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4 Things We've Learned from McDonald's Procurement Management

Michael Wilson | Apr 23, 2015

In the food service industry, there are few better examples of great procurement management than McDonald's. Excellent procurement is part of the reason that McDonald's has been ...

McdonaldsIn the food service industry, there are few better examples of great procurement management than McDonald's. Excellent procurement is part of the reason that McDonald's has been able to grow from a small family barbecue restaurant into a global conglomerate with more than 35,000 restaurants in over 110 different countries. Today's food industry supply chain operators would do well to learn from the excellent procurement management example that McDonald's has set.

Here are 4 of the most important things that we have learned from the way that McDonald's handles procurement and other crucial supply chain matters:

1. Relationships with Suppliers are Essential

One of the most impressive things about McDonald's to date is the company's ability to maintain long-standing relationships with suppliers. In some cases, the suppliers that still provide materials for McDonald's menu items are the same ones that McDonald's pioneer Ray Kroc negotiated with back in the 1950s. Keystone Foods, for example, a McDonald's supplier that provides the company with 400 million pounds of chicken and 260 million pounds of beef each year, has been doing business with McDonald's since the 1960s. Great relationships with suppliers will help you get more favorable terms and partners who have a deeper understanding of your business.

2. You Must Devote Resources to Planning and Forecasting

Originally, the task of forecasting demand and ordering the necessary supplies to cover this demand was left to individual McDonald's restaurant owners. This process was an arduous one that took up a lot of the owners' time and resources. To improve the situation, McDonald's created the Restaurant Supply Planning Department in 2004 to help restaurant owners do a better job at procurement management, based on both store-specific data and national factors like holidays and promotions. This department has been a big part of McDonald's supply chain success.

3. Contingency Planning is Very Important

The Martin-Brower Company is McDonald's biggest distributor. According to Brian Hancock, the president of The Martin-Brower Company in North America, McDonald's is among the best-prepared supply chains in the entire world. This is how the company is able to consistently meet customer demands and provide almost everything they have available on the menu. A supply chain that does not have a plan for when things go wrong is a ticking time bomb, waiting to explode and provoke chaos in the supply chain.

4. Timing is Crucial

Even though McDonald's has tens of thousands of restaurants, with over 15,000 in the United States alone, the company still has to plan its supply chain logistics in a way that accounts for even the smallest detail. For an example, consider the way that McDonald's handles delivery timing. Drivers delivering to McDonald's are instructed to call before they get there to ensure that the restaurant is able to handle delivery when they are scheduled. Because McDonald's plans its delivery timing so carefully, interruptions during the peak breakfast and lunch hours are minimal. The timing of your deliveries, shipping, and receiving will all have a huge effect on your supply chain and procurement management abilities, which is why it's so important to keep these numbers as favorable as possible.

While you may not have the resources or huge worldwide supply chain network that McDonald's does, there are still lessons to be learned from the fast food conglomerate. By adopting these principles you can breathe some life into your supply chain and make it exponentially more efficient.

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