Introduction to the Company
Two brothers Richard and Maurice made a food chain in 1940 by the name of McDonalds. In start they had twenty five food items. But they noticed that there large portion of profit comes from the sale of their hamburgers, so they decided to limit their food items to the burgers, shakes, apple pie, and soft drinks and french-fries. Now McDonalds has many branches in many parts of the country. They have 32000 branches in 119 countries and have approximately 1.7M employees. McDonalds headquarter is placed in Oak Brook, Illinois. They have social responsibility and ethical policies. The most attracting feature of the company is that they monitor all the activities of staff and customers through security camera systems to ensure safety of both. It is the largest food chain of the world and on the nutritionist point of view it is considered the best food company practicing heath and cleanliness rules. About 15% of their branches are operated and owned by McDonalds itself. Other is operated as franchises and joint ventures.
The company has its strategies and policies that are fit with its goals and objectives. We are going to discuss company’s operational management with respect to its strategies.
Performance objectives means that how organizational structure of McDonalds affect the performance of company employees so that goals and objectives of the company can’t be met. McDonalds has five performance objectives (McDonalds)
The quality of food items of McDonalds is very good. To keep quality good periodic inspections are done. To keep quality control on food items all the staff is well trained. Due to standardization in whole process leads towards the correspondence. It is the biggest strength of this company that quality of their all food items on all branches is kept same. At McDonalds people experiences are always high as compared to their expectation level but to quality improvement the company has minimum waste of time as well as the material. Their good quality level leads towards the increased revenue.
McDonalds keep their cost low while maintain the quality of goods. This gives the company a competitive advantage over the other food chains. Company applies two pricing strategies. One is that they try to keep their prices low to increase sale level .secondly they try to keep prices same to their competitors and in return they earn high profit.
McDonalds try to keep flexibility in their operations. Flexibility in food and product leads towards high variation and customization that is a success factor for the company. They allow their franchise to introduce food items that fit according to the culture of location where they are operating.
Speed means the time involved between the order taking from the customers and providing service. Speed includes both internal and external speed .in internal speed means reducing the time between the operating processes. And external speed means reducing the service producing time.
Dependability means company gives independency to the employees that they can serve the customers according to their demand. Employees try to give orders on time and they have reliable machinery and process. Dependability gives cost and money saving and it leads towards the flexibility.
It is necessary that all the objectives of performance are kept in balance for efficient performance.
Capacity Planning and Stock Management
Capacity planning means to determine the capacity of the production that is needed to organization to meet the demand of its product. Capacity means maximum work that is needed by organization to complete in specific time duration. In capacity planning of McDonalds it is kept necessarily that each product has unique recipe and process of product production should be time efficient. In McDonalds economies of scale is applied that result in low cost per unit.
McDonalds has a strategy of forecasting the increased demand of customers. And in high demand condition they boost their capacity to fulfill the demands of customer. Hence they have very good planning to balance between the supply and demand. McDonalds also apply lead strategy. They buy inventory 2 days before fried inventory e days before and cold drinks inventory 15 days before. Capacity planning includes estimation of tool, labor, machines requirements (Stevenson and Hojati)
Stock Management Process
Stock management means estimation of the stock mix to meet demand of the customers. The problem of stock management is actually that how to maintain operations so that there will be minimum waist and how customer needs will be met. Now McDonalds is using centralized stock management procedures. Good communication is found between the individual restaurants and supply planning restaurant (Zanoni and Grubbstrom)
Types of Stocks at McDonalds
Raw material includes following three sections (McDonalds)
- Ambient(items that are stored on room temperature)
These are supplied to different restaurants .work in progress means stock that has to be converted into finished goods. Finished goods are those that are now ready for use. They uses the first out first in technique (FIFO).at McDonalds communication channel is web-based.
Benefits of Stock Management
Good stock management actually gives benefits to the customers as well as the employees. They always try to avoid running out of all type of stocks. There is benefit of time saving, cost saving as well as the minimization of emergencies deliveries. Stocks are balanced at moderate level neither too much stock nor less stock than needs. There is efficient use of all types of materials. It is ensured that the time for order delivery should be minimized. Feedback reviews tells about the truth that their customer are satisfied with their services.
Process planning means the method through which product is produced systematically and economically. It includes selection, development and specifies procedures that are used to make final products. McDonalds develop the process of making all the goods readily available to their customer. They properly list down all the procedures and then make such a plan that will be efficient both in time perspective as well as in cost saving perspective. They always try to use methodology of new technology and advance methods are used that will cost and time effective. McDonalds try to make their process transparent and visible to their customers.
Followings are the sequences that are part of process planning.
- Transformational process
Raw material goods are collected and then pass them from the transformational process and finally output will produce in form of finished goods.
Process selection means that which type of process will be used that will be cost saving and time saving. At McDonalds the goods are precooked and when an order comes then it is converted to the finished goods. The whole process begins when the customer put his/her order. Then order is passed to the kitchen employees where they prepare the customized order and then final goods are served to the customer. It is specially take into the account that what is the length of time between the order placement and order serving. Time is managed efficiently this is their best success factor of company. All the staff is trained according to the need of the business.
Service process design at McDonalds
McDonalds is considered a fast food chain that is providing goods as well as the services .so it is considered product service bundle .at McDonalds, customer is facilitated and served very efficiently. The Company makes its customers happy and satisfied. Company is serving a huge mess of community and this is a plus point of their company that about 98% of their customers are satisfied with their products and services. Plus point of the McDonalds is that they use buildings and technology that satisfy their customers. They are using web based technology for order taking and automatic drink maker that facilitates their customers (Stevenson and Hojati)
Facilities at McDonalds
McDonalds provide a large number of facilities to its customers and workers. They have stat of art buildings, air-conditioning, plant and machinery that are advance in its working. They give options of take away or dine in option. They also give facility of home delivery orders. Layout means blueprint of all arrangements that involve service, product, raw material storage and administrations. McDonald’s layout design is very effective. The company layout design leads towards the efficient management of all the employees and customer satisfaction. Cost of production is reduced by using this efficient facility layout design. And this good layout design is success factor of the company (McDonalds)
Every business needs a proper location planning. McDonalds do such planning that where they open their franchise. Company mostly prefers locations that are near to many offices, schools or universities so that at lunch time people can easily access to their favorite restaurant. They also provide facility of proper and easy parking. Location planning for McDonalds leads a franchise towards success (Domschke and Krispin)
Factors of Location Planning
Following are some factors that are considered when location planning of McDonalds is being done.
- Labor availability
- Transportation facility
- Customer proximity
- Large area for parking and children fun land.
Quality control means revision of all factors that are involved in process. It is noticed whether quality is maintained in all the process that is involved in production. For the success of any business quality control is considered a big success factor. At McDonalds it is assured that their quality will be remain up to mark. This is due to two main reasons .one is due to legal issues and secondly to maintain reputation of McDonalds good (Stevenson and Hojati)
At McDonalds it is ensured that not only the quality is up to the mark but the way they achieve the quality like all process of planning, control and production is also meeting the criteria of quality. For customer satisfaction it is very necessary that their quality control and management will be good than their competitors. There are five factors of quality management that are considered very important at McDonalds (Powell)
- Effective control
- Give importance to customer requirement
- Improvement in whole process
- Culture of quality improvement
- Understanding and commitment of employees
It is very necessary for the success of the business that there will be effective parameters for evaluation of the performance of overall business.
At McDonalds first priority is given to the customer demand. What the customer demand from tem is very important point for consideration and the business who understand their customer needs will be successful as McDonalds do.
Improvement in Whole Process
At McDonalds it is assured that there is continuous and fast improvement in the whole process of production. The company meet criteria of success that keep itself up to date .and as the word is changing very rapidly and new technologies and equipment’s are inventing day by day McDonalds try to keep their business and production process competent for them to meet demands of customers.
Culture of Quality Improvement
At McDonalds it is assured that culture of business is developed where employees can easily give their feedback .and they feel themselves as an important part of the business.
Commitment of Employees
At McDonalds it is make sure that all the policies regarding quality management are known by its employees. All the strategies and goals of the company are well known and understood by the customers. This is a big factor at McDonalds that their employees are satisfied with their jobs and loyal with your organization.
Critics on McDonalds
The big criticism on McDonalds is that they are violating many environmental laws and regulations. They are using lots of packaging that are unnecessary that cause pollution in society. It is also said McDonalds are giving low wage rate to their employees at some areas of their business. Customers are more than the working staff that put a lot of work pressure on employees and they have to do extra work at low wage. Another thing about McDonalds that is criticized by many people is that they are focusing on opening of many new branches sometime they even don’t research about demand of their product on that spot. Before opening new branch it is necessary they properly do research on demand of customers located near to that location.
Final comments about McDonalds are very good. They are providing good quality of fast food items. Food at McDonalds meets the criteria of all hygienic issues. All the process takes place before the eyes of customers that satisfy many customer health regarding issues. They are using up to date technologies that are helpful in lowering their overall cost of production. They offer good food at such prices that are affordable to many customers. All the operations regarding planning, production, marketing as well as financial process is up to the mark. They are providing healthy good food. They have good management about waist material. With the passage of time McDonalds are increasing the list of their menu that is a good thing. The quality of their shakes and apple pie are very good. These two products are giving them competitive edge for business. The time management of McDonalds is very good. They have very well behaved and efficient staff. No doubt, currently McDonalds are giving very good services far better than their competitors.
- Domschke, Wolfgang, and Gabriela Krispin. "Location and layout planning."Operations-Research-Spektrum 19.3 (1997): 181-194.
- McDonalds. "Stock Control at McDonalds." 2008.
- Powell, Thomas C. "Total quality management as competitive advantage: a review and empirical study." Strategic management journal 16.1 (1995): 15-37.
- Stevenson, William J., and Mehran Hojati. Operations management. Vol. 8. Boston: McGraw-Hill/Irwin, 2007.
- Zanoni, Simone, and Robert W. Grubbstrom*. "A note on an industrial strategy for stock management in supply chains: modelling and performance evaluation."International Journal of Production Research 42.20 (2004): 4421-4426.