Team name: CABM Pantnagar

Team details Team Leader Member1 Member 2 Member 3

Name Ratul Maiti Atishi Saxena Harinder Singh Abhinav Tyagi

Educational B.Tech, M.Sc, B.Sc,MBA- B.Tech, MBA-ABM B.Tech,

qualifications MBA(Pursuing) ABM(pursuing) (Pursuing) MBA-ABM
(Pursuing)

College of College of College of College of

Organization/ Agribusiness Agribusiness Agribusiness Agribusiness
Institute Management, Management, Management, Management,
G.B.P.U.A&T, G.B.P.U.A&T, G.B.P.U.A&T, G.B.P.U.A&T,
Pantnagar Pantnagar Pantnagar Pantnagar

Contact no. 08859144848 09412417879 08859144733 07500979011

Email ID. Ratulmaiti02@ Atishi.cabm@ Harindersandhey Abhinavtyagi39

Gmail.com Gmail.com @yahoo.com @gmail.com
Introduction:
Supply Chain is one of the critical factors for the smooth functioning of any business. And
when we are talking about fast food business with McDonald’s as the subject of the study it can
expected a Supply Chain model of one of the highest precisions. It is this unmatched Supply
Chain Structure, which not just ensures on time delivery of raw materials and supplies to
McDonalds but also enables it to cut down on its cost and maximize profitability along with
maintaining highest quality standards of its products. The level of commitment of McDonalds
can be gauged from the fact that even before it set up its first restaurant in the country it infused
Rs 400 Cr. to set up its delivery mechanism. McDonald’s initiative to set up an efficient supply
chain and deploy state-of-art technology changed the entire Indian fast food industry and raised
the standards of performance to international levels.

Background:
McDonalds developed its Indian partners in such a manner that they stayed with the company
from the beginning. The success of McDonalds India was achieved by sourcing all its required
products from within the country. To ensure this, McDonalds developed local businesses, which
can supply it highest quality products. Today, McDonalds India works with 38 different
suppliers (Amrit Food, Vista Processed Foods Pvt. Ltd. etc.) on a long term basis and several
other stand alone restaurants for its various other requirements.
McDonald’s distribution centres in India came in the following order: Noida and Kalamboli
(Mumbai) in 1996, Bangalore in 2004, and the latest one in Kolkata (2007). McDonald's
entered its first distribution partnership agreement with Radha Krishna Foodland, a part of the
Radha Krishna Group engaged in food-related service businesses in offshore. As distribution
centres, the company was responsible for procurement, the quality inspection programme,
storage, inventory management, deliveries to the restaurants and data collection, recording and
reporting. The distribution centres have focused all their resources to meet McDonald's
expectation of 'Cold, Clean, and On-Time Delivery' and plays a very vital role in maintaining
the integrity of the products throughout the entire 'cold chain'. The company has both cold and
dry storage facilities with capability to store products up to -22º C as well as delivery trucks to
transport products at temperatures ranging from room temperature to frozen state.
Cold Chain was one of the unique concepts of McDonalds supply chain in India, on which it
had spent more than six years to get the system into place. This system brought about a
veritable revolution, immensely benefiting the farmers at one end and enabling customers at
retail counters get the highest quality food products, absolutely fresh and at great value.
Through its unique cold chain, McDonalds has been able to both cut down on its operational
wastage, as well as maintain the freshness and nutritional value of raw and processed food
products. This has involved procurement, warehousing, transportation and retailing of
perishable food products, all under controlled temperatures.

Strategies for further development:

Irrespective of such a robust supply chain system in place there are still certain areas to improve
which in turns can lower the cost and can help to strengthen the image of the company.
Location of indirect suppliers:
The supply chain can be embedded with an increased number of indirect suppliers for a
particular product in contrast to prevailing pattern of supplying from single supplier to different
distribution centres. For this, the location of new suppliers has to be in accordance and in closer
reach with the existing distribution centres. Through this approach, the Company will have
following benefits:
Easy & effective transportation: The long distance travelling will be avoided which in turn will
lead to a more efficient and effective supply to distribution centres which otherwise would deal
with problems like delays due to traffic jams, etc.
Reduced cost of transportation: Though the number of vehicles would increase but the relative
cost incurred would be less because of shortening the distances covered.
Reduced cost of products: Above approach will help to break the monopoly enjoyed by supplier
thus giving a fair cost of products.
Low chances of shortages: The regularity of supply will be much more ensured due to reduced
distance & area wise distribution thus reducing the chances of shortage to minimum.
For instance, consider the supply of chicken; apart from existing supplier (Vista Processed
Foods Pvt Ltd., Maharashtra), the company could also have another supplier in
Hyderabad(Poultry Capital of India), Andhra Pradesh which will cater to nearest distribution
centres (Bangalore & Kolkata) and thereby can enjoy above listed benefits.
Also, the company can have another supplier for UHT milk, milk products, cheese in Haryana
to cater to distribution centres in NOIDA & Kolkata.
The main idea behind this approach is to break the long distances into shorter ones by
increasing the suppliers’ network as per the location of distribution centres to increase the
efficiency of supply & reduce the cost of transportation.
Counter the bullwhip effect:
The Bullwhip Effect is an observed phenomenon in forecast-driven distribution channels.
Customer demand is rarely perfectly stable, businesses must forecast demand to properly
position inventory and other resources. Because forecast errors are a given, companies often
carry an inventory buffer called "safety stock". Moving up the supply chain from end-consumer
to raw materials supplier, each supply chain participant has greater observed variation in
demand and thus greater need for safety stock. In addition to greater safety stocks, the described
effect can lead to either inefficient production or excessive inventory as the producer needs to
fulfil the demand of its predecessor in the supply chain. Furthermore, it leads to a row of
financial costs.
Therefore it is necessary to extend the visibility of customer demand as far as possible. One
way to achieve this is to establish a demand-driven supply chain which reacts to actual
customer orders. This model has been most successfully implemented in Wal-Mart's distribution
system. Individual Wal-Mart stores transmit point-of-sale data from the cash register back to
corporate headquarters several times a day. This demand information is used to queue
shipments from the Wal-Mart distribution centre to the store and from the supplier to the Wal-
Mart distribution centre. The result is near-perfect visibility of customer demand and inventory
movement throughout the supply chain. Better information leads to better inventory positioning
and lower costs throughout the supply chain. It also to reduces the uncertainty, variability, and
lead time: Vendor managed inventory, Just in time replenishment, Strategic partnership,
Information sharing and smooth flow of products.
Sustainability of supply chain :

Prioritizing sustainability relative to other supply chain goals such as food safety and cost
management by taking into consideration consumer concerns. The company's vision for
sustainability is one that ``profitably yields high quality, safe products without supply
interruption while creating a net benefit for employees, their communities, biodiversity and the
environment.
Biodiversity and the environment:

An example is where the company stood in support of organized efforts against overfishing, in
the short term, to ensure sustainability of fish supply for the Fish-o-Fillet product in the long
run. Even though overfishing may support McDonald's goal in the short term, in the long run it
will be a threat to marine biodiversity and fisheries and this will lead to lack of fish for the Fish-
o-Fillet product. Some sustainability initiatives could benefit the company financially. For
example, by reducing the use of energy or by removing the need of packaging , the company
could save money.

Affordable price theme is very important for McDonald to progress in the time to come.
McDonald provides food at affordable prices. It has also advertised this by ads like- “Aap ke
zamane mai Baap ke zamane ke daam”. Challenges to sustainability of affordable prices are:

High Inflation:
Food inflation is almost uncontrollable for most of the countries in World as environment play
significant role in food production & environment is an uncontrollable factor for human beings.
To sustain affordable price theme in food inflating World, Integration of supply chain will play
significant role.
Integration of supply chain and product innovation:
Product innovation is a continuous process to sustain in today’s highly competitive market. To
compete with the rivals KFC and stay ahead in the race Mcdonalds also need product
innovation and the integrated supply chain consisting both the customer and supplier have a
great role to play. As making a decision, based on the consuming organization through a vendor
managed inventory, can shorten product development time.
The companies operating in highly collaborative practices with suppliers and customers are
likely to have an excellent performance in product quality and innovation, due to the
improvement of information visibility in the supply chain. supply integration play a significant
role in purchasing and production systems, leading to high product quality performance. Where
as being more integrated with customers also enables firms to more quickly respond to their
product changing needs in the product innovation process.
So it is important to put an integrated supply chain in place for further growth of the company
through product innovation.
Increasing the shelf life of the firm produce:
Mcdonalds has already adapted a “cold chain” supply chain model to retain the freshness and
increase the shelf life of the firm produce. But it can be further increase by using the ethylene
block chemical. Ethylene hormone is the ageing hormone which started its biochemical
activities after procurement of the firm produce from the field. Though lowering the
temperature reduce the biochemical activities in the procured produce to a great extent but it
can be further lowered by using ethylene block chemical which block the activity of ethylene
hormone and can increase the product shelf life further which in turn will help to cater more
stores from a single distribution centre.
So these will be the possible strategies that will be framed being a supply chain manager of
Mcdonalds in order to grow the business further in most effective and efficient manner.