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Deconstructing the McDonald’s supply chain efficiency, straight from the horse’s mouth. What works and what certainly does not!

A unique sense of dedication and commitment characterizes McDonald’s India – a commitment to be driven by the leadership of local owners. Commitment to provide quality products and fast friendly service at a real value to support other Indian businesses through local sourcing. McDonald’s unique ‘cold chain’ – which the QSR major spent more than six years for setting up – in India has brought about a veritable revolution, immensely benefiting the farmers at one end and enabling customers at retail counters get the highest quality food products, absolutely fresh and at great value. Setting up this extensive cold chain distribution system has involved the transfer of state-of-the-art food processing technology by McDonald’s and its international suppliers to pioneering Indian enterprises who, today, are an integral part of the McDonald’s cold chain.

Trikaya Agriculture, a major supplier of iceberg lettuce to McDonald’s India, is one such enterprise that is an intrinsic part of the cold chain. Exposure to better agricultural management practices and sharing of advanced agricultural technology by McDonald’s has made Trikaya Agriculture extremely conscious of delivering its products with utmost care and quality. Initially lettuce could only be grown during the winter months, but with McDonald’s expertise in the area of agriculture, Trikaya Farms in Talegaon, Maharashtra, is now able to grow this crop all the year round. Post harvest facilities at Trikaya include a cold chain consisting of a pre-cooling room to remove field heat, a large cold room and a refrigerated van for transportation. With this cold chain infrastructure in place, Trikaya Agriculture has also a plan to export this high value product to other international markets, especially to McDonald’s Middle East and Asia Pacific operations.

Financial support extended by OSI Industries Inc., USA and McDonald’s India Private Limited have enabled Vista Processed Foods to set up world-class infrastructure and support services. This includes hi-tech refrigeration plants for manufacture of frozen food at temperatures as low as - 35°C. Also, keeping cultural sensitivities in mind, both processing lines are absolutely segregated and utmost care is taken to ensure that the vegetable products do not mix with the non-vegetarian products. Today, production of better quality frozen foods that are both nutritious and fresh has made Vista Processed Foods Pvt. Ltd. a name to reckon within the industry.

McDonald’s supplier of cheese, Dynamix Dairy, recognising the need for quality milk to make quality cheese, has set up a dedicated quality programme for milk procurement. It has made significant investments in setting up bulk coolers at all milk collection centres in the Baramati area, where it is based. On receipt, the milk is immediately stored in the bulk coolers at the collection centres, to prevent growth of bacteria in the milk and preserve its freshness – thus, maintaining the ‘cold chain’.

McDonald’s local supply networks through Radhakrishna Foodland, which operates distribution centres (DCs) for McDonald’s restaurants in Mumbai and Delhi. Ranging from liquid products coming from Punjab to lettuce from Pune, the DC receives items from different parts of the country. All these suppliers share McDonald’s commitment and dedication to satisfying customers by supplying them the highest quality products. They work cohesively to ensure that the final product reaches the customer consistently each time and every time.

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Luxury’s not a lipstick

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Small wonder that there has been a slash in the colossal promotional activities of such luxury brands in recent times. Market watchers claim that Chanel’s couture show (2008 fall-winter collection) was a much muted version of the spectacular displays in previous years. Even the Swiss luxury giant Richemont (owner of prestige brands like Cartier & Montblanc) is cutting down on promotional costs. Given the dramatic dip in their third quarter sales (by 12%) and their quagmire is understandable.

But why has premium-luxury escaped the wrath of the market downturn? Take Tag Heuer. Despite Swiss watch brands seeing an overall drop in export figures, Tag Heuer (from Louis Vuitton), claims that in the last half of 2008, it has grown by nearly 4%. “Recession hasn’t affected us much because we are into the premium luxury segment. Our target audience will buy a Tag Heuer irrespective of recession,” Jean Christophe Babin, President, Tag Heuer told 4Ps B&M.

Clearly, premium luxury and their Richie Rich target audience continue to ride the downturn unaffected. Self-proclaimed global leader in luxury Moet Hennessy Louis Vuitton (LVMH) has recorded 6% growth for the quarter ended December 2008 and Dior has shown a 3% growth in the same period. A glaring case in point is Van Cleef & Arpels (a premium-luxury brand from Richemont) that has shown 5% growth this quarter; while Cartier and Montblanc (mass-luxury brands from the same Richemont Group) recorded negative growth. Here’s what Stanislas De Quercize, President and CEO, Van Cleef & Arpels told this magazine. “We don’t believe in volume growth. The brand has always been into quality sales (as opposed to quantity sales) so our sales figure has remained intact even during recessions.”

What also keeps the premium-luxury flame burning is exposure to emerging markets (instead of depending only on US and European markets). Take for example Cartier. The brand still does not have a direct retail presence in India, whereas LVMH has expanded its arms deeply into Japan, India and China. The company claims that 94% of 20-plus Japanese women own a LVMH bag. That’s huge, given that Japan accounts for almost 41% of the global luxury mart. “This takes care of avoiding the monetary transaction cost, which has been affected due to recession,” feels Bradely Jones, Head of South Asia Unit of UK Trade & Investment. The Lipstick-Index may or may not be decisive in its feelings and judgements; but hey, it does seem that there are a few recession-proof things in this close-knit, global world! Do we hear cheers going up from the likes of Tag Heuer, Versace, Dolce&Gabbana, Van-Cleef & Arpels???

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Why the old, brutal and controversial prisons should be closed

The next in line is Camp 1391 which was built by British to imprison Jews and Lebanese. It now serves Israeli interests and is known more as Israel’s Guantanamo. Detainees, mostly from Palestine and Lebanon, are imprisoned in small cells with walls painted black or red with one small ventilator and a light. And then there's the Black Beach of Guinea. It is said that incarcerating someone in Black Beach is like ‘a slow but gradual death sentence’. Prisoner torturing through beating, burning, limited food rationing make life as good as hell for detainees. The Vladimir Central Prison in Russia too can be safely called the Gitmo of Russia. There, in normal circumstances six captives are locked in one cell and are often subjected to violent torture by guards and suffer from deadly diseases like HIV, tuberculosis and malaria.

Closing litigious Guantanamo prison is a good start but not enough. Punishing and imprisoning criminals is very important and relevant but prisons all across are losing their credibility on ground of justice, fairness and basic facilities to be served to any human on any situation. But shutting them down would not guarantee the eradication of crime from the world. Thus it isn't about closing prisons but about making efforts to make them look similar to earth and not hell. This change would serve mankind more while keeping crime at bay. Let's not the hatred of civilised world be the reason for giving birth to a new breed of terrorists.....Continue

Death for the milkman

China gets tough on those behind the scam

Two men have been sentenced to death and a woman, a top executive of a dairy company, got life imprisonment by an intermediate people's court in Shijiazhuang, capital of Hebei Province, China, for their roles in the production and the sale of milk that was deliberately contaminated with an industrial chemical. At least six babies died and 300,000 fell ill after drinking the milk powder produced by the dairy company Sanlu Group. According to investigations, Geng Jinping, the middlemen who bought milk from farmers and sold it on to dairies, watered it down and mixed it with melamine, a nitrogen-rich chemical used to make plastics and fertilisers, which creates the appearance of higher protein levels in quality tests.

The court has sentenced Zhang Yujun, 40, to death for producing 770 tonnes melamine-laced “protein powder” and selling more than 600 tonnes to others to be mixed in the milk powder. Jinping also faces execution for selling 900 tonnes of milk tainted by 434 kg of protein powder to Sanlu Group. Geng was convicted of manufacturing and selling toxic food while Zhang was convicted of endangering public safety. Zhang was well aware of the damage his actions created, the prosecution said. Another man, Gao Junjie, got a suspended death sentence for endangering public safety while protein powder dealers Zhang Yanzhang and Xue Jianzhong got life imprisonment. The remaining 15 defendants were sentenced to 15 years in jail.

However, the life sentence given to Tian Wenhua, 66, former board chairwoman of the Sanlu Group, has outraged many parents, as they feel she too should have been condemned to death. Tian had pleaded guilty to charges of producing and selling toxic products and admitted knowing of the problems for at least four months before notifying the government. Adam Segal, senior dellow for China studies at the Council on Foreign Relations, told TSI: “It's now unclear if Chinese officials have made any real gains in food safety over the past year or they have simply been blocking bad news out. Death sentences can act as deterrence but its impact will be short-lived.” Undoubtedly, the milk scandal has tarnished the image of Chinese products in the US and European markets.....Continue