Issues Surrounding Mcdonald’s Intermediate Supply Chain

Introduction
This report explains and analyses a visit to a supply chain organisation in the service industry. Following group discussion, it was decided that a McDonald’s restaurant and its intermediate supply chain would be used. This decision came from prior knowledge within the group that there were inventory issues at a local McDonald’s restaurant. The store often runs out of stock requiredto produce core products which results in unhappy customers and a poor image for the restaurant.
A plan was formulated in order to effectively analyse the literature and the store in order to come up with recommendations for improvements in this supply chain. Secondary research in the form of journal articles and academic textbooks provided the basis for the literature review, with integrationand collaboration in the supply chain as the main focus. Having compiled a series of questions based on the problem identified and the literature review, a visit was arranged to the McDonald’s restaurant on Grainger Street, Newcastle upon Tyne. The visit provided more depth to the research and further insight into the reasoning behind the issues identified.
As part of the investigation, it wasintended to visit a Burger King restaurant in order to compare their supply chain and the way in which they operate to the findings from the McDonalds visit. Unfortunately this was not possible as local Burger King restaurant’s claimed to be too busy during this period to accommodate a visit.
 
McDonald’s Intermediate Supply Chain
McDonald’s intermediate supply chain consists of its suppliersand customers.
McDonald’s use a 3rd party logistics company, KeyStone, which look after all of McDonald’s purchasing, manufacturing and warehousing. Orders are received 3 days before the delivery date based on projections in sales.
The ordering system is automated based on what the computer thinks will be sold. This data is derived from previous sales from the previous weeks and years. There isalso a human override system to compensate for changes in products and for stock counts if there are stock out or waste issues.
From the suppliers and distributors the stock is delivered to McDonald’s stores every Monday, Thursday and Saturday mornings. The frequency is based on the shelf life of the stock as well as the demand patterns.
After the stock has been delivered it is store in a stockroom which also includes a chiller and freezer. Stock is then taken out of the stock room based on a 24/2 strategy.
McDonald’s 24/2 strategy is split between 24 hours of dry stock and 2 hours of chilled and frozen stock. This means that 24 hours worth of dried stock is taken out of the stock room each morning and set up on the shop floor ready for use. Stock is also moved to grill side freezersor dressing tables every two hours ready for immediate use. The main reason for this is for quality assurance to make sure stock is readily available but not over cluttering the shop floor or being out of its recommended storage for too long.
Orders are then taken from customers using an EPOS system which links back to the main computer system.
Literature Review
Robust integration andcollaboration in the supply chain is essential in ensuring there is never too much or too little stock at either end of the supply chain. Collaboration in the supply chain comes in a wide range of forms, but in general has a common goal: to create a transparent, visible demand pattern that paces the entire supply chain (Holweg et al, 2005).
Our expectations were that there are a vast amount ofsimilarities between theoretical supply chains and real life supply chains.
Areas of business excellence could also be used to relate McDonald’s to the literature to find ways of improvement not only in McDonald’s but also the 3PL company.
Theory tends to lead towards integration and collaboration working together to significantly improve performance (Mena et al, 2009).
Frohlich and Westbrook (2001)...