Operations Strategy and Management of McDonalds - Case Study Example

OPERATIONS STRATEGY AND MANAGEMENT OF McDonalds Contents Contents 2 Introduction 3 Supply Chain Network 3 Process Flow Chart 5 MUDA 7 Conclusion 9 References 10 Introduction McDonald’s is one of the leading retail food chain in the global environment having its branches across spread in over 100 countries worldwide having its branches spread into Canada, Middle East, Latin America, Africa, Europe and US. It has nearly 35,000 local restaurants providing service worldwide to more than 70 million people every day. The biggest strength of the company is to provide best quality service to the customer by providing them good food at an affordable price and also provides the option to the customer to make choice among the various items provided in the restaurants. Supply Chain Network McDonalds has a huge supply chain network spread globally and the company puts lots of concentration over its supply chain as it is in the food division so maintenance of the quality of the food items and protecting them from getting damaged. The diagram showing the complete supply chain network of the company is been given below (Bass, 2010, pp. 89-96). The flow of information and also the flow of the materials give a clear indication in as to how important the supply chain is for the company. The company uses various transport medium like for transporting the materials which are perishable are been transported using cold vans which has freezer facilities which helps the company to maintain the quality of the item (Manos and Vincent, 2012, pp. 65-68). Company has looked to get local suppliers for supply of vegetables which can be availed in the fresh way. (Source: McDonalds, 2014) It has distributors in the supply chain in every city where all the raw materials come from the various suppliers of vegetables, breads, meats, milk items etc. From these distributors the materials are been supplied to the various outlets and restaurants using cold vans and trucks. The time limit for every supply of raw materials is 3 days, that is after every 3 days new stock of raw materials are been supplied to the stores and the maximum stock been maintained in the stores are only for 3 days which helps the company to keep the freshness of the product as a result of which the quality of the food item is been maintained in a good way (Wireman, 2004, pp. 113-115). McDonalds looks to maintain a good relation with the suppliers by providing them good facilities and good knowledge regarding good maintenance of the animals and also gives information to the vegetable suppliers regarding the various methods used for maintaining the quality and freshness of the vegetables. The company maintains a simple policy of one material-one supplier to give the suppliers under control and have good supplier maintenance this also helps the company to build strong and long relationships with all the suppliers (Liker and Meier, 2005, pp. 43-46). Apart from the flow of the material in the supply chain for providing quality product the supply chain of the company also helps in the flow of information which is generally in the backward directing that is from the customers to the company (Baker, 2002, pp-65-72). McDonalds has provided customers to give feedback in each and every store related to the quality of food and also the service been provided. This feedback flows from each individual restaurants to the company through the vans and helps the company to improve its quality in every aspect. The information is then passed on to the suppliers regarding the problem in the quality or the required improvement that has to be made to make the product better. This information flow also helps the company to know the exact demand of a particular product in a particular place based on which the supply of the materials can be made and it helps in reducing the costs (Pinedo and Chao, 1998, pp. 54-58). Process Flow Chart The existing process flow implemented in McDonalds restaurants in given in the below diagram. McDonalds looks to deliver the products at a quick time to its customer to reduce the waiting time of the customers. The company uses MIS (management Information System) in its operations process with the help of which the correct order s been placed and is been delivered to the customers in a quick time. The process flow shows clearly how the complete operation process takes place from customer placing the order till the particular item is been delivered to the customer. Wherein WIP represents the Work In Progress, the customer order and all the orders after been cooked are been assembled in the same place that is the counter where the order is been taken over the MIS. MIS (Management Information system) helps the company to reduce a lot of time and also to have a track of the stock along with giving the right delivery of the right food item to the right customer. This helps in easy way of flow of communication from the counter to the kitchen where the order is been displayed over a screen and it helps the cook to make the particular food item and the counter person can assemble the order of all the food items properly and deliver it to the customers (Vollmann, William, Clay and Jacobs, 2005, pp. 126-129). The time taken in the whole process based on the different process in the operations is been given using the below diagram. The total output is 120 subs per day which is been calculated based on the maximum time been taken among all the stores. The per day output for a 8hr work day for each step is thus calculated as below For 8 Hours The number of orders taken= 60*8= 480 subs Number of buns and meats slice= 8*(60/3)= 160 subs For toppings and condiments= 8*(60/4)= 120 subs Pack the order= 8*(60/2)= 240 subs Thus it is seen that the most slowest and time taking process is the toppings and condiments adding in the food items (Hounshell, 1985, pp. 98-103). Thus all the process involved in the operation and production of the products in the stores are value additional and are needed to be done to keep the quality of the food items and also make it tasteful. MUDA There are basically 7very dangerous wastes or in Japanese terms MUDA that are found in an operations process for a particular company. These 7 types of MUDA’s are been listed below. Unnecessary motion of employees Defects Overproduction Transport and goods handling Inventories Waiting All these wastes are very dangerous and hamper a lot in the operation process by increasing the time and also total cost incurred in the whole production. In McDonalds the potential waste is the transport and handling of goods and also over production. The food items been made in the kitchen like Burgers are been manually handled and carried to the counters for the delivery process instead of having a chain system as in KFC where the items are provided to the counters through trays and also in case of ice creams and cold drinks they are brought from one place from where the person in the counter has to go and bring so there is also movement of the employees and also the items which is a big waste for the company. Apart from this there is also the problem of overproduction which remains as a stock for the company which is big waste of all the resources (Sutherland and Bennett, 2007, pp. 2-5). Thus the company can look forward implementing new technology to reduce the movement of items in the store and also provide the ice cream and cold drinks facility in every counter to reduce the movement of the staff members. The company must analyze the demand of a each product and produce the products using Just-In-Time technique to reduce the wastes from overproduction. The demand analysis at every store based on the location and consumer taste preferences is very important to realize which material is to be brought more in the store and which is to be brought less from the Suppliers. McDonalds can also look to undergo a QFD(Quality Functional Deployment) to know the likes of the customers based on which it can change the product category and come with products which are more preferred by the customers this will give the company a competitive advantage over other competitors in the global market. Conclusion This study of the Supply chain management and the operation process of the food retail giant McDonalds in the global market shows clearly the wide supply chain process and the various techniques and importance of supply chain management for a company and how it helps to increase the revenue and the amount of value added by the supply chain process to the company. The study of supply chain management explains the importance of having a good relation with the suppliers and also a good transport system between the various commodities present in the complete supply chain. The study also shows the operation process and the various techniques and the flow in which McDonalds provides service to its customers globally. References Manos, A and Vincent, C. 2012. The Lean Certification Handbook: A Guide to the Bronze Certification Body of Knowledge. Milwaukee. ASQ Quality Press. Bass, 2010. Lean Six Sigma. New Delhi. Tata McGraw-Hill Education. Wireman, T. 2004. Total Productive Maintenance. New York. Industrial Press Inc. Liker and Meier, M. 2005. The Toyota Way Fieldbook. New Delhi: Tata McGraw-Hill Education. Baker, K. 2002. Elements of Sequencing and Scheduling. Hanover: Baker Press. Pinedo, M., and Chao, X . 1998. Operations Scheduling with Applications in Manufacturing and Services. Boston: McGraw-Hill/Irwin. Vollmann, T, William, B, Clay ,W, and Jacobs, R. 2005. Manufacturing Planning and Control Systems for Supply Chain Management. New York: McGraw-Hill/Irwin. Hounshell, D. 1985. From the American System to Mass Production, 1800-1932: The Development of Manufacturing Technology in the United States. Maryland. JHU Press McDonald. 2014. An Overview . [online]. Available at: < http://www.mcdonaldsindia.com/aboutus/supply-chain-management.html>. [Accessed on 12 March 2014]. Sutherland, J and Bennett, B. 2007. The Seven Deadly Wastes of Logistics: Applying Toyota Production System Principles to Create Logistics Value. [pdf]. Available at: < http://www.distributiongroup.com/articles/SevenWastesofLogistics.pdf>. [Accessed on 12 March 2014]. Read More