McDonald's Food Chain

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In Search of Perfect Logistics - The Story of the Cold Chain Contd...

"This centralized distribution system is unique to McDonald's. We have to ensure that the integrity of the product is maintained throughout the cold chain," said H. Shriram (Shriram), General Manager, Distribution Centre, RFPL. FJ Walker of Australia, a McDonald's partner, helped RFPL build a cold storage in Thane. Another cold storage with equipment worth about Rs.75 lakh was built in Delhi in 1998. RFPL also handled McDonald's inventory management. It had to anticipate future requirements and contingencies and plan for optimum utilization of the refrigerated vehicles. Meeting McDonald's "cold, clean, on-time" delivery standards was no easy task considering that there were 30 suppliers situated all over the country. AFL Logistics Ltd (ALL), a joint venture between and Coughlin of the US, and RFPL was responsible for ensuring these standards. Coughlin's task was to make sure that McDonald's had the proper amount of supplies and materials at each restaurant. The challenge was the physical movement of material and inventory control in a country with bad roads and basic infrastructure bottlenecks.

To meet McDonald's high standards, Coughlin ensured that quality, temperature and packaging requirements were met. At the same time, unused capacity in the vehicles was used to transport goods from other vendors. This helped Coughlin deliver the lowest cost with the highest quality. RFPL also handled in-city distribution to restaurants. "We make a projection of demand from each of the restaurants based on historical data and ask the suppliers to meet the demand. This information is also sent to the logistics company. The suppliers, in turn, give us feedback on their ability to meet the demand," Shriram said.

According to Vinay Adhye (Adhye), director, RFPL, "Managing logistics for McDonald's is as complicated and demanding as rocket science." To begin with, while the restaurants were not supposed to stock more than three days of inventory, the time limit for distribution centres or warehouses was a stringent 14 days to minimize costs and optimize quality control. This required round-the-clock monitoring of pick-ups and truck movements. Since most of the items were perishable, McDonald's standards covered the entire delivery schedules.

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