Online Purchasing in McDonalds

The research focuses on the McDonald’s online ordering process.

The ordering method was created as a solution to the issue caused by a McDonald’s promotion. After McDonald’s made an offer to add a strip of bacon for 35 cents in 2002, everything got underway. There was a serious forecasting problem with the deal. The company had to increase the order for pig bellies as a result of the promotion’s rapid national spread. Due to the high demand, there was a shortage of pork and a rise in price. It was determined that various franchises operating independently and utilizing manual ordering systems were the main cause of the issue. The systems were not feeding information directly to the headquarters in time. For the company to plans its purchase and shipments, it developed the online system for ordering. European stores were privileged to be the first to implement the system, which saw a 30 percent reduction in both the raw waste and store inventory. More so, there was a decrease in the shipment of bacon between stores because of shortage by four percent. Furthermore, the system reduced the ordering time by half hence saving approximately an hour every week. The total annual saving in all the stores in Germany and France were USD 11.5 million. However, McDonald is forefront in the shift to demand chain planning days (Boyer & Verma, 2009).

The National Restaurant Association approximated that 12 percent of restaurants preferred to order their food supplies by electronic means while just 10 percent ordered nonfood supplies through the same way.

The company has a happy meal promotion, which makes it one of the leading distributors of toys in the world. Since each store has to receive supplies three times, a week the firm is facing some critical challenges in assimilating the supply chain. First, the company’s ability to control the adoption of new technology is limited since most of the restaurants are managed and owned by different franchisees. Robert Bauer who is the director of informatics at McDonald’s global supply chain confirms that it is even much harder to get information from these constituent restaurants. More so, it is not necessary for the franchises to use the software. As a result, only 12100 out of 13000 restaurants in the USA use the online ordering system. The next big problem is outsourcing since the whole supply chain is outsourced. The company revamped its supply chain in 1996 using the technology and software from Oracle, Sun, and Manugistics with a few years spent in collecting, gathering and organizing data. Martin-Brower and Perseco are the two leading distributors contracted to McDonald’s. The technology works fantastically well for the daily projects, but it is slow with limited supply items. Some items such as the happy meal toys must be produced 12 months in advance since there is no chance for correction the approximation error once the promotion begins even though it only runs for 28 days (Boyer & Verma, 2009).

Question One

With the ever changing technology, it can be argued that online ordering systems are better than every single franchise ordering individually. With the systems, the company can send out or order necessary inventory to every franchised faster. Therefore, to encourage adoption the firm can bundle inventory from stores, which are nearby hence lowering the overall cost of all the franchise as opposed to sending the list to different stores on various days. More so, the company can schedule training and seminars to encourage the franchisees to adjust to the online ordering system comfortably. Furthermore, they can use the hard way by making it a mandatory for all the franchises to use the online system.

Question Two

The company needs to collect information and organize data basing on the daily and weekly forecast, advertisement, marketing forecast, effects caused by the discount. On the other hand, the planning and demand of nonfood items should be done while considering the request of food items. Consequently, the demand for promotional items is supposed to be derived from the strategic growth initiative, festive seasons, and overall demand for natural foods.

Question Three

The purchase of food items should be from authorized distributors, which is supposed to be in legal contracts that are binding to the distributors. The next step the company should strategize quality inspections of both the distributed and produced goods. The well-planned quality team should work in association with other teams for checking dispatch, and the processes should be set up for operations management. The good news is that with the technology around all the processes can be established into an online system, which can automatically check and alerts in case of any errors that need correction immediately. The other area of critical importance is planning for nonfood staffs. Since the logo or the company’s image is always on top of the product, the wrappers should be considered very keenly. Packaging and wrapping are important since they help brand the goods. Also, the napkins are necessary because of the logo that is printed on top. Lastly, planning for items such as Happy Meals Toys is another area of consideration. Therefore, it calls for forecasting and planning hence without accurate forecast the firm may make few or excess toys, which may result in losses to the company. The concept of happy clients may be overruled. In the case of shortage of the toys, the customers may be unhappy since they would believe they have been coned. Finally, it would be beneficial if the company plans for a higher number of toys than they have forecasted so that all the customers are satisfied.

Reference

Boyer, K., & Verma, R. (2009). Operations & supply chain management for the 21st century. Nelson Education.