Supply chain management
"Logistics management is an integrating function which coordinates and optimizes all logistics activities, as well as integrates logistics activities with other functions, including marketing, sales, making, finance, and information technology. "(Jonsson, 2008, p 4)
Logistics Management or Supply Chain Solutions, both play a significant role in identifying the overall success of your company. Major results are located in supply chain if there is even small variance in inventory; to get over such consequences an efficient logistics is essential for any company. Logistics management includes advanced of competences and expert knowledge. Handling from raw material to final level at right put on right time is managed by logistics management. To leverage opportunity in emerging markets, companies are focusing on consolidating and aligning their resource string management infrastructure, techniques and procedures to reduce costs and improve efficiency.
A Supply string contains the group of activities and organisations that materials move through on their voyage from first suppliers to last customers. Every product has its own unique supply chain and these can be both long and complicated. (Waters; 2003; p. 7) There's a group of steps engaged from the foundation of services or product and its own consumption. The steps involved in this are known as supply chains. The statement will provide procedures of McDonalds in UK and can focus on its supply string management.
Company Qualifications and Introduction:
McDonald's Organization is the world's leading food service firm. The corporation began as a little drive-through in 1948 by two brothers, Dick and Mac McDonald. In addition, McDonald's opens a new restaurant every 3 hourfs. 'Big Macintosh personal computer' is the largest interest and backbone of the corporation. Moreover, McDonald's maintains its competitive benefits by constantly creating new what to add onto its menu. This shows us that McDonald's tactics an analyzer type of strategy, bringing out new items and defending its existing ones.
McDonald's opened its first UK restaurant October 1974. In Dec 2004, there were over 1330 McDonald's restaurants operating in the UK. Around 60% of the are owned or operated and run by the business. The remainders are operated by franchisees. Each McDonald's restaurant is set up as an unbiased business, with restaurant management responsible for accounting, operations, inventory control, community relations, training and human resources.
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Supply string management strategy:
The complete SCP model
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Supply chain management encompasses the planning and management of most activities involved in sourcing and procurement, transformation and all logistics management activities. Companies choose supply chain management to ensure that supply chain is working effectively and providing advanced of customer satisfaction with low cost. SCM combines the demand and offer management within and across companies. (Jonsson; 2008; p. 5) The quick-service-restaurant (QSR) giant has built an entire process through the years for owning a superior delivery system, starting on the live-animal production side and jogging all across the supply chain until products reach their last destination as McDonald's customers' favourite.
Nature and Procedure of Organisation:
McDonalds Firm is the world largest chain of junk food restaurant, portion more that 58millions customer every day. A McDonald's restaurant is operated by either franchisee or the organization itself. The organization revenue generates from hire, royalties and fees paid by franchisees and also from sales in company operated McDonalds. The menu is comprises hamburgers, cheeseburgers, chicken breast and fish products, French fries, breakfast time menu, soft drinks, shakes and desserts. (McDonalds Website n. d. )
Logistics PROVIDERS:
Many organisations do not perform many of their own logistics activities. They organise logistics companies to take advantage of efficient and experienced specialists to look after the transport, while the organisation can focus on its core businesses. An organisation mainly sorts a partnership with other company to look after warehousing, purchase of materials, materials handling and many of the other functions of logistics. When one company uses others to run its logistics are known as third party or 3PL or contract logistics. For McDonalds Key rock circulation works as a 3PL. (Waters; 2003; p. 90)
Keystone Circulation UK is a subsidiary of Keystone Foods LLC, which gives food processing and syndication services to quite a large amount of customers in America, Asia, and European countries. Keystone circulation was made in 1977 in partnership with McDonalds for its UK baker of hamburger bun and since then company is progressing along with McDonalds. Keystone distributor has been successfully supplying everything to its existing customer need to perform the business successfully. Keystones manages a big part of McDonalds UK resource chain and replenishing its 1200 UK stores from mops and ketchup to the essential ambient, fresh, frozen foods which makes in the McDonalds menu. (Logistic Business IT Website; 09. Nov. 2009)
Structure of Source Chain:
Structuring the supply chain requires an understanding of the demand patterns, service level requirements, distance concerns, cost elements and other related factors. (Rock ford Consulting Website N. D. ) Moving of material inward is upstream and outward is downward. The upwards activities are divided into tiers of suppliers. A supplier that sends materials right to the procedures is first tier distributor; the one that send materials to a first tier provider is another tier supplier; the one which sends materials to another tier supplier is another tier supplier and so on to the original source. Customers are also divided into tier. One that gets product immediately from the operations is first tier customer and so on to last customers. (Waters; 2003; p. 8)
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McDonalds deals with different suppliers for its different products and eventually which seeks to provide customers great style and on affordable price. McDonalds has been employed in partnership with home brand such as with Coca cola, Tropicana and Buxton who act as second tier company because they provide its products to keystone syndication who works for McDonalds as first tier supplier. Also there are volume of other suppliers such as Sunlight Valley and Moy Area who source McDonalds with Fowl product each one of these works as second tier supplier for McDonalds. Also Ecsa, the designers of the meat patties who are fundamental for success of resource chain also supplies its product to McDonalds first tier supplier (Keystone Vendors). All the various supplier deals with Keystone Distributor, who then transmits material directly to McDonalds to run the business smoothly by giving on affordable prices, delivering products on time and helps in outward activity of requests and receiving payments from customers. Overall, keystone is a important player in structure of supply chain for making upward and downward activity successful. (Constitute your own mind Website; March 2009)
Managing the resource chain:
As the McDonalds UK distributor, it's the responsibility of keystone to supply the perfect service and product every time they need and to coordinate the necessity of a huge selection of McDonalds around UK. They work over the supply chain making sure the product quality and stability is kept while transferring delivery to restaurant. In order to achieve this Keystone uses the most advanced technology and software to work meticulously with McDonalds marketing and business plan. Keystones ensures handling top and troughs as they arrive for keeping even supply string and ensures there are no out of stocks. On an average Keystone provides five days inventory in their store and delivers 3 to 4 times per week inventory in each restaurant. To meet that delivery they may have 300 vehicles, tractors and trailers that assist them to perform these logistic functions within UK and like the Isle of Man and stations Island by delivering around one million situations each week. Their biggest task is ensure those vehicles reach the restaurants promptly and comprising everything being purchased and meeting completely quality of product including iced, chilled or dried. (Business Review European countries website 10th. July. 2010)
Inventory Control at McDonalds:
McDonalds presented in 2004 a central stock management function known as Restaurant supply Planning Department. The team build these factors into the new planning and forecasting system called Manugistics which forecast likely demand of finished menu items such as Big Macs. McDonalds deals in three types of stock like every business has:
Raw Materials:
These ingredients get into producing finished product. They are really buns, beef patties, paper cups and packaging in case there is McDonalds. They are provided three and five times a week. You will discover three parts of raw material Freezing, chilled, ambient which turn up together in a single lorry so that every product can be stored at their suited temperature.
Work-in-progress:
The process of being made into finished product is discussing as Work-in-progress. A Big Mac involves a bun, two meat patties, lettuce, cheese, pickles, onions, sauce and a small amount of seasoning. The restaurant waits before order is placed so that Big Macs continues hot and fresh when served.
Finished Stock:
The product ready for immediate deal to customer are known as completed products. At lunch time and busy night hours restaurant will have range of Big Macs and hens ready for sale to customers. First-in-first-out method is utilized to handle all stock whether raw materials, work-in-progress, or done product, to be able to minimise waste and also it helps in providing fresh food in any way time to each and every customer.
Inventory Management:
The process of making sure there will do stock at all times to meet customer demand whilst minimising expensive waste products is known as stock management. High cost is involved with retaining too much stock so McDonalds uses slim stock control solution to save money.
Inventory ordering supervisor work with the new stock control system, Manugistics, to ensure sufficient uncooked stock can be found. This can help restaurant to create the meals required based on the forecasted demand. Forecast is done on the basis of restaurant ancient product-mix data from this past year, store-specific and nationwide causal factors such as nationwide promotions and institution vacations, information from store managers about factors that might impact demand. e. g. road closure or local events and new offers.
Restaurant manager need to ensure that the info they enter the system is really as accurate possible. Each day restaurant supervisor record opening and closing stock of key food items. Other items are saved weekly and monthly basis. The store computers system identifies any stock count number deviations from previous stock count so that it gives chance to manager to research missing product. For example, the supervisor may have missed off a container of regular meat while keeping track of them previously the shift.
Ordering Process:
The purchasing process involves keeping a small buffer stock. That is extra amount of inventory kept to meet any unforeseen higher demand. Inventory supervisor uses a web based communication software called 'Weblog' to view and amend store order proposals. Every time of buying weblog creates a proposed order to analyse and amend if possible. Weblog helps professionals to see what quantity have been purchased, how much is the existing stock level and how much stock is due to be shipped at a specific time. The system automatically creates a delivery note that gives the exact quantities and descriptions of the delivery. The administrator must click confirm on weblog when they surface finishes selecting amount of inventory they had a need to use.
Serving Customer:
Competition and increasing consumer choice for variety and healthier food makes McDonalds to increase the range of menu. Customers getting into McDonalds are split into those who know about menu and the ones who are new and arriving to restaurant first time and are not sure of menu. Apart from selling foods by itself McDonalds also sell ADDITIONAL VALUE meals which contain a burger, fries and a drink. When customers gets to the front counter-top and place their order, the till person applies two selling strategy. The 'retailing up' technique where order is modified by requesting customer by recommending larger portion and also by adding extra item such as drink and a different one is 'suggestive offering' approach where almost everything extra has been asked to sell every single customer. For instance if customers comes and buys two three individuals meals and one two children meal and they are being asked if they wished to buy two apple pies for 1. 50.
The till person punches the order on to their till. There are a few standard food items which are designed to be performed in creation bin, the counter-top person select the food what is being bought in a particular sequence that involves cold beverages first, and then hot refreshments second, then fries and finally burgers.
If a specific meal is unavailable in the development bin, then the counter person calls the order to the creation one who then calls the food order to the grill area. Certain foods in slack period are prepared to order due to their less demand and also to avoid waste products.
When the order in not ready the till person ask the first customer to pay and hang on aside if its eliminate order if its eat in they ask customer to take a sit and order will be taken to your table, and start dealing with the next person in the line. Each time till person completes the order there is a button 'offered' which is usually to be punched in order to let computer know that the order is completed. As if it not done the computer will not allow taking eleventh order. So each and every time order is done its necessary to serve it off.
Performance Improvement:
Keystone manages the supply chain to ensure that there is always sufficient stock to fulfill demand when orders are received. The business's included order and management system images color coded descriptive picking brands which aid restaurants in stock rotation. Purchases are then collated on to an objective built trailer made for the simultaneous delivery of frozen, chilled and ambient product stored at appropriate heat. This means that the restaurants complete order is supplied in one delivery, whilst maintaining the merchandise in perfect condition. This technique works extremely well, but there's always room to boost operations. Keystone is working on an initiative that it hope will further progress the efficiency of the business's operations. "We're critiquing the entire delivery schedule as well as the entire delivery system together with McDonald's to find a far more affordable and similarly eco-friendly delivery plan with them, " says Assal. "That's a major project for us at the moment and we're focusing on that in detail. Which will be rolled out in the returning months and it will create a major cost advantage to the complete McDonald's supply chain. "
It's also very important to Keystone's environmental insurance policy to chime with McDonald's high profile efforts in this field. "All packaging in your circulation centres, both cardboard and plastics, is collected and recycled - we recycle from office stationery down to warehouse packaging. At the moment, we run all our vehicles on diesel that contains five percent bio-diesel. But we're focusing on a project to utilize completely bio-diesel in all our vehicles by the end of this time, instead of fossil gas diesel. We believe will have a natural effect on the company; it'll neither be a cost benefit or a cost saving.
We also have lots of initiatives light hypersensitive switches, low usage bulbs inside our warehouses. We try to play our part and do that which you can to lessen our carbon footprint. " It's policies like these that produce Keystone a really intensifying company, and one which is moving with the times, equally as McDonald's changes its functions for a changing fast service industry.
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The diagram below shows the forwards stream of materials from upstream to downstream, the bidirectional flow of information, and the movements of money from downstream to upstream.
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Flows in the source chain (from Spekman et al [1998])
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It is simple to see that these factors are highly adjustable in nature and this variability needs to be considered through the supply chain examination process. In addition, the interplay of the complex considerations might have a substantial bearing on the outcome of the source chain evaluation process. http://rockfordconsulting. com/supply-chain-management. htm
