McDonald’s Supply Chain Sacri-Fries: Navigating a Potato Shortage Crisis
McDonald’s is a multinational well-known fast-food chain, but in the Philippines, a crisis affects one of their best sellers—their French Fries—that impacts their company in a detrimental way. The global freight-crisis, being the main cause of this negative impact, led to a shortage of potatoes being delivered to the Philippines. This is mainly due to the effects of the Covid-19 pandemic which made the lack of containers have a ripple effect down entire supply chains, disrupting trade on a global scale.
Even more so, due to the restrictions of the pandemic, countries such as Indonesia, Malaysia, and Taiwan had joined Japan in their struggle to obtain potatoes. This would reach social media as the pages for McDonald’s in those respective countries had notified the public of their shortage. This case study will tackle the causes of the ongoing problems caused by the crisis and provide recommended actions for the benefit of the company in the long run.
Findings
Problem Identification and Analysis
The troubles of McDonald’s with their supply chain stems from the company running into a problem in March 2019 when the shortage of potatoes forced them to temporarily discontinue large quantities of French fries across their franchises around the world. In fact, this is not the first time that McDonald’s has had to deal with a potato shortage, but it is one of the most severe cases in recent memory. In 2018, McDonald’s reported that they had lost $1 billion as a result of the shortage.
This year, however, things seem much worse. Since this is not an isolated incident, it is likely that other franchises have been serving regular-sized fries for a long time now without many customers noticing anything wrong. This demonstrates that the company’s supply network has been significantly impacted and highlights how important it is for firms like McDonald’s to be able to react quickly when something goes wrong.
The McDonald’s potato supply chain has been in dire straits recently, largely because of a problem with the supply chain itself. The problem with the potato supply for the fast-food behemoth was mostly caused by a problem with the supply chain. Potato imports delays have occurred owing to flood damage and the effect of the COVID-19 pandemic on the worldwide distribution network that moves food from farms to McDonald’s restaurants. This weather crisis also affects the McDonald corporation because its supply chain is dependent on other parts of its network such as ports and railways, which are usually able to function during normal weather conditions but are unable to do so when they experience extreme weather events such as floods or storms.
Another main issue causing this shortage is that there are not enough potatoes available for McDonald’s restaurants to use in their fried products. This shortage began because of a decrease in production from farmers across the country due to poor weather conditions this year. The decrease in production is also contributing to higher prices for potatoes, which have been increasing since last summer. These higher prices mean that customers may choose not to purchase fries or hash browns at outlets where they’re not included as part of special offers or promotions; without these two items on their menu boards, restaurants would lose sales and profits while still paying costs associated with producing them.
Evaluation of Alternative Solutions
- Use Alternative Vegetables for Fries:
- Consider substituting other vegetables like sweet potatoes or parsnips, maintaining taste and texture.
- Maximize the Use of Technology:
- Employ technology to address port congestion issues, ensuring reliable and timely deliveries.
- Find Another Potato Supplier:
- Explore alternative potato suppliers to mitigate the impact on McDonald’s business.
Conclusion
The shortage crisis stems from weather-related challenges and insufficient storage capacity. Mitigating these issues requires technological solutions, and the supply chain leaders are actively exploring strategies to address global freight and port congestion problems.
Recommendations & Implementation
Considering the available alternatives, the most effective course of action appears to be finding a different potato supplier. This straightforward solution serves as both an immediate remedy to the crisis and a potential long-term strategy. Immediate implementation is crucial for McDonald’s to resume normal operations and lift restrictions on customer fry purchases.
References
- Duhalde, M. (2022, February 15). Global shipping crisis and container shortage – visually explained. SCMP Infographics.
- GLOBAL SHIPPING CRISIS: NO QUICK FIX. (2022, February 22). Global Trade Magazine.
- Mendoza, J. E. (2022, April 23). No large fries in McDonald’s PH due to ‘global freight crisis’. Inquirer.net.