Concepts of Operations Management to the Fast Food Industry
The ability of every organisation to make profit and sustain in this competitive world revolves around its competency to perform its operations accurately. Hence although the term Operations Management seems to be recently evolved. It has oriented with the industrial revolution itsef. In a lay man's language, operations management is the effective and efficient running of the various resources within an organization. The work below looks at the various theoretical concepts of operations management and how these are applied in the practical from in the various industries. It looks the interrelation between operations management and strategic objectives of an organisation. It can be rightly said that if these two concepts have to merge appropriately for a company to survive and make profit.
Operations management can be explained as providing the finest service at the lowest possible prices. This objective can only be achieved if each and every operation within the organisation is managed optimally. The various operations within an organisation that needs to be managed areÂ financial operations, capital management and human resource management. The legitimate and accurate management of these valuable resources results in successful operations management according to Stevenson 1993, Operations Management can be described as follows " management of systems and processes that create good sand/or provide services"(Â Â as cited in J.Bicheno and B.Elliot,1977,p9). A more detailed definition of operations management is given by J.Bicheno and B.Elliot 1997, " a field study that focuses on the effective planning, scheduling, use and control of a manufacturing or service organisation through the study of concepts from design engineering, industrial engineering, management information systems, quality management, production management, accounting and other functions as they affect the operations". (J.Bicheno and B.Elliot,1977,p9).According to Mahadevan, "Operations Management is a systematic approach to address all the issues pertaining to the transformation process that converts some inputsÂ Â into output that are useful and could fetch revenue for the organisation".(B.Mahadevan,2007,p5).Thus a detailed study of both the definitions states that Operations management is concerned with the accurate management of the various operation within any kind of organisation so as to maximise results by minimum use of resources. Thus for any organisation to perform successfully, it is mandatory to strictly monitor the smooth functioning of the various operations within the organisation. Thus in brief the role of operations management is toÂ transform the input into output in anÂ efficientlyÂ manner.
Â Following are some of the benefits of effective operations management:
Improves the productivity of the organization.
Â Minimizes the cost of the organizations.
Â Â Helps in forecasting the various trends within the market.
Â Â Avoids duplication of work.
Â Â Helps in intelligent use of resources.
Â Â Guides the company to provide excellent services and products.
Â Â Helps in developing solutions for the various problems faced by the organization. (B.Mahadevan,2007,p6,7) (C.Vidler, 2001, p7).
INTRODUCTION TO MCDONALD'S
Every organisation that exists in the market has a goal set that has to be achieved by it within a given frame of time. These are goals can also be called as strategic objectives. Each organisation before entering the competitive market sets its strategic objectives and also develops a strategy to achieve the same. The organisation that is being studied is a famous chain of Fast Food Restaurants, McDonald's Corporation US. It's an organisation that started in 1940's by two brothers Dick and Mac McDonald. They stared a small restaurant in California in 1940's.Another personality that completely changed the fate of this organisation is Ray Kroc's. A combined effort of all these three entrepreneurs resulted in an organisation which is one of the leading fast foodÂ restaurants. (web-1) .Some of the objectives of McDonald's Restaurant is
To cater good quality food to the customers in an environment that is benevolent andÂ Â Â Â enjoyable.
To keep their shareholders happy by providing good returns to them consistently.
Their aim is to serve food at a faster pace which has value for money and impeccable taste and quality.
They are also aim in perform their corporate social responsibilities in an effective manner.
They are also doing their duties by being an eco friendly organization.
A look at theÂ various strategic objectives it can be concluded that McDonald's has set up a defined set of objectives. They also have developed various strategies to achieve these objectives. The three features that the organisation concentrates on are quality, speed and satisfying customers. TheÂ restaurantÂ has carried out many training programmes for the crew members so as to achieve the best customer service. They also focus on theÂ ambienceÂ of theÂ restaurantÂ and put a lot of effort to maintain it. They also have special kids section in some restaurants so that the children and parents can have a quality time at one place. Cleanliness is not only maintained within the restaurant areas around the restaurant also cleaned up on a regular basis. They also perform corporate social duties judiciously. They support aÂ charity which helps the old people. McDonald's has also stopped using plastic bags and promotes the use of paper bags. They also propagate the idea of recycling.
There are many operations within the organisations. The main operations within McDonald's are
Â·Â Â Â Â Â Â Â Â Â Procurement of raw materials and machinery
Â·Â Â Â Â Â Â Â Â Â Production and Quality Maintenance
Â·Â Â Â Â Â Â Â Â Â Pricing
Â·Â Â Â Â Â Â Â Â Â Advertising and Marketing
Â·Â Â Â Â Â Â Â Â Â Customer Service
Â·Â Â Â Â Â Â Â Â Â Corporate Social Responsibilities
Procurement of raw materials and machinery:
The main strategies used by McDonald have to maintain the inventory is JIT, Just in Time. According to Modem, "JIT can be defined as a production system to produce a kind of unit needed, at the time needed and in the quantities needed" (W.Jedlicka, 2009). The idea behind this is to reduce the cost of inventory management. This also helps in providing fresh food to the customers. This stragey is successful since the mangers in the restaurants do a daily stock count at the end of the day to keep a track of the avaiable things and things that have to be ordered. This also helps to double check the sales that are performed by the restaurant. Another strategy that is used by the restaurant is the First in First out (FIFO). According to this startegy the make it a point to sell product that have arrived earlier first and then the latter ones. The whole stock management process is designed in such a manner that this principle of Just in Time and First in First Out is strictly followed.
Production and Quality Maintenance:
In this phase the raw materials used are converted into finished products that are presented to the customers. This is a very important step. The kitchen crew is trained to produce the products by following a standard protocol. Every product that is created in the McDonald's kitchen has to follow the protocol so as to maintain the standard and quality of the products. Handling the production bin is a very important task. Every item that is produced has a certain shelf life after which it is declared to be unfit for consumption. Hence the food items are produced sloley on the basis of demands. During the busy hours there is always a manger on the production bin who manages the bin. It is only during this period that food is created a little in excess based on the expected crowd of customers. This is a strategy used by the restaurant to avoid long ques and to provide fresh food at a faster pace. Another measure that is taken by the company is the use of labels. Every ingredient with the kitchen has a label on it. This label states the time by which this product should be used and when the product should be discarded. Such a system helps in maintain the quality of the food served. The company also has the program of Mystery Shopper. In this program a member from the company's head office visit's the individual restaurants as a regular customer to check the various aspects. This visit not only checks the quality of the food, it also checks the service provided to the customers, cleanliness within theÂ restaurantÂ and the overall experience in the restaurant. Thus we can see that effort is done by the individual restaurant and the company as well to maintain high standards in terms of quality of food.
The fact that McDonald's was making a good profit even during the time of recession is a clear reflection of the fact that they have a well developed pricingÂ strategy. They are one of the few restaurants that have a very well established 1£ menu as well. This pound menu not only includes only one item it has a mix of all products that can be bought. Thus it is not only cheap but also provides variety for the customers to choose from. Even theÂ regular meals are priced rightly. Hence the customers do not hesitate. Thus in short one can surely say that dining at McDonald's is not a good experience that is not too heavy on the pockets.Â
Advertising and Marketing:
McDonald's uses many channels of advertising like print media, bill boards, television advertisements and also sponsorship. Any new product that enters the menu is well advertised and marketed by the company. They create a great amount of awareness of the product that is being launched. ThusÂ attractingÂ the customers to their outlets.Â Â Vouchers are also provided to the customers. It has been noticed that this startegy of providing vouchers is one of the major attraction for the customers. They also have promotional activities. Some of the promotional activities that are done by the restaurant are providing Coca-Coal glasses with every purchase of a large meal. They also play the game of monopoly in this every product that is sold to the customer has a sticker which may either be a part of the monopoly game or will be a coupon for a free product from their menu. Another marketing strategy that is used by the company is the use of loyalty cards. This helps in compelling their customers to come back to the same place. They also use the strategy of innovation. In this there willÂ able a particular range of new products that will beÂ availableÂ for stipulated period of time. Once this time period is over they will have a newÂ product thatÂ takes it place. Hence there is something new every time a customer walks- in. This helps in retaining the customers.
This operation forms the base of the organisation. The aim of the company is to make the experience at the restaurant a unique one. This is only possible by providing excellent customer service. The company trains the newly recruited employees for providing excellent customer service. The crew members are asked to be sensitive to the needs of the customers. Although they have a protocol to treat the customers the employees are given the liberty to act according to the need of theÂ situation. Especially in the case of senior employees and mothers.Â Â The company strongly believes that only if a customer is comfortable at the restaurant will they come back. Hence all measure is taken by the store employees to make sure that the customers areÂ completelyÂ satisfied when they leave. They also have crew training programmes on a regular basis to upgrade the service and to develop new skills. Regular meetings are conducted to deal with any issues that are faced by the employees. The company also promotes the crew members to take part in the various programmes that are conducted by the company. Thus motivating the employees. The company does annual appraisal in terms of salary as well as position based on the employee's performance.Â
Corporate Social Responsibilities:
According to P.Kotler and N.Lee, "Corporate social responsibility is a commitment to improve community well-being through discretionary business practices and contributions of corporate resources" (P.Kotler and N.Lee, 2005). Thus it can be seen that CSR has to be a way of functioning of every business thatÂ exists. This function has to be implemented in every activity within the business. McDonald's officially absorbed this function into their operation in 2007; it was at this time that they developed a Sustainable Supply Steering Committee (SSSC).this committee was responsible to keep a check on the supply chain activities within the organisation. The company adopted theÂ Three E's into their supply chain. These are Ethical Responsibility, Environmental Responsibility and Economic Responsibility. The idea behind adopting these were to make sure that all the operation carried out within the organisation follow a ethical patternÂ Â (Web 2). The company has also developed a Global Advisory Council (GAC) in 2004 that provide advice as to howÂ create a menu that provides healthy nutrition and a balanced-diet to the customers. (Web-3)
Thus we see that every operation within the organisation from the procurement of raw materials to the disposition of corporate social responsibilities is performed diligently by the organisation. A smooth co -ordination between this function is the secret to the success of the organisation. This individual operation has to be controlled in an effective manner for the overall stable performance of the organisation.
QUALITY, RESOURCE AND TOOLS MANGEMENT:
The word quality has different meanings based on individual perceptions. For some quality of product or service means. The nutrition value or standard of the product or service for some others quality is that the product or service should meet their requirementsÂ satisfactorily. In some other cases quality means value for the money that has been spent. Hence there is no definite way in which quality can be described. However an officialÂ definitionÂ of Quality has been given by International Organization for Standardization ISO 2000, "the extent to which a group of intrinsic features (physical, sensorial, behavioural, temporal, ergonomic, functional, etc) satisfies the requirements, where requirement means need or expectation which may be explicit, generally implicit or binding."Â Â (A.Illy and R.Viani, 2005).Another pragmatic definition of quality is given by Harrington 1990, "Meeting or exceeding customer expectations at a cost that represents value to them". (A.Illy and R.Viani, 2005). In any company quality of the product and service is based on resources, tools and systems used by the company. McDonald's serves beef patties, these patties are made from cows that are corn -feedÂ in the U.S and some of these are also imported from Australia and New -Zealand. These patties are instantly frozen to maintain the freshness and quality. This process of freezing is known as Individual Quick Freezing developed by Herb Lotman. Herb Lotman is the founder of the Keystones Company, which is one of the major suppliers of McDonald's. The French fries are cooked in Canola Oil which provide 0 gram of Trans Fats. Salads that are served at the restaurant are freshly prepared in the restaurant as per the request of the customer. No preservatives are used in the salads that are served in theÂ restaurant. Most of the fountain drinks that are served at the restaurant are regularly monitored to maintain optimum quality. All milk based drinks are well pasteurised and maintain high standards and quality. McDonald's coffee which is very famous is obtained from Brazil, Gutaemala and Costa Rica. The equipment that is used in the McDonald's Kitchen is Grills, Microwave, Shake Machines and many more. The grills are standardised to cook a particular meat, so they automatically set the time for cooking the meat. These grills are cleaned on a regular basis at the end of the day with strong solvents to ensure its cleanliness. The shake machines and the fountain drinks machines are regularly cleaned to ensure quality of the drinks. The fries are cooked in the frying vat at high temperatures. The quality of the oil is checked regularly to maintain the quality of the food.
TOTAL QUALITY MANAGEMENT AN ANSWER TO ALL QUALITY ISSUES:
The perfect way to imbibe quality as a part of the organisational culture is by adopting the principles of Total Quality Management. According to A.Rawlins, "Total Quality Management is a way of managing to improve effectiveness, flexibility and competitiveness of an organisation as a whole". (R.A.Rawlins, 2008 p19). This concept of TQM proposes that quality is not a term that should be confined to the end product or service. Quality has to become a part and parcel of every operation within the organisation, thus making it an obligatory to maintain the same at every step. According to G.K.Kanji and M.Asher TQM can become a part of the organisation if its principles and concepts are applied accurately. They have given four principles of TQM and eight core conceptsÂ for TQM.
Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â PrinciplesÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Core Concepts
Â Â I.Â Â Â Â Â Â Â Â Delight the customer:Â Â Â Â Â Â Â Â Â Â Customer Satisfaction, Internal Customers are real
Â II.Â Â Â Â Â Â Â Management by Fact:Â Â Â Â Â Â Â Â Â Â All work is process, Measurement
Â III.Â Â Â Â Â Â People-based Management: Team work, People make quality
Â IV.Â Â Â Â Â Â Continuous Improvement: Continuous improvement cycle, Prevention.
Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â
If all the areas mentioned in the above diagram are well managed this will result excellent functioning of the organisation. In which quality is maintained at every step hence there will not be any quality related issue. (G.K.Kanji andÂ M.Asher, 1996, p1).
Advantages of Total Quality Management:
1)Â Â Â Â Â Â Helps the organization to concentrate of the market trends.
2)Â Â Â Â Â Â Inculcate a culture of quality in every aspect of the organization from top to bottom.
3)Â Â Â Â Â Â Regularly assess all the process within the organization to eliminate outdated processes.
4)Â Â Â Â Â Â ToÂ continuouslyÂ develop new strategies for the company to achieve the changing strategic objectives of the organization.
5)Â Â Â Â Â Â To work as a team and have problem solving attitude.
6)Â Â Â Â Â Â To keep the goal and achievements of the organization well communicate d at every level.
7)Â Â Â Â Â Â To always involve in a continues development programmed.
Â (R.A.Rawlins ,2008,p20,21).
SCOPE OF IMPROVEMENT:
No organisation a be sated as perfect because there is room for improvement. An organisation that always updates or modified itself according to the need of the market is always successful. Carrying out a SWOT analysis is the best possible way to identify the weak links within an organisation. There is a lot of speculation on the company's role in providing nutritional food. As obesity is one of the major health issues in the current scenario. The company will have to reinforce as to how they are contributing to the society by providing food of the top most quality. It has been noticed that McDonald's faces the problem of high rates of attrition. This is a serious threat for the company as it is based on customer service. The reason this becomes a major issue is because it become an additional cost. As well the can also affect the company's sales and overall image. An unpleasant experience in the restaurant can be a major disaster. This can result in bad or negative marketing for the organisation. Another issue that is faced by the company is the health issue.
The effect of this high turnover ratio on the organisation is as follows:
1)Â Â Â Â Â Â HighÂ financialÂ cost in terms of training the employee every time.
2)Â Â Â Â Â Â Lack of trained employees can result in downfall of the organization.
3)Â Â Â Â Â Â Reduced productivity and interruptions in the workflow
4)Â Â Â Â Â Â Loss of expert professionals.
5)Â Â Â Â Â Â Loss of business opportunities as the company is overwhelmed by the internal issues.
6)Â Â Â Â Â Â Administrative issues within the organization.
7)Â Â Â Â Â Â Loss of job satisfaction of the other employees and insecurities among the employees.
The major issue in McDonald's as mentioned earlier is the high rate of attrition. Below are some of the points that would help in retaining the employees. Another problem that is faced by the organisation is a health issue.
ØÂ Â Peers Reviews is one of the strongest methods that can be used for employee retention.
ØÂ Â Fostering trust and respect and reducing management employee conflicts by regular meetings.(J.A.Carsen, 2002).
ØÂ Â Doing timely performance appraisals.
ØÂ Â Continuous motivation to be done- by rewarding at achievements.
ØÂ Â Recognition given to good work.
ØÂ Â Regular meetings to solve any grievances.
ØÂ Â Training the employees accurately.
ØÂ Â Job rotation should be practiced avidly so as to increase employee knowledge and enrich his experience.
Many a times there have been cases were the organisation has been blamed for being responsible for health issues like obesity. Although the organisation makes use of healthy food ingredients there are such speculations. The best way to deal with this is to market the right and more explicit information on their products. This not only allows the customers to have a clear picture but make healthy choices while ordering. They can also get their food certified by authorities in the health and food section. Such an attempt will only help to clarify these false allegations. Last but not the least a customer survey should be done to identify their opinion and bring about changes within the organisation in a manner which is helpful to the company and the customers. Such an effort on the part of the organisation will strengthen their relation with their customers.
Quality can be defined as anything that has value for the money and energy spent on it. It is not a onetime attempt to set up a good system in action and then never bother about it. Every organisation should maintain its quality standards not for good sale and profit, but must develop quality as a culture within the organisation. This culture of quality has to be passed down into every process within the organisation. It is only then a company will never face failures in achieving its goalsÂ and objectives.
1)Â Â Â Â Â Â Web 1:Â http://www.aboutmcdonalds.com/mcd/our_company/mcd_history.html
2)Â Â Â Â Â Â Web2:Â http://www.aboutmcdonalds.com/mcd/csr/about/sustainable_supply.html
3)Â Â Â Â Â Â Web3:Â http://www.aboutmcdonalds.com/mcd/csr/about/nutrition___wellbeing.html
4) J.Bicheno and B.Elliot (1997), Operations Management: an active learning approach, Blackwell Publishers Ltd, UK, p9
5)Â Â B.Mahadevan(2007),Operations Management Theory and Practice,Dorling Kindersley(India) Pvt Ltd, India,p5
6)Â Â C.Vidler(2001),Operations Management, Heinemann Educational Publishers, Oxford.
7)Â Â W.Jedlicka(2009), Packaging Sustainability, John Wiley & Sons Inc, USA,p303
8) P.Kotler and N.Lee(2005), Corporate Social Responsibility, John Wiley & Sons Inc, USA,p3
9) A.Illy & R.Viani(2005), Espresso Coffee: The Science Of Quality( 2ndÂ edn), Elsevier Academic Press, UK,p2
11)Â Â P.P Philips(2002), Retaining Your Best Employees, American Society For Training
12) J.A.Carsen(2002), HR How to Employee Retention, CCH Knowledge Point, USA.
13) G.K.Kanji and M.Asher(1998), 100 Methods For Total Quality Management,Sage Publication Ltd, London, p1-2
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