Day 125 - 12 May 95 - Page 37


     
     1        what it became.  Far from winding up the disorganised
     2        cluster of independent suppliers, McDonald's created what
     3        even most of its competitors concede as the most
     4        integrated, efficient and innovative supply system in the
     5        food service industry".  Presumably, you would agree with
     6        all of that?
     7        A.  Oh, absolutely.
     8
     9   Q.   Then it goes on:  "Today that system is increasingly
    10        responsible for preserving McDonald's as the industry's
    11        standard setter on uniformity of product.  In the 1950s
    12        McDonald's achieved its extraordinary consistency by
    13        devoting more attention than anyone else to field service
    14        and training at the store level, but beginning in the late
    15        1960s the chain began shifting some of the labour involved
    16        with food preparation at the stores back to the food plants
    17        that supplied them.  Products were produced in a more
    18        standardised fashion and in the manner that made food
    19        preparation in the store nearly fool proof.
    20
    21        Production was concentrated in huge plants devoted
    22        exclusively to McDonald's.  By the mid-1980s McDonald's had
    23        converted its distribution system into the marvel of the
    24        food processing business.  It had reduced its beef
    25        suppliers from 175 to just five, all of which run hamburger
    26        plants that are among the largest and most efficient in the
    27        meat processing business".  Presumably, you would agree
    28        with all that?
    29        A.  Yes.
    30
    31   Q.    In terms of the quality of the product, when it reduced
    32        its beef suppliers from 175 down to five, which is quite a
    33        dramatic reduction, that did not all happen in one weekend,
    34        did it?  That was a process, presumably?
    35        A.  Ask that question again?
    36
    37   Q.   Sorry.  When you had, whatever it was, somewhere near 175
    38        beef suppliers producing your products for you -----
    39
    40   MR. JUSTICE BELL:  It was put to you it did not happen
    41        overnight.  It could have been the story of the late 20th
    42        Century that you have fewer and bigger suppliers of
    43        everything?
    44        A.  Yes, it did not happen overnight.  We wanted to ensure
    45        that we had adequate supply to our restaurants, so that
    46        adequate notice was given to some of the local suppliers so
    47        that they could deplete their inventory; they knew ahead of
    48        time when they were going to lose us as a customer which
    49        gave the meat supplier, the frozen processor, an ample
    50        opportunity to take on the additional restaurant.  So, it 
    51        was done in a fairly orderly fashion; the time frame of 
    52        which I am struggling to recall, but I want to say it was 
    53        within a two or three year period of time, if that long.
    54
    55   MR. MORRIS:  I think the implication here was round about the
    56        mid-1980s, early to mid-1980s, that process took place?
    57        A.  That is right.
    58
    59   Q.   Or dramatic reduction of suppliers.
    60        A.  That is about right.

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