Challenges Faced by Mcdonald\'s

McDonald's: Sales And Purchasing

What does McDonald's hope to accomplish with sales and purchasing?

As a food company, McDonald's is forced to operate on a tight budget, making its profits from high-volume sales at a razor-thin profit margin. Its sales and purchasing decisions must prioritize keeping costs low in terms of input costs for foods. However, it must also provide a diversity of product offerings to its customers, tailoring the menu to suit local needs and also responding to pressures to offer healthier options.

What are the sales and purchasing processes?

According to McDonald's, in terms of its sourcing "all of our chicken comes from our trusted USDA-inspected suppliers in the U.S., like Tyson Foods and Keystone Foods. Our beef and pork products also come from trusted USDA-inspected suppliers, such as Lopez Foods. In order to keep up with demand, a small percentage of our 100% pure beef is imported from USDA-inspected suppliers in Australia and New Zealand" (Meats, 2014, McDonalds). In terms of distributing its products, McDonald's primary method is through franchising, whereby the franchiser pays a service fee and rent to the main company (Acquiring a franchise, 2014, McDonald's). Because McDonald's products are so standardized, the franchiser must use the specific ingredients McDonald's has approved which go into all of its products.

What are the milestones in the sales & purchasing processes and how could they be improved?

Despite its insistence that it provides its customers with high-quality beef, McDonald's has continued to receive a great deal of criticism for the quality of its food. "McDonald's used to buy from over 100 regional ground-beef suppliers. But as McDonald's got bigger and bigger, they reduced that number to five. So this had the impact of creating bigger and bigger meatpacking companies to supply the fast-food chains. And in a very short period of time, we got a very concentrated meatpacking industry" (Schlosser 2014). It is alleged that McDonald's uses poor-quality beef with 'fillers' from a very limited range of producers which also means that any problems with the beef affect a wide range of all its customers.

The distribution process of using franchises also limits the degree to which franchisers can respond to local needs although this has changed somewhat given McDonald's globalization and its efforts to tailor its menu to local needs on a country-by-country basis. Still, McDonald's menus domestically do not have the variation of, for example, Starbucks, which has a core menu that can be altered, based upon the likely clientele of the store and the specific demands of the area.

What data must be collected/accessed through these processes and how does it relate to the industry?

Ultimately, McDonald's, like all fast food companies is driven by sales and any alterations in its menu are largely based in supply and demand. McDonald's will occasionally try out new menu ideas or options in local test markets to see if they are warranted for a larger geographic distribution.

What issues and challenges does the company have with sales and purchasing and how could they be improved?

McDonald's faces a continual challenge between its demand for higher-quality, safe products and the pressures to keep costs down. Also, it must strike a balance between menu diversification and responding to changing customer demands and the need to consolidate the menu and focus on high-demand items to avoid having unused inventory.

How the sales and purchasing departments are arranged and what are they doing strategically?