McDonald's Australia supply chain and competitive priorities analysis

¶ … Internal Supply Chain at a Local McDonald's

Description of the company from an Australian market perspective, the products offered in the store visited, and the supply chain in which the store operates

The Australian McDonald's corporate Web site indicates that the company opened its first restaurant in an Australian suburb in 1971 and there are currently almost 800 McDonald's restaurants throughout the country, employing approximately 85,000 people (About us 2011). Although Australian McDonald's typically feature a majority of the standard fare offered at the company's restaurants around the world, some also feature regional specialties as shown in Table 1 below.

Representative products from a Sydney-based McDonald's restaurant

Meal

Product

Breakfast

Boston deli bagel

NYC benedict bagel

Bacon and egg McMuffin

Bakehouse brekkie roll

Rosti brekkie wrap

Assorted beverages

Lunch/Dinner

Hamburger/cheeseburger permutations

French fries

Baked fruit pies

McChicken sandwich

Chicken McNuggets

Filet-o-Fish

Various "combo" meals

Various family "dinner box" meals (available 5:00 P.M. -- 11:00 P.M. only)

Assorted beverages

Competitive priorities that the company is trying to achieve

Beyond the competitive priorities the company has with other fast food operators and traditional restaurants, an emerging competitive priority for McDonald's Australia is to distinguish itself by its corporate social responsibility and commitment to Australian vendors. In this regard, the company reports that, "McDonald's is committed to supporting Australian producers and manufacturers and our first preference is always to source produce from within Australia whenever it is viable and appropriate to do so" (Our suppliers 2011, p. 1). To its credit, the company is good to its word and almost 95 per cent of the company's food and packaging requirements in recent years have been locally acquired (Our suppliers 2011).

The company also makes it clear that among their primary competitive priorities is the need to establish a rapport with their internal and external customers that is characterized by long-term trust and loyalty. For instance, according to the Australian corporate Web site for McDonald's, "With more than one million people coming through our restaurants every day, it's their trust in our integrity that keeps them coming back. We earn that trust by respecting our customers and employees, and delivering outstanding quality, service, cleanliness and value" (About us 2011, p. 1). In fact, McDonald's in Australia set itself apart from its global parent by forcefully rejecting the media message sent by the high-profile and critical documentary, "Super Size Me" (Sheehan, 2006). In addition, McDonald's Australia also partnered with The Food Group Australia (a group of accredited practicing dietitians), to send the right message to consumers about the company's Australia-based products as well as the fact that McDonald's routinely collaborated with them in developing new and healthier menu items (Sheehan, 2006). Indeed, Sheehan notes that, "Super Size Me gave McDonalds Australia an opportunity to blow its own trumpet on a major company initiative - the Salads Plus menu -- in a credible, editorial environment which has greater persuasive value and impact than advertising can ever hope to achieve" (p. 222). The overarching messages that McDonald's Australia developed in response to the Super Size Me issues included the following:

1. McDonalds advocates a balanced lifestyle offering menu variety, customer information to support an informed choice and the promotion and support of physical activity.

2. McDonald's Australia does not offer any supersize or upsize options.

3. McDonalds is all about offering choices. In August, 2003, McDonald's Australia introduced Salads Plus. All of the meals on this menu feature 10 gm of fat or less a serve and sugar and salt levels have been carefully considered during product development. The range already sells $1 million a year, reflecting a fundamental shift in Australian consumer heating habits.

4. The main McDonalds Australia tactic was an advertising campaign consisting of three advertisements: two produced exclusively for television and, one ~ more pointedly ~ prepared for cinema. Each went to air 10 days after the launch of the film in Australia. The advertisements were made and placed only a week after the launching of the film and rebutted the documentary's claims (Sheehan 2006, p. 222).

Analysis of the efficiency and effectiveness of the supply chain and supporting rationale

The company has a highly efficient supply chain that has reached maturity. For instance, McDonald's Australia reports that, "McDonald's does not own any businesses that supply to us and we have long-term relationships in place with many of our suppliers, for example, we have been working with Inghams for over 20 years and Quality Bakers for close to 40 years" (Our suppliers 2011, p. 2). These longstanding relationships have provided the framework in which products can move along the supply chain in a seamless fashion, or at least as seamlessly as can be expected in a horizontally organized enterprise.

Areas of improvements in the supply chain operation

As noted above, McDonald's Australia is horizontally organized and does not own any businesses that supply products to them. According to Wylick (2007), McDonald's could improve the efficiency of its supply chain management operations by acquiring some or all of the suppliers that currently partner with the company, a process that would also improve reliability and reduce costs.

Computerised low level process map of the company's internal supply chain operation