PMS3313 – SUPPLY CHAIN MANAGEMENT

GROUP ASSIGNMENT 2- CASE STUDY (MCDONALDS)

SEMESTER NOV 2021 (3/21/34)

PREPARED FOR:

MAZIANA BINTI ZAINAL ABIDIN

PREPARED BY:

NAME MATRIC NO PROGRAME

SHARANYAH MEHENDREN 4193002221 BBA

GANESRAO RAMARAO 4193000151 BBA

T. MUKTISWARAN 4202035921 BBM

DIVIYAA PERUMAL 4193000321 BBM

DEIWANAYAGI D.THARICHINA 4193000851 BBA

MOORTHY
QUESTION 1

What is stock control? What are the key objectives of stock control at McDonald's?

A stock control system, often known as an inventory control system, includes all inventory
management and maintenance functions. It should cover everything from product purchasing,
tracking, and turnover to storage inputs, shipping and receiving, and product reordering.
McDonald's inventory is managed using a stock control system to ensure that raw materials
are always available. Furthermore, they use the stock control charts of their inventory
management system to display the product sales history and generate forecasts for each
restaurant. The key objectives of stock control at McDonald's is Constant communication
between the regional planner and restaurants. Every day, each regional planner contacts with
around 100 restaurants by holding conference calls and exchanging emails. The second key
objective is Accurate demand forecasting. Regional planners examine past performance and
develop future sales campaigns in order to forecast future demand. They use their inventory
management system's stock control charts to display product sales history and provide
forecasts for each restaurant. Last but the least, Storage and distribution in another
McDonald’s key factors. Separate areas for dry, refrigerated, and frozen commodities are
used by McDonald's warehouse management. Each area is kept at a constant temperature to
prevent the products from spoiling due to weather and climate changes. The same goes for
distribution – McDonald’s has the same three distribution channels via which they efficiently
supply food to locations while maintaining the correct product temperature.

The key objective of stock control at McDonald is achieving a balance between serving the
demands of consumers and minimising waste Waste is decreased by precise demand
forecasting so that items do not have to be discarded as frequently, as well as accurate raw
material stock control.

QUESTION 2

How has the role of Restaurant Managers changed at McDonald's in relation to stock control

activities?

In many nations around the world, McDonald's is a well-known brand. Its restaurants are
located in over 120 countries and serve over 50 million people every day. McDonald's has
been having trouble keeping track of its inventory. This case examines how McDonald's used
to manage its stock and how the company profited from the deployment of modern stock
management tools.
To effectively manage stock, a balance must be struck between serving consumer needs and
eliminating waste. The latter component can be accomplished by accurately estimating
demand so that food does not have to be thrown away frequently, as well as by effectively
controlling raw material supply. However, because customer tastes vary frequently, this
might be problematic. As a result, McDonald's will need to focus on product proliferation,
making waste reduction more difficult.
Previously, stock was managed by restaurant managers based on past knowledge and
information. As a result, the managers had to devote a significant amount of effort to
estimating demand. Furthermore, due to the method's simplicity, it failed to account for a
variety of additional aspects (seasonal change, holidays).McDonald's established a new stock
management team in 2004, known as the Restaurant Supply Planning Department. After
consulting with local restaurant owners, the team built a forecasting algorithm that factored in
a variety of factors that affect inventories to anticipate projected demand for menu items.
McDonald's managers employed the FIFO strategy to deal with stock to ensure that only
fresh stock was used at all times. There were several forms of stock that needed to be
managed. Materials in their natural state. Vegetables, meat, and packaging are only a few
examples. This is a work in progress. items that are on their way to becoming final goodsc
Completed items. These are items that are ready to be purchased. McDonald's was able to
ensure that enough stock was available at all times to meet consumer needs while reducing
costly waste by using the stock management system.

QUESTION 3

What are the key benefits of the new stock control system - for McDonald's as a whole, for

Restaurant Managers and for customers?

McDonald’s is undoubtedly the world’s leading quick service restaurant with over 39
thousand locations in over 119 markets. Hence, there are numerous key benefits that can look
into the new stock control system for McDonald’s as a whole for restaurant managers and for
customers.
First foremost, Restaurants avoid running out of stock is one of the fundamental benefits for
restaurant managers and for customers. It is because stockouts almost always make it to the
“worst nightmare” where it will lead to lost sales, but out of stocks also result in reduced
customer satisfaction and lower loyalty levels. Hence, if there are sufficient stocks of
McDonald’s list managers able to deliver a good quality and quantity of McDonalds’ such as
prominent burgers, chicken, appetizers, desserts and so on to the customers to fulfil their
craving and at the same time customers are also able to receive what they need. As a result,
customers can always receive what they order.

Furthermore, Time saved in ordering as the system calculates how much is required is
another key benefit. Since the technology advancement has been highly utilized by the
McDonald’s fast-food industry the ordering system made it easier for the restaurant's crew as
well as for the customers. Since manual calculation will be hard to retrieve the accurate list of
foods that have been ordered by the customer but with the technology advancement system
make the restaurant manager life even easier to sooth the process of food delivery.
Calculating food costs can be time consuming but the system where it is called KIOSK
makes all the process faster than before.

Moreover, Orders are based on the current stocks is also one of the significant key benefits. It
is because, Orders are based on current stocks. An order is the fundamental trading unit of a
securities market. When an order is placed, it attends a process of order execution. So, as
manager he or she always inputs the current stock level to have continuous food delivered for
the customers. Therefore, the major role comes from a manager to check the Stock level
because it assists to reduce the costs of holding stock while assuring you can meet customer
needs and making sure that there's sufficient food for production. Overall, it can be said that
McDonald’s always has a 'safe' proportion of stock.

Besides, the amount of stock ordered for promotion is more accurate based on past
performance. McDonald's always has a promotion on a special occasion and monthly basis.
Why do we say the stock that was ordered for promotion is accurate? It is because the
management of the McDonald's has better previous experience on the promotion period and
they know how fast, and what are the foods that have been sold previously and which are the
consumer's favourite. For example, every year during the Christmas season prosperity
burgers will be launched and have a huge promotion. Hence, the customers often buy
prosperity sets of burgers during the Christmas season. Before the season comes, the manager
of the store will feature enough stock to have better growth each coming year.

In conclusion, stock management is critical to the success of any firm. It helps the company
to conduct business responsibly. Restaurant Managers can spend more time focused on
achieving McDonald's high standards of Quality, Service, and Cleanliness since McDonald's
has taken most of the hard work out of stock management. Customers are satisfied since they
know the thing, they want will be available on the day.

QUESTION 4

Why is the stock management system likely to improve over time? What additional

information might help central stock managers to produce even more accurate figures?

The longer a company is in operation, the more stock data must be projected. A solid
prediction will take into account the company's growth curve, market developments that may
have an impact on the bottom line, customer confidence, and the sales and promotions
calendar. The one thing to remember is that what you should expect is the unexpected.
Improved stock management practices will not fix every small company problem, but they
will go a long way toward smoothing out the rough spots. Stock is a significant asset on a
small business's balance sheet, and it can tie up the company's often-limited cash resources
for a variety of reasons. Improvements in stock management allow organisations to maintain
inventory stocks more precisely, both in financial records and by physical count. This, in
turn, offers the foundation for making inventory purchasing choices and maintaining
appropriate inventory stocking levels to better satisfy inventory demand.

To produce more accurate figure, stock managers can use the ABC inventory control system
to decide which inventories should be tallied more regularly and carefully controlled, and
which should not. ABC analysis is frequently used in conjunction with the 80/20 rule or
Pareto analysis. According to the 80/20 rule, 80 percent of the goal can be attained by
executing 20 percent of the activities, while the remaining 20 percent of the goal will require
80 percent of the actions. According to the Pareto analysis, work in the first category should
be given the highest priority and tightly controlled. Moreover, ABC inventory classification
can be performed on a monthly, quarterly, yearly, or other set term basis. In today's fast-
paced consumer market, an A item might become a C item in months or even weeks.

Besides that, to produce even more accuracy stock managers can implement the RFID ( radio
frequency identification ) RFID is a useful technology for tracking inventories throughout the
supply chain. It has the ability to coordinate the information and physical movement of goods
across the supply chain from producers to retail outlets and to customers at the right place and
right time. RFID may also be used to trace returned items through the supply chain and
prevent counterfeiting.