McDonald’s China has partnered with Cainiao, the logistics branch of the Alibaba Group, to improve supply chain efficiency, as reported by the South China Morning Post.
The collaboration will incorporate technologies like radio frequency identification (RFID) to streamline McDonald’s processes from manufacturing to the point of sale.
McDonald’s China will implement Cainiao’s RFID technology in its supply chain by incorporating built-in tags on food packaging. This will facilitate the tracking of products from factories to restaurants.
The initiative is anticipated to enhance inventory management and decrease the time needed for stocktaking.
RFID is a third-generation identification technology, succeeding bar codes and QR codes. It functions by transmitting data via radio frequency signals from a microchip within the tag.
The two companies tested the RFID system, and the findings indicated that participating restaurants could perform a daily stocktake in just 15 minutes, as opposed to an hour.
The precision of inventory data also saw a 30% improvement.
In order to streamline the supply chain for fast-food establishments, McDonald’s and Cainiao will explore digitalization and automation technologies more extensively.
McDonald’s China operates 5,500 establishments and employs 200,000 individuals to cater to over a billion customers each year.
This partnership comes at a time when the logistics company is planning to raise $1 billion through an IPO (initial public offering) in Hong Kong, after submitting its filing to the city’s stock exchange in September 2023.
In November 2023, McDonald’s reached an agreement to purchase the minority stake held by investment firm Carlyle in the partnership responsible for operating McDonald’s business in mainland China, Hong Kong, and Macau.
McDonald’s, through this deal, will increase its ownership stake from 20% to 48%. CITIC Capital, a Chinese alternative investor, will retain the remaining 52% stake.
The deal is set to conclude in the first quarter of 2024.
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