In 1993, Martha Cooper and Lisa Ellram co-wrote and published the Characteristics of Supply Chain Management and the Implications for Purchasing and Logistics Strategy. After more than twenty years of debate, trials, and errors, many supply chain professionals believed the practices described in the paper simply weren’t able to be put into effective practice.
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Situation
Cooper and Ellram created the idea of SCM (Supply Chain Management), wherein they define the systems of a supply chain and described how to establish and maintain such a system effectively. The primary focus was on the collaboration of members within the supply chain in order to lower costs and improve service. The process appeared to work beautifully on paper, but was rarely seen working as described on paper. McDonald’s Sweden changed this more than two decades later.
Approach
Since McDonald’s Sweden was established, it followed the SCM as described by Cooper and Ellram. This involved collaborating with the entire supply chain, including sharing information, joint planning, and fully sharing in both the risks and the rewards of each endeavor. To date, there have been several obstacles identified that usually inhibit this process. These barriers included technical problems (such as incompatibility issues) and cultural problems (such as a lack of trust among companies).
Impact
McDonald’s Sweden, however, did not face these obstacles. This hereby proves that the SCM framework described by Cooper and Ellram does, in fact, have validity. The McDonald’s corporate philosophy was applied all the way across the supply chain, fostering a sense of open communication and trust. However, it is important to note that free sharing of information only relates to information which is important for the various members of the supply chain to know. Sharing of all information without regards to its relevance or importance simply overwhelms the lines of communications and builds different obstacles to overcome.
Advantage
Nowhere is the success of McDonald’s Sweden’s supply chain more evident than in their relationship with their carrier, HAVI. This is the only logistics company McDonald’s Sweden uses. By having a single carrier for all their logistics needs, McDonald’s Sweden was able to negotiate prices for all its franchises, meaning that prices could be consistent across the area of Sweden.
If different carriers were used for different areas or franchises, McDonald’s would not be able to offer the same prices in restaurants in different areas. Because consistent food quality and consistent pricing is one of the main selling points of McDonald’s food, this was a key issue for this company.
The most significant element in the success of the McDonald’s Sweden supply chain is the trust factor. They have effectively established a high level of trust across all suppliers, the McDonald’s company, and the restaurant franchises. McDonald’s effectively broke down the barriers to long term collaboration and proved finally that the beautiful idea of SCM can actually work just as described by Cooper and Ellram.
Since McDonald’s has reached market saturation in Sweden, the next challenges to await are finding ways to grow the business and continue to increase profit margins in the region. [/show_to]
