Description
consumer durable industry in India, logistics of order fulfillment in the consumer durable industry. Following initiatives have been taken towards improving the SCM in consumer durables sector, retailing, ecommerce, Build-to-order (BTO), forecasting techniques, flexible manufacturing. It also explains the distribution of Sony, Videocon and LG.
Case 01
The McDonald’s Way
SCM Case Presentation
Themes of the Benchmark Supply Chain
Supplier Development
Single Sourcing
Symbiotic Partnership
Backup Chain
McDonald’s Supply Chain
Ultimate Supply Chain
Quality Assurance
Economies of Scale
Global Supply Chain
McDonald’s Indian Supply Chain
Tier 2 Suppliers Tier 1 Suppliers
Processing Centres
DCs
Golden Arch Outlets
Trikaya
RKFL THANE
Dynamix
Vista
Vista
Radhakrishna
NOIDA
Mrs. Sectors
Own processing centres
RKFL
Why is it the Benchmark SC?
Type of Investment Level of Integration
• Investing not only money but also time and effort • Five years before India operations – to build perfect supply chain • Building expertise and quality control measures for suppliers • Partnership relationship with suppliers adopting a win-win model • Tight integration enables greater control over suppliers quality process • Tight integration also enables low inventory levels due to better forecasting • Focus on minute details of supplier’s operational capabilities • Evidences of Diameter of pea, Quality of Lettuce and water content in potatoes are examples of meticulous focus on raw material quality • In most products the pricing happens by adding a premium to the costs • At McDonalds the price is fixed at Rs 35, now supply chain has to reduce costs to provide sufficient margin • McDonalds follows an advisory role in enabling to achieve specialization • RKFL learnt to employ flexible refrigeration model in trucks – save costs • Suppliers learn to achieve high quality low rejection model of business
Grassroots Focus
Backward Costing Specialization of SC components
Individual Supply Chain – Iceberg Lettuce
1
RKFL
McDonalds
Trikaya
Processing Centres
DCs
Golden Arch Outlets
Characteristics
Magnitude of business: McDonald’s procures 150 tonnes of Iceberg Lettuce from Trikaya Agriculture
Risk and dependency: Lettuce is highly vulnerable to weather conditions. It has to be maintained at the precise temperature of 2 degrees for maximum shelf life. Nurturing of Supplier: McDonald’s guides and subsequently monitors Trikaya’s pest management and temperature management methods.
Yield Maximization is the key for Trikaya, something that it has learnt from McDonalds.
Individual Supply Chain – Processed Foods
2
RKFL
Farmers, Suguna, Dynamix (Cheese)
Characteristics
Vista, RKFL
DCs
Golden Arch Outlets
Magnitude of business: Vista, a joint venture, caters to 20-30% of the supply of processed foods to McDonald’s. Supplies 12 products to McDonald’s.
Meticulous Quality Control: Vista implements quality control to the extent of having precision diameter of peas and colour, taste and texture of the final patty.
Minimizing Wastage and Cost: Raw material and intermediate products are checked for aberrations at every level to minimize rejections late in the supply chain
Automation and Differentiation of Veg/Non-Veg Processes are maintained so as to maintain separate and standardised quality levels.
Individual Supply Chain – Potatoes
3
RKFL
Farmers, Suguna
McCain Foods
DCs
Golden Arch Outlets
Characteristics
No compromise Quality: Two Gujrat towns are the only source of potatoes for the whole country because of their agronomy. Indicates zero tolerances on quality. Imports continued: French Fries are made using potatoes imported from New Zealand. Again indicates no compromise on quality levels.
Individual Supply Chain – Cheese, Sauces and Buns
4
RKFL 5
Raj Foods/Cremica Agro Foods, Mrs Sectors Specialty Foods
Characteristics
DCs
Golden Arch Outlets
Product Differentiation: Separate product lines for Brittania and McDonald’s as far as cheese is concerned. Customization based on requirement.
All the suppliers are trying to expand their product portfolio based on expertise based on McDonald operations.
Regional sourcing for the buns: Separate suppliers for North and West.
Network Model of SC
Lettuce
McDonalds
Trikaya
Processing Centres
Chicken/ Veg Patty
Farmers, Suguna, Dynamix (Cheese) Farmers, Suguna
Vista, RKFL DCs
Golden Arch Outlets
Assembling and Packing
Wedges French Fries
McCain Foods
Buns, Cheese Sauce
Raj Foods/Cremica Agro Foods, Mrs Sectors Specialty Foods
Final Product: Burger + French Fries
RKFL
Cost Reduction Initiatives
How is production of the Rs 35 burger with 50 % profit margin possible?
Economies of Scale
Innovation for > Efficiency
Activity based Costing
Minimum Possible Costs
Reduce Rejection
DC inventory levels
Flexibility in Logistics
Key Learnings
?
Supplier Development: McDonald’s nurtures its suppliers and helps them grow stronger with continuous guidance to achieve the highest quality in its final product i.e the burger. Winning commitment: McDonald’s has been capable of winning the dedication and loyalty of its suppliers and distributors by sticking to just one/few vendors.
?
?
Cost Cuts with High Volume: The suppliers indulge in their own endeavor to cut costs and increase efficiencies since they operate on the large volumes of orders.
QUESTIONS??
THANK YOU..
doc_182704854.pptx
consumer durable industry in India, logistics of order fulfillment in the consumer durable industry. Following initiatives have been taken towards improving the SCM in consumer durables sector, retailing, ecommerce, Build-to-order (BTO), forecasting techniques, flexible manufacturing. It also explains the distribution of Sony, Videocon and LG.
Case 01
The McDonald’s Way
SCM Case Presentation
Themes of the Benchmark Supply Chain
Supplier Development
Single Sourcing
Symbiotic Partnership
Backup Chain
McDonald’s Supply Chain
Ultimate Supply Chain
Quality Assurance
Economies of Scale
Global Supply Chain
McDonald’s Indian Supply Chain
Tier 2 Suppliers Tier 1 Suppliers
Processing Centres
DCs
Golden Arch Outlets
Trikaya
RKFL THANE
Dynamix
Vista
Vista
Radhakrishna
NOIDA
Mrs. Sectors
Own processing centres
RKFL
Why is it the Benchmark SC?
Type of Investment Level of Integration
• Investing not only money but also time and effort • Five years before India operations – to build perfect supply chain • Building expertise and quality control measures for suppliers • Partnership relationship with suppliers adopting a win-win model • Tight integration enables greater control over suppliers quality process • Tight integration also enables low inventory levels due to better forecasting • Focus on minute details of supplier’s operational capabilities • Evidences of Diameter of pea, Quality of Lettuce and water content in potatoes are examples of meticulous focus on raw material quality • In most products the pricing happens by adding a premium to the costs • At McDonalds the price is fixed at Rs 35, now supply chain has to reduce costs to provide sufficient margin • McDonalds follows an advisory role in enabling to achieve specialization • RKFL learnt to employ flexible refrigeration model in trucks – save costs • Suppliers learn to achieve high quality low rejection model of business
Grassroots Focus
Backward Costing Specialization of SC components
Individual Supply Chain – Iceberg Lettuce
1
RKFL
McDonalds
Trikaya
Processing Centres
DCs
Golden Arch Outlets
Characteristics
Magnitude of business: McDonald’s procures 150 tonnes of Iceberg Lettuce from Trikaya Agriculture
Risk and dependency: Lettuce is highly vulnerable to weather conditions. It has to be maintained at the precise temperature of 2 degrees for maximum shelf life. Nurturing of Supplier: McDonald’s guides and subsequently monitors Trikaya’s pest management and temperature management methods.
Yield Maximization is the key for Trikaya, something that it has learnt from McDonalds.
Individual Supply Chain – Processed Foods
2
RKFL
Farmers, Suguna, Dynamix (Cheese)
Characteristics
Vista, RKFL
DCs
Golden Arch Outlets
Magnitude of business: Vista, a joint venture, caters to 20-30% of the supply of processed foods to McDonald’s. Supplies 12 products to McDonald’s.
Meticulous Quality Control: Vista implements quality control to the extent of having precision diameter of peas and colour, taste and texture of the final patty.
Minimizing Wastage and Cost: Raw material and intermediate products are checked for aberrations at every level to minimize rejections late in the supply chain
Automation and Differentiation of Veg/Non-Veg Processes are maintained so as to maintain separate and standardised quality levels.
Individual Supply Chain – Potatoes
3
RKFL
Farmers, Suguna
McCain Foods
DCs
Golden Arch Outlets
Characteristics
No compromise Quality: Two Gujrat towns are the only source of potatoes for the whole country because of their agronomy. Indicates zero tolerances on quality. Imports continued: French Fries are made using potatoes imported from New Zealand. Again indicates no compromise on quality levels.
Individual Supply Chain – Cheese, Sauces and Buns
4
RKFL 5
Raj Foods/Cremica Agro Foods, Mrs Sectors Specialty Foods
Characteristics
DCs
Golden Arch Outlets
Product Differentiation: Separate product lines for Brittania and McDonald’s as far as cheese is concerned. Customization based on requirement.
All the suppliers are trying to expand their product portfolio based on expertise based on McDonald operations.
Regional sourcing for the buns: Separate suppliers for North and West.
Network Model of SC
Lettuce
McDonalds
Trikaya
Processing Centres
Chicken/ Veg Patty
Farmers, Suguna, Dynamix (Cheese) Farmers, Suguna
Vista, RKFL DCs
Golden Arch Outlets
Assembling and Packing
Wedges French Fries
McCain Foods
Buns, Cheese Sauce
Raj Foods/Cremica Agro Foods, Mrs Sectors Specialty Foods
Final Product: Burger + French Fries
RKFL
Cost Reduction Initiatives
How is production of the Rs 35 burger with 50 % profit margin possible?
Economies of Scale
Innovation for > Efficiency
Activity based Costing
Minimum Possible Costs
Reduce Rejection
DC inventory levels
Flexibility in Logistics
Key Learnings
?
Supplier Development: McDonald’s nurtures its suppliers and helps them grow stronger with continuous guidance to achieve the highest quality in its final product i.e the burger. Winning commitment: McDonald’s has been capable of winning the dedication and loyalty of its suppliers and distributors by sticking to just one/few vendors.
?
?
Cost Cuts with High Volume: The suppliers indulge in their own endeavor to cut costs and increase efficiencies since they operate on the large volumes of orders.
QUESTIONS??
THANK YOU..
doc_182704854.pptx