Introduction

McDonald's has over 30,000 outlets in 119 countries. It is a brand known throughout the world. One of its major challenges is stock control. Outlets need a good balance of stock. They need enough to meet demand but not so much that there is waste. Each manager used to order his/her own stock, which took a lot of time. Also, it was not very accurate. In 2004, McDonald's started a Restaurant Supply Planning Department. This team forecast likely demand for products.

Stock

Stock is dealt with on a FIFO basis – i.e. first in, first out. This makes sure that managers are always using fresh stock. There are three main types of stock to manage.

• Raw materials. These are the ingredients, such as potatoes and burger buns, and supplies needed to serve them, such as paper cups and boxes.
• Work in Progress. This is stock that is in the process of being made into finished products.
• Finished products. These are goods that are ready for sale.

Stock Management

This is the process of making sure that there is enough stock when it is needed. Too much stock means waste. Too little stock means customers may not be able to have what they want. McDonald's uses lean stock control. This means that they carry as little stock as possible. The central team is made up of 14 regional planners. Each works with around 80 outlets. They speak to them on a regular basis. Managers inform the planners of any local factors that could affect sales. This helps planners to make sure that there is enough stock. The forecasting system that planners use is called Manugistics.

Stock Control Charts

Charts are used to show levels of stock against sales. Sales of products are replaced by new stock. Manugistics needs two years' worth of data to produce accurate forecasts. Managers record stock levels after they close the store. They record major items daily and all items weekly on the store computer system. A web tool called Weblog is then used to view and amend orders. It creates a daily proposed order, which the manager can view and change. Once confirmed, Weblog sends the order to the distribution centre. It creates delivery notes to be checked against the delivery.

Benefits

All parties gain from the system. Managers gain because outlets run out of stock less often, and there is less waste bringing costs down which can be passed onto the customers. Also, time is saved so managers can concentrate on the customers who also benefit from fresher food. Factors such as national promotions are taken into account. Deliveries can be less frequent because amounts are more accurate saving money in transportation costs.

Conclusion

Good stock management is vital to the efficiency of a business. McDonald's new system leads to greater accuracy and less waste. It also makes sure customers can have what they want.