected to chemical and microbiological tests.
This kept food fresh and free from contamination. |
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Apart from this, the entire production line was
automated using sophisticated technology, barring only the final compilation
of the bun, cheese and patty - which was done by hand.
QUESTIONS FOR DISCUSSION:
1. What is a ‘Cold Chain'? Explain how
McDonalds managed the components of the cold chain. Critically comment
on the role played by the unique centralized distribution system in
McDonald's supply chain.
2. ‘McDonald's is one of the few companies that has placed substantial
emphasis on effective and efficient supply chain management system as a
means to leverage for competitive advantage.'In the light of this
statement, analyse the steps taken by McDonalds to standardize its
supply chain in India.
EXHIBIT I - McDonald's - FINANCIAL PERFORMANCE SUMMARY
EXHIBIT II - McDonald's IN MEXICO
EXHIBIT III - McDonald's IN MOSCOW
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