Micro Introduction
Micro Introduction
Every current business entity has associate degree of operation management in its business. Which
means, that is the soul of the company and related to its daily actions. There are different aspects in
connection with the operation actions that can be carried inside the company. These phases can be
presented from the receipt of raw materials to production and at the end distribution and providing the
finish good to the client and consumer. In order for these operations to be set in process, there should
be a well-defined layout that map the actions that can be updated and noticed on all time so these
actions can be invested in more effective and efficient way. This comes underneath the responsibility of
operations management. Operations management is related to the success and failure inside the
business entity, he or she should do the his best to insure all the different attributes inside the company
are connected and working in harmony to insure the ability to sustain the business. Managing the
operations that cause the assembly of products and services required by the shoppers. Operations
management will mark that distinction between success and failure of any given organization reckoning
on however effective it's set. With the proper flow in operations management the company will be able
to reduce of prices when working according to a set plan and proper flow of communication, other than
cost reduction the proper operation management will lead to increase efficiency and the effectiveness
of the whole work flow, and thus this will lead to high level of client satisfaction and acceptance to the
products. While on the opposite hand, a negative practice of operations management will lead to
unpleasant sequences that will propose a major negative effect on the whole operation and
performance in the corporate, which result in unpredicted losses that can affect the stainability of the
whole business. Since the recent past, operations management has been integrated deeply in to the
business and the organizational practice playing a vital role in the whole strategy of the company. when
the operational management is integrated to the strategy management of the company different
decision-making tools will be set so the organization can gain more competitive advantage over the
other company available in the market.
The aim of operations management is to form optimum use of the resource that a corporation needs to
give finished product and services needed within the market in a very timely and efficient manner. This
report seeks to research operations that play a significant role within the overall success of a
corporation. the main focus of the report is on building business that features a world recognition; the
McDonalds. The report examines the operation of managing stock, production to the sale of ultimate
product that meet the client desires. Moreover, it relates the operations management activities with the
strategy of the corporate.
McDonald is considered to be one of the biggest chains of fast food for hamburger. Over 58 million
customers serve daily worldwide by McDonalds. The McDonald’s place is managed by a franchise,
associate affiliate or the corporation itself. The company’s revenues return from rent, royalties, and
charges paid by the franchisees, still as sales in company-operated restaurants. The revenues grew 27 %
upon the 3 years ending in 2007 to almost 22.8 billion dollars, which provided a 9% growth in operative
financial gain to $ 3.9 billion.
The main product delivered to the customers at McDonalds are hamburgers, cheeseburgers, chicken
merchandise, French fries, breakfast meals, soft drinks, milk shakes and desserts. The corporate alters its
menu with salads, wraps and fruit in response of increase of weight trends in western nations and within
the face of criticism over the physiological condition of its merchandise.
The company has taken effective measures within the past towards making certain that its customers,
business partners, suppliers and also the general public is provided a high quality services and product.
Currently, McDonalds is developing a property and reliable supply chain that connect its suppliers and
distributors to confirm that the business flows uninterrupted. all told its restaurants across the world,
the main key operation in the global location are all link together and with the general strategy of the
organization. a number of these operations include; product development, product planning, managing
stock, and quality management. As already mentioned before, this report focuses on the managing stock
to fulfill the client wants. This directly falls beneath the inventory management. Inventory management
could be an essential operation of McDonald’s as a result of it's what makes the eating place meet the
expected demand for the product. however well the business manages stock determines the degree of
sales the eating place makes on any given operating day and therefore the general profit.
McDonald’s has set its performance objectives in a way to insure the sustainability and development of
the business in order to maintain its position as the international leader in the field of fast food business.
In order to satisfy its objectives, the operation inside the business is being split into different
departments where every one of these departments is set to have a particular duty to play within the
picture to meeting the set goals that are already set by the operation of the company. There is a major
connection between the area of performance customer satisfaction since these performance functions
are the tools that the restaurant or the company depend on in order to insure the proper service of each
customer and answering the customers needs.
Performance Chart:
Speed
Speed refers to the time taken for a response to be obtained. Speed is vital as a result of it helps to reply
quickly to customers thereby support them to obtain the service or product they ordered. The speed of
serving customers will verify whether or not or not they'll come to the business again. Over the years,
McDonald’s has formed the ‘drive-thru’ policy wherever it solely takes ninety seconds for a product to
be served to the client either on the eating place table or over the counter if the acquisition could be a
‘take away.’ it's the speed of service delivery that creates McDonald’s to be the leading fast food eating
place within the town. this can be in line with the company’s strategy of client satisfaction through the
speed of response.
Cost
Cost reduction is one of the major attributes among the key objectives of the fast food service place.
McDonald’s could be a master once it involves reducing the value of operations within the business. The
fast food market could be an extremely competitive market that companies reduce its price to sell the
product at very low prices but still are able to generate profit. so as to remain within the business, the
restaurant has place in additional effort in reducing the value of production in order that it sells the
merchandise at the lower costs however still create profits. The tools of cost leadership were set by the
company in order to insure to be a major weapon in facing competitors creating serious losses below
the conventional market prices. McDonald’s has utilized over the years more and more cost reduction
tools to become a leader in cost effected and to realize a competitive advantage in markets it operates.
Value reduction is collected through different solutions and optimization of duties such as the increase
of automation, improved worker productivity still as having reliable suppliers.
Quality
McDonald’s operational policy puts quality initial in its list of performance objectives. Quality refers to
the agreement of a product or service to its specifications of production. The restaurant works on a
belief that the purchasers of the target quality of a product should be satisfied with these choice of
purchasing and not to complain about anything. If customers don't have anything to complain then,
they'll undoubtedly be happy. A cheerful client is probably going to consume and try the same service or
product once more. This successively brings additional revenue to the fast food restaurant. Concerning
operations, the restaurant ensures that the standard of processes and activities is all time high and thus
no area for mistakes. the belief here is that mistakes compromise the standard of a product still as
increasing the value of production. Therefore, the eating place cannot permit them to happen.
Flexibility
In the context of McDonald’s business model, flexibility means that the power to do a certain change
that is related to the operation. In McDonald’s, there are different forms of flexibility. The primary one is
combine flexibility wherever associate degree operation produces a good kind of product from that the
purchasers will select from. The second is that the product/service flexibility. Here, the place comes up
with new concepts that are integrated into the creating of the food and meals that customers realize
engaging. The third sort is that the volume flexibility that the restaurant uses in order to adjusts its
output to a level where it is able to cope up with the surprising changes in demand. All types of flexibility
area unit undertaken severally. In is vital to notice that flexibility at McDonald’s will increase the speed
of service delivery thereby saving time and cash.
Insurance Claim:
Dependability
Dependability refers to the act of consumers receiving their merchandise or services on time. within the
fast food business, reliability is often another advantage to the business operations as a result of
customers don’t prefer to be inconvenienced. Different number of them are related to the time
constraint and, therefore, delaying a meal order will cause wide irritation. Also Dependability is directly
link to have many effect on the volumes of sales as a result of customers perpetually come to the
restaurant knowing that the food or drink are going to be delivered to them quickly and thus don't have
any abundant time to waste.
McDonald’s Corporation’s operations management (OM) supports the company’s position because the
largest fast food chain within the world. There are around 10 sections inside McDonalds for operations
management represent the varied strategic areas of operations that has got to be coordinated for
optimum productivity and performance. McDonald’s international business entails a good sort of
strategic wants for its operations management, like strategic HRM and supply chain development.
McDonald’s also should try to address the impacts of the competition that can be available in the Fast
food fields such competitors are companies like Subway, KFC and Wendy’s. To do so, McDonald’s should
apply appropriate policies and methods all told the ten call areas of operations management.
Mcdonlads still maintain a proper procedures and strategies to address the following strategic decisions
under the arm of its operations managed in order to develop more and more sales, by the increase in
productivity of its products and the performance in its team and to maintain its place as the fast food
leader in the restaurant industry all over the globe.
The first step in all the decision areas is the start in the design of the product and Services. McDonald’s
goal during this strategic stage is to produce cheap product, with competitive price against the other
companies in the market. As such, the serving sizes and costs of its product are supported the foremost
common client expectations. However, some McDonald’s product is reduced in size to form them more
cost-effective. The second step will be Quality Management. Which is presented by the corporate aims
to maximize product quality inside different constraints, like the cost of the product and operation and
the price value of the purchase product. McDonald’s uses a mechanical system methodology to take
care of product quality consistency. Consistency satisfies consumers’ expectations concerning
McDonald’s and its whole during this strategic decision call over the area of operations management.
The third factor will be the process and capacity design. Which is represented by the McDonald’s
method and capability style is focused on the area of cost-minimization that supports the company’s
methods. This strategic call of operations management focuses on maintaining concentration on
optimizing of process to be ore effect and efficient and on the same time to have the adequate
capability to meet market demand. At McDonald’s, the assembly line methodology maximizes efficient
and capability utilization. Following with the Location Strategy, McDonald’s goal during this strategic
calls of operations management is to set locations in different part of the markets for optimum market
reach. McDonald’s promoting different set of locations to serve the customer which includes
restaurants, kiosks, and also the company’s web site and mobile app as venues, delivery application
were developed to match the online order system and so for the company to be always easy accessed
by its customers. Through these locations/venues, McDonald’s reaches customers in normal and on-line
ways. Followed by the Layout style and Strategy steps, in which McDonald’s uses for this call of
operations management. The strategy involves maximizing area of utilization in restaurants and kiosks,
instead of that specialize on comfort and bigness. The Job style and Human Resources are related to
McDonald’s human resource methods involve coaching for skills required within the mechanical system
in building kitchens or production areas. For this call of operations management, individual and
structure learning also are emphasized to support McDonald’s structure culture. Supply Chain
Management which is connected to the firm’s international supply chain that supports its varied
locations around the world. McDonald’s features a strategy of supply chain diversification for this call of
operations management. Such strategy involves obtaining additional suppliers from completely different
regions to scale back McDonald’s provide chain risks. The Inventory Management, in which the
McDonald’s goal for this strategic call of operations management is to attenuate inventory prices
whereas supporting building operations. the corporate doesn't directly sell product and ingredients to
its restaurants. Instead, native and regional intermediaries and distributors coordinate with McDonald’s
building managers to manage their inventory. Scheduling Is another aspect in which McDonald’s uses
company conventions for planning, supported native market conditions and laws, also as supply chain
wants for instance, the company’s strategy involves regular and seasonal schedules to deal with
fluctuations in native market demand. Thus, during this call space of operations management,
McDonald’s insure the use of flexibility in its actions and adapts to native market conditions. At the end
the company should focus on Maintenance, for that McDonald’s lets the managers or franchisees
choose maintenance service suppliers. However, for kitchen/production instrumentation, McDonald’s
Corporation provide and accept the certified/approved maintenance suppliers. Thus, the corporate
addresses this strategic call for operations management through native and company management.
Customer expectations and perceptions concerning the standard of service quality and the preparation
of the product that is sold to them confirm the extent of their satisfaction. For a client to enter the
McDonald’s building, she or he will be expecting that the standard of the products that are obtainable
available is doubtless exceptional. McDonald’s enjoys unmatched client loyalty within the alimentation
of other players in the market because of the high-quality of products that they sell. As an example, the
hygiene standards within the branches of the company and even in the kitchen are set to be of high
level and with high standards that a client creates a perception that such standards and processes make
sure that the food is top quality. The shop quality assurance managers and supervisors conduct routine
quality checks thereby eliminating any risk of poorly ready foods or drinks. Also, the shoppers can easily
measure the quality by evaluating the character of services in the middle of product.
Also The company understands the actual fact that its business depends on the client expectations and
perceptions of quality regard of the kind of meal that is request and offered and their connected
services. This explains why MacDonald’s has been within the recent past continuing to supply innovative
and new products along with different promotional offers that aimed toward the customer by increasing
their satisfaction and for the customers who are seeking new food and new taste. Development in
Quality is additionally being achieved by the periodic building of the company image wherever the
management desires diners to possess a contemporary and alluring atmosphere as they fancy their food
or drinks. As such, the visited location of McDonalds has been refurbished each within the interior and
exterior thereby making a replacement image of prime quality. Of these activities have created
McDonald’s restaurant highly visible and among the primary on the list once a client thinks of
sustenance restaurants within the world.
Quality Management
Whether the company is a profit or non-profit organization, quality management is one single crucial
endeavor that ensures that only the best and the high standard of the product and services should be
provided to the users. It helps within the strengthening of the name of the organization even within the
thick of stiff competition. Quality at McDonald’s operation is an important a part of the business due to
two main reasons. Firstly, there is the legal needs within the country that company is working mainly is
covered by the standard of food to be served to the general public. Secondly, McDonald’s strives to keep
up the hard-earned name it's enjoyed for many years. The McDonald’s place carries out some routine
quality assurance checks like making certain highest standards of hygiene are discovered at intervals and
outdoors the building. All workers are needed to be in their clean official dressing before embarking on
their daily activities. There is a number of the standard assurance practices also are used like often
attractive food inspectors and public health officers to conduct quality checks. The restaurant has used
many supervisors who have a main role, which is to check the numerous processes and activities in the
restaurant and to confirm that quality isn't compromised in any approach.
Quality management at McDonald’s has been increased with the introduction of the just-in-time (JIT)
system of operation. this suggests that the kitchen doesn't begin to cook till a client places a particular
order. The company has changed the way they used to prepare the food by the use of pre-cooking
techniques such as the hamburgers that used to be position underneath heat lamps awaiting customers
to order. That's a traditional apply in a number of different restaurants around the world and in the
business by not any McDonald’s branches. The Just in time system has been helpful to McDonald’s not
by just managing the standard of food and drinks however additionally at lowering prices as a result of
wastages accumulation.
Other factors that need to be check and examined and develop is the Supply chain inside the company.
Supply chain is the backbone of all the operation in all the Food and Beverage sector, the company tries
its best to meet the clients expectation by always provided the best quality of food and fresh taste. For
these attributes to be provided to the customer the company should have these items freshly available
in a fast way so the company can provide the fast food to the customer. For that While meeting the daily
wants of its customers, the McDonald’s struggles with keeping the costs of its product low in order that
a mean person will afford a meal in its restaurants. The client wants are dynamical with time and have
been changing over different intervals of time for that the company is forced to cope up with the
amendment in order to avoid losing out competitors and sustain in the market. The availability chain of
the McDonald is guided by the four ideals of the corporate that has quality, hygiene, services, and price
to the client.
The Structure of the Supply Chain inside the Company
The entire McDonald’s could be a franchise business. this means that the corporate ordinarily enters
into a rental agreement with the potential investors. The investors which want to be franchisees rent
the restaurant location from McDonald’s then transacting business to the McDonald’s name. This
business model adopted by McDonald’s is remarked as “three-legged stool”. As shown within the flow
chart below, the stool consists of suppliers, McDonalds and therefore the franchisees with every
representing one leg. The supplying company referred to as Keystone Distribution facilitates the flow of
provides at intervals this legged system. Over the years, the corporate has eliminated many bottlenecks
that accustomed hinder the delivery of provides on time and in needed condition.
Other main sector of operation will be the logistic service inside the company.
Like several alternative corporations that have operations around the different international and
national markets, McDonald’s doesn't handle its own logistics-related operations. it's entered into
associate agreement with another company to target its core operation. One advantage of this
arrangement is that McDonald’s relish the economical and specialized service without fear concerning
the transport connected prices and staffing. As mentioned earlier, the corporate that runs supplying
operations on behalf of McDonald’s is a major distribution company around the country its doing
business in while at the same time connected to the different network of service it can provide. the two
corporations will enter into a partnership wherever is needed so the company can deliver and transport
and ship the needed product from the domestic market or supplier, and from the international supplier
or headquarter of the company. Today, This way the companies with efficiency transports everything
from suppliers to the franchisees. Thus, the agreement plays associate integral half within the supply-
related operations for McDonald’s in all the different branches inside the company.
Since the service that is provided by the company is called Fast food it is highly important that the
company will be able to server it customer is a speedy way that is why McDonalds Undoubtedly, needs a
third-party company to handle its storage and distribution of its recent and frozen foods and raw
materials so it focuses on the core operations. However, there's conjointly a danger in outsourcing
supply activities particularly from one supplier because of the chance of losing management over logistic
operations. This explains why numerous McDonald’s restaurants together high dependency on the
different but major Distribution companies such business operations can stop when there are any
trouble or problem in how the operation is going and then the whole agreement is discontinuous within
the instance that the supplier has encounter different issues.
Other sector that are a main part of the whole operation at the company and are considered to be
partners and not only a part of the duty are the Suppliers. McDonald’s restaurant deals with completely
different suppliers from everywhere the country thereby sanctioning the business to supply a good and
high quality of product that can set to prepare the products at the company with cheap costs. for
example, having agreements with top farms and main distributors of chickens and meet offer
McDonald’s good and high quality of raw materials that can allow the production of the tasty burgers
and salads that have set MacDonald’s at the top of Fast Food chains in the world. Of course There are
also other suppliers which provide the company with different items such as plastic ware, printing,
merchandise and many other issues to insure the whole operation is developing the needed product
and services to the clients. This has been advantageous to the corporate as a result of the suppliers
deliver merchandise on time and at no additional costs. in addition, there's space for changes ought to
one provider fails to deliver the expected merchandise on time or within the rightful quality and
quantities. However, there also are demerits of managing this advanced network of the availability
chain. One is that there's significant investment of resources, time, and cash to make sure that each
operation within the offer chain goes as planned and expeditiously.
This drawing explains a bit of different information about ordering of products by the company and how
everything is being set.
The processes concerned in ensuring that there's enough stock all the time in order to satisfy the client
demands and answering to their needs of customization, will mark the distinction between profit and
loss within the Food and Beverage business. Moreover, the value of holding a lot of or an excessive
amount of stock is usually high given the very fact that much of the stock consists of product that need
special kind of storage and are product than can be ruined if stored for longer time than need.
McDonald’s has avoided such prices by use of the internal control system called Manugistics. With this
method being used, the restaurant will keep a tiny low buffer stock simply just in case demand will
increase or a brief delay during a shortage of stock is experienced. The advantage of the system,
Manugistics is that it will facilitate in prediction demand mistreatment historical information about
seasonal holidays or other kind of holidays, it can track different demand attributes presenting the
senior stock management a vision of the needs and wants of the stock. It helps the company to know
how to refill its stock and when to order the raw products. Along with a proper follow up the program
can support all the supply power inside the company and insure the ability for each branch around the
world to present finished fresh goods all the times for the customers. Forthcoming events in addition as
new promotions can be also track and studied through the software. The inventory manager uses an
easy web-based communication platform called the WebLog. Which is a net tool, that allow the
manager to read and discover if there is any stock deficiencies and order for a lot of stock. On each day,
the WebLog creates orders that area unit analyzed by the managers before a proposal is distributed
bent on the central planners which at the same time provide the ultimate call on whether or not the
stock in question ought to be delivered.
McDonald’s prides itself on delivering always the highest and the best levels of quality, service and
cleanliness to any or all of its customers in every branch around the world. The key to the continuing
success and sustainability of the Fast food business is regularly watching and functioning on the
feedback given to us by their customers. McDonald’s attempt to be a progressive market leader in every
step and for that the company always keep an open ear to and remember to listen to the guest, which is
considered to be the ambassadors of the product and services. They have recognized that complaints,
inquiries or positive feedback from customers are precious items of knowledge. When any kind of
company especially the fast food business used properly complaints it will facilitate and fine-tune the
work flow inside the business and connect with the customer to meet their wants and needs. it's these
insights that facilitate the corporate to stay moving forward. It is Equally effect and efficient to listen to
the customers coming to the stores and on the same level to be effectively managing the complaints
from customers. If the corporate isn't seen to be managing poor experiences, then discontented
customers who are unpleased by the whole product and service presented from the company can vote
to stop visiting the restaurant and eventually it can affect the business reaching a steady point where
the company can lose the business.
It is little doubt that McDonald’s branches have been facing stiff competition from alternative
restaurants around the world that are in the Fast Food businesses and thus forced to expand its vary of
menu. The menu is often divided into different classes, which is, for those customers who are already
familiar and have the experience and knowledge of what the menu contains and people that are new to
the whole McDonalds experience. Once a client walks into the McDonald’s branch, the primary stop is
that the counter wherever associate order is placed. The receiver or the person serving the client apply
2 techniques in serving the client either commercialism or suggesting technique. commercialism
technique is wherever the client is asked whether or not she or he would love an outsized portion for a
reduced price. On the opposite hand, the suggesting technique is wherever the client is asked to pay an
extra money in order to receive an additional item. The person serving the customer with the orders is
anticipated to finish the order in a small service time which is one minute. There's a typical sequence of
serving the client either over the counter or on the table. Cold drinks are usually the primary followed by
hot drinks, then fries and finally burgers. The orders are processed on the basis of “first come first
service” this basis implying that the primary client on the queue is served first, followed by the second,
and continues therein pattern.
Conclusion
McDonald’s successes over the years have come back as a results of persistent and consistent
improvement of its operations management activities and processes. though the corporate has been
facing numerous number of challenges as well as stiff and high level competition, along with negative
and unpleasant and difficult economic times, it has utilized different tools and varied ways to counter
the issues. The McDonald’s restaurants still improve in operational potency there by proving quality
product that on the far side client expectations. Also, the corporate has an efficient and well-integrated
supply chain consisting of respectable suppliers and franchisees that follow the ideals of McDonald’s
starting from quality, cleanliness, and price to the client. With all these factors combined, McDonald’s
will still keep previous the competitors in providing quality healthy product and at cheap costs.
However, the restaurants have to be compelled to minimize the price of observance the availability
chain as a result of it's taking several resources in terms of your time and cash.
Recommendations
McDonald’s spends tons of resources on operations concerning supply chain to acquire all the items
needed to insure the freshness and the development of the products. Given the actual fact that there
should be a link between the suppliers and franchisees, the corporate ought to institute a joint designing
between the distributor and these alternative parties, so value of observation these activities reduces.
this type of arrangement ensures that the corporate will very little in facilitating the flow of the provides
from the suppliers to the franchisees. This practice is thought to be more cost-efficient within the long
term agreements that are set with the supplier, as suppliers will perceive the sales forecast and normal
procedures needed for competitive business.
Since the biggest composition of the McDonald’s customers is youth, the corporate ought to invest in
promotional activities that area unit additional appealing to the youth. one in every of the explanations
is that youth have dynamic tastes and preferences, and, therefore, they might solely consume things
that they contemplate stylish. However, key attention should lean to costs, the costs as a result of if that
new product area unit oversubscribed at high prices, the purchasers would rather purchase from the
competitors.
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