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The operations function of restaurant chain MCDONALD’S

PREFACE

Operations management is defined as business area, in which there is a management process that is concerned of converting or transforming inputs ( raw materials, energy and labour) into outputs (finished goods and services), by insuring the efficiency of resources needed and the effectiveness of meeting the requirements of customers.

As the purpose of this assignment is to explore the operations function of any existing organization in detailed and serious way, so as to understand the activities involved on it.

And, as an example of an organization that i have chosen to talk about is MCDONALDS, which is the largest fast food industry in the world .

Personally, this essay has given me the opportunity to diversify my researches and to find out what was hidden on me about MCDONALDS organization in terms of production systems and so on... rather than just eating burgers...

INTRODUCTION

MCDONALD’S is the largest fast food restaurant chain in the world, which was established by Richard and Maurice (MCDONALDS’ brothers) in 1930s in San BERNANDINO, California. In 1955 it was a franchise founded by Raymond Albert Kroc. In fact he was an early franchisee after he met Dick & Mac; the brothers of MCDONALDS. This company began with milkshake multimixer sales man who was selling a machine that produces 5 milkshake cups at the time, and in which Ray Kroc sold 8 machines to the brothers , as he was amazed by the quick service that the machines made to the customers and then he got the idea of opening more fast food restaurants and bought all rights from Maurice and Richard. At that time he opened his first MCDONALDS in Illinois; Chicago; as well as his hamburger university. MCDONALDS became day after day larger than it is in the USA and around the globe.

MCDONALDS owns one of the most respected and recognized brand in the world. It operates more than 30,000 restaurants over 119 countries on the six continents.

All MCDONALDS’s brands have a strong competencies in all restaurants operations, marketing and franchising, retailing and real estate , as well as, they are involved in social responsibility area. This organization has extremely changed the eating habits of both Americans and foreigners, due to its foods and services. MCDONALD’S provides high quality and healthy food with a balance between lifestyle, diet and health. It is always working on reducing preservatives and colorants amounts, in products. As foods, they sell sandwiches, chicken, salads, snack and sides, breakfast, ice cream, soft drinks, Mc café, shakes and desserts. MCDONALD’S co seeks new products quality that satisfy customers regarding their both taste and value expectations.

Every restaurant of MCDONALD’S delivers high quality of services and cleanliness to its customers, and give them the opportunity to put their complaints properly in order to meet their needs successfully, as well as this organization facilitates the way of getting the customers’ orders without getting out of their cars through the MC drive. In addition, McDonald’s encompasses play place for children in every restaurant. Moreover, this fast food restaurant allows to its job applicants with the relevant skills and performance for work whatever his or her nationality, race, gender, color, disability or marital status is. And also provides training program for staff.

TRANSFORMATION PROCESS OF MCDONALD’S

Transformation process is the process that transforms inputs into outputs.

The input side embodies two main kinds of resources, transformed resources and transforming resources.

Transformed resources: include materials, information and customers.

Transforming resources: include facilities and staff.

And for the output side of the transformation process, the outputs are products and services that are desirable to customers.

So as transformation process of McDonald’s co :

INPUTS

TRANSFORMED RESOURCES:

Materials: are the ingredients including beef, fish, chicken, salad ingredients, buns, milk… and that are delivered to MCDONALD’S restaurants in one lorry under 3 sections ; chilled, ambient, and frozen ; for being converted into finished products on the FIFO basis to remain the freshness.

Packaging: MCDONALD’S uses boxes of burgers, tumblers for drinks and various bags for chips. This fast food restaurant uses cardboard because it is clean, recyclable and that what’s make a responsible and ecological company as well as to insure the convenient freshness and safety of its products.

Customers: consumers of all ages, from children to elderly people and families, MCDONALD’s is for all classes but mostly for working and middle classes.

TRANSFORMING RESOURCES:

Facilities: kitchen equipment, such as equipment of food concession and food processing . etc

Staff: restaurants staff, restaurant management, office staff and franchisee staff, these people are working in delivering a high quality of services and products to the MCDONALD’S customers.

OUTPUTS

Are food and beverages served and sold to the customers for their value satisfaction.

4 Vs OF MCDONALD’S

In order to distinguish between different types of operations we use 4Vs. So regarding to the four dimensions of McDonald’s operations:

VOLUME: High volume, McDonald’s serves nearly 23 million burgers around the globe every day using a mass rapid system in every restaurant. As there is a high frequent repeatability in procedures, in which each member of staff is assigned to perform the same job or position to accomplish a specific task. For instance, one person is specialized for cooking burgers, another for frying French fries and so on… Moreover, it allows for occurring a high systemization of the work which leads to a higher operation’s capital intensity as well as to a low unit costs.

VARIETY: The variety dimension of operations has its own implication, it can be either high or low. So for the variety of McDonald’s is low, because it relies on standardization in terms of its products and services in an established routine as it is specialized only in fast food, and also it uses build to stock strategy (BTS), because McDonald’s doesn’t know when people are coming for lunch, so the burgers are made in anticipation.

VARIATION: From the company’s characteristics we can see that variation in demand dimension has many implications. For a McDonald’s co has a low variation in demand, because of the repeatability of the meals and there is a high usage of resources with a low cost of unit. And the most important thing for this point is that McDonald’s doesn’t have a change of sales in a specific seasons; this fast food restaurant adapts to all seasons.

VISIBILITY: Low visibility, because in McDonald’s we don’t see neither how the meals are processed or made nor the materials used, the only thing that we see is the customer processing operations.

PRODUCTIVITY

Productivity measures to assess the efficiency of resources that are transformed into products and services. Efficiency gains can come from technological improvements, and also the increase of the average size of establishments which create the economies of scale, and other organizational changes.

In general, productivity is defined as the ratio between production and all or a part of the resources used to achieve it. Production is the amount of services and goods produced. So for The resources used (that is to say the means of production or factors) include labor, capital, energy, raw materials, etc..

So for the calculation of the productivity we apply this formula:

PRODUCTIVITY= Output quantity/ Input quantity

Output quantity: the burgers made in a second, so for MCDONALD’s , they make 75 simple burgers in a second.

Input quantity: are the factors used in the production of the burger, which are 9 factors: labor, energy, packaging, bread, beef, cheese, onion, ketchup, gherkin.

So now let’s apply the formula:

Productivity= 75/9= 8,333333333

As we know the Productivity allows assessing the effectiveness of a company. For a company to improve its productivity, is to create more wealth, through a more efficient combination of inputs that will enable it to generate productivity gains.

In order To Increase the productivity for MCDONALD’S they have:

    - To produce more burgers with the same amount of inputs,

 or,

    - To produce as many with fewer inputs.

So there are two challenges:

*First challenge: competitiveness:

If with the same number of hours in which MCDONALD’S gets a higher production volume, while productivity increases.

And If this fast food restaurant reduces more its unit cost, so it improves productivity .

* Second challenge : economic growth.

PERFORMANCE OBJECTIVES OF MCDONALD’S

The competitive advantage of McDonald’s can be provided by its operations function through its performance at the five competitive objectives:

QUALITY: High quality of both food and services that are free of error, as they use fresh ingredients to make a tasty burgers, and deliver them to its customers in a good conditions of services by helpful and cheerful staff. As well as, the customers’ satisfaction comes from the overall quality of hygiene standards of both the restaurants and washrooms.

COST: Low cost, MCDONALD’S produces high volume of burgers and that’s due to its low cost of unit which encourages the productivity to grow. As well the low variety helps them to focus only on specific meals in a way of repeatability which helps MCDONALD’s to hire unskilled people in the production process regarding the low labour cost, so for any lower cost of inputs leads to a lower cost of output.

SPEED: High, because there is a quick response to the requests of customers once they are ordering their meals, starting from the cashier registration, payment, till a ready to eat meal. And this action should not exceed more than 3 min after the order has been taken from the consumers.

DEPENDABILITY: High, MCDONALDS’ meals are served on time of delivery, So in this operation they highly rely on the dependability, so if any problem goes beyond, either in the production process or in the services then it will be a bottleneck for them in which they can lose their customers or reduce their productivity.

FLEXIBILITY: Low flexibility, because the ability to meal changes is weak. And it is divided into 4 sections:

Product/ Service Flexibility: McDonald’s brings to the market the right food in a good service conditions at the right time. As it makes both the meals and the services flexible according to the customers need. For instance, in India McDonald’s sells vegetables menus.

Mix Flexibility: They are dependable while serving tasty burgers.

Volume Flexibility: It serves a high volume of burgers produced.

Delivery flexibility: they deliver the meals ordered on time exactly after 90 seconds of the customers orders.

(P.O) OF THE MCDONALD’S COMPETITOR

Depending on the McDonald’s five performance objectives studied above, let’s compare it to another competitor in the same industry. As a competitor I have chosen T.G.I. Friday’s , which is an American retailer whose concept of restoration is to provide a bar restaurant for youth who want to relax after work. The menu is typically American with burgers, grills and so on...

*QUALITY: The quality of food in T.G.I. Friday’s is the same quality of food in McDonald’s; they both serve tasty foods with cheerful and helpful servers in an atmosphere full of hygiene and cleanliness.

*COST: High cost, as we know Friday’s restaurant doesn’t produce high volume of meals, because it has a variety of foods, so there is a lack of repeated activities while the food preparation, as it uses build to order strategy, so as to the customers will have the opportunity to order their meals upon their choices and ways.

SPEED: low speed, there is a low response to the customers’ requests because it gets long to prepare the food ordered, so Friday’s restaurant is not speedy as McDonald’s.

DEPENDABILITY: low dependability, Friday’s meals are late served meaning they are not served on time, because the process time of preparing meals takes long. Whereas, McDonald’s serves the meals on time because the burgers are prepared before the customers’ orders.

*FLEXIBILITY: High flexibility, because the ability to meal changes meaning the variation of demand is high. And it is divided into 4 sections:

Product/ Service Flexibility: regarding the similarity of food quality between Fridays and McDonald’s they both bring to the market the tasty food in a good services. But T.G.I Friday’s leave the space to its customers to do their meals in own ways .

Mix Flexibility: They are not dependable while serving tasty foods.

Volume Flexibility: It serves low volume of meals produced because of high variation in demand.

Delivery flexibility: they deliver the meals ordered after the time of the process that it takes long.

In order to clarify the differences and similarities of the five performance objectives of both McDonald’s and T.G.I. Friday’s we draw the polar diagram:

COST

QUALITY

FLEXIBILITY

DEPENDABILITY

SPEED

McDonald’s

T.G.I FRIDAY’S

MARKETING STRATEGY & 5 Ps

McDonald’s applies a top down strategy which is Used to provide information from a higher level to a lower level, Managers of McDonalds work on training their staffs locally and globally in order to unify the work processes and services through in a hierarchical way. For instance, as a head of the restaurant, there is a "store manager" with, a number of "managers", often four or five, because it takes at least one of them to be present continuously throughout the duration of opening the restaurant. So each one in the operation is followed or instructed by a decisive instructions made by his or her top manager.

Regarding the 5 Ps of the McDonald’s operations strategy:

PURPOSE: the strategy of McDonald’s aims to deepen and enrich its relationship with consumers through three axes which are knowledge, sharing and fun by focusing on the consistent quality of their products and services as well as controlling their resources continuously in order to develop their operations strategy.

PARTICIPATION: in McDonald’s organization there are several participants that participate in the implementation of the process who are: staff that are responsible for making decisions, employees for following the steps given by their top managers, as well as suppliers for providing the raw materials to McDonald’s and finally customers for buying the meals offered.

POINT OF ENTRY: is the point in where McDonald’s stated its process of implementation in terms of defining the work plan, management structures and so on. Also this restaurant started local and went through a global market.

PROJECT MANAGEMENT: McDonald’s has focused on a good implementation’s management as this point was based on an effective coordination of the implementation program.

PROCESS: it is concerned on the way of creating McDonald’s strategy on through different steps.

ORDER-WINNING/ORDER-QUALIFIERS FACTORS

Order-winning is a characteristic in which the business should be distinctive to its competitors in a good shape. And for the order- winning factors, are Identified by customers for the reason in which they made a purchase. So for the order-winning factors of McDonald’s restaurant are taste of meals, low prices, speed, globalization and diversity; as it caters its menu in several countries by the adaptation to the region’s cultures. And that represents a competitive edge of McDonald’s towards different fast food restaurants. And also it characterizes by a play place for the children in which all McDonald’s competitors don’t have.

Whereas,

An order-qualifier is the required characteristic of a specific product or service in order to be considered by customers. For the firm to stay in the market, it needs to provide qualifiers, in which it requires to be similar to their competitors, and for the failure to do so, it will end by a loss. The order-qualifiers factors are not important than the order winning factors, but they differ from each other. For McDonald’s is good as its competitors are, in terms of hygiene factors as well as by providing fast food meals to its customers with a cheerful and helpful employees .

Order qualifier factors may not be a crucial point or part in determining the success but for any disqualification, the business wouldn’t be considered by customers.

THE VOLUME-VARIETY EFFECT&PROCESS DESIGN

The effect of volume-variety is one of the factors that needs to be taken into consideration before the choice of the manufacturing process is done. High volume leads automatically to a low variety and vice versa. So the effect of high volume and low variety in McDonald’s indicate the suitability for the process.

McDonald’s has a batch process by which they made a large number of burgers at the same time. In order to this restaurant make a cheese burger menus, they first must take the buns and place them into grilling sheets, then heat the beef patties and put them between the buns with an amount of Mc sauce, onions, and slides of pickles for each burger, as well as to take a slides of cheese and add them into the burgers, and finally wrap them in packages and put them aside. So this action is limited in how many cheese burgers that McDonald’s produces at one time without skipping from process to another until each process is complete. So the cheese burger menu cannot be served without French fries and coke. In here the French fries are made by someone else who is responsible only for that process and also the same thing for responsible of serving coke. We can say the cheese burger menus are done in batches as they require numerous steps before to be passed from batch to another.

MCDONALD’S BILL OF MATERIALS

Let’s take the BOM of Big Mac:

MCDONALD’S STANDARDIZATION

Since its inception, McDonald's has promoted greater standardization of its products and services. This standardization has enabled its rapid expansion and maintenance of its overall business direction across the franchise system. Indeed, since the introduction of the reduced menu in 1948 at the opening of the first modern restaurant company, hamburgers are all filled with the same ingredients, and customers cannot ask to change the recipe. The company, unlike many of its competitors, has maintained this system until today. Then, during the establishment of franchises, the franchisees are required to meet strict standards in the maintenance franchises, both the organization and maintenance in the products offered. This serves to maintain both quality standards and the control of products and services: they must be extremely similar from one restaurant to another. And more than that, With the Hamburger University, the company can also control the quality of its employees and staff in its franchises. All this control is to produce a standardized products and services in order to emphasize the feeling of safety to customers, and let them know what are exactly expecting when entering a McDonald’s. In Every day, 500,000 employees around the world, doing exactly the same gestures strictly defined, timed and controlled, this standardization is displayed as a selling point. Everywhere the crew at McDonald's repeat to its customers exactly the same phrases, eye contact at the same time.

MCDONALD’S MODULARIZATION

&

COMMONALITY

For McDonald’s modularization, we choose 4 types of menus:

                                                        McDonalds                                                  

 

 

9 Mcfish                   4 Mc Chicken                       6  Mc Tasty            3 Hamburger

 

9*4*6*3= 648

So in this case it’s Possible to produce 648

configurations with only 22  different parts.

McDonald’s Commonality:

We can absolutely see the commonality of McDonald’s in its foods, for instance we can make the same beef in different meals such as cheese burger, hamburger and so on… and also the same thing for the other ingredients, that’s why McDonald’s has it’s own special taste that remains the same in different menus in similar categories, fish menu, chicken menu and beef menu.

THE DESIGN OF MCDONALD’S

PRODUCTS/ SERVICES

There are several methods that McDonald’s has used them in improving the design of its products and services, which are: concurrent engineering, design for manufacture, collaborative design and design for environment.

In concurrent engineering McDonald’s has focused on bringing food quality specialist, marketers, good suppliers and product engineers together in order to design Mc meals through different processes by using different tools such as CAD that includes CAE and CAM that facilitate the work for designers, and increase their productivity so as to meet the expectations of its customers.

Design for manufacture: this fast food restaurant has designed its foods by an economical and organized production system, using batch process that is efficient and leads to produce high volume of foods. As there is a repeatability of the same actions and items in which the operation runs smoothly.

McDonald’s uses a collaborative design, in which its designers manage projects documents as well as work to expand the stores globally by maintaining the same store designs in terms of front office, back office, play place and so on…

In every restaurant the service plays a vital role in completing the products performance such as: the customer services, Mc drive facilities, hygiene as well as skilled managers for making an effective top down decisions and others, all of these are encompassed in the service design .

All the methods above contribute in improving and evaluating the design of foods and services that McDonald’s provides, however, the most valuable contribution in the society is the one that is done by the design for the environment by which McDonald’s uses e recycled packaging for packing the meals and that can be useful for customers in wrapping other items into it.

CONCLUSION

All major global companies have faced many and varied problems at one time or another such as: poor image, poor quality or inappropriate products to new requirements and so on. Some were able to react and adapt, and some did not. As all multinationals, McDonald’s has faced some problems :

First, the Obesity problem, which represents the accumulation of fat in a person’s body. Nowadays, this problem has become popular than it was, and it is not only caused by McDonald’s In fact by all fast food restaurants, so as this organization represents one of the most known fast food restaurant, it is always subject to receive claims from customers. In my opinion McDonald’s has to reposition itself in a pleasant place in the fast food industry by focusing more on organic foods, and also to reinforce the variety of its meals and let to its customers the choice to make the meals in their own ways.

Second, “happy meal” problems, this meal is especially for children as it includes a burger with French fries, soda and a little toy. The parents have claimed that their children usually want to eat this meal cause of the toy that is packed inside and neglecting other foods such as: vegetables, fish and so on.

Personally, I can suggest to this organization to make this meal happier than it is, without using any sort of toy, in a way of making this meal healthier than it is, in an attractive way, for instance by using vegetables, fishes, chicken… in a form of cats or dogs, cartoons or others and helps the children for eating their meals properly instead of playing and neglecting the foods, as well as it is good also for the organization to keep selling the same orders of meals or maybe more than before concerning the improvement of its happy meal image.

Besides all of the problems above, The promise of McDonald's remains always the same, in having an operational excellence, whatever in eating a Big Mac or a Double Cheese either in Beijing, New York, Stockholm and Casablanca, and it will be exactly the same product with the same quality, even the same taste and food safety and also, this fast food restaurant works on improving problems’ solutions..

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