McDonalds Supply Chain

US-based fast food giant, McDonald's success in India had been built on four pillars: limited
menu, fresh food, fast service and affordable price. Intense competition and demands for
a wider menu encouraged the fast food giant to customize product variety without
hampering the efficacy of its supply chain. Around the world (including India),
approximately 85% of McDonald's restaurants were owned and operated by independent
franchisees. Yet, McDonald's was able to run the show seamlessly by outsourcing nine
different ingredients used in making a burger from over 35 suppliers spread all over India
through a massive value chain.

The challenge was to bring the iceberg lettuce from Ooty, mutton patties from Hyderabad
and sesame seed buns from Punjab etc to the distribution centres. Initially the distribution
centres were in the north only: two in Punjab, one in NCR, one in Haryana and one in UP.
Meeting McDonald's "clean and on-time" delivery standards was no easy task considering
that there were 30 suppliers situated all over the country. After the products reached the
distribution centres, another challenge was to take them daily to various retail outlets
across cities, which was again a tough task considering the traffic in NCR and Punjab
highways. The cost of supplying the products to its distribution centres began escalating
and also the limited space constraints posed a challenge. Supply was continuous but due
to initial years in operation, the same was not consumed at a fast pace.

Having the uniformity in products across all the retail outlets was also a challenge. The
below table shows some ingredients and their suppliers:

Cheese Dynamix Dairy Industries Ltd., Pune

Dehydrated onions Jain Foods, Jalgaon
Iceberg lettuce Trikaya Agriculture, Pune
Chicken patty Vista Foods, Taloja, Maharashtra
Veg. Patty, Veg. nuggets, Apple pie Kitran Foods, Taloja, Maharashtra
Chicken (dressed) Riverdale, Talegaon, Maharashtra
Buns Cremica Industries, Phillaur, Jalandhar
Eggless mayonnaise Quaker Cremica Pvt. Ltd., Phillaur, Jalandhar
Sesame seeds Ghaziabad
Iceberg lettuce Meena Agritech, Delhi
Fish fillet patties Amalgam Foods Ltd., Kochi.
Iceberg lettuce Ooty Farms & Orchards, Ooty
Vegetables for the patties Finns Frozen Foods & Jain Foods (Nasik, Jalgaon)
Mutton and mutton patties Al Kabeer, Hyderabad

1. How should McDonalds ensure freshness of products delivered in north?

2. How to obtain uniform standardized products from the various suppliers?
3. How should they increase the capacity to tackle the over-supply?