Monday, November 10, 2014
How McDonald’s manage its inventory?
McDonald’s is one of a few brands that succeed in inventory management in virtually every country in the world. It owns more than 30.000 restaurants in 119 countries and regions, with 50 million customers every day.
Inventory management, specifically stock management, is a challenging task for every McDonald’s manager. Stock management includes two parts, forecasting demand so that products will not be thrown as waste, and controlling stock accurately for raw materials.
Between the central restaurant supply planning manager and individual restaurants, there are constant communication which helps to manage the inventory more accurately. A central team, including employees who have worked in the individual restaurants as well as stock control specialists, serve as the regional planner.
Each regional planner works with 100 restaurants and communicates with them on a daily basis via emails and tele-conferences. Any factors that would influent the inventory level need to be discussed within the team. Regional planners also work with the new ICT stock control system called Manugistics to ensure enough raw materials such as beef, potato and bread.
The regional planner include a range of ad-hoc factors in calculation of the forecast for inventory, so that they can predict future demand based on both past performance and future sales campaigns. For example, the sales of Big Mac will increase during the “Buy one Get one Free” campaign.
A stock control chart shows the balance of orders for new inventory against sales. The system is heavily dependent on figures for expected sales. For example, if sales of McFlurry are running out of the system, then stocks of ice-cream would need to be coming into the system.
The Manugistics system uses a couple years’ worth of product sales history to generate time series forecasts for each restaurant. The regional planner team applies a specific factor(the blue blocks in the graph above) to the time series analysis for the forecast. After calculation, the graph can generate a forecast for future inventory level.
Effective and accurate inventory management is crucial to any business, particular chain restaurants like McDonald’s. Thanks to McDonald’s effort in stock management, each restaurant manager can spend more time focusing on delivering McDonald’s high quality service and cleanliness. The whole system is also optimized for reducing wastes. With efficient use of raw materials and high throughput of work-in-progress, fewer wastes are produced, which produces a win-win situation for McDonald’s and the environment.
1.McDonald's UK: http://www.mcdonalds.co.uk/content/dam/McDonaldsUK
2. McDonald's, a guide to the benefits of JIT: http://www.inventorymanagementreview.org/2005/11/mcdonalds_a_gui.html