McDonald's Controls Its Supply Chain

Apply the knowledge of management presented in this chapter tothe following case. The goal of this case analysis is to enable youto understand what happened at McDonald's by applying theory.

Read the case below and answer the questions thatfollow.

McDonald's was founded in 1940 and is currently the world'slargest restaurant chain with over $22.8 billion in revenue in2017, serving over 69 million customers a day. The company hasaround 37,000 locations in over 100 countries, and employsapproximately 235,000 people.¹

McDonald's is known for its hamburgers and fries, but therestaurant chain also offers a variety of salads. Salads were firstoffered as side salads in 1985 and were then upgraded to premiumsalads in 2003. Premium salads include superior lettuce blend andmeat options.²

McDonald's has one of the best supply chain management systemsin the world, according to entrepreneur David Kiger. Kiger says,"Some of McDonald's suppliers have been with them since theirbeginnings. They strive to maintain their partners for the long rungiving them incentives to stay that way. In order to serve morethan 200 million customers a year, they must receive products fromdifferent suppliers in separate places of the world." Since theearly 2000s, McDonald's has been focusing mainly on optimizing andmaintaining the company's supply chain utilizing a system ofagricultural management that abides by strict parameters andstandards demanded from its suppliers in all of their raw materialsand foodstuffs, according to Kiger.⁸

So What Happened?

In July 2018 the Illinois and Iowa departments of health beganinvestigating reports of people contracting Cyclosporiasis aftereating salads at McDonald's. Accordingto Fortune, "Cyclosporiasis is an intestinalillness caused by the Cyclospora parasite ? the parasite is mostcommonly found in developing countries, but has been increasinglyaffecting Americans during the summer months. People often contractthe illness after eating fresh produce contaminated with theparasite." Cyclosporiasis can take a week or more before it startsto affect the body, which is different than other food-borneillnesses.³

When all was said and done, more than 500 people across 16states were infected with Cyclosporiasis. So how did McDonald'shandle the outbreak? On July 12, 2018 the Illinois Department ofHealth posted an alert urging customers who, "ate a salad fromMcDonald's since mid-May and developed diarrhea and fatigue,contact a health care provider about testing and treatment." A daylater, McDonald's stopped selling salads at more than 3,000locations in 14 states.⁴Out of an abundance of caution,we decided to voluntarily stop selling salads at impactedrestaurants until we can switch to another lettuce blend supplier,McDonald's said in a statement.⁵

McDonald's took swift action on July 20 to replace FreshExpress, its lettuce blend producer, in states where infectionswere reported, according to CBSChicago.⁶ Fresh Express released a statementon its website saying it had launched a "precautionary recall" ofthe institutional food service product on July 27 [2018] of a"limited number of cases."⁷

The Food and Drug Administration (FDA) declared the outbreak tohave ended on September 12, 2018. FDA Commissioner Scott Gottliebstated that, "The FDA worked with McDonald's to quickly removeimplicated salad from the stores ? and all of the produce suspectedof being contaminated was destroyed, preventing additionalCyclospora illnesses from occurring."⁹

McDonald's salad recall most closely aligns with which of the following reasons why control is needed at organizations? Multiple Choice discover irregularities and errors provide performance feedback reduce costs, increase productivity, or add value adapt to change and uncertainty detect opportunities and increase innovation