Mc Donald Operation ManagementNovember 12, 2017
These basic operations could be done by a traditional logistics service provider. But LIAR services is a high Value Added, it integrates various and Increasingly complex tasks such as: Deliveries tailored for each McDonald’s restaurants; LIAR services provides each restaurant with an amount of products based on the stock in the restaurant (security stock, target stock), the story of the exits of the platform made the year before (balanced by a coefficient of seasonality) and forecasts by restaurant.
Store inventory management, LIAR services develops an economic inventory management in the restaurant (Each products have its own place In the stock according to its volume and rotation) and In the platforms (classed by type and stored In different location In France depending on their turnover). Optimized routing and scheduling of deliveries with special truck (If the transport concerns ultra-fresh products, it will be made by “bi or trio-temperature truck”) especially designed for Ms Dona’s restaurants. Relationship duration: balance (past) and perspectives (future). Risks of outsourcing from Ms Dona’s perspective and probability to put an end on the relationship. L. R. Services has been the logistics provider to McDonald’s France since 1989 and is responsible for the delivery of all stock (food, packaging, cleaning materials and ancillaries). At the beginning the relation between both was based on outsourcing the logistics missions to a unique logistic service provider In France.
The principal need was to transfer all the risks and the investment of the logistics to a third party. Quantifiable benefits have been created to ensure that the logistics service provider would be more efficient than Ms Dona’s. Competencies but the level of cooperation between both of them has increased. The objectives and perspectives of Ms Dona’s are to develop, in cooperation with LIAR services, the more efficient partnership. It means to exchange more information and means in order to reach the highest Customer Service Level.
For example have a maximum of 5% late orders, reduce the inventory stocks, and optimism the delivery system to lower CA emissions. From Ms Dona’s perspective major risks of outsourcing are: Several losses. If the relationship isn’t based upon trust and the information is asymmetric and incomplete, there is a risk for Ms Donald to reduce its profits, lose other opportunities, inhibit its competitiveness and increase the whole supply chain operating costs. Corporate culture issues.
If Ms Dona’s and LIAR services have not the same vision and culture, some misunderstanding or errors can occur due to differences and affect the stability of the supply chain Information transmission. Outsourcing its supply chain, Ms Dona’s doesn’t control anymore the scope of the supply chain. It’s highly possible that much information from the market stays in LIAR reveres office. Miscalculated objectives. Because Ms Dona’s and LIAR services core competencies are different and each one are an expert in their own, objectives fixed by Ms Dona’s can be unrealistic and contribute to the failure of the cooperation.
Image. If LIAR services cannot fulfill its engagements towards Ms Dona’s, it will directly affect the company image and market share because LIAR services is delivering Ms Dona’s restaurant, indeed the final customer. Because supply chain management is critical for operating success, Ms Dona’s should prevent itself from these risks by creating Key Performance Indicators and halogen the third party on them. Expectations must be reasonable and realist in order to create a cooperation towards identity objectives and culture.
Also agreements must evolve from short term to long term. The more Ms Dona’s will exchange information, the more secure and productive it will be. Otherwise Ms Dona’s should put an end to the cooperation as soon as possible. 3! 30 Relationship nature. Existence of other logistics service providers? If so, at which services, working with them since 1989. The company deals with 90% of Ms Dona’s activity (more than 400. 000 tons a year for 1. 115 restaurants).
However, LIAR Services does not work alone in that task: Ms Dona’s has other logistics service providers that help LIAR Services manage the Fast Food giant’s operations. The main part of it is for Software use. Indeed, LIAR Services does not develop its own software systems. Thus, they have to work with a software developer to streamline Ms Dona’s operations. In that case, they work with Paragon Software Systems. To help them work in the best osmosis possible, Ms Donaldson let LIAR Services chose the Software Developer they wanted.
Paragon services were chosen among several other software products. In fact, Paragon “demonstrated that it could provide the accuracy and efficiency improvements [LIAR Services] need to fulfill [their] services”, says Bruno There, Distribution Project Manager. Thus, his company uses both Paragon Multi Period Planner and Paragon Multi Depot software to answer Ms Dona’s requirements. In addition to that, Ms Dona’s uses the services of another Software Developer, Numismatics, a provider of demand-driven supply chain management solutions.
In fact, they have implemented its Forecasting and Replenishment solutions in France, with the idea to extend it to other countries if the experience is successful. The goal of this Software is to make better decisions on likely demand, deliveries… So as we see, however LIAR Services is the main logistics service provider of Ms Dona’s, there are others, as they can’t do everything on their own: they need companies specialized in other fields, to meet Ms Dona’s goals in terms of logistics. Mainly, they have to work with Software Developers, such as Paragon and Numismatics.
In order to be as efficient as possible, they try to keep a good relationship with those companies, as Olivier Schoolhouse, Supply Chain Director for LIAR Services said: “We have already formed a strong basis for a lasting partnership. 40 Main motivations for outsourcing (Ms Dona’s perspective). In this context, precise the fast food company’s preferred type of growth. The main motivations for Ms Dona’s to outsource are the following: Concentrate on its core business; the fast food market to keep its position of leader.
Logistics department represent a huge investment for a company (human and financial); a wrong handling can lead to a loss of market share (especially in this market where products quality and deliveries are the keys for customer’s satisfaction) Favor the flexibility of Ms Dona’s by making its logistic service provider responsible or the variations of activity (orders, transport restrains, new quality expectancies… ). LIAR can deal with the last minute tasks thanks to its network. The company will be more efficient, because it entrust the activity to experts.
They have a very good platforms, its own transport company (with 210 vehicles), 480 employees. Reduce the weight of the structures by reserving the resources available (because not fully dedicated to logistics) on other fields (such as R, Marketing… ) Improve the profitability; if the third party can supply a service with the same quality and the name deadlines but at a lower price than the internal cost, Ms Dona’s will save a huge amount of money and improve its cash flow. According to Livableness. Com, Ms Dona’s is implementing a new system that had tested before in some selected countries such as France and Germany.
As it is meeting the goals of Ms Donald Europe they now plan to expend the software in the I-J, Sweden and Austria. So Ms Dona’s type growth is based on a strategy testing new systems with its outsourced partners companies in some places then expending them in others. 50 Sharing of logistics activities and processes: “who does what”? In this context, you might distinguish : operational, tactical (coordination) and strategic level. Degree of value added (V. A. ). Position (location) within the logistics chain: (extreme) upstream ?+ (extreme) downstream.
This question could be linked to the third one of this case study, about the existence of other logistics service providers. As we have shown, there are several of them. Now, it is interesting to find out how they share the logistics activities, meaning by that: “who does what? ” In fact, Ms Dona’s is a huge company, where logistics is at the same time really important and really complicated. Thus, it is better and more secure to have different companies dealing with their field of specialization in this logistics system.
However, there has to be a coordinator of this whole logistics chain. Legitimately, we can say that most of the time, the company delegating its activities will be coordinating the chain, putting together all the information… But in the case of Ms Dona’s, LIAR Services seems to be so ubiquitous in the logistics activities that we can say it is coordinating the supply chain (even though Ms Dona’s is keeping an eye on everything). The company is also in charge of the operational side of this 5! Hahn (owner of the trucks, makes the deliveries… ).
Finally, the strategic level is shared between Ms Dona’s, which keeps an eye on the whole logistics activities, chose their logistics partners, advise Ms Dona’s about the best view to give to logistics (e. G. : the concern about the environment with ‘green’ trucks for delivery was an idea of LIAR Services, supported by Ms Dona’s). But finally, each one of the companies that works in that logistics chain adds value to it and is essential to its functioning: However LIAR Services is the main partner of that chain, it could not do much if Paragon was not here to provide their Software.
And if Ms Dona’s subcontracted these operations, but did not leave any power of decision to the company hired, the system would inevitably crush. So all the components (companies) of the logistics chain add a different value to it, but every single one of them is important in the functioning. Now, we can talk about the position of each of them in the logistics chain. Out of the four main partners we have seen throughout this study, Numismatics is the most upstream of all. In fact, their system of software offer forecasting and Replenishment solutions, which are at the top of the logistics chain.
The second one is Paragon, because their systems of software allow allocating the volumes to the right days, optimizing the deliveries… Third, LIAR Services is responsible to make the deliveries happen… And downstream, we have Ms Dona’s itself, which takes in charge the deliveries at their arrival in the points of sale, and sells it to the final customers. So as we see here, the logistics chain, especially in a business as complicated as the fast food industry, requires a lot of different actors, which all have an important role in it, even though some are in charge to manage the whole chain. 6!