Mcdonald\'s Process and Location Strategy at Mcdonald\'s

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Process and Location Strategy at McDonald's

In order to minimize the level of potential variation in the sourcing, procurement, production and serving of their products, McDonald's Corporation relies extensively on a repetitive focused strategy. By aligning its organization to this strategic approach to sourcing, procurement, fulfillment and service, McDonald's has been able to overcome significant challenges from a cost and performance standpoint and emerge as the global leader in the quick service restaurants (QSRs) category. One of the most significant lessons learned by McDonald's with regard to making their repetitive focused strategy successful was the need for also supporting a level of product and service customization. This required the company to continually improve upon its process areas that included Operations Research (OR) and Total Quality Management (TQM) initiatives as well (Cramer, 2009). Combining these two areas of focus with their repetitive-focused strategy also gave McDonald's the ability to optimize supply chain management and logistics processes along with quality standards for customization (Cramer, 2009). Taken together these factors allowed McDonald's to move quickly into entirely new markets both from a geographic and demographic standpoint.

In conjunction with the repetitive focus strategy, McDonald's has an extensive supply chain network that enables its success. It is one of the few QSR chains globally to have a completely functioning and highly automated Vendor Managed Inventory (VMI) program which gives shares risk across suppliers for highly perishable goods, incouding those inventories at Golden State Foods as well (Cramer, 2009). McDonald's also relies on a comprehensive Collaborative, Forecasting, Planning & Replenishment (CPFR) workflow to allow ensure high levels of demand management and forecasting accuracy throughout their entire network of franchisees and company-owned stores globally. Combined these two strategies significantly reduce risk and increase time-to-market for new products while keeping logistics costs down (Hoffman, 2006). In addition, all of these factors are also responsible for the repetitive focused strategy being successful.

Today McDonald's is headquartered in Oak Brook, Illinois, a suburb of Chicago, Illinois. There were several factors that led McDonald's to select Chicago over comparable cities in the Midwest and the potential of also locating in Los Angeles, California or San Diego, one of the key cities in the company's history. Chicago was chosen due to its central location and its role as a logistics hub throughout the central United States. It is the location of over two dozen freight forwarding and 3rd party logistics providers, and also home of United Airlines. Shipments form Chicago can reach any major metro area in the country within three hours. Chicago is an ideal city for a supply-chain centric business to be located in. There are the additional actors of universities in the area that have strong marketing, merchandising and customer behavior research ongoing. These include the University of Chicago and others that are graduating marketers that would be able to bring this expertise to McDonald's too.