An Outline of McDonald’s Wildly Successful Supply Chain Management (2024)

McDonald’s, a food industry giant, is reluctant to share its Special Sauce recipe. However, the fast food leader gladly shares its recipe for a successful supply chain, which is considered to be one of world’s best supply chains. Previously, we had discussed Amazon’s supply chain and Apple’s supply chain, but today we are going to discuss the secrets of successful supply chain management at McDonalds.

Every successful business has a person behind its success. For McDonald’s, that person is Ray Kroc who joined the company in 1954. The McDonald’s supply chain got all of its power thanks to his efforts. He managed to develop ongoing relationships with suppliers, which have stayed with the company until now.

Kroc saw the company as a system consisting of three main building blocks: employees, owners, and suppliers. The company couldn’t exist without either of these building blocks. And all solutions should consider the question “What’s best for the system?”

As for McDonalds supply chain management, Kroc decided that a 100% outsourced supply chain would be the best solution for the system, and he did not fail. The first reason was that he did not have enough funds to build his own vertical supply chain. Secondly, Kroc didn’t copy the strategies of competitors who forced their franchised restaurants to buy food from them only.

Instead, he focused on the long term-outcome, not the short term one. Kroc’s McDonalds supply chain strategy was aimed at finding suppliers who would become the partners of McDonald’s and who would treat this partnership as seriously as he did. This strategy still remains the driving force of supply chain at McDonalds.

McDonald’s Vested Business Model

Researchers from the University of Tennessee studied the McDonald’s system and came up with the vested business model on which this system was based. The main principle of the vested model are win-win relationships in which both parties are equally committed to each other’s success. According to this model, supply chain management at McDonalds relies on the following five rules:

  1. Rule #1: Focusing on outcomes, not transactions. Instead of hunting for suppliers that offer the best price, McDonald’s focuses on creating long term relationships with existing suppliers.
  2. Rule #2: Focusing on the what, not the how. McDonald’s does not micromanage its business partners. Instead, it helps its vendors to be successful, just like they help McDonald’s to achieve success.
  3. Rule #3: Clearly defined and measurable outcomes. McDonald’s shares with suppliers the key supply chain priorities that are valuable for the McDonald’s system. The main goal is to maintain the relevance of the brand and satisfy the ever-changing needs of consumers in a fast-paced business environment.
  4. Rule #4: Individual vendor pricing models. McDonald’s implements highly transparent pricing modules that contain the variables to help all parties understand the trade-offs on the total costs. The objective of the McDonald’s pricing models is to reduce the total cost, but not the price. To ensure price stability for the restaurants, McDonald’s and its vendors regularly revise the pricing models based on the category and region.
  5. Rule 5: Peer-to-peer relationships with each supplier. McDonald’s initiates communication with suppliers in both formal and informal settings. The goal is to establish an open culture that discusses important issues and makes decisions based on the “System First” philosophy.

McDonalds Inventory Management

As for any food company, McDonald’s faces challenges when it comes to inventory management. These challenges consist in demand forecasting so the products are not thrown away as well as controlling the raw materials such as bread, potatoes, and beef. However, McDonald’s is capable of overcoming those challenges, and here’s how:

  • Constant communication between the regional planner and restaurants. Every day, each regional planner communicates with about 100 restaurants by making conference calls and exchanging emails.
  • Reliable inventory management system. McDonald’s inventory is managed by using the stock control system to ensure constant availability of raw materials.
  • Accurate demand forecasting. Regional planners analyze the past performance and work on future sales campaigns, thus predicting the future demand. They use the stock control charts of their inventory management system to display the product sales history and generate forecasts for each restaurant.
  • Storage and distribution. McDonald’s warehouses management runs with separate areas for dry, refrigerated and frozen foods. In each area, a specific temperature is maintained so the products are not spoiled because of weather and climate changes. The same goes for distribution – McDonald’s has the same three distribution channels through which they efficiently deliver food to restaurants while maintaining the correct product temperature.

This is how the McDonald’s supply chain and McDonald’s inventory control processes are organized. Today McDonald’s serves around 68 million customers daily in 119 countries and stays ahead of the competition. This is the result of a successful supply chain strategy, which is more than 60 years old.

An Outline of McDonald’s Wildly Successful Supply Chain Management (1)

Adam is the Assistant Director of Operations at Dynamic Inventory. He has experience working with retailers in various industries including sporting goods, automotive parts, outdoor equipment, and more. His background is in e-commerce internet marketing and he has helped design the requirements for many features in Dynamic Inventory based on his expertise managing and marketing products online.

An Outline of McDonald’s Wildly Successful Supply Chain Management (2024)


What is the supply chain for McDonalds? ›

McDonald's supply chain is a complex web of direct and indirect suppliers that are held to clear standards for quality and efficiency. The company uses direct suppliers that coordinate purchasing and distributing to restaurants. In comparison, indirect suppliers operate facilities such as grain mills and abattoirs.

What management system does McDonalds use? ›

McDonald's uses the NewPOS NP6 system, also known as the McDonald's NP6, MediaWorks NewPOS, or MW NewPOS (as well as Torex or Savista NewPOS).

How can McDonalds improve their supply chain? ›

By owning livestock farms, McDonald's can better control its beef patties. And by operating its own distribution centres, McDonald's can deliver food to restaurants faster and at a lower cost. Vertical integration has helped McDonald's keep a tight grip on its costs.

Is McDonalds US supply chain lean or agile? ›

McDonald's is really a mini Lean manufacturing plant. Different work cells prepare various “components” there is an assembly area, there is a supply chain coupled with “customer support” (i.e. the sales clerk). They are prepared for any order from the menu.

What is the supply chain strategy? ›

A supply chain strategy is the overarching plan that an organization uses to manage the flow of goods and services, from sourcing raw materials to delivering products to customers.

Who is McDonald's largest supplier? ›

NEW YORK, July 22 (Reuters) - McDonald's Corp (MCD. N) and more than 20 of its largest U.S. suppliers - including beef producer Cargill and chicken processor Tyson Foods (TSN. N) - on Thursday said they will increase diversity among their providers.

What is McDonalds strategic strategy? ›

McDonald's strategic plan focuses on a long-term outlook to deliver meaningful growth and increase guest counts, a reliable measure of the Company's strength that is vital to growing sales and shareholder value. We are targeting opportunities at the core of McDonald's — food, value and the customer experience.

What are the four functions of management in McDonalds? ›

McDonald's Management Functions

Management functions of McDonald's, a franchise business that operates individually owned restaurants, comprise of planning, organizing, controlling, and leading.

What is McDonalds technology strategy? ›

McDonald's is leveraging big data and AI algorithms to analyze historical customer data and offer personalized services. For instance, McDonald's acquired Apprente, which provides voice technology for food order taking, and Dynamic Yield, which customizes ordering on digital menu boards.

What makes supply chain successful? ›

Successful Supply Chains Are Prepared for the Unexpected. The more things change, the more your organization needs to be able to adapt to solve new problems. The most successful organizations are able to apply their values and vision for the company to the solutions needed to overcome unexpected hurdles.

What are 3 reasons McDonald's is successful? ›

McDonald's success today is largely attributed to its franchising model, consistency, and innovation. Through their franchising model, they were able to enjoy rapid growth.

How can supply chain management be successful? ›

6 keys to successful supply chain management
  1. Find the right people. ...
  2. Establish alliances with key suppliers. ...
  3. Match supply chain and business line. ...
  4. Improve the flow of information. ...
  5. Make technology work for you. ...
  6. Get outside help.

Does McDonalds outsource their supply chain? ›

McDonald's does not own any of our Supply Chain. Our Supply Chain it's essentially outsourced by trusted suppliers who are extremely committed to the success of the system and meeting customer expectations.

What can McDonalds improve on? ›

How McDonald's Can Improve Customer Service
  • Recognize that people matter. Match your investments in products and processes to your investments in your people. ...
  • Shifting the paradigm. ...
  • Rethink your definition of service. ...
  • Train your employees. ...
  • Put your money where your mouth is. ...
  • Establish daily rituals.
Apr 12, 2013

What is an example of a successful agile supply chain? ›

Clothing and accessory retailer Zara uses an agile supply chain in its business model. The company focuses on taking runway concepts, designing them in house, producing them, and then delivering them to stores within a few short weeks.

What are the five key elements of a strong supply chain strategy? ›

The Top-level of this model has five different processes which are also known as components of Supply Chain Management – Plan, Source, Make, Deliver and Return.

What are the 3 supply chain strategies? ›

The three levels of supply chain management are strategic, tactical and operational.

What are 4 types of supply chain strategies? ›

Types. The main four types of supply chain strategies are client-centric, predictive business, visibility and smart automation.

Who is McDonalds biggest customer? ›

The McDonald's target audience is mainly lower to middle class consumers, who are interested in fast, cheap and convenient food. During the pandemic, the famous McDonald's drive-thru became even more popular. In 2020, the average drive-thru purchase took 349 seconds.

Is McDonalds the biggest chain in the world? ›

The largest restaurant companies in the world are primarily chain operations with an international presence. McDonald's Corporation is the largest fast-food chain. As of 2022, Starbucks is the largest restaurant company by revenue, with 35,000 stores globally.

What is the most sold McDonalds product? ›

The Most Popular Thing at McDonald's Is…

Ever since the first McDonald's menu from when the chained opened in the 1950s, french fries have been a star. The famous Golden Arches sell upward of 9 million pounds of fries per day! That's a whole 'lotta large fries.

What is McDonald's message strategy? ›

McDonald's marketing strategy includes investing in online and offline marketing methods that spread its clear, brand-centered messages to a large audience and using other channels like its dedicated mobile app to reach and keep loyal customers.

What is the secret to the McDonald's international strategy success? ›

Adaptation strategy

The strategy can be compared to localization. With this strategy, McDonald's adapts to the needs of the consumers as required by the cultures of specific countries. Adaptation works very well for McDonald's. The strategy enables the fast food chain to have a wider reach worldwide.

What is McDonald's business model? ›

The company makes money by leveraging its product, fast food, to franchisees who have to lease properties, often at large markups, that are owned by McDonald's. Franchisees are lured by the impressive margins that make McDonald's franchises an almost guaranteed moneymaker.

What are McDonald's 4 principles? ›

At our best, we don't just serve food, we serve moments of feel-good, all with the lighthearted, unpretentious, welcoming, dependable personality consumers know and love.

What is the core function of McDonald's? ›

As one of the most frequented restaurants in the world, we help feed millions of people every day, with a focus on evolving the Happy Meal and making balanced meals more accessible to families across the world.

How many principles of management are followed in mcdonalds? ›

As is well known, Mc Donald's has implemented some or all of Henri Fayol 14 principles of management which are as follow: 1) Division of work. 2) A delegation of authority. 3) Discipline. 4) Chain of commands.

What are the four elements of success in supply chain management? ›

Integration, operations, purchasing and distribution are the four elements of the supply chain that work together to establish a path to competition that is both cost-effective and competitive.

What is the most important step in supply chain management? ›


Additionally, transportation cost modeling and warehouse efficiency models are the other components that need to be developed and without which the supply chain management process would be incomplete.

What are 3 strengths that McDonald's has in a global market? ›

The following are Mcdonald's strengths that have helped keep it in business for a very long time:
  • Early Market Movers. McDonald's is an early mover in the fast-food industry. ...
  • Brand Recognition. ...
  • Customer Service. ...
  • Menu Diversity. ...
  • Strong Business Model.
Feb 23, 2023

What are the 3 pillars of growth strategy for McDonald's? ›

“Our three growth pillars known as our 'MCDs' – marketing, core menu and the 3Ds (digital, delivery and drive-thru) guide our business.

Why is IT important for the success of supply chain management? ›

Why Is Supply Chain Management Important? Modern supply chains help improve living standards by enabling consumers to buy essential products at lower costs. This is because an effective supply chain streamlines the process of getting products to market, and ultimately to consumers.

How do McDonalds communicate with their suppliers? ›

McDonald's maintains communication with suppliers both in formal and informal styles. The goal is to encourage supply chain visibility and incorporate an open culture in communication. An open culture and communication also ensure all decisions are based on the company's “System First” philosophy.

What are McDonalds doing to be sustainable? ›

By 2030, McDonald's has committed to reducing greenhouse gas emissions by 36%, globally, saving 150 million metric tonnes of CO2, and to source all packaging from renewable or recycled sources by 2025. All the energy McDonald's buys to run its restaurants comes from renewable wind and solar power.

What are the challenges that McDonalds faces? ›

Overall McDonalds has come a long way. From facing constraints including beef ban, lack of poor infrastructure and storage, vegetarian population, political issues, to becoming the most preferred fast food brand, it surely has won the hearts of Indians.

What makes Mcdonald's different from its competitors? ›

Its key competitive advantages have included nutrition, convenience, affordability, innovation, quality, hygiene, and value added services. The success of the organization has been its ability to leverage its key strengths so that it can overcome weaknesses.

What does McDonald's want to achieve in the future? ›

We will aim to reach net zero emissions by 2040 across our entire business and value chain to have a positive impact on climate. By 2030 achieve net zero emissions for all our restaurants and offices.

What is a real example of supply chain management? ›

What Is a Supply Chain Management Example? Supply chain management is the practice of coordinating the various activities necessary to produce and deliver goods and services to a business's customers. Examples of supply chain activities can include designing, farming, manufacturing, packaging, or transporting.

What is an example of effectiveness in supply chain? ›

For example, an extremely efficient supply chain might excel at obtaining the lowest possible cost for essential materials, but only by sacrificing quality or timely delivery. As a result, customer satisfaction drops, sales decline, and the company pays a heavy toll for its “peak efficiency.”

What are the examples of supply management chain? ›

The most basic version of a supply chain includes a company, its suppliers and the customers of that company. An example would be: raw material producer, manufacturer, distributor, retailer and retail customer.

What is supply chain fast food? ›

A food supply chain is the process that all food products go through, from production all the way through to consumption. The food supply chain is, thus, a hugely important step in how you safely consume and understand the food you eat.

What are the main supply chains? ›

The three main flows of the supply chain are the product flow, the information flow and the finances flow. These occur across three main stages: strategy, planning and operation. SCM involves coordinating and integrating these flows both within and among companies. A diagram of the main stages of the supply chain.

Does Mcdonalds outsource their supply chain? ›

McDonald's does not own any of our Supply Chain. Our Supply Chain it's essentially outsourced by trusted suppliers who are extremely committed to the success of the system and meeting customer expectations.

What is supply chain in food manufacturing? ›

Colloquially known as “farm to fork,” food supply chains encompass all of the activities involved in the transformation of foodstuffs (i.e. raw materials) into consumer-ready food products – from sourcing, to processing, handling, distribution, and sale – as well as the management and documentation of these activities.

What are the 5 stages of the food supply chain? ›

The processes include production, processing, distribution, consumption and disposal.

What is a good example of supply chain? ›

Supply chain management is the practice of coordinating the various activities necessary to produce and deliver goods and services to a business's customers. Examples of supply chain activities can include designing, farming, manufacturing, packaging, or transporting.

What is the importance of supply chain management in fast food industry? ›

An efficient supply chain and logistics facility ensures that the food products are stored at optimum temperatures at all times to maintain their freshness and quality. Keep pace with the consumer's dynamic buying habits with the help of Quantzig — turn data into business acumen that will drive sound decision-making.

What are the four 4 stages of supply chains? ›

What are the components of your supply chain you should be focusing on right now?
  • INTEGRATION. Integration starts at your strategic planning phase and is critical throughout your communications and information sharing and data analysis and storage. ...

What is supply chain management in simple words? ›

At the most fundamental level, supply chain management (SCM) is management of the flow of goods, data, and finances related to a product or service, from the procurement of raw materials to the delivery of the product at its final destination.

What are the 4 main elements on the supply chain? ›

Integration, operations, purchasing and distribution are the four elements of the supply chain that work together to establish a path to competition that is both cost-effective and competitive.

What type of production system is McDonalds? ›

One of the first businesses outside of manufacturing to adopt the philosophies of Lean Management production systems was McDonald's. When the business expanded from one little shop to franchises and made a commitment to increase their turnaround times they needed to find a way to do it.

What are three main supply chains? ›

The 3 Levels of Supply Chain Management: Strategic, tactical and operational. The three levels of supply chain management are strategic, tactical and operational.

What are three basic supply chains? ›

There are three main flows of supply chain management: the product flow, the information flow, and the finances flow.

What is the supply chain manufacturing process? ›

In product manufacturing, the supply chain facilitates the transfer and transformation of raw materials into finished products. From there, the manufacturer transports and distributes the products to a retailer or directly to a consumer.

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