See discussions, stats, and author profiles for this publication at: https://www.researchgate.

net/publication/348183221

Supply chain management and its tools used by McDonald's in India

Research · January 2021

DOI: 10.2139/3719680

CITATIONS READS

0 845

3 authors, including:

Ajay Kumar Pagare Robin Khandelwal

Jaipur National University Jaipur National University
7 PUBLICATIONS   0 CITATIONS    2 PUBLICATIONS   0 CITATIONS   

SEE PROFILE SEE PROFILE

Some of the authors of this publication are also working on these related projects:

Improving production rate though maintenance strategies View project

All content following this page was uploaded by Ajay Kumar Pagare on 04 January 2021.

The user has requested enhancement of the downloaded file.

Supply chain management and its tools used by McDonald’s in
India
Ajay Kumar Pagare, Assistant Professor, department of Mechanical Engineering, Jaipur National
University, [email protected]
Ruby Kumari, Student of Mechanical engineering Department, Jaipur National University,
[email protected]
Robin Khandelwal, Assistant Professor, department of Mechanical Engineering, Jaipur National
University, [email protected]

Abstract McDonald’s is largest fast food chain in world, it is also known for its speed of operation. It is present in 118
countries with 36900 outlets. It is very crucial task to satisfy every customer where their expectation are very high, all
they want is hygiene, taste, cleanliness, reliable price, fast delivery and many more. In India there is 250 eating outlets
covering 40 cities and they add more outlets every time. McDonald’s entirely outsourced its service and managed
quite long supply chain network in India. It uses various model like HUB and SPOKE model and different software
like SAP SCM,RAMCO ERP with COBRA. The explanation will help to understand the flow of supply chain
management and its tool in India.
Keywords — COBRA, RAMCO ERP, Supply chain management, multi layered SCM, Hub and Spoke, Pull supply chain, SAP

India has both critical and multilayered supply

I. INTRODUCTION
chain which is divided in two categories: Tier 1
McDonald’s is an American fast food company, and Tier 2 suppliers
founded in 1940.it is the world largest chain by Tier-1 suppliers provide processed products to
revenue and serves 69million customer daily in distribution center e.g. vegetable and chicken
more than 118countries.It has approximately patties. There are 40 suppliers in which 14 are
36900 outlets covering 118 countries. The core suppliers or Tier-1 suppliers
McDonald’s corporation revenues generated from
their rent, royalties and fees paid by the
franchisees as well as sales in company operated
restaurants.
As of report published in 2015, McDonald’s is the
world’s fourth largest private employer.
In India the first outlet of this chain opened on
October 13, 1996 in Delhi and it was first
McDonald’s restaurant in the world not serving
beef on its menu. The complex supply chain
process, India is 2nd highest populated country in
the world and to work in this environment every
company need to manage its operations very
effectively and efficiently, supply chain
management is one of them. McDonald’s India
has 250 outlets and 9000 employees including
restaurant staff across the whole country and its
intricate supply chain network is managed by a
small group of people. Supply chain network of
McDonald’s in India have its own kinds:
 100 percent outsourced
 Lean with no backup staff

Electronic copy available at: https://ssrn.com/abstract=3719680

 management. RKFL controls and manage daily
activities of supply and demand, keeping tracks on
working capital management, delivery time, lead
time, payments etc. any required item is sourced
directly from RKFL. Only Coke and Bun directly
sent to restaurant. Whole supply chain network
work on two systems HUB & SPOKE SYSTEM,
where Hub is distribution center and another one
is PULL-SUPPLY CHAIN SYSTEM.

Tier-2 suppliers rest 26 suppliers out of 40 which

are generally growers and processors who provide Technology in SCM at McDonald’s
lettuce, poultry products, potato and coating
system that are used for marinating and for India:
coating of patties and chicken. Some tier-2 As time goes situation changes, and according to
suppliers in India are Vista processed foods and Product Life Cycle change is very important to be
McCain Food India Pvt. Ltd and so on. Most of in growth and maturity stage. Now a day’s
the Tier-2 suppliers are local suppliers. The flow competition is hard and complexities in every
of products is from Tier-2 to Tier-1 suppliers for operation are increasing as standard time of doing
processing and then it is transferred to distribution work is decreasing. The best way to cope up with
center through proper refrigerated trucks. situation is integration of technology.
These trucks are customized and have different For the effective and efficient functioning of SCM,
compartments of various temperature zones various software are incorporated, the power of
according to the food- frozen product at - technology make every process smooth and
18℃ to -20℃, chilled product from 1℃ to 4℃ effortless.
and dry products at ambient temperature. In McDonald’s suppliers are using SAP software
while distributer are using RAMCO ERP with
COBRA software. These software automated the
Monopoly of one distribution partner: process of uploading of orders, daily activities,
The whole management and distribution of staff scheduling process, daily forecasting of
McDonald’s products in India is look-over or required product etc as well as it also send
handled by Radhakrishna Foodland Pvt. Ltd. predicted information to DCs.
(RKFL), the only distribution partner.  SAP SCM: It plays an important role in
RKFL manages all distribution centers which are 4 achieving coordination between its entire
in number, two are primary and two are secondary
supply chain processes with respect to
distribution center. It also controls the movement
of refrigerated truck in entire supply chain change in environment.

Electronic copy available at: https://ssrn.com/abstract=3719680

 It helps in establishing connection between Production management, Human resource,
customers, manufacturer, processor, Asset management and much more. By
retailers, business partners and global using this organization can digitize their
connections to generate result oriented daily operations and help themselves to
solution. focus on other aspects of business.
The various components of SAP are as RAMCO provide very effective solution in
follow: logistics management, it include all the
 SC Collaboration-Here operation and process related to
collaborative forecasts are transportation.
generated. Distributors of McDonald’s uses RAMCO
 SC Planning-Here operational plans because it offers great logistics
are generated as per data in management, the multi modal system that
system. provide order planning, load consolidation,
 SC Coordination-This component documentation, carrier selection and
organize and coordinate the execution of whole shipping process.
exchange of data and information Delivery proof can also be obtained on
between departments. mobile phone using this software.
 SC Execution-This component
make sure that plans are executed  COBRA Software: It stands for
properly to get optimum result. ‘Consolidation of Back office and
Restaurant Accounting’ It is a centralized
Supplier’s uses SAP in McDonald’s to get these
software used by McDonald's for its
benefits
 Reduce the days sales outstanding process. It has various function related to
 Efficiently manage forecasts and handle material management, food & beverage
sudden change in demand and supply. costing and back office accounting. It
 Proper inventory management and reduce covers these functions
lead time by optimizing other process.
 Communication is very fast  Material requisition
 Reduction in production cost because of  Purchase
improvement in production.  Receiving
 It reduces transportation taxes and reduces  Receipt management
transportation errors.  Financial reporting

Conclusion:
McDonald's Supply chain is handled in very
 RAMCO ERP: ERP stand for Enterprise unique way with very number of staff. after having
Resource Planning, its basic function is to 100 percent outsourcing McDonald's is growing
integrate all the process of different 30 to 40 percent every year in India with
department into single one. RAMCO is implementation of supply chain management
one of the ERP software that provides software in a a very effective way. This system of
model can be used in other sectors also.
numerous cloud based solution to its
customer. RAMCO promise great
efficiency and deliverability at lowest cost REFERENCES
by integrating various department [1] http://www.mcdonalds.com/us/en/our_story.html
operations. There are solutions for Quality [2] http://www.mcdonaldsindia.com/aboutus.html
assurance, Supply Chain Management, [3] http://www.food-service-
europe.com/trendscout/hottrends/pages/

Electronic copy available at: https://ssrn.com/abstract=3719680

[4] 4.http://www.icmrindia.org/free%20resources/cas
estudies/McDonald%20food%20ch ain.htm
[5] http://sourcing3.com/blog/mcdonalds-india-supply-
chain/3/
[6] http://logistics.bafree.net/mcdonalds-india-supply-
chain/
[7] http://www.prologicfirst.com/hotelsoftware/hotel-
back-office-software.html

Electronic copy available at: https://ssrn.com/abstract=3719680

View publication stats