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Executive Summary
With the constant changing scope of operation administration, supply chain management has emerged as a sophisticated concept in the business world. A majority of organizations across the globe are making discoveries on a modern front of competitive advantage typically referred to as supply chain management and are continually investing in enhancing the supply chain management process. McDonald’s that is regarded as an American fast food organization discovered in 1940 is facing various supply chain challenges, given its broad-sized international supply chain (Jacobs, Chase & Lummus, 2014). The business has been facing these challenges which in turn have contributed to the poor performance in some of its stores with a majority of these problems originating from the procurement and stock control sections of the supply sequence management. They relate to the source of its existing raw resources, the contending food chains that avail fast-casual and additional up-market dining categories such as Panera, Shake Shack, and Chipotle. Effective integration of various operations and supply chain management tools together with the appropriate concepts will assist the business to lower its general wastage, enhance consumer contentment, and have proper relations with their suppliers and other vendors. Controlling various duties in the supply series has faced several alterations in the current decades, needing the organization of more apparent supply chains and sustainable services and supply chain management tools in the continually growing fast-food institution.
Background Information
Over the past decades, the operations management has continuously witnessed significant problems as documented by reordering points to supply chain management together with the enterprise resources planning. Therefore, operations management has incorporated a vast scope regarding the methods used (Tangpong, 2011). The supply sequence control and business managers in the food trade are the vital and apparent administration of supply chains, from the procurement procedures to stock control. In the modern business world, operations managing and logistics are closer as the two methods cannot be separated from an operational procedure point of view. In the past, its operations management concentrated on the movement of roles form institutional procedure to the supply chain beginning McDonald’s suppliers to their clients.
McDonald’s organization is based in America and was discovered in 1940 as a restaurant controlled by Richard and Maurice McDonald in California. The restaurants typically operate menus that are strategically preferred by the type of locality, given that their international reach is over 100 nations. Some of the segments incorporates America, high growth markets, corporate, fundamental markets and global lead business environments (Tangpong, 2011). The business has a constant and direct influence on the franchisee’s supply chain procedures aimed at keeping the needed standards and qualities of their menus. Some of the business’s high growth markets include Poland, China, Spain, Switzerland, South Korea, and Italy and are focused on the introducing customer excitement with their appealing promotions, menus, and values together with the digital mechanisms implementations through specific operations and mobile solutions. Some of the critical dishes provided by the food giant incorporate hamburgers, cheeseburgers, the Big Mac, Filet, different sandwich among other dishes.
Problem Description
The discussion aims at outlining the supply of the existing operation chain management issues affecting the management and clear operations within the McDonald’s restaurant and other of their outlets, examining the procurement and inventory management procedures. In the modern business of food together with the hospitality industry, innovative supply chain controllers have discovered that upon the selection of preferred suppliers that fulfills the industry’s needs, an adequate corporation is essential if both supplier and the customers are to benefit from the big dividends. With the increase in technologies in the field of supply chain management, industries such as McDonald’s are in better situations to incorporate them more so as a technique of cutting back the entire cost of procurement and controlling inventory (Pullman and Collins, 2013). The business has been hit by supply chain problems especially engaging transparency on the sourcing of the ingredients. Other competitors including Chipotle and KFC have in the past engaged in effective processes that have managed to organize their procurement procedures, together with the use of systems in the administration of back-sourcing of raw resources to specific suppliers. The business’s sourcing controls are similarly encompassed by few stock-keeping units that in turn make procurement process and other inventory management strategies complicated. The procurement procedure at the company’s chain is additionally affected by the disintegration of the directorate duties between its many sub-divisions, a majority of which are franchises together with the problem of managing several brands falling under single umbrella.
The groceries and hospitality business procurement, administration and sourcing processes engage trading from local producers which in turn means a combined lack of streamlined procedures that would, in turn, clarify that all the deliveries and purchases are met. As a result, these proprietary ordering mechanisms results into non-standardized goods evaluation that in turn results into wastage (Jacobs, Chase & Lummus, 2014). Shortfalls in control together with significant inventory controlled by the business’s outlets will lead in the loss of finances some of which can be taken back to the various steps or engaging in more aggressive prices for their menus. A majority of the McDonald’s outlets have been losing finances due to poor proactive procurement strategies. Apart from procurement and inventory control, the business is also faced by other problems including the supply chain processes. Managing suppliers, maintenance of safety and quality together with risk mitigations aimed at providing buffer stock in situations such as bankruptcy are among the problems faced by the chain executives at the organization. Therefore, having to acknowledge all the risks associated with the supply chain procedures is essential in monitoring that outlets and groceries have the preferred number of suppliers at a given moment and high-quality values.
Applications of Logistics and Supply Chain Management Concepts
Proper chain management requires a first knowledge of the specific tools and strategies useful in operations and supply chain management that are in turn embedded in the five main supply chain processes such as production, transportation, location, inventory, and data. When done with understanding the essential apparatus, it is similarly necessary to create an overview of the needed mixes of the ideas that can be utilized to enhance the business’s supply chain. Therefore, production as a supply chain’s capacity to supply and store goods is sufficient for the company. One of the significant considerations that the supply chain managers have to put into account when looking for ingredients is the trade-off that is likely to exist amid procurement responsiveness and efficiency (Tangpong, 2011). Big warehouses will, in turn, make it practical to keep enough inventories for proper responses in cases of demand swings. Similarly, if the entire storage capacity is being utilized, then the outlets are likely to face problems in handling an increase in demand even in the short term. Therefore, operational and supply chain management can be utilized when designing the structures of managing inventory, and they include functional focus and product concentration.
When utilizing the merchandise mechanism, more pressure is put on the expansion of skills on the good range offered as compared to the general functionality. Using this concept evaluates the techniques regarding goods and services with more regard to their nutritive data (Pullman, and Collins, 2013). Stock management process may as well utilize three other types of approaches relying on which effectively uses the buffer supply while keeping the needed quality in check. This method is typically spread out throughout the organization’s supply chain. Consequently, logistics control is a significant operations and supply chain management tool that in turn increases demand fulfillment. The primary objective is to continually supply the needed goods and services to the appropriate outlet and at the specific time. Logistic control is part of the bigger supply sequence that is engaged in forecast, implementation, and monitoring of sufficient and adequate back and forth flows of inventories together with the related data between the primary source and the spending point in a manner that fulfills the client’s needs.
Another essential tool that is effective McDonald’s business is that of supply management that in turn concentrates at evaluating, accessing, acquiring, position and the control of valuable resources. Therefore, logistics management should focus on monitoring ingredient sourcing while supply supervision maintains the tactical sourcing of other indirect equipment including tools used at the restaurant (Msimangira & Venkatraman, 2014). There is also the need to concentrate on actual consumer order instead of force goods into the markets that might not sell quickly enough; thus, leading to wastage and enormous supply storage costs. Therefore, it is best noted for an organization to keep at least the general flow of raw resources from the source to cold storage space with the aim of reducing cost.
Expected Results
As a result of the mix of the supply chain management concepts and essential equipment, enhanced inventory management practices are likely to assist the business’s outlets and franchise to place the order more timely and accurately while keeping their goods collection together with the suppliers. The modern inventory management mechanism will, in turn, allow the franchisees to generate reports while keeping track of their most favorable costs on vendors and suppliers that can be utilized in reconciliation and increase of supply (Jacobs, Chase & Lummus, 2014). Proper purchasing practices in the logistics chain will also assist bear the company’s operative requirements through drawing more concentration on the purchasing steps made, how the products are gathered from the various dealers and building effective relationships with other vendors. Also, through the unique cold chain, the industry is capable of cutting down on the prepared wastages while keeping nutritional ideals and freshness of the raw together with the processed foodstuffs.
Conclusion
Operations and supply chain management tools are the right procedures for enhancing the industry’s supply sequence by spending less on wastages, increasing supplier dealings through suitable vendor selection, and increased consumer service. The research has made discoveries beyond small supply side of the chain management at the food business, evaluating the supply chain management strategies that can be adapted to enhance the effectiveness of the chain, beginning from purchase to the control of inventory via the cold chain. Also, having a continually operating operations and supply chain and management system will eventually assist the McDonald’s business to initiate better competitive advantage and to enhance their goods and services quality at a lower price.
References
Jacobs, F.R., Chase, R.B. and Lummus, R.R., 2014. Operations and supply chain management (pp. 533-535). New York, NY: McGraw-Hill/Irwin.
Msimangira, K.A. and Venkatraman, S., 2014. Supply chain management integration: Critical problems and solutions. Operations and Supply Chain Management, 7(1), pp.23-31.
Pullman, M. and Collins, D.E., 2013. Reshaping the Operations and Supply Chain Management Core Class Curriculum to Include Business Sustainability. Operations Management Education Review, 7.
Tangpong, C., 2011. Content analytic approach to measuring constructs in operations and supply chain management. Journal of Operations Management, 29(6), pp.627-638.
