Business Model

Supply chain management is the wide range of processes which are required to plan, control and perform the flow of products from purchasing the raw materials and manufacturing through distribution to end consumer in the cost effective manner possible (Fredendall and Hill, 2016). The objective of below report is to conduct supply chain analysis and operations process of two different organizations. For this report, two organizations are chosen i.e. McDonalds and Wesfarmers. Among two, one of the companies is based in Australia. First part of this report includes the summary of assessment 1 that describes business model, current supply chain, suppliers and types of customers of each company. Furthermore, this report includes the existing supply chain analysis of both of the chosen organizations. At the end, conclusion and recommendations are given on supply chain systems of both companies. These recommendations will help the organizations to improve their supply chain processes.

McDonalds is an America based fast food organization that was established in the year 1940 as a restaurant that is run by Maurice and Richard McDonald in California, United States. From the previous assessment, it can be stated that McDonalds is operating its business by using franchising business model. It is running its restaurants through franchising and it includes conventional franchises which are under franchise agreements. The organization has differentiated its customers by using demographic characteristic i.e. age. Primary customers of this company are children, teenagers and business class people who love to eat fast food. In its supply chain management system, the organization has different activities such as customer order, replenishment cycle and procurement cycle. The major suppliers of McDonald are such as Simplot, Martin Brower, OSI and McCain (Ovenden, 2018).

Wesfarmers Limited is a conglomerate in Australia that is headquartered in Western Australia with the interests in chemicals, coal mining, retail, hotels, fertilizers, safety and industrial products (Wesfarmers, 2018). For its products, it is targeting an entire family as it offers a broad variety of products. Under its supply chain management system, the company uses the Supplier Ethical Data Exchange to improve the efficiency of suppliers and monitor the ethical compliance (Chkanikova and Mont, 2015). It is using continuous replenishment model whereby stock is continuously replenished by working with its suppliers.

From the analysis in previous assessment, it can be stated that both Wesfarmers and McDonalds has almost same supply chains in which companies replenish their goods and services by working closely with their suppliers. The major difference between both company’s supply chain process is that McDonalds uses an additional strategy which is categorized into three process cycles i.e. customer order cycle, replenishment cycle and procurement cycle. The major operations of McDonalds are emphasized on offering its customers with delicious meals like hamburger whereas operations of Wesfarmers includes like hotels, supermarkets, liquor and convenience stores. Thus, both have managed their supply chain processes differently (Jacobs and Chase, 2013).

Current Supply Chain

The logistics objectives of McDonalds and Wesfarmers are to improve the movement of raw materials and resources from the suppliers to their retail stores and ultimately to end consumers. Both of the companies are practicing their supply chain processes using modern technologies and complying with the ethical standards. Moreover, current material issues of McDonalds and Wesfarmers consist of providing a clean and safe workplace environment, developing strong relationships with suppliers, managing a strong corporate governance and making positive contribution to the society (Wesfarmers, 2018). In this way, there are both differences and similarities in the supply chain processes of McDonalds and Wesfarmers.

According to Stadtler (2015) Supply chain is one of the most important aspects for all the organizations. Supply chain system may different as per the core business activities of a specific company. Products form physical flow outside and inside of the firms. In the case of retailers, the products can be inventoried, warehoused and shifted from one place of supply to place of product demand (Stadtler, 2015). As a result of this, process flow management that limits product consists of different activities such as order processing, inventory, transportation, storage, handling of raw materials and packaging. As reviewed the literature in part A, Brandenburg, et al. (2014) stated that supply chain strategy of a company is created by its framework, its internal supply chain procedures, exclusive value proposition and managerial emphasis. The authors explained that there are various examples of supply chain models which can be used by the organizations in real life business environment. The literature review shows that one of the most ideal models is continuous flow model that can be used by the companies which have higher demand for stability. It is more useful for the mature sectors which have little changes in the demands of customers. On the basis of responsiveness, another model is agile supply chain model that is ideal for the companies which manufacture the products as per the unique specifications of their targeted customers (Brandenburg, et al 2014).

Supply chain of McDonalds is complex network of indirect and direct suppliers. The company manages this complex system by working with direct suppliers who share vision and values for making the supplies sustainable. The company holds them clear standards safety, efficiency, sustainability and quality. In its current operations, McDonalds is using continuous flow supply chain model. The major features of continuous –flow supply chain model are demand and supply stability with the practices scheduled in such a manner as to ensure constant flow of products and information. This model is for mature supply chain with the demands of customers which have fewer changes (McDonalds, 2018). Thus, the workload of production can meet the demands via a continuous-replenishment model on the basis of “make to stock”. The supply chain activities of McDonalds are categorized in different steps i.e. customer order cycle, replenishment cycle and procurement cycle. The supply chain processes of McDonalds are described below:

Suppliers and Customers

At McDonalds, Customer order cycle is developed when the customers communicate with the staff in restaurant and gives his order, prior to paying money for meal. After that, order taking process has been completed and orders from counter will give back to kitchen area where the kitchen employees will collect different materials like cheese, beef patty lettuce, buns to put them together so that they can develop final product. In this order cycle of McDonalds’s supply chain, demand is external (New, 2015).

This cycle connects the retailer and distributor and it is generally started due to needs of retailers to replenish the shortage of goods in restaurant for the future demands. This type of cycle may be generated at McDonalds when they are running out of stock of cheese and buns (Touboulic and Walker, 2015). The replenishment cycle is same as customer order cycle except that retailers are now customers.

In the supply chain model of McDonalds, procurement links the supplier and distributor, for distributor requires receiving supplies from suppliers to distribute the products to many restaurant outlets in United States. Generally, the order scale increases whereas order frequency declines in supply chain when moving from the consumer. This cycle can be exemplified the example, of how an individual just orders meal daily form retailer. Retailer orders lots of lettuce weekly for its burgers (Gattorna, 2015). Distributors receive larger orders from over one retailer monthly and suppliers receive larger scale of order to serve the needs of distributor every 3 months.

Recommendations and Conclusions 

The above paragraph shows that McDonalds is managing its supply chain processes by using continuous–flow supply chain model. It makes its processes and order delivery system smoother. It is hereby recommended that management team of McDonalds should emphasize on supply chain collaboration. As the demands of customers is hardly stable, so there is requirement for the businesses to estimate the expected demands to hold sufficient supplies to fulfill future needs. The company should use effective supply chain strategies so that it can know about the periods in which it will require more stocks. Moreover, it should adopt technical forecast system that will assist the organization in preventing the fluctuations in sales lead time. By understanding about how to prepare for spike in the demands, McDonalds can save the time and reduce the funds spent on avoidable losses. These modes will help the company to make improvements in its supply chain management system.

Existing Supply Chain Analysis

Thus, it can be concluded that McDonalds is using effective techniques and processes for implementing its supply chain processes. Current health of company’s supply chain is good which can help it to attain its overall objectives. All the practices of company match with the chosen model i.e. continuous –flow supply chain model. By analyzing the needs and demands of customers in any specific season, the company is able to manage the demand and supply of its products. In today’s mature and competitive market, it is very important for McDonalds to stay highly responsive to the orders of its customers (Hugos, 2018).

As mentioned above, Wesfarmers Limited is using effective practices for managing its supply chain operations and processes. In Australia, the company is operating its business under different brand names like Coles, Target and Kmart (Wesfarmers, 2018). These firms have managed their commitment to the transparency in supply chain by publishing the details of factories which directly manufacture their products. During last year, Wesfarmers focused on the supply chain transparency as the key to ensuring modern oppression is not happening in its supply chain. Wesfarmers is operating its supply chain management system and related practices by adopting agile supply chain model that is useful for the firms which produce the products under exclusive features for every customer on the basis of order (Devin and Richards, 2018). To become agile, the model generates the demands for surplus production capacity and products are prepared for smallest possible batches.

Supply chain agility is utilized to measure the supply chain’s capacity of to respond the changes in market so that an organization can gain competitive advantage. After facing losses before 2007, Wesfarmers has emphasized by designing its supply chain to fulfill the needs of business planning. Instead of decreasing the costs, Wesfarmers made investment is logistic chain to enhance its profitability. Under agile supply chain, this company uses effective techniques to become more responsive and efficient. It utilizes Supplier Ethical Data Exchange (Sedex) to streamline the monitoring and ethical compliance and to improve efficiency to its suppliers. This technique accelerates the assessment of risks and sharing of information across its platform for the social audits (Göbel, et al, 2015). It assists Wesfarmers in maintaining the visibility and produces consistency over its supply chain.

Target and Kmart of Wesfarmers have implemented an ethical sourcing program roadmap for improve the efficiency of its supply chain operations. This identifies different strategic areas and related risks to be practiced over the timeframe of next three years (Wesfarmers, 2018). It is shifting this program from compliance and audit approach to a model with more emphasis on supplier compliance ownership, industry partnership and factory capacity building. Moreover, the firm is using the continuous replenishment model where stock is continuously replenished by collaborating with the suppliers. However, the use of Supplier Ethical Data Exchange matches with company’s chosen model but other things like manufacturing as per order did not match to its supply chain model (Rushton, Croucher and Baker, 2014).

Conclusion and Recommendations

Recommendations and Conclusions 

As one of the largest groups in Australia, Wesfarmers Limited is using various impactful techniques and processes so that it can deliver its products to final customers smoothly. Still, there is room for improvement in the supply chain practices so that it can stay competitive in highly competitive retail industry in Australia. The company should enhance its current logistic process so that it can attain maximum results. Like its Kmart brand, Wesfarmers should incorporate Dematic cross belt sorting system in other brand also to improve its supply chain system. In order to grow in domestic market, the company has to develop strong bond and relationships with the suppliers to attain desired outcomes.  

From the above analysis, it can be concluded that Wesfarmers Limited is practicing an effective supply chain management system that can help it to approach a larger group of customers. In order to enhance its supply chain, the company has managed the information flow effectively. The above report shows that company’s supply chain operations are very effective in the growth of success of organization.  

References  

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