case study on inventory management of mcdonalds

• About / Contact
• Privacy Policy
• Alphabetical List of Companies
• Business Analysis Topics

McDonald’s Operations Management: 10 Critical Decisions, Productivity

McDonald’s operations management (OM) supports the company’s position as the largest fast-food restaurant chain in the world. The business implements solutions pertaining to the 10 decision areas of operations management, such as supply chain management for the movement of ingredients. In these 10 strategic decisions, McDonald’s aims for maximum operating efficiency and productivity to facilitate business strategies that rely on low production costs. For instance, in process and capacity design, which is a part of operations management, the food service company optimizes production processes to minimize costs and enable competitive selling prices. In this regard, operations management effectiveness impacts how the goals of McDonald’s mission statement and vision statement are achieved. Operations strategy and related strategic planning determine the restaurant corporation’s overall business performance.

With the 10 decisions of operations management, McDonald’s optimizes the business to counteract competition. The company competes with Wendy’s , KFC, Dunkin’, Burger King , Subway, and Arby’s. McCafé operations also compete with Starbucks and Tim Hortons, as well as some PepsiCo beverages and Unilever ’s Bru coffee, which can be purchased online in various countries. The Five Forces analysis of McDonald’s Corporation shows that these competing firms impose a strong competitive force, which influences the company’s operations strategy and measures for optimal productivity.

McDonald’s Operations Management: 10 Critical Decision Areas

1. In the design of goods and services , the objective is to develop the best product, given the resources and limitations of the fast-food company. In this case, McDonald’s aims for high efficiency of service operations, and the standardization of goods. High efficiency and productivity in food preparation minimizes production costs. On the other hand, standardization of goods contributes to menu and product consistency and customer satisfaction at store locations. In this strategic decision area of operations management, managers are concerned with satisfying the general public, which is the target market based on McDonald’s generic strategy for competitive advantage and strategies for intensive growth . The company aims to attract everyone to its fast-food restaurants. Also, in making product design decisions, operations managers account for the product element of McDonald’s marketing mix or 4P . Thus, the strategies and tactics in the fast-food company’s marketing mix relate to this strategic decision area of operations management.

2. Quality management involves matching McDonald’s food, drinks, and service to the quality expectations and preferences of target consumers. The operations strategy applies policies and measures to ensure that such matching is achieved at company-owned, franchised, and licensed locations. Product standardization comes with quality consistency, which contributes to the business strengths identified in the SWOT analysis of McDonald’s Corporation . Such quality consistency helps the fast-food business satisfy consumers’ expectations. However, McDonald’s operations management faces the challenge of maintaining satisfactory quality despite cost minimization, which is essential for competitive selling prices.

3. Process and capacity design is a decision area that pushes operations management to optimize production processes, such as the production of intermediate ingredients used to make burgers and fried chicken. McDonald’s operations strategy maximizes the benefits of economies of scale in production processes, in order to support competitive pricing. For example, the company employs custom equipment for large-scale and high-speed food preparation. In this way, operations management achieves high efficiency in production processes and the minimization of costs at corporate facilities, hubs, and restaurants. Also, the production line method maximizes productivity and capacity utilization at McDonald’s restaurants.

4. For its location strategy , McDonald’s has various facilities that support its operations. The operations management objective in this strategic decision area is to establish and maintain locations that optimally account for access to target consumers, access to resources, the supply chain, costs, productivity, and economic variables. For example, McDonald’s production facility locations satisfy restaurants’ supply requirements. Also, company-owned, franchised, and licensed locations are established for maximum market reach. In this decision area, McDonald’s operations management involves restaurants, kiosks, and the company’s websites and mobile apps as venues. Other locations considered are those of third-party distributors or retailers of McCafé products, such as Walmart , Costco , Amazon , and Target. Through these locations or venues, the global fast-food restaurant chain reaches customers in traditional and online ways. Also, McDonald’s business structure (company structure) determines the locations of facilities and resources, including human resources.

5. Layout design and strategy aim for high efficiency in moving resources and information throughout McDonald’s business organization. For the movement of information at the fast-food company’s offices and other locations, information technology offers high efficiency with minimal drawbacks. On the other hand, at restaurants and kiosks, McDonald’s operations strategy involves layouts that maximize space utilization and productivity, rather than comfort and spaciousness. For example, kitchens are designed to match steps in food preparation. Also, many small tables are arranged to accommodate large numbers of diners at the restaurants.

6. In human resources and job design , operations management has the objective of developing and maintaining an adequate workforce for McDonald’s business development. The multinational corporation supports the staffing needs of its restaurants. For example, the company has standardized training programs for skills needed in food production and preparation. This support is in addition to the human resource policies and measures that McDonald’s franchisees and licensees implement on their own. For this decision area of operations management, individual and organizational learning are also emphasized throughout the fast-food restaurant chain. McDonald’s organizational culture or corporate culture influences human resource management programs to facilitate such learning.

7. Supply chain management aims to maintain high effectiveness and operating efficiency throughout McDonald’s supply chain. The food service company’s operations management uses information technology to inform suppliers and enable them to match their operations to the company’s supply needs. McDonald’s has a mixture of regional suppliers for highly standardized ingredients, and local suppliers for perishables. In this context, suppliers’ productivity affects the restaurant company’s productivity. With this consideration, McDonald’s corporate social responsibility (CSR), ESG, and stakeholder management strategy and other business strategies impose policies and rules for suppliers, to minimize disruptions in the supply chain.

8. In inventory management , McDonald’s operations management objective is to ensure adequate inventory for smooth business operations with minimal disruptions in resource availability. This decision area of operations management functions as an interface between the supply chain and the rest of the food service organization. Materials from suppliers pass through inventory management, or are stored for later use, depending on the requirements of the corporation and its restaurants. Inventory management effectiveness influences productivity at store locations. In this regard, McDonald’s minimizes inventory costs while supporting restaurant operations.

9. Scheduling at McDonald’s follows industry best practices, with considerations for supply chain capabilities, market conditions, and regulations. The strategic objective in this decision area of operations management is to apply schedules so that resources and assets are utilized to their full potential, while the fast-food chain satisfies its target customers. Regular schedules are used for McDonald’s corporate offices and restaurant locations. Also, seasonal schedules may be applied to support operations during spikes in market demand for fast food. Operational effectiveness is achieved by matching the schedules to the requirements of McDonald’s and its partners.

10. In maintenance , strategic decisions focus on maintaining stable operations, which relate to the stability of operations at the company’s corporate offices and stores. To maintain high productivity, McDonald’s operations management monitors the needs of its restaurants, and uses the resulting data to inform maintenance teams. Third-party service providers are also used in some situations, such as for the repair of cooking equipment and machinery. At McDonald’s hubs for material distribution, maintenance is implemented in terms of matching operational capacity and human resources to the current needs of the business organization. In this context, operations management also uses real-time monitoring and control to ensure that decisions and actions correspond to the current conditions of the food-service company. Considering the international scope of the business, the global, regional, and local trends characterized in the PESTEL/PESTLE analysis of McDonald’s Corporation influence the maintenance requirements and the tools available to maintain stable operations and high productivity.

Productivity at McDonald’s

With regard to the 10 strategic decisions of operations management, McDonald’s works toward maximum productivity in all its business areas. The following productivity metrics are some of the criteria applicable to McDonald’s operations management:

• Order fulfillment rate (productivity at McDonald’s restaurants)
• Stockout rate (productivity of inventory management, hubs, warehouses, and distribution facilities)
• Timely delivery rate (productivity of deliveries, including third-party delivery services)
• Akkaş, A., & Gaur, V. (2022). Reducing food waste: An operations management research agenda. Manufacturing & Service Operations Management, 24 (3), 1261-1885.
• Alexander, T. (2023). Unwrapping the McDonald’s model: An introduction to dynamic social theory. The Journal of American Culture, 46 (3), 232-241.
• Amirul, S. R., Pazim, K. H., Amirul, S. M., Mail, R., & Dasan, J. (2022). Developing and validating the qualitative labour productivity measurement in service industry. Quality & Quantity, 56 (4), 2853-2874.
• McDonald’s Corporation – Food Quality & Sourcing .
• McDonald’s Corporation – Form 10-K .
• McDonald’s Corporation – Our Commitment to Quality .
• McDonald’s Corporation – Where We Operate .
• McDonald’s History .
• Veiga, G. L., Pinheiro de Lima, E., & Gouvea da Costa, S. E. (2022). An efficiency-frontier based procedure to improve operations strategy. Journal of Industrial Integration and Management, 7 (03), 367-399.
• Zhou, L., Jiang, Z., Geng, N., Niu, Y., Cui, F., Liu, K., & Qi, N. (2022). Production and operations management for intelligent manufacturing: A systematic literature review. International Journal of Production Research, 60 (2), 808-846.
• Copyright by Panmore Institute - All rights reserved.
• This article may not be reproduced, distributed, or mirrored without written permission from Panmore Institute and its author/s.
• Educators, Researchers, and Students: You are permitted to quote or paraphrase parts of this article (not the entire article) for educational or research purposes, as long as the article is properly cited and referenced together with its URL/link.

• SUGGESTED TOPICS
• The Magazine
• Newsletters
• Managing Yourself
• Managing Teams
• Work-life Balance
• The Big Idea
• Data & Visuals
• Reading Lists
• Case Selections
• HBR Learning
• Topic Feeds
• Account Settings
• Email Preferences

McDonald’s and the Challenges of a Modern Supply Chain

Three lessons.

Recently, McDonald’s, the world’s iconic largest food service provider, has been (forgive the cliché) through the grinder. Poor performance has led to the departure of its CEO and plenty of critical attention in the business pages . Part of this story relates to the provenance, or origins, of its products: Chains that provide more upmarket “fast casual” dining such as Panera, Chipotle, and Shake Shack have brands that speak of freshness, health, and trustworthy sourcing.

• Steve New teaches operations and supply-chain management at the University of Oxford’s Saïd Business School and is a fellow of Hertford College.

Partner Center

Breaking Down McDonald’s Supply Chain Strategy: A Recipe for Success

Breaking Down McDonald’s Supply Chain Strategy – DFreight

The food supply chain is the process of getting food from producers to consumers, and it has evolved significantly in the digital age. McDonald’s is a significant player in the food supply chain, leveraging technology through its supply chain strategy to become highly efficient and stay competitive. Through partnerships with digital freight forwarders like DFreight, food companies can coordinate shipments, monitor performance, optimize resources, and monetize data analytics. With the help of digital forwarders, they have streamlined their food supply chain and improved their overall efficiency.

In this blog post, we will delve into the critical components of McDonald’s supply chain strategy and explore how it contributes to the company’s overall success.

Table of Contents

McDonald’s and Supply Chain Strategy

McDonald’s  is one of the world’s largest fast-food chains, with a global presence and millions of customers served daily. Understanding its supply chain strategy is essential to comprehend the company’s ability to deliver quality food and maintain customer satisfaction consistently.

A well-designed supply chain strategy is crucial for any successful business, and McDonald’s is no exception. By effectively managing its supply chain, McDonald’s ensures the timely delivery of ingredients, minimizes costs, and maintains product consistency across its vast network of restaurants.

In the previous blogs, we looked into the supply chains of famous and leading companies, which you can read about each of them in the section below.

Navigating the Complexities of McDonald’s Supply Chain

McDonald’s is one of the world’s largest and most successful fast food companies, and a complex and far-reaching supply chain powers its success. From procurement and supplier management to distribution and logistics, technology and innovation to sustainability and ethical practices, and collaboration and partnerships – managing the complexities of its supply chain is no small feat. In the following, we look at the various elements of McDonald’s supply chain and explore how it ensures consistent success.

Procurement and Supplier Management

McDonalds offers a wide range of food products to customers around the world. The company is committed to selecting high-quality suppliers, setting a rigorous quality control and standards, and maintaining strong relationships with suppliers. By understanding their effective supplier management practices, we can gain insights into McDonalds’ commitment to providing excellent customer satisfaction.

1. Sourcing Ingredients and Products

McDonald’s sources a wide range of ingredients and products to create its diverse menu. The company carefully selects suppliers meeting stringent quality and safety standards, from fresh produce to meat, packaging , and condiments. McDonald’s manages its procurement process to ensure a steady supply of high-quality ingredients aligned with its brand values.

2. Supplier Selection and Evaluation

Maintaining strong relationships with suppliers is critical for McDonald’s supply chain. The company selects and evaluates its suppliers based on reliability, capacity, cost-effectiveness, and adherence to ethical practices. Discovering how McDonald’s fosters collaboration and transparency with its suppliers will shed light on its effective supplier management practices.

3. Quality Control and Standards

Ensuring consistent quality across all its restaurants worldwide is a priority for McDonald’s through the rigorous quality control measures implemented by the company, including regular inspections, audits, and certifications. Understanding how McDonald’s maintains high-quality standards will give insights into its commitment to customer satisfaction.

Distribution and Logistics

McDonald’s supreme success in the fast-food industry is due in part to its effective logistical operations. From centralized distribution models to inventory management and transportation strategies, McDonald’s has perfected its supply chain in order to meet customer demand, prevent stockouts, and maintain efficient delivery networks. By exploring how McDonald’s manages distribution and logistics, we can gain insights into their strategic prowess.

1. Centralized Distribution Model

Efficient distribution and logistics play a vital role in McDonald’s supply chain strategy. The company employs a centralized distribution model, allowing for streamlined operations and reduced costs. Understanding how McDonald’s manages the movement of ingredients and products from suppliers to restaurants will provide valuable insights into their logistical prowess.

2. Inventory Management

Maintaining optimal inventory levels is crucial for a fast-food chain like McDonald’s. McDonald’s utilizes advanced inventory management systems to forecast demand, prevent stockouts, and minimize waste. Discovering their inventory management techniques will showcase their ability to achieve operational efficiency and meet customer demand.

3. Transportation and Delivery

Ensuring timely and efficient transportation is essential to deliver fresh food to McDonald’s restaurants. The company manages transportation and delivery logistics, including using dedicated distribution centers, fleet optimization, and route planning. Understanding their transportation strategies will show their ability to operate on a global scale while maintaining consistency and quality.

Technology and Innovation

McDonald’s is renowned for its commitment to innovation and efficiency in its supply chain operations. By leveraging advanced digital solutions, automation technologies, and data analytics, the company is able to optimize their operations and ensure customer satisfaction at all stages of the supply chain.

1. Digital Supply Chain Solutions

In today’s digital age, technology plays a vital role in supply chain management. McDonald’s leverages digital solutions such as order management systems, real-time tracking, and data analytics to optimize their supply chain. Exploring their use of technology will highlight their commitment to innovation and efficiency.

2. Automation and Robotics

Automation and robotics have revolutionized supply chain operations across industries. McDonald’s is no exception, utilizing automation technologies in various supply chain stages. Automation and robotics enhance efficiency, reduce costs, and ensure food preparation and packaging consistency.

3. Data Analytics and Forecasting

Accurate demand forecasting is critical for McDonald’s to manage inventory, minimize waste, and meet customer expectations. The company utilizes data analytics, machine learning in logistics , and predictive modeling to forecast demand, optimize supply chain operations, and drive business growth. Understanding their data-driven approach will showcase their ability to adapt to changing consumer preferences.

Sustainability and Ethical Practices

McDonald’s has committed to sustainable sourcing, environmental impact reduction, and labor and social responsibility as core principles of its supply chain management strategy. These initiatives demonstrate the company’s commitment to protecting the environment and providing safe and ethical working conditions for those involved in their supply chain.

1. Sustainable Sourcing Initiatives

Sustainability is an increasingly important aspect of supply chain management, and McDonald’s recognizes the significance of minimizing its environmental footprint. The company’s sustainable sourcing initiatives include responsible agricultural practices, support for local farmers, and commitment to certified sustainable ingredients. Discovering McDonald’s efforts toward sustainability will highlight its dedication to protecting the planet.

2. Environmental Impact Reduction

McDonald’s understands the importance of reducing its environmental impact. The company implements measures to minimize waste generation, optimize packaging materials, and promote recycling and energy efficiency across its supply chain. Exploring their environmental initiatives will showcase their commitment to operating in an environmentally responsible manner.

3. Labor and Social Responsibility

McDonald’s supply chain strategy also focuses on labor and social responsibility. The company ensures fair and ethical treatment of workers throughout its supply chain, including supplier factories and farms. Understanding their commitment to labor rights and social responsibility will show their dedication to creating a positive impact beyond just business operations.

Collaboration and Partnerships

McDonald’s has built their successful supply chain on the basis of fostering strong collaborations and partnerships with franchisees, suppliers, stakeholders, and communities. From engaging stakeholders, to working closely with suppliers on production and demand, to working with franchisees to support their success, McDonald’s exemplifies an ideal model of successful collaboration and partnership.

1. Franchisee Relationships

McDonald’s operates on a franchise model, which requires strong collaboration and partnerships with its franchisees. The company fosters franchisee relationships, including supply chain collaboration, training programs, and shared goals. Exploring their collaborative approach will showcase the importance of a cohesive network in executing McDonald’s supply chain strategy.

2. Collaborative Planning with Suppliers

Collaborative planning with suppliers is crucial to McDonald’s supply chain strategy. The company works closely with suppliers to optimize production schedules, manage demand fluctuations, and drive continuous improvement. Understanding their collaborative planning processes will provide insights into their ability to adapt to market dynamics and ensure smooth operations.

3. Engaging Stakeholders

Engaging stakeholders is essential for the success of any supply chain strategy. McDonald’s recognizes the significance of fostering positive relationships with various stakeholders, including suppliers, customers, employees, and communities. The company actively engages stakeholders through transparent communication, social initiatives, and community partnerships. Discovering their stakeholder engagement practices will showcase their commitment to building strong relationships beyond the traditional supply chain.

Challenges and Future Trends

The global supply chain landscape is becoming increasingly complex as companies face new challenges due to changing consumer preferences, geopolitical risks, and technological advancements. McDonald’s is no exception to this complexity and has to navigate these issues while adapting their supply chain strategy to an ever-evolving market.

1 . Global Supply Chain Complexity

Operating a global supply chain comes with its fair share of challenges. McDonald’s faces complexities, including managing diverse regulations, cultural differences, and geopolitical risks. The company tackles these challenges and adapts to the evolving global landscape.

2 . Changing Consumer Preferences

Consumer preferences and trends constantly evolve, presenting challenges and opportunities for McDonald’s supply chain strategy. The company navigates changing consumer demands, including the rise of healthier food options, customization, and digitalization. Understanding their approach to consumer preferences will highlight their agility in adapting to market shifts.

3 . Technological Advancements and Adaptation

The supply chain industry is experiencing rapid technological advancements. We will explore how McDonald’s embraces emerging technologies such as blockchain , the Internet of Things (IoT) , and artificial intelligence (AI) to enhance their supply chain operations. Discovering their technological adaptations will showcase their ability to stay at the forefront of innovation.

Streamline Your Food Supply Chain with DFreight

Harness the power of digital freight forwarder DFreight and its online platform and mobile app to improve overall efficiency, reduce risk, and enhance traceability in your food supply chain. With DFreight, you can quickly access accurate and up-to-date product and shipment information to ensure your food deliveries arrive on time, every time. Unlock the potential of your food supply chain and take the hassle out of transporting food with DFreight today.

What factors should I consider when selecting a food provider for my supply chain?

When selecting a food provider for your supply chain, you should consider the provider’s quality standards, sustainability practices, transportation capabilities, pricing, customer service and availability. Additionally, be sure to evaluate their ability to meet your order requirements in a timely manner.

How can I improve the efficiency of my food supply chain?

You can improve the efficiency of your food supply chain by leveraging digital freight forwarding services to streamline the ordering and delivery process, monitor transportation processes, track inventories, and forge partnerships with suppliers for better food availability. Additionally, digital freight forwarding enables businesses to access lower-cost, more reliable transport options while optimizing supply chain visibility and control.

How is McDonald’s supply chain structured?

At the top of McDonald’s supply chain is an international network of strategic partnerships with various suppliers that are responsible for providing raw ingredients such as beef, potatoes, and eggs, as well as other finished products. Products are typically sent to McDonald’s regional distribution centers, which then send the products to franchised locations.

How does McDonald’s ensure food safety in their supply chain?

McDonald’s ensures food safety in its supply chain by evaluating food vendors and partners, maintaining strict food safety protocols and testing, and conducting regular quality and safety inspections. Additionally, the company has a traceability system to guarantee accountability and transparency when sourcing, manufacturing, and preparing foods.

What steps has McDonald’s taken to improve its supply chain strategy?

McDonald’s has taken a number of steps to improve its supply chain strategy, including expanding its use of third-party logistics providers, implementing automated ordering and delivery systems, partnering with suppliers to reduce waste, and leveraging new technologies to optimize operations.

Air transportation is a convenient and fast way to move cargo and is suitable for small and large companies as well as individuals. You Might Also Like

Commodities

Most Popular

• Inventory Management Software
• Sales Orders
• Purchase Orders
• Barcode Software for Inventory Systems
• Dynamic Reports
• Low Stock & Inventory Alert Software
• Warehouse & Multi Location Management Software
• Product Information Management
• Customer Management
• Vendor Management
• User Access Management Solution
• IT Security Audit Log Software
• Consignment Sales Software

An Outline of McDonald’s Wildly Successful Supply Chain Management

Post on Wednesday, April 18th, 2018 in Accounting

McDonald’s, a food industry giant, is reluctant to share its Special Sauce recipe. However, the fast food leader gladly shares its recipe for a successful supply chain, which is considered to be one of world’s best supply chains. Previously, we had discussed Amazon’s supply chain and Apple’s supply chain, but today we are going to discuss the secrets of successful supply chain management at McDonalds.

Every successful business has a person behind its success. For McDonald’s, that person is Ray Kroc who joined the company in 1954. The McDonald’s supply chain got all of its power thanks to his efforts. He managed to develop ongoing relationships with suppliers, which have stayed with the company until now.

Kroc saw the company as a system consisting of three main building blocks: employees, owners, and suppliers. The company couldn’t exist without either of these building blocks. And all solutions should consider the question “What’s best for the system?”

As for McDonalds supply chain management, Kroc decided that a 100% outsourced supply chain would be the best solution for the system, and he did not fail. The first reason was that he did not have enough funds to build his own vertical supply chain. Secondly, Kroc didn’t copy the strategies of competitors who forced their franchised restaurants to buy food from them only.

Instead, he focused on the long term-outcome, not the short term one. Kroc’s McDonalds supply chain strategy was aimed at finding suppliers who would become the partners of McDonald’s and who would treat this partnership as seriously as he did. This strategy still remains the driving force of supply chain at McDonalds.

McDonald’s Vested Business Model

Researchers from the University of Tennessee studied the McDonald’s system and came up with the vested business model on which this system was based. The main principle of the vested model are win-win relationships in which both parties are equally committed to each other’s success. According to this model, supply chain management at McDonalds relies on the following five rules:

• Rule #1: Focusing on outcomes, not transactions. Instead of hunting for suppliers that offer the best price, McDonald’s focuses on creating long term relationships with existing suppliers.
• Rule #2: Focusing on the what, not the how. McDonald’s does not micromanage its business partners. Instead, it helps its vendors to be successful, just like they help McDonald’s to achieve success.
• Rule #3: Clearly defined and measurable outcomes. McDonald’s shares with suppliers the key supply chain priorities that are valuable for the McDonald’s system. The main goal is to maintain the relevance of the brand and satisfy the ever-changing needs of consumers in a fast-paced business environment.
• Rule #4: Individual vendor pricing models. McDonald’s implements highly transparent pricing modules that contain the variables to help all parties understand the trade-offs on the total costs. The objective of the McDonald’s pricing models is to reduce the total cost, but not the price. To ensure price stability for the restaurants, McDonald’s and its vendors regularly revise the pricing models based on the category and region.
• Rule 5: Peer-to-peer relationships with each supplier. McDonald’s initiates communication with suppliers in both formal and informal settings. The goal is to establish an open culture that discusses important issues and makes decisions based on the “System First” philosophy.

McDonalds Inventory Management

As for any food company, McDonald’s faces challenges when it comes to inventory management. These challenges consist in demand forecasting so the products are not thrown away as well as controlling the raw materials such as bread, potatoes, and beef. However, McDonald’s is capable of overcoming those challenges, and here’s how:

• Constant communication between the regional planner and restaurants. Every day, each regional planner communicates with about 100 restaurants by making conference calls and exchanging emails.
• Reliable inventory management system . McDonald’s inventory is managed by using the stock control system to ensure constant availability of raw materials.
• Accurate demand forecasting. Regional planners analyze the past performance and work on future sales campaigns, thus predicting the future demand. They use the stock control charts of their inventory management system to display the product sales history and generate forecasts for each restaurant.
• Storage and distribution. McDonald’s warehouses management runs with separate areas for dry, refrigerated and frozen foods. In each area, a specific temperature is maintained so the products are not spoiled because of weather and climate changes. The same goes for distribution – McDonald’s has the same three distribution channels through which they efficiently deliver food to restaurants while maintaining the correct product temperature.

This is how the McDonald’s supply chain and McDonald’s inventory control processes are organized. Today McDonald’s serves around 68 million customers daily in 119 countries and stays ahead of the competition. This is the result of a successful supply chain strategy, which is more than 60 years old.

Adam is the Assistant Director of Operations at Dynamic Inventory. He has experience working with retailers in various industries including sporting goods, automotive parts, outdoor equipment, and more. His background is in e-commerce internet marketing and he has helped design the requirements for many features in Dynamic Inventory based on his expertise managing and marketing products online.

Learn how Dynamic Inventory can streamline your business today!

Join the Conversation

Continue reading....

Tuesday, December 11th, 2018

The Coca Cola Supply Chain & Manufacturing Process Explained

Download This Article Now

• Enter your Email *
• Email This field is for validation purposes and should be left unchanged.

Related Articles

An Overview of Dell’s Supply Chain Strategy

Dell entered the market in 1985, and evolved from a small, dorm-room based company in Texas to one of the …

How to Improve Your Warehouse Management System

A warehouse is not only a place to store your inventory. It also hosts all of the important logistics and …

How To Write Product Descriptions That Actually Convert To Sales

A product description should not just be a bland list of a product’s features. After the price of an item, a …

• Your Name *
• Your Work Email *
• Company Name
• What Services Do You Need? Inventory Management Asset Tracking Manufacturing All of the Above Other
• I agree to Dynamic Inventory's Privacy Policy *
• Comments This field is for validation purposes and should be left unchanged.

Vested pp 119–152 Cite as

McDonald’s Secret Sauce for Supply Chain Success

• Kate Vitasek ,
• Karl Manrodt &
• Jeanne Kling  

248 Accesses

Last but not least. Governance may be the last of the Vested Five Rules, but it is perhaps the most important. Following the first four rules helps you get to a good agreement—but you have to manage it. If you do not manage it well, the consequences are costly. In fact, leading industry research found that poor governance can erode up to 90 percent of anticipated value. 1

None of us is as good as all of us. —Ray Kroc

This is a preview of subscription content, log in via an institution .

Buying options

• Available as PDF
• Read on any device
• Instant download
• Own it forever
• Durable hardcover edition
• Dispatched in 3 to 5 business days
• Free shipping worldwide - see info

Tax calculation will be finalised at checkout

Purchases are for personal use only

Unable to display preview.  Download preview PDF.

Ian R. MacNeil, Contracts: Instruments for Social Cooperation (South Hackensack, NJ: F. B. Rothman, 1968).

Google Scholar  

O. E. Williamson, “Outsourcing: Transaction Cost Economics and Supply Chain Management,” Journal of Supply Chain Management 44, no. 2 (2008): 5–16. Blackwell Publishing Inc. Retrieved from http://doi.wiley.com /10.1111/j.1745-493X.2008.00051.x.

Article   Google Scholar  

John F. Love, McDonald’s: Behind the Golden Arches, rev. ed. (New York: Bantam Books, 1995), relates the widespread practice of the chain restaurant business during the 1950s. It concludes: “Having captive licensees as guaranteed buyers, franchisers needed to do little else than sit back and collect money.”

Peter Eisler, Blake Morrison, and Anthony DeBarros, “Fast-Food Standards for Meat Top Those for School Lunches,” USA Today , December 9, 2009, http://www.usatoday.com /news/education/2009-12-08-school-lunch-standards_N.htm.

Download references

You can also search for this author in PubMed   Google Scholar

Copyright information

© 2012 Kate Vitasek and Karl Manrodt

About this chapter

Cite this chapter.

Vitasek, K., Manrodt, K., Kling, J. (2012). McDonald’s Secret Sauce for Supply Chain Success. In: Vested. Palgrave Macmillan, New York. https://doi.org/10.1007/978-1-137-51190-4_6

Download citation

DOI : https://doi.org/10.1007/978-1-137-51190-4_6

Publisher Name : Palgrave Macmillan, New York

Print ISBN : 978-0-230-34170-8

Online ISBN : 978-1-137-51190-4

eBook Packages : Palgrave History Collection History (R0)

Share this chapter

Anyone you share the following link with will be able to read this content:

Sorry, a shareable link is not currently available for this article.

Provided by the Springer Nature SharedIt content-sharing initiative

• Publish with us

Policies and ethics

• Find a journal
• Track your research

Brought to you by:

McDonald's Corporation

By: Frank T. Rothaermel, John Kim

The case is written from the perspective of McDonald's CEO Steve Easterbrook. Easterbrook assumed office in March 2015, and the case highlights the company's recent and dramatic decline in…

• Length: 23 page(s)
• Publication Date: Sep 28, 2017
• Discipline: Strategy
• Product #: MH0050-PDF-ENG

What's included:

• Teaching Note
• Educator Copy

$4.95 per student

degree granting course

$8.95 per student

non-degree granting course

Get access to this material, plus much more with a free Educator Account:

• Access to world-famous HBS cases
• Up to 60% off materials for your students
• Resources for teaching online
• Tips and reviews from other Educators

Already registered? Sign in

• Student Registration
• Non-Academic Registration
• Included Materials

The case is written from the perspective of McDonald's CEO Steve Easterbrook. Easterbrook assumed office in March 2015, and the case highlights the company's recent and dramatic decline in performance amidst increasing competition. In addition, the case details Easterbrook's strategic initiatives in an attempted turnaround of McDonald's' fortunes. With some $25 billion in sales (in 2017) and some 45,000 restaurants globally (thereof 27,000 in the U.S.), McDonald's remains the largest quick-service restaurant (QSR) chain. At the same time, McDonald's has been struggling on several fronts in recent years. Attempting to be "everything for everybody," McDonald's fell victim to being "stuck-in-middle," without a clear strategic position. With such a large global installed base of restaurants and franchisees, any changes coming from the McDonald's headquarters require significant leadership, investment, and potential risk.

Learning Objectives

Vision, mission, and values; Core competency; Business model; Business unit and corporate strategy; Industry and competitor analysis.

Sep 28, 2017

Discipline:

Geographies:

United States

Industries:

Restaurants and food service industry

McGraw-Hill Education

MH0050-PDF-ENG

We use cookies to understand how you use our site and to improve your experience, including personalizing content. Learn More . By continuing to use our site, you accept our use of cookies and revised Privacy Policy .

McDonald’s Business Studies Case Study

DOWNLOAD THE RESOURCE

Resource Description

role of operations management ● strategic role of operations management – cost leadership, good/service differentiation

Operations → business processes that involve transformation/production – Production = conversion of inputs into outputs

Customer focus → minimising waste, fair value for labour, low cost, reflect changes in consumerism Profit centres → aspects of the business that derive revenue and profits Cost centres → areas which cost is attributed

Cost Leadership → aiming to have the lowest cost & be most price-competitive

CASE STUDY: McDonald’s → Mcdonald’s invested in a global training program (Hamburger University) to ensure efficiency and reduce overall costs

goods and/or services in different industries

Goods/Services Differentiation

Standardisation → making products that are all the same

Product Differentiation → distinguishing products

Differentiating Goods Differentiating Services

– Product features – Product quality – Augmented features (add-ons or benefits) – Time spent on a service – Level of expertise – Qualifications and expertise of the service provider – Quality of the materials/technology used in service delivery

Goods Differentiation Perishable goods → short lead times, distributed fast

Non-perishable goods → operations similar in all industries, more durable goods

Self-service → encouraging customers to take initiative

● interdependence with other key business functions

Interdependence → mutual dependency on one another

Interdependence with… Marketing → producing goods based on market needs, marketing based on cost, product design affects transformation

Finance → cost of production, labour costs

Human Resources → staff needed for production, technology changing operations, outsourcing specialists influences

● globalisation, technology, quality expectations, cost-based competition, government policies, legal regulation, environmental sustainability

Globalisation → removal of trade barriers between nations, operating on an international scale & develop international influence

CASE STUDY: McDonald’s → McDonalds has 37,000 restaurants in 120 countries → in 2018, McDonald’s ranked 11th on Forbes list of most valuable brands → 2017 report showed US$91billion in sales, showing success in maintaining competitive advantage by adapting to global conditions

Supply chain management → managing the flows of goods and services, including transformation. – Businesses need a reliable supply chain that is responsive to changes

Technology → the design, construction and application of innovation devices, methods and machinery in the operations process.

– Administrative level → organisation, planning, decision making – Processing level → manufacturing, logistics, quality management, inventory management

CASE STUDY: McDonald’s → digital menu boards, automatic drink dispensers, online ordering apps

Quality → how well designed, made and functionable goods are. – Expectations that people have of business determines the way products are designed, created and delivered.

CASE STUDY: McDonald’s → after complaints of coffee quality, McDonalds made a promise in 2011 that coffee would be barista made. → in 2018, Mcdonalds started using fresh (not frozen) beef patties, despite taking longer to cook, quality was improved

Cost-based Competition → derived from the breakeven point Fixed costs = costs that do not change regardless of business activity Variable costs = costs that vary in relation to business activity/level of production

CASE STUDY: McDonald’s → in 2015, Mcdonalds dominated western Europe, other businesses attempted to compete by lowering their prices → close focus on cost, helps them to maximise profits Government policies & Legal Regulation → Work Health and Safety Act 2011, Fair Work Act 2009, Superannuation Guarantee Act 1992, Racial Discrimination Act 1975, Taxation Act 1953 → influence business operations

CASE STUDY: McDonald’s → McDonalds is bound by obligations in relation to marketing, advertising, product safety and quality guarantees (Australian Consumer Law 2010) → they must ensure conscionable conduct at a local, state and federal level Environmental Sustainability → business operations shaped around sustainable practices

CASE STUDY: McDonald’s → in 2012, McDonalds opened the Australia’s first Green star accredited restaurant in VIC

● corporate social responsibility CSR → doing more than just complying with the law, but having higher respect for people, community and environment Triple Bottom Line → financial profitability, social impact and environmental impact of a business.

Report a problem

Popular HSC Resources

• Speech on George Orwell ‘1984’ – Human Experiences
• How To Survive the HSC
• One Night the Moon – Analysis (Video)
• 2020 – Physics – PHS (Trial Paper)
• Business Studies Influences on HR (Quiz)
• Sci Ext – Portfolio Pack
• 2020 – Science Ext – Exam Choice (Trial Paper)
• Domino’s Marketing Case Study

Become a Hero

Easily become a resource hero by simply helping out HSC students. Just by donating your resources to our library!

What are you waiting for, lets Ace the HSC together!

Join our Email List

No account needed.

Get the latest HSC updates.

All you need is an email address.

Academia.edu no longer supports Internet Explorer.

To browse Academia.edu and the wider internet faster and more securely, please take a few seconds to  upgrade your browser .

Enter the email address you signed up with and we'll email you a reset link.

• We're Hiring!
• Help Center

How does Mcdonalds manage their inventory

Related Papers

Joachim Hasebrook

scielo.unal.edu.co

Jesus Ortiz

Tom Nyamache

Self adornment plays a significant role in ensuring the continuity of the political, socio-cultural and ethno-moral principles of communities in Kenya. Whether with permanent marks like tattoos or scars, or temporary decorations like makeups, clothing and hairstyles. Adornment is a way of signaling an individual's place in society, marking a special moment, celebrating a transition in life or simply following a fashion. This paper analyses the history of adornment practices from ancient civilizations in Kenya. The study was informed by cultural history theory. Cultural history focuses on the changes and practices in human agency. Culture is transmitted across generations through the memory which is a faculty of the individual mind. Adornment is part of societal practices and basically the skin serves as a visible way of defining individual identity and cultural differences. It also serves as a text upon which reality is inscribed. Since the nineteenth to the twenty first century...

Cuba and the European Union Interregional Cooperation and Global Insertion Susanne Gratius and Raynier Pellón Azopardo (eds.)

Tomasz Rudowski

First, we will examine regional integration and dialogue, which the Caribbean Regional Protocol emphasises as a key issue, and we will refer to the experiences of Cuba and Caribbean to date. We aim to show the possible scenarios for Cuba’s inclusion in the Caribbean agenda and the challenges to be faced, paying attention to Cuba’s historical relationship with the Caribbean region and the EU. A SWOT analysis will be used to consider the significant factors for Cuba’s possible incorporation in post-Cotonou, showing the individual conditions behind any decision the country makes in the context of strengths and weaknesses as well potential opportunities and threats. This will help us construct possible scenarios.

Pratiques. Linguistique, littérature, didactique

Jean-François Laplénie

Après une décennie de pièces réputées sombres, M. von Mayenburg confirme avec Perplexe (2010) une transition vers la satire sociale. La pièce se compose d’un enchaînement fluide de situations dans lesquelles les mêmes quatre personnages sont appelés à occuper des positions différentes. Dans ces glissements insensibles et virtuoses, le réalisme psychologique ne joue pas le rôle de donner vraisemblance aux caractères, qui demeurent relationnels et sans profondeur, mais de tuiler ensemble les différentes situations de couple pour laisser affleurer les effets de domination sociale et rendre sensible, jusque dans l’effondrement final des conventions théâtrales, la fragilité des identités. [EN] Perplex in front of Perplex. Psychological Realism and its Subversion in Marius von Mayenburg Abstract : After a decade of reputedly dark plays, M. von Mayenburg (2010) confirms with Perplex a transition to social satire. The play consists of a fluid sequence of situations in which the same four characters occupy different positions. In these imperceptible and meticulous shifts, psychological realism does not play the role of giving verisimilitude to the characters, who remain relational and shallow, but of tiling together the different couple situations to show the effects of social domination and the fragility of identities. Perplex vor Perplex. Unterminierter psychologischer Realismus bei Marius von Mayenburg Zusammenfassung: Nach einem Jahrzehnt, in dem Marius von Mayenburg düstere Texte verfasst, bestätigt er mit Perplex (2010) die Hinwendung zur Gesellschaftssatire. Nach einem Jahrzehnt mit Stücken, die als düster gelten, bestätigt M. von Mayenburg mit Perplex (2010) seine Hinwendung zur Gesellschaftssatire. Das Stück besteht aus einer fließenden Verkettung von Situationen, in denen dieselben vier Personen unterschiedliche Positionen einnehmen. In diesen unmerklichen und virtuosen Verschiebungen spielt der psychologische Realismus nicht die Rolle, den allerdings recht seichten Charakteren Wahrscheinlichkeit zu verleihen, sondern die verschiedenen Situationen aus dem alltäglichen Eheleben der Protagonisten zusammenzuknüpfen, und somit die Effekte der sozialen aufzudecken und beim Zusammenbruch der Theaterkonventionen am Ende des die Zerbrechlichkeit der Identitäten spürbar zu machen.

Ria Naena Febriana

Journal of the Knowledge Economy

Amine Nafla

Mattia Luigi Pozzi

Biophysical Journal

walter balanta

Acta Anaesthesiologica Scandinavica

Adnan Tariq Bajwa

MacDonald Change Management Case Study

McDonald’s, one of the most recognizable fast-food chains in the world, has undergone significant changes in recent years to adapt to changing market trends and consumer preferences. 

These changes required a comprehensive change management strategy to ensure a smooth transition and successful implementation. 

In this case study, we will examine external and internal factors that forced McDonald’s to initiate changes, key steps taken to implement those change, and the results of the change management.

Let’s start with overview and background of MacDonald.

Overview of MacDonald History 

McDonald’s is a global fast-food chain that was founded in 1940 by Richard and Maurice McDonald in San Bernardino, California. 

The original concept was a small drive-in restaurant that served burgers, fries, and milkshakes. 

In the 1950s, Ray Kroc, a milkshake machine salesman, became involved in the business and helped to transform it into a franchise model, which rapidly expanded across the United States and eventually the world. 

Today, McDonald’s operates over 38,000 locations in more than 100 countries and serves approximately 69 million customers daily. 

Over the years, McDonald’s has faced many challenges and has adapted to changes in the market and consumer preferences, which has required the company to implement significant changes in its business model and operations

External factors that caused change 

There were several external factors that contributed to the need for change at McDonald’s. Here are a few examples:

• Changing consumer preferences: Consumers are becoming more health-conscious and are demanding healthier food options. As a result, McDonald’s had to adapt its menu to include more salads, fruits, and vegetables to appeal to these consumers.
• Increased competition: There is intense competition in the fast-food industry, and McDonald’s faces competition from both traditional fast-food chains and newer, more innovative brands. To stay competitive, McDonald’s had to find ways to differentiate itself and offer unique value propositions to customers.
• Economic factors: Economic downturns and changes in consumer spending habits can have a significant impact on fast-food sales. McDonald’s had to adapt to changing economic conditions and find ways to maintain sales growth during challenging times.
• Technological advancements: Advancements in technology have transformed the way that consumers order food and interact with restaurants. McDonald’s had to embrace new technologies such as mobile ordering and delivery services to meet the changing needs of its customers.

Internal factors that caused change 

There were several internal factors that contributed to the need for change at McDonald’s. Here are a few examples:

• Declining sales: McDonald’s experienced declining sales in certain markets, which prompted the company to re-evaluate its business model and operations.
• Operational inefficiencies: McDonald’s had become too reliant on its traditional business model and was struggling to keep up with changes in the industry. The company had to find ways to streamline its operations and make them more efficient to remain competitive.
• Cultural resistance to change: McDonald’s had a culture that valued consistency and uniformity, which made it challenging to implement significant changes. The company had to overcome this cultural resistance and find ways to foster a culture that supported innovation and change.
• Employee engagement: McDonald’s recognized that its employees play a vital role in the success of the company and had to find ways to engage and motivate them during the change management process. The company had to communicate effectively with its employees and provide them with the tools and resources needed to embrace the changes.

What were 03 biggest changes that Macdonald successfuly implemented

There were several significant changes that McDonald’s successfully implemented as part of its change management process. Here are three of the most significant changes:

• Menu diversification: McDonald’s recognized the need to adapt its menu to changing consumer preferences and introduced a range of healthier menu items such as salads, fruit, and grilled chicken sandwiches. The company also expanded its breakfast menu to include all-day breakfast and introduced new menu items such as the McWrap to appeal to a wider range of customers.
• Digital transformation: McDonald’s recognized the importance of embracing new technologies and embarked on a digital transformation strategy. The company introduced self-service kiosks in its restaurants, mobile ordering, and delivery services. McDonald’s also launched its own mobile app, which allows customers to order and pay for their food from their mobile devices.
• Restaurant redesign: McDonald’s recognized the need to create a more modern and appealing restaurant experience to attract younger customers. The company invested in a redesign of its restaurants, which included a more contemporary design, comfortable seating, and interactive features such as touchscreen ordering. The company also introduced table service in select locations to improve the customer experience.

These changes were significant and helped McDonald’s to remain competitive and appeal to changing consumer preferences. The successful implementation of these changes required a comprehensive change management strategy that involved collaboration with employees, effective communication, and a commitment to innovation and continuous improvement.

MacDonald’s leadership role in implementing change initiatives

McDonald’s leadership played a crucial role in the successful implementation of change initiatives. The company’s leadership recognized the need to adapt to changing consumer preferences and competitive pressures and committed to a comprehensive change management strategy to drive growth and improve performance.

One of the key leadership roles was played by Steve Easterbrook, who served as the CEO of McDonald’s from 2015 to 2019. Under Easterbrook’s leadership, McDonald’s implemented several changes, including menu diversification, digital transformation, and restaurant redesign.

Easterbrook was instrumental in driving the company’s innovation agenda and creating a culture of continuous improvement. He encouraged employee engagement and empowerment, which helped to drive innovation and ensure that employees were invested in the changes.

Easterbrook also prioritized effective communication, ensuring that employees and customers were informed about the changes and that feedback was solicited and acted upon.

In addition to Easterbrook, McDonald’s leadership team was also instrumental in the successful implementation of change initiatives. The company’s leadership team provided the vision, strategic direction, and resources necessary to implement the changes effectively. They also provided the support and guidance necessary to overcome resistance to change and ensure that the changes were embraced by employees and customers.

Results of the successful change management implemented by MacDonald

One of the biggest outcomes of the changes implemented by McDonald’s was an improvement in its financial performance. The changes helped the company to increase sales, improve profitability, and strengthen its competitive position in the fast-food industry.

For example, McDonald’s menu diversification strategy helped to attract new customers and retain existing customers who were looking for healthier food options. The introduction of digital ordering and delivery services also made it easier for customers to order from McDonald’s and increased the convenience factor, which helped to drive sales growth.

In addition, the restaurant redesign helped to create a more modern and appealing restaurant experience, which helped to attract younger customers and improve customer satisfaction. The successful implementation of these changes helped McDonald’s to achieve its financial goals and improve its overall performance.

Another significant outcome of the changes was the improvement in McDonald’s brand perception. The company’s menu diversification and focus on healthier food options helped to improve its reputation and attract customers who may have previously avoided McDonald’s due to concerns about the nutritional value of its food.

The introduction of digital ordering and delivery services also helped to improve the customer experience and create a more positive perception of the brand. Overall, the changes implemented by McDonald’s helped to strengthen the company’s brand and improve its reputation in the market.

Final Words 

McDonald’s change management process provides an excellent case study for other companies looking to implement significant changes to remain competitive and adapt to changing consumer preferences. By following a comprehensive change management strategy that involves employee engagement, effective communication, and a commitment to innovation and continuous improvement, companies can successfully implement changes that drive growth, improve profitability, and strengthen their competitive position in the market.

About The Author

Tahir Abbas

Related posts.

How to Write a Business Case for a Project? – Step-by-Step Process

Nudge Theory in the Workplace – Influencing Employees Behaviour

10 Change Management Team Building Activities

The Federal Register

The daily journal of the united states government, request access.

Due to aggressive automated scraping of FederalRegister.gov and eCFR.gov, programmatic access to these sites is limited to access to our extensive developer APIs.

If you are human user receiving this message, we can add your IP address to a set of IPs that can access FederalRegister.gov & eCFR.gov; complete the CAPTCHA (bot test) below and click "Request Access". This process will be necessary for each IP address you wish to access the site from, requests are valid for approximately one quarter (three months) after which the process may need to be repeated.

An official website of the United States government.

If you want to request a wider IP range, first request access for your current IP, and then use the "Site Feedback" button found in the lower left-hand side to make the request.