McDonald's case study shows the virtues of horizontal supply chains

Dive Brief:

For the sixth year in a row, McDonald's was awarded with a top 10 spot in Gartner's Supply Chain Top 25, securing the second-best spot for the third year in a row. The reason, Supply Chain 247 reports, is the company's horizontal (or "system") model wherein everyone, including suppliers, succeed.
One of McDonald's main supply chain tenets is to focus on the end-product, rather than the process of production, meaning that while quality and other standards must be met, the supplier is empowered to determine the methods employed to do so.
Agreeing on measurable outcomes is another requirement for doing things the McDonald's way. As one of the three legs of the McDonald's operational stool, suppliers know they're valued as contributors to the system — which emphasizes offering the exact same product worldwide.

Dive Insight:

As consumer and regulatory standards increase, companies from Nike to CVS are trying to take control of their supply chain to improve oversight and synergies. But the McDonald's case study shows, sometimes, operating a fully horizontal supply chain is more effective, assuming positive relationships with suppliers.

So the merit lies not just with McDonald's as a company, but also with its supply chain partners. A fully horizontal supply chain means supplier-buyer relationships are key, and McDonald's has shown utmost trust in its partners over the years.

An article examining McDonald's supply chain practices reveals the company responded to a wave of negative documentaries, like "Fast Food Nation" and "Super Size Me," by increasing the transparency in its supply chain. By tapping into its close ties with its suppliers, the company was able to weather the storm of poor publicity by revealing the veracity of its products: beef was beef, after all. It also produced a campaign called "Our Food/Your Questions," meant to further promote its certainty in its own products.

Because of the long-standing and close relationships the company establishes, it was able to demonstrate with confidence that its practices were sound and its sources fair and reliable. And while the health aspect of its products remains disputable, the success of its transparency, demonstrated by the confidence it showed in revealing its sources, does not.