The Importance Of Purchasing Management In Mcdonalds

The Importance of Purchasing Management in McDonald’s

Introduction

A sustainable purchasing management is important in many different global business sectors such as McDonald’s, IKEA and Coca-Cola. It is a highly strategic role in either public or private sectors, whether they are profitable or non-profitable. The supply chain from contracts, procurement and logistics are being fully covered. In the other means, it covers from negotiating, purchasing and storage or distribution. Purchasing management concentrates on souring, pricing and purchasing the right items, at the accurate price and time. Effective purchasing helps a company to gain more profit through cost reduction, quality maintenance and risks management to the company’s own supply

Its successful operation and strategies which lead McDonald’s to become a worldwide restaurant nowadays should be further investigated; on the other hand, further suggestions in improving the company should be suggested. In the following, the aspects of supply chain as well as the E Procurement will be focused in this essay respectively.

Supply Chain Management

A supply chain management is an inter-connected business in the eventual supply of products and services requested by the end customers. In other words, it spans the overall raw materials’ storage and movement, working processes and finalized goods from the origin to the consumption. An effective supply chain management requires changing from the integrated individual function activities into the supply chain processes. Moreover, the supply chain

This would result to inefficient allocation of resources. Planning and management would become difficult, and uncertainty would also be created in manufacturer determination in production and transportation capacity. In result, McDonald’s needs to bare higher transportation and manufacturing costs and suffers from higher inventory levels. McDonald’s also needs more emergency production changeovers to deal with urgent situations. On the other hand, the pull strategy coordinated with customer demand; while firms do not hold any inventory on hand that they would only respond to orders specifically. This reduces the lead times by improved incoming ordering expectation from retailers and also reduces the variability in the system. However, it is always hard to implement such strategy when lead times are too long because it is not practical in reacting to the information in demand. In addition, it is more difficult to benefit form the economies of scale as