A McDonald’s location in Guangzhou, China. Credit: kit lau/Shutterstock.com.

McDonald’s China has teamed up with Cainiao, the logistics arm of the Alibaba Group, to enhance supply chain efficiency, the South China Morning Post has reported.  

The partnership will integrate technologies such as radio frequency identification (RFID) to expedite McDonald’s processes from manufacture to point-of-sale. 

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McDonald’s China will use Cainiao’s RFID technology in its supply chain via built-in tags on food packaging which will enable the tracking of products from factories to restaurants.

The initiative is expected to improve inventory management and reduce the time required for stocktaking. 

RFID is a third-generation identification technology, following bar codes and QR codes. It operates by transmitting data through radio frequency signals from a microchip within the tag. 

The RFID system was tested by the two companies, and the results showed that participating restaurants could complete a daily stocktake in as little as 15 minutes instead of an hour. 

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The accuracy of inventory data also improved by 30%. 

To optimise the supply chain for fast food restaurants, McDonald’s and Cainiao will further investigate digitalisation and automation technologies. 

McDonald’s China has 5,500 locations and employs 200,000 people to serve more than a billion customers annually.  

This partnership comes at a time when the logistics company is planning to raise $1bn 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 agreed to acquire investment firm Carlyle’s minority stake in the partnership that operates McDonald’s business in mainland China, Hong Kong and Macau. 

McDonald’s will increase its stake from 20% to 48% via the deal. The remaining 52% stake will be held by CITIC Capital, a Chinese alternate investor. 

The transaction will close in the first quarter of 2024.