McDonald Supply Chain Management Issue Essay

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Description of the company/industry

McDonalds

McDonalds happens to be a premier global retailer of food services with presence in more than 100 countries (World Branding Forum, 2019). According to World Branding Forum (2019), the Retailer (McDonalds) has an excess of 36,000 locations globally and employs 1.8 million workers. Most of the global McDonalds franchises (approx. 80%) are operated and owned by business people operating independently. McDonalds serves various menu options with outstanding quality ingredients. The restaurant enjoys an upwards of 25 million customers each day. Close to 90% of the 14,000 McDonalds restaurants in the U.S. are operated and owned independently (World Branding Forum, 2019). There are close to 1,200 United Kingdom McDonalds restaurants serving close to 3 million people each day. The McDonalds brand employs approx. 97,000 workers in the UK and has invested more than £40 million on development and training every year (World Branding Forum, 2019).

McDonalds offers he culture of opportunity, diversity, opportunity, and flexibility to her people (World Branding Forum, 2019). The restaurant operates as an important component of the locally served community. The restaurant is involved in the support and championing of various community activities including charity events, local games, and picking of litter. McDonalds supports British agriculture and sources approx. 55% of the food ingredients from Irish and British farms (approx. 17,500 farms) (World Branding Forum, 2019). McDonalds is known for supporting local community football. For more than a decade McDonalds has encouraged and supported young people to engage in football through increasing local club standards. From 2002 the restaurant has been partnering with 4 football associations in the UK (World Branding Forum, 2019). In the time McDonalds has been able to develop more than 20,000 football coaches in the UK and assisted in the increasing football standards in more than 6,000 local clubs (World Branding Forum, 2019).

McDonalds has committed itself long-term in the Olympics. The involvement of the restaurant in Olympics began in the year 1968 when the United States athletes longed for American food. McDonalds airlifted their hamburgers for the athletes to Olympic village (World Branding Forum, 2019). McDonalds began to officially sponsor the Olympics in 1976 during Montreal games. The Olympic sponsorship by McDonalds lasted until the 2012 London Olympics (World Branding Forum, 2019).

Analysis of the operations/supply chain process

The supply chain of McDonalds details the complex nature of the indirect and direct suppliers. The complex system is managed by way of working with the direct suppliers sharing the same vision, values and aspirations of sustainable Supply as McDonalds (McDonalds, 2019). McDonalds holds their suppliers to clear sustainability, efficiency, safety, and quality standards. The expectation is that the suppliers will extend the same requirements to the entities that supply them. McDonalds also partners with suppliers for the purpose of identifying, addressing, and understanding sustainability challenges while achieving continuous process improvement (McDonalds, 2019). McDonalds alongside the suppliers collectively focus on the three fundamental areas of ethics, responsibility, economics, and environment. The focus areas of the McDonalds supply chain includes: sustainable fisheries, workplace accountability for the suppliers, welfare and health of animals, and sustainable management of land resources (McDonalds, 2019).

The sustainable supply chain vision is that profitability will yield safe products and high quality without the interruption of supply while leveraging the leadership framework for the purpose of creating overall benefit through enhanced ethical, economic and environmental outcomes (McDonalds, 2019). On ethics McDonalds envisions purchasing products from suppliers who ascribe to practices that guarantee safety and health of employees as well as the humane handling of animals through the supply chain (McDonalds, 2019). On environment McDonalds envisions influencing material sourcing and making sure that product designs, manufacture of products, their distribution and the use of those products is in such a manner that minimizes life-cycle consequences for the environment (McDonalds, 2019). On economics McDonalds envisions delivering foods that are affordable, participating in trade practices that are equitable, minimizing the growth and spreading of agriculture related diseases, as well as influencing the community within which suppliers exist positively (McDonalds, 2019).

McDonalds views their responsibilities and vision holistically. During the making of decisions on sourcing McDonalds considers costs, quality, and food safety and most importantly economic, environmental, and ethical responsibilities.

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McDonald’s global stand on coffee and beef sustainability is a demonstration of how the restaurant is resolute on breathing life onto this approach (McDonalds, 2019). The supply chain of McDonalds comprises various regional and local supply chains globally. These supply chains are interlinked through the policies, strategic framework and the McDonald department of global supply chain (McDonalds, 2019). As a way of guiding the oversight and creation of sustainability related issues McDonalds created a global structure of governance in 2007. The structure is referred to as the SSSC (Sustainability Supply Steering Committee) (McDonalds, 2019). SSSC has the responsibility of steering McDonalds towards the sustainability supply vision through identification of global priorities and making sure that progress is achieved in various ways which complement local efforts and priorities (McDonalds, 2019).

In addition to this each leader in global products for the purchase of products like potatoes and beef leads the way in the inclusion of sustainability initiatives for products (McDonalds, 2019). McDonalds has consistently worked with advisors, suppliers, and other relevant industries for the purpose of ensuring that the suppliers have an awareness of the relevance of sustainability. McDonalds also supports efforts for stakeholder development in order to enhance the production of raw materials with better sustainability.

Description of strategic issues/problems/challenges…

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…of new workforce. The restaurant can also achieve better gains through implementation of best practices in the vast restaurant network.

Weaknesses

The United States market is currently saturated with restaurants hence making local growth impossible. This has left McDonald’s with no choice but to explore international growth opportunities and this has occasioned many cultural challenges (Krull, 2010). The annual hikes in dividend is likely to persist but the growth in dividends has been slumping and may probably continue slowing down or leveling off.

Opportunities

Outside the United States, there are better growth and expansion opportunities and McDonald’s has continued to exploit those growth opportunities. The Chinese market is a remarkable opportunity as well (Krull, 2010). The menu innovation is also open for McDonald’s. The low rates of interest provide cheaper capital for the purpose of growth. The domination of the dollar in debt has led McDonald’s to explore the Yuan bonds in Hong Kong (Krull, 2010).

Threats

The government is considering introducing regulations on fast foods. There is also a growing health consciousness causing people to go for foods that are healthier. McDonald’s is also under strong competition from peers like Burger King, Shake Shack, Chipotle, and Panera (New, 2015). New McDonald’s product must contend with other products from established restaurant players like Jamba smoothies and Starbucks coffee. The increase in commodity price is likely to cause an escalation of costs. A weakening economy may limit the ability of McDonald’s to pass costs to their customers (Krull, 2010).

PESTEL Analysis

Political factors

· More international agreements on trade (opportunity)

· More guidelines on health and diet from governments (opportunity and threat)

· Changing policies in public health (opportunity and threat) (Greenspan, 2018)

Economic Factors

· Stable albeit slow growth in developed countries (an opportunity)

· Speedy growth of developing nations (opportunity)

· Slowing of the China economy (threat) (Greenspan, 2018)

Social Cultural

· Growing trends in healthy living (opportunity and threat)

· Increased diversity of culture (opportunity and threat)

· Busy urban environment lifestyle (opportunity)

· Increasing disposable income (an opportunity) (Greenspan, 2018)

Technological

· Increased e-commerce (opportunity)

· Better automation of business (opportunity)

· Moderate research and development in restaurant industry (opportunity) (Greenspan, 2018)

Environmental/Ecological

· Climatic change in various regions (threat)

· Increased popularization of sustainable strategies in business (opportunity)

· Increased programs in the corporate environment (opportunity) (Greenspan, 2018)

Legal

· more regulations in health both in school and workplaces (threat)

· The rise minimum wage legally hence costing McDonald’s in labor costs (threat)

· More animal welfare programs and regulations (both an opportunity and threat)….....

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