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OPS 928 Logistics Systems

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OPS 928 Logistics Systems

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Course Code: OPS928
University: University Of Wollongong

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Country: Australia

Question:
Identify and investigate how the organisation you have been assigned has approached the planning and implementation of their logistics/supply chain activities. You are required to address the following issues:
 
1.Organisation background including company size, competitive environment and market share.2.Approach adopted for planning and implementation of the logistics/supply chain activities you have identified including techniques used, extent and focus of investment for implementation.3.Issues impacting the decision to implement, the rationale for implementation and specific strategies employed.4.Benefits and limitations.5.Future trends and the direction the organisation sees itself moving towards.
Answer:

Introduction 
The primary motive of this task is to discuss about the supply chain and logistics management activities of McDonald’s Corporation. Supply chain management is an essential and integrating function which optimizes and coordinates all logistics activities including sales, marketing, finance, manufacturing and technology. McDonald’s is the major player in fast food industry who is maintaining effective supply chain management at the workplace. An approach which helps in identifying and analyzing the supply chain activities in McDonald’s has been explained in the task. Without supply chain activities, the company cannot flourish the business at international level. Issues impacting the decision to initiate the supply chain activities, benefits, limitations and future trends also have been drawn in the task briefly.
Mcdonald’s is an American fast food Company which is incorporated in 1940 in United States by Richard and Maurice Mcdonald (McDonalds, 2018). The company serves approx 68 million in more than 119 countries on daily basis. In today’s modern world, the company has grown to have approx 36,000 restaurant across the globe (McDonalds, 2018). The main vision of McDonalds is to respond to the quick changing demands, requirements and expectations of the Filipino family. The mission of the firm is to serve the Filipino society by rendering great and delicious food at reasonable prices. The core values of McDonalds include customer driven, Malasakit, integrity, teamwork and excellence. All these core values help the organization to meet the expectations and requirements of the business. The company serves the people by providing various food items such as Big Mac, Big n’ tasty, Quarter pounder with cheese, French fries, cheeseburger, Egg McMuffin, Sundae and Apple Pie. At McDonalds, excellent and effective standards and code of conducts are in place for cleanliness, service and quality (McDonalds, 2018).
The size of the company is unique and wider as it also helps the firm to be a player in the competitive market. McDonalds has become the leader in the fast food industry with their strong and constant focus on the customer service, use of marketing tool for development, and response to competition in the global market. By monitoring and analyzing the choices, needs and wants of key target auidence, the company has been able to make a dynamic and strong position in the global market. The firm starts with rendering great and unique restaurant experience every time. The company’s suppliers, employees, and operators work together to fulfill the needs and requirements of target audience internationally.
In today’s modern world, McDonalds is expanding and exploring its business actions and activities internationally. The statistics indicates the brand value of the precious and effective fast food brands across the globe in 2018. The company is most valuable and significant brand around the world with predicated brand value approx 126.04 billion U.S. dollars (Statista, 2018).
It is stated that McDonalds which is one of the biggest and well known fast food chain network across the world uses porter five forces analysis to compete with rivals. The porter five forces analysis of McDonalds Corporation has been discussed below.
Competitive rivalry: It is noted that fast food restaurant is significant and leading competitive business today. Thus, there is high and intense competition in the global market. The competitors of McDonalds include burger king, Johnny Rockets and Wendy’s. Each player is spending money on advertisement, promotion, innovation and menus to maximize the profitability and outcomes (Adamkasi, 2017).
Threat of new entrants: It is noted that threat of new entrants is moderate in fast food industry. To become a global competitor of McDonalds, the rivals will have to create or generate a large number of outlets and stores throughout the global which needs more time and massive capital investment in the competitive market.
Bargaining power of suppliers: The bargaining power of the suppliers is a feeble force for McDonald’s because the company has large number of suppliers. The raw material like potatoes and chicken that the company’s uses for its fast food products are available through a wide range of suppliers. It is analyzed that the suppliers are in no position to negotiate or bargain with McDonalds to maximize its prices. The company may easily switch suppliers with little switching cost (Adamkasi, 2017).
Bargaining power of buyers: It is seen that bargaining power is high and powerful in the hands of purchasers. The buyers of the firm have several choices available in today’s competitive world therefore; they can easily switch from one restaurant to another without any extra switching cost if they are dissatisfied. Along with this, the customer loyalty and morale to fast food restaurant is reducing constantly with so many rivals. Apart from this, the company uses innovative strategies and policies to attract and retain its target audience globally (Adamkasi, 2017).
Threat of substitutes: It is portrayed that threat of substitute is high and strong in the global market. Bakery products and KFC products are considered alternate of McDonald’s fast food products. All these fast food substitutes are competitive in terms of quality, taste and consumer dissatisfaction. It has been analyzed that threat of substitute is high and intense against the McDonalds.
Supply chain and logistics management of McDonalds 
It has been found that McDonalds uses strong and unique supply chain and logistics management to compete with rivalries globally. Supply chain management may be defined as management of the flow of service and goods, includes the storage and movement of raw material, finished goods and work in progress of inventory (Ellram and Cooper, 2014). Logistics and supply chain management both play a major and major role in determining and analyzing the overall success and progress of the firm. In other words, supply chain is a structure of companies, technology, people, information, actions and resources included in moving fast food product and service from supplier or vendor to entire target audience. The management of McDonald’s supply chain has to be able to fulfill the needs and requirements of approx 70 million daily customers of a firm with 35,000 restaurants (Simonergrabner, 2015).
 It is needed to calculate and analyze the daily orders well and effective to ignore that product carried out. Supply chain and logistics management are needed to fulfill the future needs and demands internationally. Every distribution centre supplies between 250 and 700 restaurants where are managed and controlled with daily sales, transportation, marketing, promotions, warehousing, and restaurant stocks and logistics services (Simonergrabner, 2015). McDonald’s supply chain model is based on the “Three legged stool” model designed by Ray Kroc. The three legged stool business model indicates that the company’s franchisees and vendors all work together to manage the business activities and operations in a hassle free manner. Along with this, fast food giant initiates the 5 vested outsourcing rules and principles which are mutually effectively and successful to the company and its suppliers. The rules include:
Rule1: Monitor on outputs, not transactions
Rule2: Monitor on the what, not the how
Rule 3: Agree on evidently defined and evaluates outcomes
Rule4: Pricing model, service tradeoffs and benifits for cost
Rule 5: Govern for insight, not oversight
Approach adopted by McDonalds to implement supply chain and logistics activities 
It has been found that various approaches are being used by the company while planning and implementing the supply chain and logistics activities at the workplace. With thousands of fast food outlets, the company entrusts and believes upon a large and difficult supply chain. It uses automation technique to implement supply chain activities effectively (Bosona and Gebresenbet, 2011). Improving and enhancing the supply chain needs, wants, expectations automation and investment in supply chain resources and technology. Huge investment is done by McDonalds to implement logistics and supply chain activities within the organization. This entails utilizing computerized system for asset management, utilization of barcode labeling and the utilize of difficult databases such as enterprise resource planning system, warehouse automation, inventory planning, and data gathering to supervise and analyze the overall performance and productivity. It is stated that the company has introduced new and innovative ways of functioning and automation that has led to maximized performance, yield and a considerable and unique rise in profitability. Automation is vital technique that used by McDonalds in order to stand out against the rivalries in the international market.
Distribution and communication approach: One of the significant approaches that being initiated by the company is distribution and communication approach that help to uplift its outcomes and improves its performance globally. It is stated that McDonalds uses innovative and unique distribution and communication approach to maintain good and strong relationship with suppliers and customers to a large extent. The most well-known and unique place McDonald’s fast food products could be fount are at its cafe.  Other location where the firm utilizes to sell its products are McDonald’s mobile app, Kiosks and postmates websites and app. It is seen that the company uses selective distribution channels and sources to maintain pull and push marketing communication (Christopher, 2016). The firm is undertaking this approach to maintain strong relationship with dealers, suppliers, customers and other outsiders in the global market. This approach is further needed to improve and enhance the overall company’s supply chain. This procedure also looks to engage and involve all the workers; the firm is distributing the roles and responsibilities of success and progress around operators, suppliers, employees and strategic resourcer (Fernie and Sparks, 2014). The supply chain of McDonald’s is becoming more unique and transparent with the help of distribution and communication approach. It is further elucidated that McDonald’s launched a effective campaign and programs to showcase consumer where its fast food products come from and how they are made and change people’s expectations and awareness of the farming industry. Along with this, the firm has announced its plan to minimize and eliminate the regular use of antibiotics in its supply chain. This entails the implementation of new strategies, approaches and timelines for minimizing the routine utilization of antibiotics in all food animals (Sandle, 2018). Distribution channels help the firm to reach its current and potential customers in the global market.
McDonald’s uses effective and unique integrated marketing communication to supply its products to the customers across the globe. The customers of the firm are the adults, teens who need meal quickly and family with young children (Lindalidan, 2016).
After the various studies it has been reported that the company has invested huge amount on the distribution and communication approach to implement supply chain activities and logistics (Cao and Zhang, 2011).
Issue impacting the decision, rationale for implementation and strategies 
While implementing the logistics and supply chain activities, ample of issues affect the business activities. Various reputational challenges include bad environmental practice, long time space and bad health issues could impact the business operations adversely (Oke and Gopalakrishnan, 2009). Improper and poor communication is another big issue that put direct impact on the decision regarding the implementation of supply chain and logistics activities (New, 2015). Along with this, the distribution channels, and practices which used by the company are not uniform and effective. Thus, it can affect the financial position and brand image of the firm adversely. Global operations and supply chain activities need global principles and standards. Despite the excellent the great strides that the company’s has made in various markets, strategies, policies and practices have not been unique and effective (Businessmirror, 2015). Globalization is another major issue that may affect the fast food products and services in the competitive market. Apart from this, consumer behavior is influenced by social, cultural, personal, and psychological elements that are quickly changed by globalization and technology. It may affect the supply chain of McDonald’s as it also affects the needs, expectations and demands of the customers internationally (Rushton, Croucher and Baker, 2014). Natural disasters, rising food prices, cyber security, contract violations and adverse weather are the top and unique supply chain risks and issues plaguing the food industry today. Product quality and compliance issues further are being faced by the McDonalds while implementing the supply chain and logistics activities internationally (Rothaermel, 2015). The firm needs to focus on these issues and challenges to make unique decisions in regards to implementation of logistics and supply chain activities (Boumans, 2017). Lack of supplier visibility is other major issue in McDonald’s supply chain and logistics management that could influence the outcomes and returns of the firm adversely.
Logisticsbureau (2016) investigated that supply chain is the significant factor that helps in satisfying the needs and requirements of the customers globally. Investing and analyzing the costs of serving consumers is one manner to understand and analyze the manner supply chain costs influence the business progress and achievement. The company implements supply chain activities to fulfill long term demands and tastes of the customers globally. It is stated that logistics and supply chain activities are crucial and significant components for McDonald’s to attain competitive edge (David, 2011).
It is noted that the company can uses ample of strategies to overcome the supply chain and logistics issues at the workplace. Some of the issues that faced by McDonald’s have been detailed below.
Supplier relationship management strategy: The significance of supplier relationship is flourishing and growing day by day. Thus, it is significant to create, follow and understand mutually agreed upon rules and standards. This will allow McDonald’s to better understand and evaluate opportunities for enhancement and improvement (Parmigiani, Klassen and Russo, 2011).
Talent management strategy: It is vital strategy that can be used by the company to overcome the various issues and challenges while functioning and working. In today’s globalization world, it is quite complex to find interested, talented and qualified employee for handling the supply chain activities at the workplace. Supply chain leaders or managers need an extensive and unique understanding of the key capabilities, duties and roles needed for supply chain management roles.
Risk management and planning: In order to stay as efficient and effective as possible, redesigns and periodic assessments are required. Creating and implementing a risk management plan is needed to overcome various supply chain and logistics issues in the international market Parmigiani, Klassen and Russo, 2011).
Benefits and limitations 
It has been analyzed that supply chain and logistics activities provide ample of benefit to McDonald’s by boosting and enhancing their outputs and revenue (Schlosser, 2012). The following are the benefits of strong and effective supply chain and logistics activities:
Higher efficiency rate: Effective and unique supply chain helps in maximizing the efficiency rate of the workers. The strong supply chain further would able to adjust more effectively and efficiently to the variable economies, shorter product life cycle and emergency markets (AIMS, 2018).
Decrease cost effects: It improves inventory system of McDonald’s by reducing the costs and further adjusts the storage space for finished products which prevents bad quality resources. Along with this, it improves and enhances McDonald’s relationship with vendors and distributors.
Increases output: The strong and unique supply chain further helps in improving and enhancing communication and collaboration in McDonald’s Corporation. This adds up to the collaboration and coordination with transport and shipping corporations, suppliers and vendors.
Enhanced supply chain network: The effective and efficient supply chain and logistics activities further are needed to maintain and enhance strong supply chain network in the competitive market (AIMS, 2018).
The paper is emphasized and concentrated on the supply chain and logistics activities of McDonalds Corporation that essential to focus on the performance and effectiveness of the firm. But at the same time, it is further stated that McDonald’s faces ample of issues and challenges while implementing the supply chain and logistics activities. Therefore, it can be said that McDonald’s could also need to concentrate and focus on the inventory and transportation issues to attain high level of satisfaction of the customers globally. It could help the organization to make a unique image and reputation among the customers (Schlosser, 2012).
Future trends and direction 
Some of the future trends and direction in areas of supply chain activities are discussed below.
Firstly, the logistics and supply chain activities are needed to be a player in the fast food industry globally. Proper and effective analysis of supply chain data can efficiently and significantly improve and enhance business decision making and forecasting. It can also optimize the use of various resources included in transport, storage and inventory management. Thus, the firm needs to focus on the strong and effective supply chain activities and operations to develop a brand reputation globally (Min and Kim, 2012).
To address customer demands and needs in an effective manner, McDonald’s must segment them into groups. These groups must be based on what triggers, and consumer purchasing behavior as opposed to a wider generalization (Spina et al, 2013). In this way, McDonalds can take ample of benefits or advantages in the near future. The logistics and supply chain activities are vital and essential for McDonald’s in terms of supply of transport, raw material, effective manufacturing process and storage of the finished products and services (AACB, 2018).
On the other hand, new direction on supply chain and logistics activities could be brought about by the expansion and growth of technology and economy. A difficult example is the information technology that leads to the research on commerce, internet, e-business and related distribution channel choice. In today’s era, the general usage of RFID, cloud method and big data could be significant study for the future (Vanany, Zailani and Pujawan, 2009).
The logistics and supply chain activities would continue to be a big and serious issue. With the steady rise in universal population, resource crisis, economies scale, ecological damage, changing needs and requirements of the customers, and other concerns have shown global challenge. Logistics and supply chain issues are significant and unique research direction. In the future, wide range of this topic would not only be just reverse and remanufacturing logistics and closed loop supply chain (Ganesan et al, 2009).
Conclusion 
It is concluded from the above mentioned analysis that McDonald’s is one of the growing and leading fast food brand in the global market which is delivering fast food products and services to the customers around the world. The analysis shows that how the company implement effective logistics and supply chain activities in the organization. Supply chain management is crucial part of each and every organization. McDonald’s initiates innovative supply chain activities to cope up with rivalries and to determine adequate supply of food in the international market. Ample of challenges and issues are being entertained by the firm while taking decision of implementing the supply chain activities. Supply chain management also is needed to uplift revenue and returns of the firm as well as its productivity in the international market.
References 
AACB.2018. Top 10 future trends in supply chain and logistics [Online]. Available from https://www.aacb.com/trends-in-supply-chain-and-logistics/ [Accessed as on 15th October 2018].
Adamkasi.2017. Porter five forces analysis of McDonalds [Online]. Retrieved from https://www.porteranalysis.com/porter-five-forces-analysis-of-mcdonalds/ [Accessed as on 15th October 2018].
AIMS.2018. Key 7 advantages and benefits of supply chain management [Online]. Available from https://www.aims.education/supply-chain-blog/advantages-and-benefits-of-supply-chain-management/ [Accessed as on 15th October 2018].
Amberosesmith.2016. McDonald’s distribution channel & supply chain logistics [Online]. Available from https://mpk732t12016clusterb.wordpress.com/2016/05/14/distribution-and-logistics/ [Accessed as on 15th October 2018].
Bosona, T.G. and Gebresenbet, G., 2011. Cluster building and logistics network integration of local food supply chain. Biosystems engineering, 108(4), pp.293-302.
Boumans.G.2017. Supply chain disruptions; What McDonald’s lack of supplier visibility can teach us [Online]. Available from https://www.linkedin.com/pulse/supply-chain-disruptions-what-mcdonalds-lack-supplier-guy-boumans [Accessed as on 15th October 2018].
Businessmirror.2015. McDonald’s and the challenges of a modern supply chain [Online]. Available from https://businessmirror.com.ph/mcdonalds-and-the-challenges-of-a-modern-supply-chain/ [Accessed as on 15th October 2018].
Cao, M. and Zhang, Q., 2011. Supply chain collaboration: Impact on collaborative advantage and firm performance. Journal of operations management, 29(3), pp.163-180.
Christopher, M., 2016. Logistics & supply chain management. Pearson UK.
David, F.R., 2011. Strategic management: Concepts and cases. Peaeson/Prentice Hall.
Ellram, L.M. and Cooper, M.C., 2014. Supply chain management: It’s all about the journey, not the destination. Journal of Supply Chain Management, 50(1), pp.8-20.
Fernie, J. and Sparks, L., 2014. Logistics and retail management: emerging issues and new challenges in the retail supply chain. Kogan page publishers.
Ganesan, S., George, M., Jap, S., Palmatier, R.W. and Weitz, B., 2009. Supply chain management and retailer performance: emerging trends, issues, and implications for research and practice. Journal of Retailing, 85(1), pp.84-94.
Lindalidan.2016. Integrated marketing communication of McDonald [Online]. Available from https://mpk732t12016clusterb.wordpress.com/2016/05/08/integrated-marketing-communication-of-mcdonald/ [Accessed as on 15th October 2018].
Logisticsbureau.2016. 7 reasons why the supply chain matters to business success [Online]. Available from https://www.logisticsbureau.com/7-reasons-why-the-supply-chain-matters-to-business-success/ [Accessed as on 15th October 2018].
McDonalds.2018. About McDonalds [Online]. Available from https://www.mcdonalds.com.ph/content/page/about [Accessed as on 15th October 2018].
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New.S.2015. McDonald’s and the challenges of a modern supply chain [Online]. Available from https://hbr.org/2015/02/mcdonalds-and-the-challenges-of-a-modern-supply-chain [Accessed as on 15th October 2018].
Oke, A. and Gopalakrishnan, M., 2009. Managing disruptions in supply chains: A case study of a retail supply chain. International journal of production economics, 118(1), pp.168-174.
Parmigiani, A., Klassen, R.D. and Russo, M.V., 2011. Efficiency meets accountability: Performance implications of supply chain configuration, control, and capabilities. Journal of operations management, 29(3), pp.212-223.
Rothaermel, F.T., 2015. Strategic management. McGraw-Hill Education.
Rushton, A., Croucher, P. and Baker, P., 2014. The handbook of logistics and distribution management: Understanding the supply chain. Kogan Page Publishers.
Sandle.T.2018. McDonald’s improves its supply chain through automation [Online]. Available from https://www.digitaljournal.com/business/mcdonalds-improve-its-supply-chain-through-automation/article/500860 [Accessed as on 15th October 2018].
Schlosser, E., 2012. Fast food nation: The dark side of the all-American meal. Houghton Mifflin Harcourt.
Simonergrabner.2015. Supply chain management of McDonald’s [Online]. Available from https://logisticsmgepsupv.wordpress.com/2015/05/13/supply-chain-management-of-mcdonalds/ [Accessed as on 15th October 2018].
Spina, G., Caniato, F., Luzzini, D. and Ronchi, S., 2013. Past, present and future trends of purchasing and supply management: An extensive literature review. Industrial Marketing Management, 42(8), pp.1202-1212.
Statista.2018. Brand value of the 10 most valuable fast food brands worldwide in 2018 (in million U.S. dollars) [Online]. Available from https://www.statista.com/statistics/273057/value-of-the-most-valuable-fast-food-brands-worldwide/ [Accessed as on 15th October 2018].
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Vanany, I., Zailani, S. and Pujawan, N., 2009. Supply chain risk management: literature review and future research. International Journal of Information Systems and Supply Chain Management (IJISSCM), 2(1), pp.16-33

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