McDonald's Is Using AI and Data to Optimize Its Supply Chain
Digital technology is helping industries become more efficient, effective, and better at serving their customers. With so many companies now embracing their digital transformations, those which don't are in danger of being left behind.
AI and data are two aspects of Industry 4.0 technology which can be utilized by almost every industry around the globe. Combining the two is helping brands get a far better understanding of the customers and markets they serve than would have ever been possible previously. Digital technology naturally captures a large amount of data, and, thanks to artificial intelligence, this data can now be processed and analyzed to a high degree of accuracy.
As the world's biggest fast-food chain, McDonald's understands the importance of its supply chains and is using big data and artificial intelligence to improve its operations across the board.
McDonald's
The globe-spanning fast-food chain recently announced its acquisition of Dynamic Yield - an Israel-based tech company that specializes in personalization software. McDonald's plans to deploy Dynamic Yield's solutions at all levels of its infrastructure - from customers to suppliers.
For example, the technology will enable menus to dynamically change as a customer places an order. Order a burger and the system will suggest a meal upgrade. Order a healthy option such as a salad, and it will pair it with a related product like a bottle of water. Drive-thru menus will be able to promote different options depending on environmental factors such as time of day, traffic levels, and weather conditions - promoting hot chocolate on a cold day, for example.
"With this acquisition, we're expanding both our ability to increase the role technology and data will play in our future and the speed with which we'll be able to implement our vision of creating more personalized experiences for our customers," said McDonald's CEO, Steve Easterbrook.
However, far more exciting than the customer-facing applications of the Dynamic Yield platform are the implications these personalized recommendations have for the entire McDonald's supply chain.
AI and Data
Take the restaurant end of the supply chain, for instance. The automation of the upselling process could help individual restaurants better manage their inventory and avoid running out of key products while waiting for a delivery - especially if adverse weather etc. is preventing supplies from reaching them.
If the AI platform is plugged into both the menu and the inventory systems, it can promote or withdraw items based on stock levels. For example, if the restaurant is running low on chicken burgers, but has an abundance of beef, the menus can give beef products greater prominence on the menu and reduce demand on chicken - preventing the restaurant from running out.
Of course, a company such as McDonald's has long been using analytics in its supply chain, but this new acquisition will empower it to bring together supply and demand like never before. The ability to influence demand at the restaurant level will create minimal waste and an optimized supply chain throughout the organization.
"What we hadn't done is begun to connect the technology together, and get the various pieces talking to each other," said Easterbrook. "How do you transition from mass marketing to mass personalization? To do that, you've really got to unlock the data within that ecosystem in a way that's useful to a customer. As you start to link the predictive nature of customer demand all the way through your stock levels in the restaurant and the kitchen, you can flex it back down through the supply chain."
These suggestions can be further influenced by real-time data from the supply room - all the way to global distribution centers and other suppliers. The AI system could then cross-reference data from all over the McDonald's supply chain network and suggest the items which will maximize profit and customer satisfaction while making the best use of available stocks.
This ability to control personalized recommendations and supply chains in real-time will be particularly useful for new and/or seasonal items. It is far more difficult to predict demand for these items at individual stores, so the new system will be crucial for helping manage stock levels.
Final Thoughts
AI and data are helping McDonald's bring together supply and demand. By tying personalized recommendations to its entire supply chain network, the fast-food chain has created a new way of managing its inventory and promoting key products.
"It's all integrated, all the way back to the suppliers and even the raw material suppliers. The stores immediately know if there's any low availability, outages or supply issues, so that the messages going to consumers are completely synchronized."
You can hear McDonald's Senior Counsel for Commercial, Privacy, & Technology, Peter Nadimi, speak at Supply Chain Next 2019, taking place in November at the Westin Chicago River North, IL.
Download the agenda today for more information and insights.