Answer to Question #156507 in Economics for harink

Question

Central to its early success was the ‘Speedee Service System’ – an operations process that prioritised a standardised process that prescribed consistently high quality, exact preparation methods, specially designed equipment and strict product specifications. In particular, operating procedures were specified in minute detail with prescribed specific cooking instructions and operating procedures, defined to ensure a required customer experience. With the increasing number of recently established ‘fast food’ brands in the market competing in various ways, has forced McDonald’s to become more innovative when delivering its quick service. Quality operation (management) at McDonalds has been considered as one of the main factors which has catapulted the company to the top of the food retail industry. The organisation has digitised its information systems as well as implementing it with an objective of facilitating revolutionising how customers pick up their food. McDonalds prioritises the improvement and maintenance of the provision of high-quality products and services. Their business model’s focal point is service based, and they have continually improved their customer services to the extent that the current waiting time for customers has been significantly reduced. Thus, resulting in the process of pick-up orders at any McDonald’s outlet being fast and efficient. Inventory Appraisal In the traditional operation management, inventories of finished products and raw materials are held as a reserve in case needed items run out of stock. However, in the recent years, management has realised such large inventories are expensive. As a result, majority of organisations have changed their methodology in inventory and production management (Patton et al., 2011). McDonald’s has also implemented strategies in the control of flow of food processing in a multistage process of production. This inventory and production management approach is referred to as Just-In-Time Management (JIT), in which goods and raw materials are acquired when they are to be used in a certain production stage. This type of production and inventory has brought significant savings to the cost of production due to decreased inventory levels. The key aspect of JIT is its use of the “pull” strategy in the control of production (Patton et al., 2011). The JIT system at McDonald’s has some essential aspects which includes the following: I. It reduces inventory in the supply chains. This system of inventory management gains substantial efficacies through numerous deliveries of minimal quantities to cater for the instant demands in the food production chain. II. It applies a “pull” system which is referred to as Kanban in the control of production and raw materials. III. It also involves the commitment of employees regarding their involvement and participation. Since its adoption of the JIT system, McDonald’s has managed to significantly reduce the cost of production. The following important characteristics of the JIT approach are behind these cost savings: I. Uniform and smooth production flow II. The pull method of stage coordination during production McDonald’s Performance Objectives Performance objectives are developed by an organisation’s management to serve as guiding principles for the company’s vision and mission to accomplish set objectives in all aspects of the organisation. They are developed based on the specific activities and operations performed by the organisation (Johnston, Clark and Schulver 2012). McDonald’s performance objectives enhance the quality of products and ensure the maintenance of good customer service and relations. Customer satisfaction is a key aspect in McDonald’s business model mostly because the firm is service-based. They have continually improved their customer services to the extent that the current waiting time for customers has been significantly reduced. Kaplan (2009) describes the process of picking up orders at any McDonald’s outlet as fast and efficient. The firm has strived to ensure that customers have good customer experiences in all McDonald’s food outlets. The firm has also adopted and implemented modern technology to enhance their service delivery; such digitalising of their operations has enabled the McDonald’s employees to serve more customers daily. McDonald's also focuses on costs as one of the performance objectives. Cost is an important aspect of any business enterprise that aims to have competitive prices. Some organisations lose cash on employee wages, purchase of tools and machinery and provision of services which minimises their profits. McDonald’s has mastered the art of minimising their operating costs. They are thus able to sell their food much lower than their competitors. Food Quality is one of the main emphasis of McDonald’s. The company has established measures and regulations to ensure that all their stores maintain high quality standards. Some of the measures defined by the quality management operations include regular inspection of food quality at all McDonald’s restaurants. Speed is the time it takes for the customers to have their products or services delivered. McDonald’s aims to reduce this waiting time to 95 seconds. The objective is to achieve a drive through experience and hence the company needs to fine tune this aspect. Employee Management Employee management in quality control operations is primarily based on scientific management principles. This principle suggests that workers should be rewarded for accomplishing their set objectives and goals. They should also be rewarded with promotions for achieving certain degrees of academic education. McDonald’s food chain has implemented the use of job promotions and competitive wages where hardworking employees are recognised and rewarded. McDonald’s rewards exceptional and outstanding employees in different ways such employee of month awards and positive remarks and cognitions (Slack, Chambers and Johnston 2013). The organisation has implemented some thorough and precise procedures that govern the employees’ working environment and ensures the food products being sold to customers are of high and uniform quality in all its franchises. COVID-19 Related Operation Management Challenges at McDonald’s The following are the main challenges facing the management of operations at McDonald’s: • Variety of overall output • The varying demand for the end products • Degree of visibility of the end products to the potential customers • The volume aspect McDonald’s is popular for its inexpensive prices, and regularly faces the problem of long queues. For fast food restaurants, fast queuing times and short queuing lines are important in attracting customers, besides inexpensive price, good worker attitude and superb food quality. Initially it was known that customers arrive at a rate of around 10 per hour and that an average time it takes to complete their order was within 5 minutes. With new social distancing measures in place across the UK and Ireland McDonald’s has had to adjust their day-to-day operations. The restaurants closed seating areas and temporarily moved to only offering Takeaway, Drive Thru and McDelivery. The My McDonald’s App would continue to offer the opportunity to order and pay ahead for collection and Drive Thru. After the lockdown it was reported that the expected number of customers was estimated at around 123k vehicles at the only McDonald’s branch in Dorchester (Munbodh, 2020). Across the Britain McDonald’s drew largest number of customers over one weekend as seen in the table.

1. What approach(es) does McDonald’s seem to take for its capacity management to reconcile capacity and demand? 2. Analyse the implementation of the four Ds by the McDonald’s restaurants? 3. Evaluate what the five performance objectives mean for the operation in McDonald’s?

Answer 1

1. What approach (s) does McDonald’s use to manage capacity to match capacity and demand?

McDonald's plans employment and production without distributing demand across all types of products offered; they focus on aggregate demand and the aggregate output they can supply.

 2. Analyze the performance of the four D's in McDonald's restaurants?

Double the 3 D (Digital, Delivery & Travel) by leveraging a competitive edge and creating a powerful digital experience growth engine that delivers fast, easy experiences for our customers.

3. What do the five performance indicators mean for McDonald's?

Cost is an important aspect of any business that seeks to be competitively priced. Some organizations lose money through staff salaries, buying tools and equipment, and providing services that minimize their profits. McDonald’s has mastered the art of minimizing its operating costs. Thus, they can sell their food for much less than their competitors. Food quality is one of McDonald's top priorities. The company has established policies and procedures to ensure that all of its stores meet high-quality standards.

Speed ​​is the time it takes customers to deliver their goods or services. McDonald's is committed to reducing wait times to 95 seconds.