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Operations management is a keyword or method that is used to convert the inputs like materials, labour, 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 manufacturingÂ or service organisation 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 organisation 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 organisation, operations management relating with the strategy of the organisation plays a vital role. However, in this coursework, we will demonstrate the relationship between the operations management and the strategy of the organisation with the help of a corporate entity.
The corporate entity chosen isÂ McDonald's Corporation.
McDonald's CorporationÂ was first launched in 1940. It is one of the leading fast-food restaurant chains in the world. It was driven by siblings Richard "Dick" J. McDonald and Maurice "Mac" McDonaldÂ inÂ San Bernardino,Â California. The employees were instructed to "Treat Every Customer with Respect" and so children were made to feel special when they ordered. The food was not only served quickly, to a consistent standard, but it was also inexpensive. The result was the "Speedee Service System." The principle of the modern fast-food restaurant was established in 1948. Due to fastest growing company, McDonald's restaurants are found in 120 countries and territories around the world and serve nearly 54 million customers each day.
In all its restaurants around the globe, there are a number of operations that has a relationship with the overall strategy of the organisation. Let us now discuss the key operations decisions and its relationship with the strategy.
Problems in McDonald's Restaurant - Woolwich
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.
The kitchen space is much narrowed.
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.
Capacity planning is the way of determining the capacity of product that the organisation needed to meet changing demands for its products. In the circumstance of capacity planning, "capacity" is the maximum amount of work done by the organisation in a given period of time. So, capacity panning is important for any organisation for operation decision making. Operations managers usually distinguish between short, medium and long-term capacity decisions. For short- and medium-term capacity planning, the capacity level of the operation is adjusted within the fixed physical limits that are set by long-term capacity decisions. This is also referred to as aggregate planning and control because it is necessary to aggregate the various types of output from an operation into one figure.
In McDonalds Restaurant, the operations managers have to set its capacity of making food items in such a way that it responds quickly to the demands of those items in peak hours which is very important for a fast food restaurant like McDonalds. It also have to make sure that it has enough stock ofÂ ingredientsÂ to prepare food items which is very important because if one ingredient fall short then the whole process of making food may halt. For instance, if the buns required for making hamburgers fall short, then the restaurant may not be able to sell any hamburgers even if it has enough quantities of other ingredients.
Another most important role that every organisation 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 organisation. Better location planning leads the organisation in success and obviously worse location planning leads the organisation in failure. Therefore, it is an essential significant success factors for any organisation. 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 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.
Layout 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 ofÂ achieving either optimal or near optimal layout plans. Care must be taken by organisation when designing layout because poor layouts may lead the organisation to reduce the overall capacity and overall productivity.
In McDonald's Restaurant also, layout 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 is another important operation of any organisation. Inventory management is the process of controlling the stocks needed to run any organisation. It involves choosing the best method of inventory control. While choosing the method of inventory control, the organisations 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 organisation.
Whether for profit, non profit, or an organisation like health-care maintenance organisation, quality management is the single most important process in any organisation for maintaining the quality of the goods and services. It also helps the organisation to keep up the reputation of the organisation. To manage and maintain the quality of the products and services, the organisation 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.
Therefore we conclude that operations management is very important for any organisations as they have a relationship with the overall strategy of the organisation. Operations management contributes to the strategy and therefore helps the organisation to gain competitive advantage. For instance, process planning can help the organisation reduce cost and gain cost advantages and therefore gain competitive advantage. Therefore the organisations must effectively manage the operations of the business as it has a massive effect on the strategy of the organisation.