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المملكة العربية السعودية
وزارة التعليم
الجامعة السعودية اإللكترونية
Kingdom of Saudi Arabia
Ministry of Education
Saudi Electronic University
College of Administrative and Financial Sciences
Assignment 2
Introduction to Operations Management (MGT 311)
Due Date: 11/11/2023 @ 23:59
Course Name:
Student’s Name:
Course Code: MGT 311
Student’s ID Number:
Semester: First
CRN:
Academic Year:2023-24-1st
For Instructor’s Use only
Instructor’s Name: Dr. Asif Hasan
Students’ Grade:
Marks Obtained/Out of 10
Level of Marks: High/Middle/Low
General Instructions – PLEASE READ THEM CAREFULLY
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The Assignment must be submitted on Blackboard (WORD format only) via allocated
folder.
Assignments submitted through email will not be accepted.
Students are advised to make their work clear and well presented, marks may be reduced
for poor presentation. This includes filling your information on the cover page.
Students must mention question number clearly in their answer.
Late submission will NOT be accepted.
Avoid plagiarism, the work should be in your own words, copying from students or other
resources without proper referencing will result in ZERO marks. No exceptions.
All answered must be typed using Times New Roman (size 12, double-spaced) font. No
pictures containing text will be accepted and will be considered plagiarism).
Submissions without this cover page will NOT be accepted.
Learning Outcomes:
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Understand fundamental supply chain management concepts.
Apply knowledge to evaluate and manage an effective supply chain.
Understand the foundational role of logistics as it relates to transportation and
warehousing.
How to align the management of a supply chain with corporate goals and
strategies.
Go through the given case scenario
Choose an organization operating in any part of the globe (preferably a super
market, hyper market chain (or) a fast-food industry or an electronics
equipment manufacturer/distributor, automobile manufacturer or automotive
parts or retail products / services.
The organization that you choose should either manufacture or market or
distribute some products / services. The competition in these businesses
majorly depends upon price, quality, timely delivery and service (which are
core aspects of Supply Chain Management). Hence there is immense pressure
on all the organizations in these businesses to keep the four aspects mentioned
to their supreme best.
As these businesses are the most emerged industries in the recent past, the
supply chain has seen huge transformations. These businesses are getting to
the maturing stage and so as the transformations in the supply chain
management of these business become more and more competitive, the
customer gets only the best products / service.
Note: In case your chosen organization is operating in many countries
and deals with many products, it is enough you consider the operations
in any one country and indicate some materials that are part of the
business and select 2 or 3 materials out of them for providing answers to
the questions given below.
Students can make use of graphs, tables, illustrations, maps, pictures,
images to add clarity to your answers.
1. Examine and evaluate your chosen organization’s Supply Chain,
describe its basic working, strategy used by them, key drivers for
achieving an integrated supply chain. What is the SCM model used?
(2MM)
2. Go through the typical Working of the chosen Organization’s logistics
process, Is there a role for reverse logistics for your chosen
organization’s products / services ? If there is a role, explain the process
that is applicable. (2MM)
3. Analyse and understand the different modes of transportation employed
by your chosen organization. Indicate whether the current arrangements
are effective. Suggest improvements for making the transportation
sustainable and new modes of transportation. (2MM)
4. What is the Warehouse design used by the chosen organization and
provide your idea on the appropriate warehouse design that will be
suitable for the future. Justify your choice with proper reason. (2MM)
5. Given the nature of the products that you have selected for your chosen
organization, what is the type of Inventory management control that
your chosen organization should adopt? Give reasons. (2MM)
Note:
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You must include at least 5 references.
Format your references using APA style.
Each answer must not be less than 300 words
Answers
1. Answer2. Answer3. Answer4. Answer-
5. Answer-
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MGT311- Assignment 2
Examine and evaluate your chosen organization’s Supply Chain, and describe its basic working, strategy
used by them, key drivers for achieving an integrated supply chain. What is the SCM model used?
Introduction:
Supply chain management is responsible for the management of goods and services, as well as the
processes involved in the conversion of raw materials to completed products. It encompasses product
production, product development, and information systems that adhere to quality standards. Supply
chain management is critical since it assists businesses in achieving their objectives and increasing profit
margins. It includes five critical components: planning, raw material procurement, production, delivery,
and returns. (2020, Fernando).
McDonald’s:
McDonald’s is a fast-food restaurant chain headquartered in California, United States. It was established
in 1940. It is the world’s biggest restaurant chain, with over 37,000 locations. Known for its burgers and
fries, they also provide chicken, breakfast, beverages, and desserts.
(Encyclopedia Britannica, 2020)
McDonald’s Supply Chain Management
McDonald’s supply chain is comprised of both direct and indirect suppliers who must adhere to
consistent quality and efficiency standards. The organization works directly with suppliers to manage
restaurant purchasing and delivery. Direct suppliers operate grain mills and abattoirs.
Wheat, lettuce, and other critical components for animals are raised or grown on farms and ranches.
Distribution centers oversee the procurement and delivery of ingredients to restaurants. McDonald’s will
accept goods only if they are presented in acceptable circumstances. Processing facilities manufacture
finished goods such as beverages, bread, and beef patties.
McDonald’s logistics and supply chain performance is highly reliant on Ray Kroc’s long-term plans.
McDonald’s’ three-legged stool is built on mutually beneficial outcomes for franchisees, suppliers, and
workers. Rather than just exchanging value, McDonald’s and its suppliers collaborate to create value for
one another, resulting in more advantageous, long-term partnerships. (Author, 2019). McDonald’s has a
sustainable supply chain that incorporates the three E’s: ethics, the environment, and economics.:
Sustainability at McDonald’s (Three E’s):
Ethics
McDonald’s requires its suppliers to adhere to the health and safety of people as well as the animals in
its supply chain. McDonald’s supports techniques of animal husbandry that minimize the use of
antibiotics in animal feed.
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Environment:
McDonald’s strives to mitigate the climate impact of its supply chain and restaurants, namely
greenhouse gas emissions. Additionally, it works with its suppliers to eliminate food and packaging
waste. Water conservation and forest conservation are two more areas of environmental effect.
Supply Chain Economics:
Long-term producer and supplier live are crucial to supply chain economics. As part of its efforts to
continually improve its overall quality and performance, McDonald’s works with its suppliers to learn,
share, and scale best practices. It’s designed to reduce hunger and provide food producers with goodpaying employment and growth in the economy.
Consistency of supplies from McDonald’s:
In order to provide meals to more than 70 million clients each day, it requires consistency—which is
gained via the use of both ingredients and food preparation techniques—as well as regularity, which
results from cooking meals for many days. At McDonald’s, certain rules have been established by which
suppliers must comply. Regardless of the supply company, you are 100% responsible for the quality and
safety of the products you provide. In order to maintain constant quality, the company focuses on
creating consistent texture, color, freshness, and cut.
Safety of food products:
Food safety is an issue of extreme importance for McDonald’s, and it must make certain rules to
safeguard the public. For the supply chain, suppliers use traceability systems to help with this.
Additionally, the business conducts continuous food safety education sessions for its employees. The
suppliers of McDonald’s take part in these initiatives, exchanging best practices.
Food-safety problems may negatively impact a restaurant chain’s ability to operate. Responsive, fresh
food and accountability are what customers are demanding nowadays.
Performance in Cost:
When dealing with suppliers, McDonald’s scale allows it to secure consistent and sustainable food and
paper pricing with its suppliers. In this way, it is possible to realize cost savings for the company.
Supply chain disturbances:
To minimize the effects of delays, McDonald’s uses a centralized supply chain. According to McDonald’s,
one of the major reasons working in its advantage is that in many regions, its manufacturing sources
produce products for numerous different manufacturers. Thus, the company no longer has to rely on a
single provider. If a few of its suppliers are running into some problems, it is simple to get additional
supplies from other vendors.
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Effective Vertical Integration Use:
In vertical integration, several stages of the supply chain are handled by a single company. This approach
is to be implemented successfully and will enhance supply chain productivity, keep prices down, and
boost profitability.
Since McDonald’s sources its meat from contractual vendors, grows its own potatoes, and delivers its
products, it is both in-house and self-sustaining. Furthermore, most of the property on which its
restaurants are built is owned by the firm, which means that leasing or renting space will have little or no
impact on the business.
2. Go through the typical Working of the chosen Organization’s logistics
process, Is there a role for reverse logistics for your chosen organization’s
products / services? If there is a role, explain the process that is applicable.
(2MM)
Supply Chain Network – Design
Network design choices are critical because they have far-reaching and long-lasting consequences. It is
essential to examine the integration of all SCM drivers in order to support a firm’s competitive strategy
and optimize profitability. Inventory and information on facility transportation. Supply chain design must
take this into account. The distribution network Facility-related choices that the business must make
when determining the placement of facilities, assigning capacities and markets to each facility, and
Uncertainties in financial variables such as pricing, currency fluctuations, and inflation
McDonald’s Corporation is the world’s biggest restaurant chain, serving more than 58 million customers
daily. McDonald’s restaurants are either franchised or corporately owned. The corporation earns income
via rent, royalties, and fees paid by franchisees, as well as through sales at company-operated
McDonald’s restaurants. Burgers, cheeseburgers, chicken and fish items, French fries, a breakfast menu,
soft drinks, shakes, and desserts are all available on the menu. The quick-service restaurant (QSR)
behemoth has developed an entire procedure for managing a complex delivery system throughout the
years, beginning with live-animal production and continuing all the way through the supply chain to the
ultimate destination as a McDonald’s customer favorite.
Supply chain management is the process of planning and managing all operations associated with
sourcing and procurement, conversion, and logistics management. Businesses use supply chain
management to guarantee that their supply chains run effectively and provide a high level of customer
satisfaction at a reasonable cost. SCM is a process that combines demand and supply management
inside and across businesses.
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McDonald’s’ goal is to satisfy consumer demand while keeping prices low, and the company operates on
a lean approach to accomplish so, since McDonald’s does not begin cooking orders until a client places
one. They adhere to a JIT (just in time) approach, which enables them to minimize, and in some cases
eliminate, waste and inefficiency while maintaining a cost-effective strategy. The benefit is that this
results in higher-quality customer service; even putting a customized order does not put McDonald’s in a
panic mode, which may result in delays. Additionally, since the keeping cost of burgers is quite high, the
JIT approach enables them to minimize spoilage. JIT enables McDonald’s to maintain a close watch on
the Economic Order Quantity, which dictates how much to order, and there are two variables that
contribute to economic order quantities being low: low ordering costs and high holding costs.
Variability in demand and variability in lead times from suppliers’ place pressure on organizations to
maintain a certain level of safety stock. In the case of McDonald’s, the supplier is an internal production
process. However, the disadvantage of JIT is that it reduces your safety stock, which can be a significant
issue. Additionally, organizations following a lean strategy lack the capacity to respond to changes in
consumer demand.
Numerous organizations outsource a significant portion of their logistical operations. They contract
logistics service providers to manage the shipment, allowing the organization to focus on its core
activities. A business often establishes a partnership with another business to handle storage, material
procurement, material handling, and a variety of other logistical tasks. When a business outsources its
logistics, this is referred to as third party, 3PL, or contract logistics. Keystone Distribution acts as a thirdparty logistics provider for McDonald’s. (Waters, 2003; pp.90-91.) However, the obligations of the thirdparty logistics provider are addressed in Appendix B under Supply chain frameworks.
Keystone Distribution UK is a subsidiary of Keystone Foods LLC, a company that offers food production
and distribution services to a diverse client base in North America, Asia, and Europe. Keystone
distribution was founded in 1977 in collaboration with McDonald’s to serve as the business’s hamburger
bun maker in the United Kingdom. Since then, the firm has grown in lockstep with McDonald’s. Keystone
distributor has been effectively providing its current clients with all they need to operate a successful
company. Keystones is responsible for a significant portion of McDonald’s UK supply chain, supplying its
1200 UK locations with everything from mops and ketchup to the key ambient, fresh, and frozen items
that comprise the McDonald’s menu. (Logistics Business Information Technology Website; 09.Nov.2009)
A large organisation like McDonald’s requires a partner to manage sourcing, warehousing, procurement,
and distribution in order to run its business, but there are some risks associated with this. By hiring a
3PL, the company may lose control over its logistics activities, divergent opinions and perceptions may
result in service level issues, and it may also increase dependency at certain locations.
McDonald’s contracts with a variety of suppliers for its many goods, with the end goal of providing
consumers with excellent flavour at a reasonable price. McDonald’s has partnered with household
brands such as Coca-Cola, Tropicana, and Buxton as a second tier supplier since they provide their goods
to keystone distribution, which is a first tier supplier to McDonald’s. Additionally, there are a number of
additional suppliers, such as Sun Valley and Moy Park, that provide McDonald’s with chicken products.
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Each of these suppliers serves as a secondary supplier to McDonald’s. Additionally, Ecsa, the
manufacturer of the beef patties critical to the
supply chain’s performance, provides its product to McDonald’s first tier provider (i.e….Keystone
Distributors). All suppliers enter into agreements with Keystone Distributor, which then sends material
directly to McDonald’s. Keystone Distributor assists McDonald’s in running the business smoothly by
offering competitive pricing, delivering products on time, and assisting in the outward movement of
orders and collecting payments from customers. In general, keystone is a critical component of the
supply chain structure, ensuring the success of upward and downward activities. The disadvantages of
controlling the supply chain at McDonald’s include that it requires a significant commitment of time,
money, and other resources to execute and requires oversight of the supply chain as well, increasing
dependence.
As the McDonald’s UK distributor, it is keystone’s duty to offer the right service and product whenever
they need it, as well as to manage the requirements of hundreds of McDonald’s locations across the UK.
They work throughout the supply chain pipeline, ensuring that the highest standards of quality and
dependability are maintained throughout the delivery process to the restaurant. To do this, Keystone
leverages cutting-edge technology and tools to collaborate closely with McDonald’s marketing and
business strategy. Keystones manages peak and trough periods as they occur to maintain a smooth
supply chain and eliminates stock outs. On average, Keystone maintains a five-day inventory at their
shop and distributes goods to each restaurant three to four times each week. To fulfil that commitment,
they have 300 trucks, tractors, and trailers that enable them to operate these logistic operations across
the United Kingdom, including the Isle of Man and Channel Islands, delivering about one million cases
each week. Their primary difficulty is ensuring that those trucks get to restaurants on time, with
everything requested, and with the highest possible quality of food, whether frozen, chilled, or dry.
However, since operating such vehicles generates a significant quantity of pollution and harms the
environment, the issue here is to ensure that eco-friendly tools are utilized.
Inventory Management:
Supply management is the practice of keeping product on hand in sufficient quantity to satisfy consumer
demand while minimizing costly waste. To conserve money, McDonald’s employs a lean stock
management technique that involves increasing the expense on high-stock holdings. More information
may be found in Appendix A for more details on inventory control.
The job of inventory ordering manager is to make sure adequate raw stock is always accessible, working
with the new stock management system, Manugistics. This helps restaurants meet the anticipated
demand by providing them with the food they need. Restaurant historic product mix data from last year
is used as the basis for forecasting, along with local and national factors such as national promotions and
school holidays, as well as store-specific data and that provided by store managers about factors that
may influence demand, like for example, road closures or local events.
In order to guarantee that the data they input into the system is as correct as possible, the restaurant
manager must pay close attention to the data entry process. Every-day restaurant management keep a
note of the supply of important food products when the restaurant opens and closes. Items such as rent,
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credit card charges, and utility bills are documented weekly and monthly. The system is capable of
notifying store managers if the inventory count deviates from previous inventory count, thus it
empowers managers to examine any product shortages. Consider this: The manager may have
miscounted a box of standard meat earlier in the shift and overlooked it.
3. Analyse and understand the different modes of transportation employed by
your chosen organization. Indicate whether the current arrangements are
effective. Suggest improvements for making the transportation sustainable
and new modes of transportation. (2MM)
For the quality and efficiency of McDonald’s supply chain, both direct and indirect suppliers are held to
well defined criteria. The firm does business with local suppliers who are also responsible for buying and
delivering food. Indirect providers, for example, use grain mills and abattoirs to help their customers.
Both farms and ranches produce cattle and cultivate other important components such as wheat,
lettuce, and so on.
A similar service provider is distribution centres that help restaurants organize buying and delivery.
Restaurants are able to deliver their products using temperature-controlled trucks. Products from
McDonald’s can only be delivered if they are sent under optimal circumstances.
The final goods that processing plants create include anything from drinks, bread, and beef patties. A key
part of the company’s supply chain is that it is ethical, environmental, and financially viable.
McDonald’s commitment to sustainability:
McDonald’s collaborates with its suppliers to guarantee both the health and safety of its guests and the
health and wellbeing of the animals in its supply chain. McDonald’s, for example, supports animal
production methods that minimize antibiotic usage in food animals.
Likewise, the business maintains a zero-tolerance policy for animal abuse across its supply chain. For
instance, 100 percent of hens used in its worldwide supply chain are reared cage-free. McDonald’s does
not accept birds that have been reared in cages.
The company’s supply chain seeks to decrease pre-slaughter travel delays. Additionally, the
slaughterhouses of suppliers are inspected yearly to verify they adhere to industry best practices.
1) Environmental protection and supply chain management
McDonald’s seeks to mitigate the climate effect of their supply chain and restaurants, including
greenhouse gas emissions. Additionally, it collaborates with suppliers to minimize food and packaging
waste. Other areas of environmental effect include water preservation and forest conservation.
McDonald’s, for example, collaborates with suppliers to minimize the water impact of their supply chain.
2) Supply chain economics
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The economics of the supply chain are concerned with maintaining farmers’ and suppliers’ long-term
viability. McDonald’s collaborates with suppliers to identify, share, and expand best practices that boost
production and efficiency. Simultaneously, it seeks to save land, cattle, and livelihoods.
The company’s activity in this area is guided by the Sustainable Development Goals of the United
Nations. Its mission is to eradicate hunger while also providing good employment and economic
development for its suppliers. Its Flagship Farmers initiative seeks to promote excellent practices among
farm food suppliers.
3) McDonald’s supply are consistent.
Daily service to over 70 million consumers needs uniformity in both the materials and the food
preparation procedure. McDonald’s has established stringent criteria for its suppliers to follow. Suppliers
are solely responsible for the product’s quality, consistency, and safety.
To maintain its constant standards, the business strives uniformity in texture, colour, freshness, and cut.
Additionally, its suppliers are obliged to adhere to relevant animal welfare standards.
4) Food security
McDonald’s must take food safety seriously and ensure that it has strong processes in place to safeguard
the public and prevent litigation. To assist with this, suppliers maintain traceability systems that allow
them to monitor the movement of food across the supply chain. Lamb Weston, for example, sells french
fries and has procedures in place to trace the fries back to the farm where the potatoes were produced.
McDonald’s has a Food Safety Advisory Council that serves as the company’s strategic leader on food
safety issues. Additionally, the business conducts continuous education sessions on food safety for its
workers. Suppliers to McDonald’s take part in these initiatives and exchange best practises.
Food safety concerns may significantly damage the success of a restaurant business. Chipotle Mexican
Grill is an example (CMG). A succession of food safety issues had a major effect on this business and its
shares. As a result, it is critical for restaurants to have strong food safety procedures in place. Food
product suppliers play a critical part in this.
4. What is the Warehouse design used by the chosen organization and provide
your idea on the appropriate warehouse design that will be suitable for the
future. Justify your choice with proper reason. (2MM)
McDonald’s Warehouse Design
McDonald’s warehouses are designed to be highly efficient and productive in order to meet the high
demand for its products. The warehouses are typically large and spacious, with high ceilings to
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accommodate tall racking systems. The racking systems are organized in a way that maximizes storage
space and minimizes picking time.
The warehouses are also equipped with a variety of automated technologies, such as conveyor belts,
sorters, and pick-to-light systems. These technologies help to automate the picking and packing process,
which further increases efficiency and productivity.
In addition, McDonald’s warehouses are strategically located to minimize shipping time and costs.
Warehouses are typically located near major transportation hubs, such as highways and airports. This
allows McDonald’s to quickly and efficiently distribute its products to its restaurants around the world.
Future Warehouse Design
The future of warehouse design is likely to be shaped by a number of factors, including the rise of ecommerce, the increasing use of automation, and the need for greater sustainability.
One trend that is likely to continue is the move towards smaller, more urban warehouses. This is due to
the fact that e-commerce customers are increasingly demanding faster and more convenient delivery
options. Urban warehouses can help to reduce delivery times and costs, as they are located closer to
customers.
Another trend that is likely to accelerate in the future is the use of automation. Automated technologies
can help to improve efficiency and productivity in warehouses, while also reducing labor costs. Some of
the automated technologies that are likely to be used in future warehouses include:
Automated guided vehicles (AGVs): AGVs are self-driving vehicles that can be used to transport materials
and products around the warehouse.
Robotic picking systems: Robotic picking systems can be used to automatically pick and pack items from
shelves.
Drones: Drones can be used to transport items within the warehouse or to deliver items to customers.
In addition to automation, future warehouses are also likely to be more sustainable. This means that
they will be designed to reduce energy consumption and waste production. Some of the ways in which
warehouses can be made more sustainable include:
Using natural light: Warehouses can be designed to use more natural light, which can reduce energy
consumption.
Using renewable energy sources: Warehouses can be equipped with solar panels or wind turbines to
generate their own renewable energy.
Recycling and composting: Warehouses can implement recycling and composting programs to reduce
waste production.
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Conclusion
The future of warehouse design is likely to be shaped by a number of factors, including the rise of ecommerce, the increasing use of automation, and the need for greater sustainability. Future warehouses
are likely to be smaller, more urban, and more automated. They are also likely to be designed to be more
sustainable.
I believe that the future warehouse design described above is the most appropriate design for a number
of reasons. First, it is designed to meet the needs of e-commerce customers, who are demanding faster
and more convenient delivery options. Second, it is automated, which helps to improve efficiency and
productivity while also reducing labor costs. Third, it is sustainable, which is important for both
environmental and financial reasons.
In addition to the reasons listed above, I believe that the future warehouse design is also adaptable to
future changes in technology and consumer demand. For example, if drone delivery becomes more
popular, the warehouse can be easily adapted to accommodate this. Additionally, if consumer demand
changes, the warehouse can be reconfigured to meet the new needs of customers.
Given the nature of the products that you have selected for your chosen
organization, what is the type of Inventory management control that your chosen
organization should adopt? Give reasons.
Given the nature of the products for McDonald’s, a perpetual inventory system is the most suitable type
of inventory management control.
Perpetual inventory systems track inventory levels in real time, using software to update inventory
records as products are purchased, sold, and used. This type of system is ideal for businesses like
McDonald’s, which sell perishable goods with high turnover rates.
The benefits of using a perpetual inventory system for McDonald’s:
Improved accuracy: Perpetual inventory systems provide more accurate inventory counts than periodic
inventory systems, which only track inventory levels at specific times of the year. This is important for
McDonald’s, as inaccurate inventory counts can lead to stockouts, overstocking, and lost profits.
Reduced waste: Perpetual inventory systems can help McDonald’s reduce waste by tracking the
expiration dates of perishable goods. This allows managers to identify and remove outdated products
before they spoil.
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Better decision-making: Perpetual inventory systems provide managers with real-time data on inventory
levels, sales, and other key metrics. This data can be used to make better decisions about product
ordering, pricing, and marketing.
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