Mitch Mac Donald has more than 30 years of experience in both the newspaper and magazine businesses. He has covered the logistics and supply chain fields since 1988. Twice named one of the Top 10 Business Journalists in the U.S., he has served in a multitude of editorial and publishing roles. The leading force behind the launch of Supply Chain Management Review, he was that brand's founding publisher and editorial director from 1997 to 2000. Additionally, he has served as news editor, chief editor, publisher and editorial director of Logistics Management, as well as publisher of Modern Materials Handling. Mitch is also the president and CEO of Agile Business Media, LLC, the parent company of DC VELOCITY and CSCMP's Supply Chain Quarterly.
Armario has served in a number of capacities since joining McDonald's in 1996, including group president of McDonald's Canada and Latin America, president of McDonald's Latin America, and senior vice president and international relationship partner for the Latin America region. In his current role, he oversees procurement of over $23 billion worth of food, packaging, and "premiums" annually and heads up the corporation's global food safety and quality systems initiatives. He also manages the overall franchising strategy for an organization that has served billions and billions of customers in 123 global markets.
Armario may be steward of one of the most far-flung and complex supply chains imaginable, but he is quick to credit others for his group's successes. These include what he calls the "very smart, capable, experienced people" who serve on the supply chain front lines as well as the corporation's famed founder, Ray Kroc, whose unwavering focus on customer satisfaction has provided the foundation for the company's decades-long success.
In addition to his day job, Armario is a member of the board of directors for USG Corp., where he serves on the audit and compensation committees; a director of the international advisory board and president's council of the University of Miami; and a director for the Chicago Council on Global Affairs. He earned a master's degree in professional management at the University of Miami and an associate's degree in business administration from Miami Dade College.
Armario met recently with DC Velocity Group Editorial Director Mitch Mac Donald to discuss the challenges of keeping billions and billions of customers satisfied.
Q: As one of the world's largest fast-food companies, McDonald's operates a supply chain of almost jaw-dropping size and scope. How do you cut through all the complexity to get to the point where you can make actionable decisions? A: We are very fortunate to have a system in place that has survived the test of time. We call it the three-legged stool. It is the philosophy that was instilled in the company by McDonald's founder Ray Kroc. The whole principle centers on a great balance, a great will to win. In other words, when the company does well, when our owner/operators do well, and when our suppliers do well, we all win. Of course, the corollary to that is that if any leg is shorter or longer than the others, you don't have good balance.
We try to remind ourselves about the three-legged stool at all times. That is the philosophy going forward, but we also have very smart, capable, experienced people in all areas of the world we serve. Our staff works with very tenured suppliers to make the day-to-day decisions. Our role at corporate is to supply strategic direction and to ensure that the brand is protected along the way so that we are always delivering gold standard products at the highest levels of quality and safety. We want our customers to be confident that their Big Mac will taste the same whether they're in Germany, Argentina, the U.S., Canada, or any other part of the world. Everyone involved—from the supplier all the way to the restaurant—will meet the same standards.
Q: As important as adhering to those standards might be, I would guess that it's still important to have the flexibility to adapt to local market conditions? A: You're right. There does have to be some level of flexibility in the framework because no two markets are exactly the same. You can't import all the products or even produce all the materials in one country, so when you create formulas for the products, there is going to be a little room for variance. The level of flexibility is not large, but it enables us to function and be successful in the marketplace.
Q: What are the biggest challenges you face right now? A: There are several challenges. First, the consumer today is smarter and more aware than in the past and has more access to information about what they are consuming. That places more responsibility on every company that serves food. We know that our customers are looking at how the food is made. They are looking at the ingredients. They want to know if we are being responsible, if the products are sustainable, if there is any sort of code of conduct in place with respect to the labor forces in different markets.
So I think there is a greater degree of transparency required of companies today, and it's only going to get more intense. We are looking at everything we do with a lot more care. We are going to continue to be as transparent as we can be. We pride ourselves on that, on our transparency. We are holding ourselves accountable on the typical measures of success, but we are also increasing our level of focus around sustainability because it is becoming more and more important.
Second, I would say that one of our biggest challenges going forward is making sure we are prepared for further growth. We are fortunate. We have had a great deal of success, and we're seeing demand for more restaurants in more countries. That means we have to be as prepared as possible for that growth and, as you know, when you enter or expand in any marketplace, before you hire the first manager to run your business, you have to get your supply chain in order. The supply chain has a very long leadtime, so today we are asking ourselves how big we are going to be 10 years from now, and what we and our suppliers have to do to prepare for that growth. We're looking at everything from levels of investment, to the best places to grow and produce raw material, to the people needs behind that.
Q: How does the focus on the customer come into all of this? A: We absolutely know that one of the things our customers appreciate most about McDonald's is that they get a great experience at a great value for their money, and that they can always depend on McDonald's, not just for consistent quality and taste, but to have the product there when they ask for it. That takes a lot of work. It requires years and years of working closely with our supplier partners to make sure we have the right forecasting systems in place. We continue to work very closely with several suppliers around those types of projections.
One of the things we are also working toward is a lot more automation. We envision making much better use of technology so that the restaurant-level information is being fed to our key suppliers, which will allow them to use actual consumption data to get a better handle on demand. At the opposite end, the benefit to the restaurants is that managers don't have to spend time counting inventory and projecting usage rates, which frees them to concentrate on running their operations.
Q: How important a role have enabling technologies played in your continuing ability to achieve the corporation's supply chain goals and objectives? A: That it is one of our largest investments of time and capital. We have suppliers who have really invested time and energy and sweat equity in building these programs in conjunction with us. It brings to mind a recent example. Last year, when the U.S. ran the McRib promotion, the improvement by using this new technology to forecast usage was so impressive that there was barely any leftover stock at the end of the promotion.
Q: Which of your personal skill sets do you draw on most heavily in your day-to-day job? A: I've been told by many people that my strength is my people skills and practices. I am blessed to be surrounded by extremely smart, capable, intelligent, experienced professionals who build great teams around themselves. We all know that in business, any business, it is all about the people at the end of the day.
Q: What advice would you offer someone considering a career in logistics and supply chain management? A: I would say whether it is supply chain or any other industry, profession, or discipline, look for what you love to do. As the old Chinese saying goes, "If you love what you do, you never work a day in your life." But also realize that you are responsible for your own success. Don't leave it to others.
Supply chain planning (SCP) leaders working on transformation efforts are focused on two major high-impact technology trends, including composite AI and supply chain data governance, according to a study from Gartner, Inc.
"SCP leaders are in the process of developing transformation roadmaps that will prioritize delivering on advanced decision intelligence and automated decision making," Eva Dawkins, Director Analyst in Gartner’s Supply Chain practice, said in a release. "Composite AI, which is the combined application of different AI techniques to improve learning efficiency, will drive the optimization and automation of many planning activities at scale, while supply chain data governance is the foundational key for digital transformation.”
Their pursuit of those roadmaps is often complicated by frequent disruptions and the rapid pace of technological innovation. But Gartner says those leaders can accelerate the realized value of technology investments by facilitating a shift from IT-led to business-led digital leadership, with SCP leaders taking ownership of multidisciplinary teams to advance business operations, channels and products.
“A sound data governance strategy supports advanced technologies, such as composite AI, while also facilitating collaboration throughout the supply chain technology ecosystem,” said Dawkins. “Without attention to data governance, SCP leaders will likely struggle to achieve their expected ROI on key technology investments.”
The British logistics robot vendor Dexory this week said it has raised $80 million in venture funding to support an expansion of its artificial intelligence (AI) powered features, grow its global team, and accelerate the deployment of its autonomous robots.
A “significant focus” continues to be on expanding across the U.S. market, where Dexory is live with customers in seven states and last month opened a U.S. headquarters in Nashville. The Series B will also enhance development and production facilities at its UK headquarters, the firm said.
The “series B” funding round was led by DTCP, with participation from Latitude Ventures, Wave-X and Bootstrap Europe, along with existing investors Atomico, Lakestar, Capnamic, and several angels from the logistics industry. With the close of the round, Dexory has now raised $120 million over the past three years.
Dexory says its product, DexoryView, provides real-time visibility across warehouses of any size through its autonomous mobile robots and AI. The rolling bots use sensor and image data and continuous data collection to perform rapid warehouse scans and create digital twins of warehouse spaces, allowing for optimized performance and future scenario simulations.
Originally announced in September, the move will allow Deutsche Bahn to “fully focus on restructuring the rail infrastructure in Germany and providing climate-friendly passenger and freight transport operations in Germany and Europe,” Werner Gatzer, Chairman of the DB Supervisory Board, said in a release.
For its purchase price, DSV gains an organization with around 72,700 employees at over 1,850 locations. The new owner says it plans to investment around one billion euros in coming years to promote additional growth in German operations. Together, DSV and Schenker will have a combined workforce of approximately 147,000 employees in more than 90 countries, earning pro forma revenue of approximately $43.3 billion (based on 2023 numbers), DSV said.
After removing that unit, Deutsche Bahn retains its core business called the “Systemverbund Bahn,” which includes passenger transport activities in Germany, rail freight activities, operational service units, and railroad infrastructure companies. The DB Group, headquartered in Berlin, employs around 340,000 people.
“We have set clear goals to structurally modernize Deutsche Bahn in the areas of infrastructure, operations and profitability and focus on the core business. The proceeds from the sale will significantly reduce DB’s debt and thus make an important contribution to the financial stability of the DB Group. At the same time, DB Schenker will gain a strong strategic owner in DSV,” Deutsche Bahn CEO Richard Lutz said in a release.
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
Serious inland flooding and widespread power outages are likely to sweep across Florida and other Southeast states in coming days with the arrival of Hurricane Helene, which is now predicted to make landfall Thursday evening along Florida’s northwest coast as a major hurricane, according to the National Oceanic and Atmospheric Administration (NOAA).
While the most catastrophic landfall impact is expected in the sparsely-population Big Bend area of Florida, it’s not only sea-front cities that are at risk. Since Helene is an “unusually large storm,” its flooding, rainfall, and high winds won’t be limited only to the Gulf Coast, but are expected to travel hundreds of miles inland, the weather service said. Heavy rainfall is expected to begin in the region even before the storm comes ashore, and the wet conditions will continue to move northward into the southern Appalachians region through Friday, dumping storm total rainfall amounts of up to 18 inches. Specifically, the major flood risk includes the urban areas around Tallahassee, metro Atlanta, and western North Carolina.
In addition to its human toll, the storm could exert serious business impacts, according to the supply chain mapping and monitoring firm Resilinc. Those will be largely triggered by significant flooding, which could halt oil operations, force mandatory evacuations, restrict ports, and disrupt air traffic.
While the storm’s track is currently forecast to miss the critical ports of Miami and New Orleans, it could still hurt operations throughout the Southeast agricultural belt, which produces products like soybeans, cotton, peanuts, corn, and tobacco, according to Everstream Analytics.
That widespread footprint could also hinder supply chain and logistics flows along stretches of interstate highways I-10 and I-75 and on regional rail lines operated by Norfolk Southern and CSX. And Hurricane Helene could also likely impact business operations by unleashing power outages, deep flooding, and wind damage in northern Florida portions of Georgia, Everstream Analytics said.
Before the storm had even touched Florida soil, recovery efforts were already being launched by humanitarian aid group the American Logistics Aid Network (ALAN). In a statement on Wednesday, the group said it is urging residents in the storm's path across the Southeast to heed evacuation notices and safety advisories, and reminding members of the logistics community that their post-storm help could be needed soon. The group will continue to update its Disaster Micro-Site with Hurricane Helene resources and with requests for donated logistics assistance, most of which will start arriving within 24 to 72 hours after the storm’s initial landfall, ALAN said.