McDonalds Case Study

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McDonalds Case Study
McDonald’s is one of the top foodservice companies in the world. The company has over 35, 000 joints and presence in over 120 countries. It is growing very fast in China with the presence of multiple outlets. The company has been championing supply-chain transparency throughout the expansion process. Shangai Husi Co., a subsidiary of OSI Group Inc. is a major supplier for McDonald’s in the region. Despite the transparency effort, the two companies came under governmental scrutiny. The supplier was alleged of selling meat to McDonald’s beyond the shelf life (Jargon 2). The supply chain was halted, but McDonald’s lost customers. Osi Group opened investigations on the subsidiary supplier which forced McDonald’s to deal with new suppliers.
1. Suppliers are very important to companies since they provide a source of raw materials which make products like hamburgers. McDonald’s has dealt with OSI Group for over 20 years. It is not advisable for the company to end the relationship. The most prudent thing is closing the supply chain temporarily and wait for investigations. The two companies should retain the supply chain.
2. McDonald’s would have protected their brand and retained their customers if the quality of supplies were checked, confirmed and reported. Companies can achieve supplier quality control by implementing a quality management system. This system should track and reports quality variation. A non-compliance program will help companies reduce defective supplies, late supplies, and wrong orders.

Companies should not allow local systems to compromise quality management activities along the supply chain.
3. The actions by Shangai Husi show aspects of an intended action. As a case analyst, I feel the company was a bit inconsiderate to its long-term partner. I am compelled to suggest compensation for brand damages and reduced customer base. The length of the relationship caused McDonald’s to accept supplies without detailed quality check-ups. Terms of the supply chain need to be reviewed if the relationship is retained.
McDonald’s should hold suppliers more accountable for quality. The food industry is very sensitive in terms of health and safety. Therefore, suppliers should act in good faith. The two companies need to deliberate on the case as investigations are being carried out. A new quality management system will reduce problems along the supply chain.

Works Cited
Jargon, Julie. “McDonald’s Rethinks China Supplier”. Wall Street Journal, August 27 2014, p.2.