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Operations Management Practices At Impressive Burger

Every organization wants a good management and wants to adopt a good business strategy that could help in managing organizational operations, capabilities and effectiveness. For this purpose employees in organizations should keep their mind open to welcome any change in the organization and maintain organizational culture to make smooth operations that would result into enhanced productivity and profitability of organization. The growth and success of organization is actually the success of employees those who devote their skills, knowledge and time to their work and keep operations smooth and continuous.

Operations management is concerned with efficiency and effectiveness of operation to support organizational strategic goals and objectives. It includes design and operations of a system to ensure smooth good’s production and services. It is basically planning, scheduling and controlling of activities that change raw material to finished goods like wood to bed, cotton to cloth etc. this term normally used for manufacturing organizations but in many cases it is being widely used for service sector as well. Actually some theories are developed solely for services.

Definitions of operations management from few sources are as follow:

"The ongoing activities of designing, reviewing and using the operating system, to achieve service outputs as determined by the organization for customers" (Wright, 1999).

“Management of conversion process hat transform inputs such as raw material, labor and other resources into outputs such as finished goods and services” (Richard B. Chase).

Goal of Operations Manager:

The goal of operations manager is to attain efficiency i,e, reducing cost, time, efforts and other resources and effectiveness using various techniques and tools like production planning, budgeting, analysis of quantitative data, inventory control and scheduling. Productivity is the measure of efficiency which is basically the variance between inputs and outputs. Productivity is found by dividing total output of goods and services in value by total input of raw material, labor wages, and other resources or overheads used in production.

Major Functions of Operations Manager:

Following are the major functions of operations managers in practice,

Purchase management.

Management control and coordinating function.

Productions management- goods & services

Quality management

Inventory management

Logistics & transport management

Facilities management

Configuration management-keeping the systems of organization up-to-date

Dispatch & distribution

All operations functions work in coordinated way for establishing an efficient OM in the organization.

Competitive Priorities of Operational Manager:

Operations managers are mainly concerned to ensure smooth operations of organizations. Operations management include following top of the list competitive priorities,

Quality: Quality of product or service should have features like high performance, consistent quality and added features.

Cost: Cost of operations should be low.

Time: Delivery of product must be on time, processes involve in production and offering services must be fast and speedy.

Flexibility: There should be flexibility in product and service like offer customization of product and change in volume of production etc.

Production Strategies:

There are three types of production strategies. All three strategies are discussed bellow,

Make to Stock: By using this production strategy firm produce large volume of standard products to meet demand of particular product on basis of their sales forecast.

Assemble to Order: By using this strategy firms produce product as per order of customer. Raw material is readily available but just need to be assembled as order reach to them. For example when a bicycle is purchased they seller at the spot assemble purchased bicycle.

Make to Order: Using this strategy firms produce product as order of customer reaches and according to the customization specification given by the customer. For example jewelers manufacture jewelry on basis of specification given by customers and some restaurants normally fast food restaurant make meal as per specification of customer.

Introduction to Company:

Impressive Burgers was established 10 years ago with the goal of providing fast take away food to their customers quickly and of a higher quality to that of their rivals. Each restaurant offered a simple menu structure with a choice of six set meal options.

1. Burger, Chips & Soft Drink

2. Cheeseburger, Chips & Soft Drink

3. Chicken Burger, Chips & Soft Drink

4. Vegetarian Burger, Chips & Soft Drink

Customers were offered a choice of size of each meal: Regular, Medium or Large. The size of the chips and drinks portions varied but the burger size remained the same. Using this format they were able to serve each customer their order within 4 minutes from a ordering at the till to receiving their complete order to take away.

The company has grown to a chain of restaurant operations and the management introduced a number of changes to the format 12 months ago in an effort to increase each business at each restaurants.

The menu options were increased by further three options:

5. Chicken Nuggets, Chips & Soft Drink

6. Chicken Salad, Garlic Bread, & Soft Drink

7. Hot Dog, Chips & Soft Drink

In addition to these set menu additions the company also offered the option of changing the chips option on the set meals for either a Side Salad or for Potato Wedges. The restaurants themselves have not changed and the number of staff and machinery has remained at the same levels before the menu changes.

Overview of the Problem:

Since these changes were implemented there has been a dramatic increase in turnover and the number of customers that are visiting each of their restaurants. However, overall profit has declined dramatically over the last 12 months. Serving times also have increased dramatically and it now takes an average of 9 minutes for a customer to be served and the number of customer complaints has increased. The main complaints include rude and agitated staff and incorrect or incomplete orders. The total value of stock held at each restaurant has increased by an average of 20% and waste has dramatically increased.

Critical Evaluation of Impressive Burgers’ Approach:

Every business wants to grow and bring changes to attract new customers and retaining existing customers. Initially on takeaway the Impressive Burgers was offering four choices to their customers

1. Burger, Chips & Soft Drink

2. Cheeseburger, Chips & Soft Drink

3. Chicken Burger, Chips & Soft Drink

4. Vegetarian Burger, Chips & Soft Drink

There were three choices for the size of meal like small medium and large but actually it just affects the size of chips and drink, though the size of burger remains same. In every fast food people want to get their order in minimum time. So according to this menu Impressive Burger was able to deliver meal on takeaway in just four minutes from placing order.

What happened actually, Impressive Burger expanded their business by opening new takeaways that automatically increase the overall sales. Because earlier they were serving in one market area but now they are serving in several market areas, so it is obvious to gain increase in overall sale. Suppose initially Impressive Burger’s sale was 1000 meals per day in one market area. Afterwards Impressive Burger if gain 200 meals per day from each 2 new takeaways then overall sales will increase to 1400. In the same way they found dramatic increase in turnover. Here one thing is important to consider that no doubt overall sales is increasing but average sales of each takeaway has decreased. Earlier customer from other market areas may also used to place order at first take away. But after opening new takeaways in other areas customer may use to go takeaway I their own market area. So it will definitely decrease the sales of first takeaway too.

Moreover Impressive Burger introduced some new meals to attract customers and added three more meals in their menu

5. Chicken Nuggets, Chips & Soft Drink

6. Chicken Salad, Garlic Bread, & Soft Drink

7. Hot Dog, Chips & Soft Drink

With the increase in choices of meals the workout require to serve an order will also increase that would need more human resource to manage or the time of delivery will increase if human resource remain constant. Furthermore Impressive Burger also offered the option of changing the chips option on the set meals for either a Side Salad or for Potato Wedges. That also played a vital role to burdensome the workout and time required for delivery of meal to customer.

Here second thing to consider is that the Impressive Burger has increased its range of meal and is offering customization to their customers but there is not change in human resource and restaurant equipments. That is very essential to keep operations smooth with the changes in menu. That’s why serving time also dramatically increased from 4 minutes to 9 minutes. Human resource was limited so operations were not smooth and complaints were increasing about rude behavior of staff because they were messed up with over burdened workout. So they were not able to greet customers properly. As there was various choices of modification for customers so staff was getting confuse about what changes are ordered with which meal.

Reasons behind Problems:

Problems the Impressive Burger is facing are, declined in overall profit over the last 12 months, dramatic increase in serving times it now takes an average of 9 minutes for a customer to be served and the number of customer complaints has increased that include rude and agitated staff and incorrect or incomplete orders. Furthermore total value of stock held at each restaurant has increased by an average of 20% and waste has dramatically increased.

The critical reason I found is the shortage of human resource and equipments needed to make meal. As there is increase in meal choices that increased from 4 to 7, that ultimately require more staff to keep operations smooth. But we find no change in number of staff. Moreover for frying nuggets, making salad and hot dogs staff needs more equipment. But there is not change in equipments of restaurant. That’s why serving time increased. Resource remained constant and production increases that messed up all operations and in result complaints increased.

Reason behind wastage of material is very clear. Customers are making complaints for incorrect orders. So the material that is used in incorrect order delivery is wastage for the restaurant. Secondly the material which is mishandled during messed up operations is also a source of increase in wastage.

On the other side the total value of stock held at each restaurant increased by an average of 20% is due to wrong predictions of manager. For making order of supplies we must consider the average sale of every takeaway separately.

Suggestions to Rectify the Problems:

1 - Managing Capacity:

Capacity is the maximum output (product or services) that can be produced from a given resources and environment. Capacity management to understand the maximum output from given resources is very essential to get desire results. Organizations manage their resources to meet the required capacity according to their desire and sales forecast. It should not be very high that would cause of wastage of resources and it should not be very low that would cause of shortage or resources. In our case of Impressive Burger the resources were very short as compare to workload. That was a big problem of decrease in quality of processing and order fulfillment.

Capacity Measurement:

Capacity is measured in term of total output can be produce using given resources. Like earlier Impressive Burger had capacity of delivering 4 types of meals with minor size changes with in 4 minutes. Later the choices increase for customers as well as the customization involved that needed more resources to keep processes smooth. But there was not change in resources at all.

Capacity Utilization:

It must be in observation of production manager that how efficiently the capacity of given resources is being utilized. Whether there is need of more resources to keep processes smooth or our resources are not utilized. Capacity measurement is vital tool to reduce cost by eliminating idle resources as well as can enhance operations by putting more resources if shortage identified.

To measure capacity utilization formula is,

Capacity Utilization = Average Output X 100

Total Capacity

2 – Managing Inventories:

A plan to meet the sales volume and customer’s requirements is composed of capacity, workforce and inventories. So managing inventories is also essential to eliminate problems that may arise during processing.

Inventory management cycle includes five steps starting with acquisition of raw material, storage, conversion into semi finished and finished goods, again storage, and finally distribution of products to the customer.

Demand and Sale Forecast: It is very essential to forecast demand or need of inventories in nest period. It depends upon the analysis of past sales pattern. Seasonal surplus sales are also kept in view to place order for inventory.

Inventory Measurement: During processing we need to observe the level of inventories available in stock. It is also important to order for supplies as level reach to threshold and make sure a minimum balance to stock all the time to cover the market or meet the demand.

Inventory Carrying Cost: It includes insurance, tax and maintenance cost like refrigerator, cleaning supplies etc. as long inventory will be preserved in your warehouse as much cost you have to pay for it. This is the case with Impressive Burger. Their stock value increased by 20 % that is ultimately making cost for them.

FIFO/LIFO: LIFO suggests which inventory come last must go out first while FIFO suggests which inventory comes first must go out first. FIFO technique is suitable for restaurant business. Because as long food items will remain in stock their quality and taste will decrease.

Acquisition of Raw Material:

Recognition of need by the production department.

Assessment and approval of procurement by the management.

The purchase department finds and selects the suppliers (on the criterion to supply quality materials at an economical price and agreed delivery schedule and payment terms).Placing the order.

Tacking the order.

Receiving the order.

Evaluating the desired quality and features as agreed upon with the supplier.

Inventory Management Strategies:

There are three common strategies for inventory management.

Lead Strategy: According to this strategy firms keep inventories in stock little more than their forecasted need for a period of time. So they can sale surplus if demand increase than the estimated sale due to extra ordinary sale growth, seasonal impact or any other reason. Like if sales increase in take away still they have some extra inventories to serve more orders than forecasted.

Lag Strategy: According to this strategy firms keep inventories exactly as forecasted on previous sales pattern. If in any time period noticeable growth in sales happens, then in such condition restaurant will be out of stock that is the big disadvantage of this strategy and you can lose your customer.

Tracking Strategy: According to this strategy firms keep an eye on available inventories and sales pattern. As they feel need of new supplies they make an order for supplies. It can be implemented if supplier is ready to deliver supplies instantly. But in our scenario supplies are delivered once in every other week. So it is not applicable.

Impact of Inventory on Profitability:

Firms normally keep inventories in stock that is enough to meet the demand and little surplus sale in seasonal period to fulfill extraordinary demand. On the other side extra inventories will block the investment of business in inventories and will sustain loss or generate less profit on investment.

3 - Process Management:

Process management is vital element to manage by any organization. The productivity and effectiveness of organization is depends upon the operations and processes involve in manufacturing and offering services. Process management is the best selection of inputs, operations, workflow and techniques to convert input material into output like any final product or service.

When Process Management Decisions are needed?

Decisions regarding process management are needed in following situations,

The new business or product is launched.

The quality of the product seems inadequate.

Competitors have threatened by introducing new technology.

The demand for the product is decreasing.

Making substantial changes or improvements in product seems essential.

The cost or availability of input has been changed.

Major Decisions in Process Management:

There are three major decisions are needed to make in process management.

Process Management: It can also further divided into four choices,

Job Shop: It is type of processing in which firms produce small quantity of product but in wide range.

Batch Processing: In this kind of processing firms produce product on basis of some standard methods or processes but produce relatively large capacity than Job Shop.

Line / Repetitive Processing: Using this processing type firms produce a large amount of products.

Continuous Production: These types of firms produce high volume of products in bulk quantity as compare to other processing types.

Resource Flexibility: Here organizations decide the capacity of human resource they needed. What sort of their skills are required for processing. Furthermore decision is made about production unit whether general purpose unit is required or a specific purpose unit is needed. General purpose processing unit can produce products in high volume while specific purpose processing unit can produce two or three specific nature of products.

Customer Involvement: Here organizations decide the way they are supposed to serve their customer. Whether they will offer customer services or self services like usually in practice in fast food restaurants. Whether the product will customized or not and what location will be for delivery. Like at the door of customer or not. As many restaurants offer home delivery.

Workforce Management:

Workforce play vital role in smooth operations and processes. Workforce is one of the key elements to improve operations of any organization. It is not an easy task to do. But you cannot ignore it. If your employees are willing to perform their task efficiently and effectively, your operations will remain smooth. But if your employees are paying their intension to work, it can produce distasteful results for your organization.

Training and Development:

Training keep employee on track to prosper outputs. Training is basically a planned effort to facilitate the learning of job related knowledge, skills and behavior by employees. Training can be of any following three modes.

On the job training

Distance learning or E-Learning

Classroom and traditional workshop

The objective of training is to improve individual performance to work in an environment using given resources and established skills. Training is given by senior manager or external professional trainer, who imparts basic skills in workers mandatory to do the job correctly. Impressive Burger needs on job training for their employees to work more efficiently to decrease the delivery time. An on-the-job training concept grooms basic skills in labor-force. Development is an advanced training to further nourish and polish worker’s skills.

Job Design:

It specifies a job’s contents, a set of duties and responsibilities to do the job (called job analysis) and an employee’s skills, qualification, experience, specialization, and training needed to perform the job (called job specification). Some of the techniques to enhance the scope of job in Impressive Burger and achieve greater performance are as follow,

Job Specialization:

A job with specialized nature of work required fewer tasks to perform, repetition of work, high quality and great efficiency. For instance in our scenario we can assign specialized jobs to each employee to make operation efficient. If an employee working on till, he keep working on till for longer period of time to increase efficiency and accuracy of task.

Job Enlargement:

It is techniques used to increase responsibilities of an employee to overcome the shortfall of employees. For example if an employee is working a supply station in restaurant then he also do packing of meal and then deliver to customer at takeaway booth.

Job Rotation:

This allows the workers to exchange jobs occasionally with the permission of the supervisors, which adds in their skills level and reduces boredom. But the workers should be capable to perform the job with approximately the same level of efficiency. This job design technique enhances skills of employees working in organizations and they can work for any other employee in his absence to keep operations smooth. For example if an employee can work efficiently on till then he must move to other station like in kitchen for making meal or at supply for packing and delivering meal to customer.

Job Enrichment:

This allows workers to have a greater control and responsibility of an entire system, rather a specific operation by reducing the number of supervisors. It is also called employee empowerment or self-managing teams. It also enhances employees’ skills level and reduces boredom. For instance, the chef and his team in a restaurant help each other in completing the daily process by purchasing the ingredients, cutting, cleaning and cooking food, restaurant maintenance, and finally serving the meals.

Work Standards and Method of Work Measurement:

A work standard is measure of work efficiency or a performance goal, in which a worker performs a task in a prearranged manner in a predetermined time and normal effort. The techniques of work measurement are to examine the performance of each task by a sample group of trained workers and to record the start and finish time on a stopwatch and then, develop a general standard of time and efforts for an average trained work to complete a certain process, which may be, preparing pizza in a fast food restaurant in two minutes.

Using such technique Impressive Burger can set a standard of performance for employees on each working station like till, supply and kitchen and in this way they can easily forecast the number of employees they need to perform customization in meals as per orders ensuring delivery of meal in just 4 minutes that is very necessary for fast food restaurant. Actually less time is significant phenomena behind success of fast food restaurants.

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