Did you know that McDonald serves 75 burgers per second? We all knew that McDonald was the biggest fast-food chain in the World (before KFC, Subway and Pizza Hut), but what made its success can be a little blurry… Part of the reason why is their incredible logistics system. They actually had the 2nd best Supply Chain Management in the World in 2016 (after Unilever). Bob Stewart (McDonald’s Corporate Vice President of Strategic Supply Chain Services) said: “As a restaurant, you have to be prepared to offer menu items when customers want them, not when it’s convenient to you“.
This is why we are going to try answering the following question:
What makes McDonald’s logistic system so damn good?
First, they use what we call a “Supplier Optimization” system in which they prefer to select only a few suppliers with whom they create a solid, long-term relationship rather than having too many. This helps building a relationship where trust is a major component.
This is also linked to the “Vested business model” that McDonald is trying to create. It is a model in which every party wins: the suppliers, the company and its employees, and the franchisees. They want to answer this important question: “what’s in it for We?“: they work together to ensure a mutual success.
In order to build a successful system, they have created a set of rules to follow:
- Rule 1: Focus on outcomes, not transactions
- Rule 2: Focus on the what, not the how
- Rule 3: Agree on clearly defined and measurable outcomes
- Rule 4: Pricing model/incentives for cost/service trade-offs
- Rule 5: Govern for insight, not oversight
McDonald also uses 3PL Strategy (3rd Party Logistics providers), such as Martin Brower, which are responsible for executing the supply chain management decisions. The company represents 36,000 restaurants throughout the world, among which 80% are franchises. the board of Directors made the decision to support these franchises and to assure that they are correctly supplied. To do so, they created shorter supply chains, which are easier and more reliable to deal with. This also means a great supply and demand consistency where the supply exactly meets the customers’ needs. To do so, each restaurant is approximately resupplied 2.5 times a week with fresh and frozen products.
McDonald is currently spending a lot of money into its supply chain development in order to offer a greater experience to its customers. For having such a performant supply chain strategy, McDonalds has been able to serve 62 million customers a day!