Logistics Management Issues - Essay Example

Logistics Management. Logistics is basically the flow of various factors such as goods, information, energy and people from one point to another. The point where it starts is the point of origin and the end point is called the point of consumption. Logistic management is a part of the supply chain management or the production management that deals with the organizing and controlling the flow and storage of goods and services, and also takes into account the related information that is used in the production process, which flows from one point to another. The essay focuses on the importance of the logistic components in the effective management of McDonald’s food chain. McDonald is one of the leading food chains in the world, and many use it as an example of global economy, as it is today functioning across the world, in almost all the countries in the world. McDonalds is a global manufacturer and holds an important place as a food chain in the global hospitality industry. It was started by the two McDonald brothers in San Bernardino, California in the 1940s, and it has since then grown and developed into the world’s largest food chain, holds an impressible place in the quick service restaurants for informal eating in every country where it functions. This global foodservice retailer has more than 30,000 local restaurants, provides more than 52 million people and is functioning in over a 100 countries in the world. In this paper we shall make an attempt to study and analyze the logistical management of this mammoth organization. We shall focus on four main components of the logistic mix, namely: transportation, packaging, storage facilities and communications. The company is global and due to its magnanimous size, it requires a huge amount of resources and input. These have to be transported from the market to the factories for the raw materials to be processed and then these have to be transported to the McDonald outlets that are situated all over the world. This is a very expensive procedure as there are a number of outlets, and the products produced are perishables, and has to transported with care, while ensuring that hygiene and quality is maintained. The management of the transportation has to be done to ensure that the resources are utilized to their maximum capacity, the time that is taken to transport the material is minimal and that the conditions are controlled to ensure that the food does not get spoilt or rot. Transportation of the food and other perishable methods has to be done with the help of freezers, and ‘warm weather’, where the temperatures are controlled. The food products are frozen, and they are cooked as and when required to fill the demand, and if not required they can be kept in storage. This is the most economical and hygienic method of transformation of food. Other products such as sugar, coffee, etc are also all custom made, and the company transports these to its outlets. The company raises its own chicken, hens, pigs, cows and other poultry and has faced heat over this from PETA continuously. PETA believes that these animals are raised in cruel conditions and has protested and campaigned against McDonalds vehemently. These animals are then transported to factories, and processed. The transportation system of the organization employs trucks, air planes, refrigerated load carriers, trains, etc. Transportation has to keep accounts of the movements of resources and inputs, records have to be maintained, and also the company has to pay custom duty for movement of resources from and to various countries. McDonald also provides from home delivery services for its end products to the consumers and for this too it has to employ scooters and motor cycles as well as personnel for making the delivery. This also requires management and coordination, and it increases the total cost of production. In the recent times, with the development of the ideas of economic sustainability, the organization has shifted its usage of vehicles that are environmental friendly and keep to the norms and standards that have been set by the governments of various nations and international law. For the transportation of fresh raw materials that are used in the restaurants, the company procures them from the local markets and uses the local transport system to transport them such as subways, buses, etc. in certain countries such as Australia, where such local transportation system is not developed the company employees its own vehicles, and has developed its own transport, such as trucks, refrigerated lorries, air transport is also employed, such as airplanes, where special installations have been made like refrigerators, etc to transport raw material, poultry, etc. The company uses the policy of unitisation in its transportation system, especially in the domestic transportation, as it has a number of benefits, such as reduced damages to the goods that are being transported, as well as dramatic cuts in the cost of labour as well as handling costs in the transportation process. It also helps the company to categorize its transportation, and ensure faster and more efficient movement of goods and services. The packaging strategy that is followed by the company has changed and evolved over time with the changes that took place within the organization as well as those that took place outside it. McDonalds uses a packaging system which is environmental friendly as well as in touch with the requirements of the consumers. Its packaging slogan that it revealed in 2004 was “I’m Lovin It”, which became really important in the marketing of the products of the organization all over the world. The slogan was used by the company to connect with its customers and show that the joy of enjoying and appreciating the smaller things in lives. This new strategy that was adopted by the company was a success, and studies have shown that people were able to relate more to the slogan as it helped the company portray the simple lives that people lead, and that it makes a connection at a more personal level. The new design was meant to put across to the consumers the quality of the McDonald food. It also helped the organization create a global design that helped in creating the global and all encompassing image of the organization, while at the same time it allowed for creation, blending and customization of the design into the local preferences and culture. The new Design was formulated by the organization Boxer Creative, and it was first implemented in the US and then gradually into 17 other countries and finally to all the countries in the world, thus bringing a gradual change to the image of the organization in the global market and arena. In 2003, the company decided to change its packaging to help make it more cost effective. The packaging for sandwiches will change from paper wraps to rigid containers, and it was to switch to white bleached bags which it had discontinued in 1992, so as to prevent environmental degradation. It was using brown unbleached bags which were more environmental friendly. These changes were to take place in US and then every where else, but after engaging in dialogue with the Environmental Defence, the company decided to offset these changes. Krupp, the chief of Environmental Defence had said on that occasion-“When I met with McDonald's CEO Jim Cantalupo this summer, he assured me he would do what was needed to offset the impacts fully, we will monitor progress on this commitment and will hold the company accountable for meeting these goals. McDonald's has gained a clear reputation as an environmental leader and, going forward; sustained improvements in packaging will be needed to maintain that leadership.” The company decided to offset these changes by making changes in other packaging. Krupp responded to these changes by saying-“We are disappointed that McDonald's has chosen to make these changes. We believe these changes are unnecessary for packaging with a useful life typically on the order of minutes.  But we are pleased that McDonald's has pledged to ensure that the overall impact of its packaging on the environment does not increase.” Storage is another very important area of the logistic management of any company, and it is especially important in the case of this company as it is a fast food joint. The materials that are used by the company are mainly perishable, and they require efficient and economical. While storing the materials there has to be ensured that the quality and structure, texture and palatability of the food is not altered or adversely affected in any manner. Usually the poultry such as the chickens, pigs, cows, etc are all stored in the pens and sheds. These are mainly raised and stored at farms in various countries, and they re transported to the factory once they have been raised and are ready to be slaughtered. The PETA has protested against the storage method that the company follows. It says that the company allows .55 square feet of living space for the chickens, in which they cannot even spread their wings. A study conducted by the USDA shows that between four and seven hens are stuffed into tiny wire mesh cages which are stacked in warehouses, as many as 100,000 hens in these huge sheds. It is believed that they can't breathe, nor can they move. By the time they're shipped to slaughter, most are crippled or have broken bones. The conditions under which animals are being raised are so appalling that the entire European Union has decided to phase out battery cages. There thus has to be developed a better system of storage and management of poultry while they are being raised. The company uses refrigerators and coolers to keep the processed and frozen meat and other materials, so as to ensure that the food’s quality and palatability is maintained. The storage of things such as the bread, sugar, etc are done in store houses and other storages which are dry and cool so as to ensure that the food does not get spoiled. Thus, the maintaince and storage of food products and materials requires management and planning, and this is empirical to the production process. The fourth component of the logistic mix is communication. Communication is perhaps the most important part of the logistic mix of the company, as it is a company that relies on the everyday communication of its employees with its customers and consumers. Communication in the company takes place at two levels, externally, where the employees interact with the customers and internally where there is establishment of communication between the employees and the management. McDonalds places the consumer at the core of its business activity and makes a commitment to the consumers for providing services promised, to give back to the community and also to ensure that there is continuous growth and development so as to improve the already existing system. Employees engage in a two way communication, where the represent the company’s ideas to the customers and take their feedback to the management. The management looks into the existing communicating system, and try to improve on this through strategies, communication councils, tactics so as to ensure that there is development of greater leadership priorities, programs, etc. The management should also train the employees of the company in communicating with the consumers, so that there is greater satisfaction and also that data can be gathered on the requirements and demands of the consumers which can then be communicated to the management which would then develop strategies to accommodate these demands so that the company grows and changes with the changing needs and also to ensure that the objectives of the company are fulfilled and achieved. The employees of the organization must have good communicating skills, should have superior oral, written and organizational skills, should be able to study the changes required and be able to translate it into reality. They should also be able to project the global context and outlook of the company. They should also be able to interact regularly with the management and communicate to them the changes in the management and productivity process so as to ensure improvement. They should also be able to work in a team. Thus, the conclusion that can be reached after the discussion is that McDonalds, which is leading global fast food chain and provides services to 52 million people each day in 117 countries across the globe, requires a detailed logistic management so as to ensure that it is able to economically manage its resources while trying to achieve the objectives of the organization, and this can only be done if there is carried out a detailed analysis of the existing system, so as top discover the short comings and improve these, thus ensuring better and more efficient logistical management. 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