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Operations management Essay

McDonald’s Corporation is the world’s largest chain of fast-food restaurants. They’ve proudly served more than 46 million customers in 59 different countries and currently have more than 30,000 different locations worldwide. The fast food industry is booming at a rapid rate, especially the health conscious food options. With this in mind, McDonald’s has a strategic plan to stay on top of their competitors by providing consumers with affordable prices, great service, and more healthy meal options. McDonald’s is competitive in many categories, including price, quality, management and employee training. Consumers trust McDonald’s products because they use many of the same trusted brands that families buy at local grocery stores.

Operations Strategy
“In many companies, the key to success is often an operations-based advantage. Superior operations effectiveness not only serves to buttress a company’s existing competitive position, but, when based on capabilities that are embedded in the company’s people and operating processes, is inherently difficult to imitate.” –R. H. Hayes and D. M. Upton, “Opeations-based Strategy.” California Management Review, Summer, 1998. McDonald’s utilizes an excellent operations strategy in order to gain a larger market share and increase value to the shareholders.

The corporation specifically focuses on speed, standardization, quality, and affordability. McDonalds has moved ahead of the competition by focusing on these factors. McDonald’s competes on three main bases, such as speed, affordability, and standardization, mainly to make their customers happy. Through extensive market research and surveys, the organization discovered that its customers desired speed as one of the restaurants’ top priorities. Therefore, McDonald’s vision aims to “provide fast, friendly and accurate service” (“McDonald’s Worldwide”).

McDonald’s realized that specific targets are necessary to measure the performance of speed; therefore, they continuously take relevant measurements to compare actual performance with desired targets. From the customer’s order, to the making of the burger, and till the customer leaves the restaurant, speed is a key factor in McDonald’s operation strategy.

To reduce the amount of time it takes to provide services, the company uses standardized training processes for its employees and new drive-thru layouts. Along with speed, McDonald’s also competes by offering prices at a low cost. McDonald’s organization recently underwent drastic strategy changes to better serve their customers. Under their previous system, the company would make several sandwiches at once, and hold the sandwiches in a warming bin until purchased by a customer. Under this system, management had to precisely predict how much food had to be put on hold. Precise prediction had to be used because if there were not enough food placed on hold, this would create the problem of increase waiting times for customers, and too much food would cause waste of expired items. McDonald’s dramatically changed their strategy in order to stay competitive with other fast food organizations.

Product development
Organisations exist to provide products and services which can be purchased by other organisations or an individual. Therefore planning of products and services is one of the most important operations of any organisation. It involves designing products with both economy and quality in mind, which a customer will find attractive, be able to understand and quickly able to use with minimum risk and which delights him or her by its performance or flavour or durability etc. (Bicheno, 2002; p51) In McDonald’s Restaurants, product development is a key operation. It has to keep on adding new products to its menu so as to meet the needs of the customers as their needs and preferences are constantly changing. For instance, the increasing preference of consumers towards healthy food made the restaurant add healthier food items to its menu. Similarly it has to add new products for different seasons, for examples hot coffee in winter and milkshakes in summer. Capacity Control

The second operation decision important for organisations is capacity planning. Capacity planning and control is the task of setting the effective capacity of the operation so that it can respond to the demands placed upon it. This normally means determining how the operation should respond to fluctuations in demand. 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.

(source: http://www.mas.dti.gov.uk/content/resources/categories/fact/FACT_Capacity_planning.html) 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 of ingredients to prepare food items which is very important because if one ingredients fall short then the whole process of making food may halt. For instance if the buns required for making hamburgers falls short then the restaurant may not be able to sell any hamburgers even if it has enough quantities of other ingredients. Facility location

Location planning is one of the important operations that every organisation carries out and it is essentially one of the critical success factors for any organisation. Success or failure of any organisation may well depend on the location where it is situated. Therefore it is very important for businesses to choose an ideal location. Businesses may choose location on the basis of various factors such as proximity to the source of raw material, cost-effectiveness, proximity to customers or suppliers, competition in the area, transportation availability and cost, availability of resources, and availability of right labour.

McDonalds Restaurants also have to plan their location in such a way so that maximum customers visit their restaurants. Therefore McDonalds prefer locations such that it can have large customer base, transport access and availability of parking space. Moreover it also prefers locations that are suitable for raw material delivery that is availability of ample space for deliveries of raw material. Process design:

After developing the product the businesses have to develop processes for making and supporting the product. Organisations have to identify appropriate processes which will be needed to achieve required level of output of the planned goods and services at right quality standards. Organisation considers both the traditional methods in which the organisation has handled and processed its products and services and the possible alternatives which currently present themselves. That is, it considers the advancement of technology, computing power, and evolving managerial expertise.

Bicheno, 2002; p99 In McDonalds restaurant also, the operations manager 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 also designs processes so that the health, safety and hygiene issues are taken into consideration. Also the managers keep on introducing latest equipments with the advancement of technology so as to bring pace, perfection and quality in the product. Layout Design

Layout is the arrangement of facility to provide working, service and reception, storage and administrative areas. The layout is designed by traditional techniques using templates, scale plans, string diagrams, and travel charting as they have been proved as low-cost methods of achieving either optimal or near optimal layout plans. Poor layouts can greatly reduce the overall capacity and overall productivity.

Therefore care must be taken by organisation when designing layout. (Bicheno, 2002; p121) In McDonalds Restaurant also layout designing is a very important operation. A proper layout of the equipments in the kitchen is very essential to ensure preparation of quality food in less time. It also designs its layout keeping in mind the health and safety issues. It also designs layout in such a way that needs of supervision is minimised. Another factor that is considered is the cost of production which also depends on the layout. .

Inventory Management
Inventory management is another important operation of 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. The basis on which the organisations choose their methods of inventory control may differ but the common idea is to ensure that the mix of inventory types is able to satisfy customer needsand deliver the required profitability and cash flows. In McDonalds the inventory is managed on the basis of First-In-First-Out basis.

This is because most of the inventory consists of perishable items. Therefore delivery of inventory happens thrice or more times a week depending on the business of the restaurant. Moreover inventory is stored in freezer with proper packaging so as to ensure freshness of the food items. All this activities comes under inventory management of the organisation. Quality Management

Quality management consists of maintaining the quality of the goods and services so as to meet the minimum requirements laid by the industry. Moreover it is important so as 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 McDonalds 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. Maintenance

Maintenance means preservation of the things in the organisation. In simple words, maintenance is way of protecting your production workers, office workers, drivers, and all the other users of your organization’s assets. (http://www.maintenanceresources.com/ReferenceLibrary/MaintenanceManagement/The_Battle_of_Maintenance.htm) In McDonalds, there are several equipments that are used for the preparation of food. Therefore it is very important to maintain and service those equipments so as to maintain the quality of the product, safety of the employees and to avoid further costs of repairing machines. Another important things that needs maintenance are hygiene, costs, quality etc. CONCLUSION:

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 Bibilgraphy

Chase, R., Jacobs, F., Aquilano, N. Operations Management for Competitive Advantage (10th Edition). McGraw-Hill Irwin; Boston; 2004. Howard, Lisa. “Suppliers.” June 19, 2003. Accessed online on November 8, 2004 at: . Kerin, R., Berkowitz, E., Hartley, S., Rudelius, W. Marketing (7th Edition). McGraw- Hill Irwin; Boston; 2003. Lessnau, Ronald, Current McDonald’s Owner. Personal Interview “McDonald’s Worldwide Corporate Responsibility Report 2004.” Accessed online on October Phillips, Eddie, Prior McDonald’s Manager, Personal Interview, Phillips, Kenny, Current McDonald’s Manager. Personal Interview, October 27, 2010 “Restaurant Management.” McDonald’s Restaurant Management Careers. Accessed online Zuber, Amy. “Big Mac, Big Value: McD to Lower Prices;” Accessed online at http://www.findarticles.com/p/articles /mi_m3190/is_50_35/ai_80748686.

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