One of the most important factors in the success and profitability of a business in relation to its supply chain management is logistics management. Logistics incorporates the flow of raw materials and information throughout supply chain processes of an organization. In the past few decades, logistics management has gained significant attention because of the emergence of new technologies and strategic alliances that are geared towards enhancing an organization's competitive advantage. For global companies like Mcdonalds Corporation, logistics management is vital for gaining access to new markets, taking advantage of technological competencies for overseas operations, and enhancing production efficiencies. This paper examines the importance of effective logistics management with regards to smoothing material flow, lessening inventory costs, and enhancing responsiveness across the supply chain. This analysis is done using Mcdonalds Corporation and challenges in its modern supply chain.
McDonalds' Modern Supply Chain Problems
McDonalds' Corporation, which is the largest fast food service provider across the globe, has been experiencing challenges with its supply chain. These challenges have been characterized by poor performance, which has forced the company's Chief Executive Officer to depart (New, 2015). One of the major factors behind Mcdonalds' recent poor performance is the origins of its products given that competitors in this industry are renowned for having products and raw materials that reflect freshness, trustworthy sourcing, and health. In essence, Mcdonalds is experiencing challenges in its modern supply chain processes that have generated concerns regarding the trustworthiness of its sources of materials. These challenges are worsened by the fact that global operations need global standards that are consistent, especially with regards to supply chain processes.
In light of the transparency and reliability issues facing Mcdonalds' supply chain, the company's needs a suitable logistics management policy and framework to help improve the efficiency of its supply chain. Due to lack of transparent sourcing, the corporation's is experiencing challenges with regards to flow of materials and responsiveness of its supply chain, which in turn increases the costs of inventory. The lack of transparent sourcing in Mcdonalds comes at a time when customers need clear and truthful account of supply and production processes given the increased focus on food safety because of health concerns. This implies that the corporation does not generate smooth flow of information and materials across its value network for customers' benefit and competitive success.
Possible Solutions to Mcdonalds' Supply Chain Problem
Transparency in Mcdonalds' modern supply chain framework can be addressed through effective logistics management. As previously mentioned, logistics involves information and material flow within an organization (Gunasekaran & Ngai, 2003).
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Logistics encompasses all aspects of material and information flow in the supply chain process including management of incoming raw materials, production processes, storing finished products, and delivery of products to customers. In essence, logistics management is a component of supply chain management that handles the planning, implementation, and control of information and material flow within an organization. This process is geared towards ensuring efficiency and effectiveness in supply chain processes between the origins of raw materials to the point of consumption in order to meet the requirements of customers (Logistics Degree, 2012).
As a global corporation, Mcdonalds can significantly benefit from logistics management by enhancing production efficiencies and utilizing technological competencies to foster supply chain transparency. This is primarily because the corporation is experiencing delays in providing information and obtaining materials from trustworthy sources. Therefore, the company has been unable to provide inter-linked services and demonstrate flexibility based on the changing customer demands and requirements. As part of effective logistics management, Mcdonalds need to develop a suitable logistics structure, deal with logistic processes and activities, and enhance its information and reporting systems.
The first step towards effective logistics management for Mcdonalds is inventory management, which is crucial towards lessening inventory costs. The need for suitable inventory management emerges from the fact that Mcdonalds deals with different suppliers. The transparency issues relating to its supply chain have been centered on whether the company's suppliers are trustworthy with regards to the provision of healthy food products. Mcdonalds can address these concerns by establishing a logistics structure in which a well-developed system calculates and forecasts the quantities of inventory required in every restaurant chain (Fristedt et al., 2012). The establishment of such a logistics structure will help ensure that raw materials are obtained from trustworthy suppliers at the right quantities and at the right time. Additionally, the establishment of a well-develop system for calculating and determining supply needs will help in lowering the number of inventory checks carried out by the company. This in turn ensures that inventory levels are effectively maintained so that the restaurants can focus on customers, which helps in lessening inventory costs. This system will provide important information regarding raw materials' needs and ensure that inventory levels are efficiently and effectively maintained.
Secondly, Mcdonalds should enhance it vertical integration component of supply chain management. In this case, the corporation should ensure that its logistics management processes and activities are supported by forward and backward integration. According to Yuen & Cheng (2015), forward integration….....
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