McDonalds Corporation Inventory and Supply Chain Essay

Excerpt from Essay :

Managing Inventory and Supply Chain

Effective operations management is one of the most important processes and components toward the success of any business organization. Given the increased competition that characterizes the modern business environment, organizations are faced with the need to develop suitable strategies for operations management. Managing inventory and supply chain is one of the components of operations management, particularly in manufacturing organization or fast food chains. Inventory and supply chain management plays an important role in the success and profitability of a company because of the role it plays in production processes. This paper examines how to improve inventory systems and supply chain management processes at McDonalds Corporation as part of operations management. The discussion concludes by providing recommendations on how to improve management of inventory and supply chain in this company.

Overview of McDonalds Corporation

McDonalds Corporation was established in 1954 in California, USA and has developed to become the leading fast food chain restaurant across the globe. The company operates in the fast food industry, which is characterized by increased competition. This fast food chain company serves approximately 50 million customers every day in more than 120 countries worldwide. Since its inception, McDonalds Corporation has continued to experience tremendous profitability and success across its global operations due to sound business strategy and practices (Han, 2008). As part of its business strategy, McDonalds Corporation has continuously improved its brand image through engaging in various social activities including sponsorship of major sporting events worldwide such as the UEFA Champions League. McDonalds Corporations’ business strategy is based on a geographic structure and franchising.

One of the components that have contributed to successful operations and profitability of McDonalds Corporation is effective operations management. The firm’s operations management framework supports its position as the largest fast food chain restaurant across the globe (Gregory, 2017). Supply chain development, inventory management, and strategic human resource management are among McDonalds’ strategic needs for its operations management. As competition in the fast food industry continues to increase worldwide, McDonalds faces the need to enhance its inventory systems and supply chain management processes. The company needs to enhance inventory and supply chain management to effectively address the intense competition from competitors like Subway, Wendy’s and KFC. In this regard, McDonalds Corporation needs to identify and implement suitable policies and strategies for inventory and supply chain management in areas of operations management.

Functions, Roles and Types of Inventory in the Inventory Mix

As previously mentioned, the core to the success and profitability of McDonalds Corporation over the years is inventory and supply chain management. The company is regarded as one of the few businesses with successful inventory management strategy and framework in nearly every country where it operates. Since it operates multiple fast food outlets in different countries worldwide, McDonalds Corporation relies on a large and complex supply chain (Sandle, 2017). The size of the supply chain implies that inventory management systems and processes in the corporation is increasingly complex. Inventory management at the corporation entails stock management, which is a challenging task because of the size and complexity of the supply chain.

There are two major functions of inventory and supply chain management of the different types of inventory at McDonalds Corporation. These functions are based on stock management, which is at the core of inventory management. First, inventory systems and supply chain management processes at McDonalds Corporation focus on controlling stock accurately for raw materials. Secondly, these processes focus on forecasting demand in order to avoid throwing products as waste. In this regard, the processes focus on creating a balance between products and demands in order to avoid wastes.

Similar to many businesses, there are three types of inventory at McDonalds Corporation. The first type of inventory is raw materials, which are utilized in the production or creation of finished products for customers. For McDonalds Corporation, raw materials are ingredients used to create finished products (food items). Some of these ingredients include salad…

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…partners provide raw materials, which are utilized in creating products that meet customer demands. Therefore, the role of supply chain partners in the system is to provide inventory to the company, particularly inputs. On the other hand, employees play a critical in this process since they transform these raw materials to finished products through various processes. Employees are the premise for the organization’s profitability since their input results in product development. Restaurant owners or operators help to determine the required levels of inventory, which is the basis with which supplies are ordered and delivered by supply chain partners. This implies that restaurant owners/operators help to determine the required level of inputs (raw materials, services and components) for production. These three stakeholders influence the operations management processes by determining operations, particularly in product development. They influence product development processes, which in turn influence the ability of the company to meet customers’ demands and needs.

Recommendations for Improvements

While McDonalds Corporation has a relatively effective inventory and supply chain management framework, the company need some improvements. One of these improvements is developing and enhancing the just-in-time system to help reduce throwing finished products as wastes. Secondly, the company should consider conducting pareto analysis before distributing inventory to each restaurant. In addition to highlighting the most valuable inventory, this analysis would help ensure that such inputs are delivered at the right level. Third, the corporation should calculate its stocks on a regular basis and use the results to create a forecast inventory levels.

In conclusion, McDonalds Corporation is the leading fast food chain restaurant across the globe. The corporation has remained profitable and successful across all its operations since inception due to its use of suitable business strategies. One of the factors that have contributed to its profitability and success is effective operations management including suitable inventory and supply chain management. The corporation is renowned to have one of the best supply chains despite inconsistent revenues in recent years. However, in light of increased competition…

Sources Used in Document:

References

Gregory, L. (2017, February 5). McDonald’s Operations Management, 10 Decisions, Productivity. Retrieved May 10, 2019, from http://panmore.com/mcdonalds-operations-management-10-decisions-areas-productivity

Han, J. (2008, November). The Business Strategy of McDonald’s. International Journal of Business and Management, 3(11), 72-74.

Hill, A. & Hill, T. (2018). Essential operations management (2nd ed.). London, UK: Palgrave MacMillan.

Ovenden, J. (n.d.). McDonalds’ Supply Chain Success Shows the Benefits of Collaboration. Retrieved May 10, 2019, from https://channels.theinnovationenterprise.com/articles/mcdonalds-supply-chain-success-shows-the-benefits-of-collaboration

Sandle, T. (2017, August 24). McDonald’s Improves its Supply Chain Through Automation. Digital Journal. Retrieved May 10, 2019, from http://www.digitaljournal.com/business/mcdonalds-improve-its-supply-chain-through-automation/article/500860


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