Managing stock to meet customer needs
A McDonald's Restaurants case study

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Page 3: Stock management

Holding too much stock carries costs, so McDonald's runs a lean stock control to save money. Stock management is the process of making sure there is enough stock at all times to meet customer demands whilst minimising expensive waste.

Planning and managing supply

a way to control stock

Ongoing communication between the central Restaurant Supply Planning team and individual restaurants helps to manage the stock more effectively. A mixture of specialist stock controllers and employees who previously worked in the restaurants makes up the central team. This team of 14 regional planners works with around 80 restaurants each and communicates on a regular basis with them via email/telephone. Anything that would affect the number of customers visiting their restaurant needs to be logged with the team. This is taken into account in the calculating of the forecasts.

Supply Planners work with the new stock control system, Manugistics, to ensure enough raw materials, e.g. beef, tomatoes, lettuce, etc., leave the McDonald's distribution centres, such as Basingstoke. This ensures restaurants can produce the meals required for the level of demand forecasted.

Forecasting

A forecast is an estimate of future sales of finished products. Forecasts are calculated using:

  • store-specific historic product mix data from the last two years
  • store-specific and national causal factors. These specify dates for events such as national promotions and school holidays
  • information from store managers about factors that might affect emand, e.g. road closures or local events and promotions.

Causal factors

Supply Planners working for McDonald's include a range of causal factors in the calculation of the forecasts, so that based on past performance they can predict future demand for each restaurant. For example, Big Mac sales increase during a 'Buy One Get One Free (BOGOF)' promotion. The planners use this data in the forecasts for all stores that took part in that promotion. Analysing how weather affects demand for particular products, such as McFlurrys and salads, can also be built into the model. The forecasts then become more accurate, decreasing costs and improving customer satisfaction.

McDonald's Restaurants | Managing stock to meet customer needs
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