New decision technology could optimize supply chain for fast food giant

The McDonald's brand was built on efficiency, and the company has for decades been known for its elite supply chain management, having placed on Gartner's Supply Chain Top 25 several  years running. But with the recent acquisition of a personalization and decision logic technology company, the Golden Arches appears poised to optimize its supply chain even further.

In March, the McDonald's Corporation announced the purchase of Dynamic Yield Ltd., a decision technology company based in New York and Tel Aviv. The global fast food chain stated it would use the technology to provide a more personalized customer experience by automatically adjusting outdoor digital Drive Thru menu displays to show certain food items based on variables such as time of day, weather, current restaurant traffic and trending items. The tech could also suggest additional items based on a customer's order, like recommending bottled water with a salad order or upselling a sandwich to a combo meal.

McDonald's will be one of the first companies to integrate decision technology into the customer point of sale at a brick and mortar location.

"Technology is a critical element of our Velocity Growth Plan, enhancing the experience for our customers by providing greater convenience on their terms," Steve Easterbrook, McDonald's President and Chief Executive Officer, said in a statement. "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."

In one sense, this new development may appear to be simply a more modern, automated way of asking, "Would you like fries with that?" Yet the company is taking it to a whole new level of sophistication by using real-time data to drive the upselling process, and finding a way to improve supply chain management as well.

The data can not only help McDonald's better analyze and predict customer buying habits, but could also nudge consumers in the direction of certain items, based on inventory. For example, if a location is running low on grilled chicken, it could remove that option from the menu and instead prominently feature hamburgers or something else that's in high supply.

By using artificial intelligence to both predict and influence a customer's order, McDonald's could potentially generate millions in new revenue and make up for the traffic declines it has seen in recent years.

"It allows for an integrated supply chain that starts from customer's decisions and goes all the way to operational, strategy and tactical decisions," Ohio University professor Ehsan Ardjmand told Supply Chain Dive. "It could mean lower operational costs, lower lost sales and better planning."