Anjuman-I-Islams

Allana Institute of Management

Studies
Year: 2015-16

Operations Management in
McDonalds

Name: Siddhant Mandu

Roll no: 26
F.Y.M.M.S
DIV: A

INTRODUCTION TO OPERATIONS
MANAGEMENT

Operations management is an important area of management concerned with designing,

organizing, controlling, scheduling and overseeing the production of goods and services
and redesigning and reorganizing business operations. It certainly involves the tactics. It
focuses on production and distribution of goods and services efficiently and effectively.
Operations Management is relating with process of management, which transform inputs
like raw materials etc into outputs as in finished goods (McNeal, 2004).
Operations management programs generally include instruction in principles
general management, production control, plant management, industrial labor relations,
equipment maintenance management, manufacturing and production systems, skilled
trades supervisions, cost control, productivity analysis, material planning, systems analysis
and strategic manufacturing policy (Jacobs,2004).
According to Barnett (1996), operation is perfectly concerned with the effective
use of the organization resources. Then turn the resources into finished goods and a
service that must satisfy customer wants in a cost effective and time efficient way.
To understand the full theme of operation management we choose the corporate
entity McDonalds Corporations. In which adopting the best operational strategy and tools
to make a product for the customer in such way that would make the customer maximum
satisfied. Experts also try to mark the criteria used by customer and evaluating the specific
product satisfaction. By Two folds, these are order winning and order qualifying criteria.
Applying so these criteria a company defines its operational tasks, analyze the strategies
and procedures adopted to make criteria that all the operational tasks and strategies are
efficiently carried out (McNeal, 2004).
McDonalds Introduction
McDonalds corporation is the worlds largest and most famous chain of fast food
restaurants. In 1940, the fast food restaurant started by Mr. Ray Kroc in San Bernardino,
California. In 1948, the main principals of fast food restaurant are operating successfully in
all over the world. It serves around 65 million people per day in the health conscious food
standard the fast food industry is growing fatly with a relationship of over all organization
strategy McDonalds restaurants are conducting a number operations around the globe.

Statement of
McDonalds Operations Strategy
To provide unmatched consistency in operations in
support of high product quality. This must be
accomplished with adequate speed, low cost, and
process innovation to accommodate changes in
consumer tastes.
From the statement of McDonalds operations
strategy, it is clear that both consistent and highperformance qualities are considered order winners,
while speed, cost, and innovation are considered
order qualifiers.

McDonalds Operations Strategy

Dimension
Capacity

Facilities

Process
Technology

Vertical
Integration

Workforce

Organization
Control
Systems

Strategy
Growth as needed through additional stores - but
capacity added carefully
Well-utilized - franchisee's well-being depends on it
being used heavily
Distributed facilities, each facility being very similar to
the next, all focused around the same menu - although
the uniformity is beginning to change
High degree of process understanding, emphasis on
"fool-proof" processes
A leader in the technology of fast-food delivery
Partnership arrangement
Long-term relationship with suppliers to promote
innovation and quality improvement
Franchisees: well-trained, carefully selected,
entrepreneurs
Operators: high-turnover, cheap
Guidelines provided by corporation, but franchisees
push to locally optimize
Centralized buying
Bulk contracts
"Push" system for basic supplies, "pull" system day-today in the restaurants

Evaluation of the operations strategy:

Internal and external consistency - Looking at the operations

strategy along the seven dimensions, they all support the

operations mission and the business strategy from the previous
page.
Contribution to competitive advantage - Systemic strategy

creates unmatched consistency in operations that has been

difficult to imitate.
4

Operations Management Methods

At McDonalds Corporation
Business
Operations management is a keyword or method that is used to convert the inputs like
materials, labor, proprietary information, etc into outputs like value-added products, services,
goods, etc. The method includes a forecasting, capacity planning, scheduling, managing
inventories, assuring quality, motivating employees, control of activity, and many more. In
other words, it is 'a field of study that focuses on the effective planning , scheduling, use, and
control of a manufacturing or service organization through the study of concepts from design
engineering, industrial engineering, and management information systems, quality
management, production management, accounting, and other functions as the affect the
operation.' (APICS Dictionary, 1995)
Operations management concerns making the most efficient use of whatever resources an
organization has so as to provide the finished goods or services that its customer need in a
timely and cost effective manner. (Barnett,1996).
For better organization, operations management relating with the strategy of the organization
plays a vital role. However, in this coursework, we will demonstrate the relationship between
the operations management and the strategy of the organization with the help of a corporate
entity.

Problems in McDonald's Restaurant

There are many problems in McDonald's restaurant of Woolwich among which some are
listed below:
Improper product planning.
Cannot respond quickly to demands in peak hours due to which the customers go to Nandos
located next door. Short of ingredients is always a major problem.
No parking facility for the customers.
The Woolwich market is closed by 5 p.m. daily. Hence, the customer will decrease gradually
after that period of time.
Since there is no facility for drive thru, it is the major problem for those customers who have
no waiting time.
As there is no facility for drive thru, most of the customers visiting the restaurant eat in.
Hardly 30 customers can eat in at the same time in rush hours.

The restaurant has always issue in supply chain and inventory management due to which
there is always shortage in shock. The problem may be due to inappropriate ordering or
miscalculation of stock.
McDonald's restaurant use batch processing where numbers of sandwiches are made at the
same time with the same condiments. If a customer wants, say, a hamburger without onions,
he or she has to wait for a new batch of patties to be grilled.

Product Planning
Every company should introduce new products. New products development shapes the
company's future as well as gives a new taste to the customer. A company can add new
products through attainment or promotion. Product planning is just a systematic decision
making in all aspects of the development and management of a firm products. A product is
anything that can be presented to a market to satisfy a want or need.
Keeping on mind the exact utilization of the product through product planning, McDonald's
Restaurant should keep on adding new products to its menu so as to accumulate the needs
and choices of the customers which are persistently changing. For instance, the increasing
liking of consumers towards healthy food made the restaurant add healthier food items to its
menu. On the other hand, depending upon the season, it has to add new products for
different seasons, for example hot coffee in winter and milkshakes in summer.

Location Planning
Another most important role that every organization must focus on is location planning.
Success or failure actually depends on the location where it is situated. So, location planning
plays a vital role for any organization. Better location planning leads the organization in
success and obviously worse location planning leads the organization in failure. Therefore, it
is an essential significant success factors for any organization. Thus, it is very important for
businesses to choose an ideal location.
McDonalds Restaurants also have to choose their location in such a way that maximum
customers visit their restaurants and have full facilities of parking. Some customers may
have no waiting time to eat in, so drive thru should be introduced. Moreover, it also prefers
locations that are suitable and have plenty space for raw material delivery.

Process Design
Process planning can be defined as the systematic method by which a product is to be
manufactured economically and competitively. It consists of developing, selecting and
specifying processes, machine tools and other equipment to convert raw material into

finished and assembled products. After developing the product, the businesses have to
develop proper processes planning for making and supporting the product. Process planning
begins after the product design is completed.
In McDonald's restaurant, the operations manager should develop and establishes the
process of cooking food items so that food is prepared using that method which helps them
to maintain the speed and the quality of the food. Moreover, it should also design processes
so that the health, safety and hygiene issues are taken into consideration. Also the managers
should keep on introducing latest equipments with the advancement of technology so as to
bring pace, perfection and quality in the product.

Product service Design

product is the blueprint for arrangement of facility to provide working, service and reception,
and storage and administrative areas. Traditional methods are used to design the layout.
These methods include templates, scale plans, string diagrams, and travel charting as they
have been proved as low-cost methods of achieving either optimal or near optimal plans.
Care must be taken by organization when designing layout because poor may lead the
organization to reduce the overall capacity and overall productivity.
In McDonald's Restaurant also, product designing is a very important operation. Due to the
nature of the kitchen space, a good layout design should be carried out. Operations manager
must have good knowledge about what equipment where to keep. So, a proper layout of the
equipments in the kitchen is very essential to ensure preparation of quality food in less time.
It should design its layout keeping in mind the health and safety issues with minimal
supervision. Costs of productions also rely on the layout.

Supply Chain Management

A supply chain is the flow of processes of moving goods from the customer order through the
raw materials stage, supply, production, and distribution of products to the customer. All
organizations have supply chains of varying degrees, depending upon the size of the
organization and the type of product manufactured. Managing the chain of actions in the
process of supply chain is called as supply chain management. Effective management must
take into account coordinating all the different pieces of this chain as quickly as possible
without losing any of the quality or customer satisfaction, while still keeping costs down.
In McDonald's also have certain suppliers who supply them the with the raw materials like
buns, beef, patties, ketchup, sauce, mayonnaise, disposable cups, food packaging materials,
etc. Therefore, it has to manage its relationship in an effective manner so as to get the raw
materials at the right time, in proper quantity, and at acceptable cost.

Inventory Management
Inventory management is another important operation of any organization. Inventory
management is the process of controlling the stocks needed to run any organization. It
involves choosing the best method of inventory control. While choosing the method of
inventory control, the organizations must keep in mind the expected demands of the
products.
McDonald's should follow the First-In-First-Out rules in the process of controlling the
inventory. This is because most of the inventory consists of fragile items. Delivery of
inventory happens twice or more times a week depending on the business of the restaurant.
In addition, the stock kept in freezer with proper packaging so as to ensure freshness of the
food items. All this activities comes under inventory management of the organization.

Quality Management
Whether for profit, non-profit, or an organization like health-care maintenance organization,
quality management is the single most important process in any organization for maintaining
the quality of the goods and services. It also helps the organization to keep up the reputation
of the organization. To manage and maintain the quality of the products and services, the
organization may adopt a number of practices like quality checks procedure etc.
Quality in McDonald Restaurant is very important because of two reasons. Firstly because of
the legal requirements of the quality of food served. Secondly, to keep up the good reputation
which McDonalds restaurants have earned over the years. Quality of food can be very
difficult to maintain and therefore, McDonald's restaurant carry on a number of practices to
make sure that quality food is served. Some of these practices are the visits by the food
inspector from the head office, supervisor checks etc.

Conclusion:
Therefore we conclude that operations management is very important for any organizations
as they have a relationship with the overall strategy of the organization. Operations
management contributes to the strategy and therefore helps the organization to gain
competitive advantage. For instance, process planning can help the organization reduce cost
and gain cost advantages and therefore gain competitive advantage. Therefore the
organizations must effectively manage the operations of the business as it has a massive
effect on the strategy of the organization.