McDonald’s is one of the largest chain of hamburgers in the world that serves more than 60 million customers in 119 countries on daily basis. The company is headquartered in United States. In UK, it operates more than 1200 restaurants (McDonald’s Corporation, 2017). The company has a workforce of 67000 people working in both the company owned branch or franchisees. The objective of this report is to analyse and examine the performance of process management and operations of the company in order to focus the supply chain. This report concludes the discussion by focusing strengths and weaknesses of the processing system of McDonald’s (McDonald’s Corporation, 2017).
Every company relies on external environment of business to grab the opportunity to grow. Moreover, apart from the opportunity, the external environment brings threats the risk that creates dynamic situation for the organisation. While considering the natural environment, global warming is an issue that creates negative impact on economies. Global warming is severely affecting the supply chain and transportation system of McDonald’s. Indirectly the quality of the food products of company will be affected because of global warming which contribute to the damage of seafood and agricultural products (McDonald’s Corporation, 2017).
Analysis of the operations of the selected organisation
The operational management is a process that considers the production and finally deliver the goods to customers. Operational activity is the core activity of the company especially while considering the size of the McDonald’s. Managing its regular operations is a challenge. McDonald’s have its establishment in different regions which has different dishes in the menu.
Nature of the transformation process-
McDonald’s follows a manufacturing process, which is completely transparent to the customers. The company follows a transformation process of inputs into outputs. It handles the input and output servicing which maintains quality services. The specific operation has a flow input-transformation-output. This system has a set of elements that work for a particular aim by acting on inputs to produce outputs. This flow adds economic value to the product. Inputs in the below flow chart are land, labour, capital, and material. The process includes roasting, wrapping, assembling that helps to obtain the output (Lee, and Vachon, 2016).
The arrow-based flow chart of transformation is the critical element, which determine the way organisation produces goods and services that can meet consumer needs.
Impact of the ‘4Vs’,
All the operational processes are similar in the process as they all indulge in transforming inputs to derive output. The distinguishing point depends on the peculiar process of what is the variety of outputs. The operational process of McDonald’s is described by analysing the four relevant aspects, which are known as- Volume, variation in demand and consumer preferences, variety, Visibility.
Volume dimension
McDonald’s serve millions flavours of hamburgers in the world. The high volume of production is organised by the McDonald’s operational department because of repetition of same task by the same people. The work is executed in a systematic manner by accomplishing standard procedures. The organisation fixes procedures related to manual and volume production by following proper instruction of the manager. Moreover, the company uses special technology to reach the efficiency and high volume processes to get the items at low cost
Variety dimension
McDonald’s has a variety of hamburgers with huge volume. Nevertheless, the demand preferences of the customers differ from region to region. With the localisation of the store, the company has provided the flexibility to the variety of burgers in the menu. McDonald’s deliver the goods in a standardised manner (Steenkamp, 2014).
Variation dimension
McDonald’s has a high and considerable variation in its product`s demand. As it offers huge range of products to the customers such as cold drinks, ice cream, and hot food. The preferences differ on seasonal basis such as customers prefer ice cream and cold drink in the summer season.
Visibility dimension
It is a considerably difficult dimension of the operational approach. This dimension considers how transparent the production process to the customers is. Customer-processing and information-processing operation is exposed to the customers. Undoubtedly, McDonald’s shows a high degree of operational transparency while executing the operational activities to the customers. The company undertakes steps to ensure transparency in the operations of the shops.
Performance objectives and current performance
To order to maintain and manage the quality and quality of resources while allocating it into the operations, it is necessary to monitor, check, and review the performance of operations. The quality control processes identify the appropriate measures of operational performances that relates to internal and external factors, which are relevant to organisational competitiveness. The operational management of the McDonald’s can analysed on the basis of five performance objectives such as quality, dependability, cost, speed, and flexibility.
Speed
Speed defines the time that the customer has to wait for the product or service. To improve the performance McDonald’s have to modify the policy and system in which it operates to serve the customers on time rather they would leave the store or food court if they find delay in the services. To perform and manage customer’s base, the company serves the customer who arrived the store first. After the first customer, the system should serve the customers in a sequence through first-in-first-out (Lee, and Lambert, 2016).
Cost
Multinational companies focus on cost of their product. Cost reduction is the main objective of the McDonald’s. If the producer is able to produce the product at lower cost, it will be able to provide the same product at low cost. The prices of McDonald’s is reasonably cheaper as compared to other companies. As more and more burgers are produced and sold, the average cost of production decreases considerably well. Moreover, the company have sought to increase its efficiency in producing the goods by minimising the cost of the inputs. The company follows JIT (just in time) to manage the inventory system.
Quality
Nearly in 2014, the company suffered violations from the key supplier in china. The issue brought out the relabeling of expired meat. This problem has affected the reputation of McDonald’s among the customers especially regarding the quality of food. To control the quality of products and services, it involves specific measures on the behalf of business that work to maintain and improve the procedures of managing the quality. The company also applies the program Hazard analysis and critical point control (HACCP) to ensure safe supply chain of its food products (Raju, Singh, and Tariyal, 2015).
Total quality management (TQM) undertakes to meet a long-term success by satisfying the customer needs. The focus of this approach is to improve the quality of final goods and services by making continuous improvements in internal practises. There are certain principles of TQM specified as customer-focused, process-centred, strategic, and systematic approaches, continual improvements in the process, information based decision-making, integrates system, and employee involvement (Business and technology, 2012).
Dependability
As the company operates at such a high level. The company has fix opening hours and ensures that the availability of stock and raw material is available constantly dusting the whole day. However, in this way customers receive order on time.
Flexibility
McDonald has introduced a digital menu board that provide a versatile digital menu as per the key customer demographics. Moreover, it is trying to change to adapt the changing nature of customer preferences such as involving the healthier food (Whitten, 2017).
Location and Layout
Layout defines the way that diverse machines are arranged in the departments to ensure the reduction in overall cost of production and time taken. This leads to achievement of maximisation of turnover of factory output and work-in-progress. The demand strategy addresses the issue of adjusting and facilitate the location. Directly or indirectly, it helps to serve the market customers effectively and satisfying the long-term demand forecasts. The company selects the area of location on different perception such as it mainly establish its store or shop in a particular area, when the area is either regarded as business area or shopping areas. By opening the store in the business area, it can target working class and business people (Crawford, 2015).
Layout Design
The design of layout is an important issue in manufacturing the products as per the current market situation. The facility layout problem (FLP) is an issue that costs high for the premises. Any transformation, change, or modification indicates an increase in the heavy expenses that cannot be attained easily. The company implements innovative strategic plans to hire or built the layouts for the store that should consider exterior and interior infrastructure of the store (Serban, 2015).
For maintaining the exterior infrastructure, company set the premises for how it would handle and cater the entry of the customers. The design of the store should be standardised as the company has high brand image in the market. Moreover, it should be in accordance with difference in location worldwide. The selected layout should save time and satisfy maximum customers. The exterior appearance of the store distinguishes it from other brands and make a recognisable image among the customers (Chen, and MacDonald, 2014).
As far as interior of the store of the company is concerned, the design pattern should be standard for all shops across the world. The company is maintaining its interior by indoor seating, adding the breakfast to the menu, play areas, and drive through the window. In addition to it, the company introduced the retail design called “Experience of future” that provides direct interaction in the store such as touch screen ordering, table service and customised and also adding the ingredients as the per the requirements and taste of the customers by touch ordering.
A new bun-toasting machine is included in the processing of the burgers and at the same time positioning of condiment containers in the process. It has established a new kitchen that led to save huge cost every year. The company has started following the assembling method elaborated in the flowchart below.
Supply chain management
It is the sum of various key business processes from procuring the raw materials to serving the end customers. Almost MacDonald’s operates nearly 1200 restaurants in UK, 65% of which are franchised and rest 35% have whole company stake. The source of raw material for UK branches is from the suppliers of Ireland. The supply chain involves nearly $500 million every year to avail them with ingredients. The CEO of the company has introduced a business model named as “three-legged stool” where suppliers, workers and the franchisees play a crucial role Esmaeilikia, Fahimnia, Sarkis, Govindan, Kumar, and Mo, 2016). The company coordinates with many suppliers who provide food, packaging, and equipment that is based on rigid rules and guidelines to confirm that the stores in local area provide the best quality products with special standards and TQM principles.
All the stakeholders such as suppliers, employees, and the franchisees are connected to each other through Electronic-procurement platform (E-procurement). This system manages global franchises and enable to collect the information more effectively and efficiently as compared to traditional Dial-up networking. E-procurement system is the backbone to not only logistics but also the whole supply chain. A company named “Emac Digital” provides the website for the McDonald’s corporation that serves 27000 franchises.
The use of information technology and human resources to support the operations
McDonald’s is the largest and well known global foodservice company which has more than 30000 restaurants in around 119 countries with the workforce of 42000 people. HR department of the company formulates the policies and programs to ensure the performances of the workforce. The link of what is necessary for maintaining the integrity of products. Four steps such as procurement, transportation, retailing of food product and warehousing helps to achieve this system (Latukha, 2015).
Moreover, along with applying the practises to attract and retain the desired employees. Employee turnover is the major problem faced by the organisations and McDonald`s could not hide from the same problem. In 2016, fast food workers fought for their rights that led to largest global strike. It took place 300 cities in every part globe. The company has a special infrastructure, which separates the processing lines of chickens and vegetable food. Transportation system carries refrigerated trucks to distribution centre that connect to suppliers by a centralised procurement. The truck transports all the required provisions to the store outlets or to the place where they are serve customers (Bernal, and Alesón, 2015).
Identification of the major strengths and weaknesses
After analysing the operations of McDonald’s, recognition the strengths and weaknesses is possible-
Strengths
Brand Recognition- By selecting the appropriate location and layout designs; it has enabled the company to build a brand image, which has won minds of customers (Bhasin, 2018).
McDonald’s strong supply chain- It is the integral and inseparable part of the company operation`s success. It provides another competitive advantage to operational activities (Krishnaswamy, 2017).
Increasing flexibility- the company is planning to introduce healthy food in its menu. Moreover, it has increased the flexibility of business so that it can address the competition and dynamic market situations (Jurevicius, 2018).
Weaknesses
Low wages- The workers play an important role in executing and running the supply chain. In various countries, the company should consider the labour rights and their low pay. To reduce the labour turnover, the company should provide necessary recognition when an employee works in the organisation for more than five years (Bhasin, 2018).
Bad image- Due to food scandals, MacDonald’s has suffered image loss such as in the case of china where it marked the expired meat from the suppliers. The company have faced lack of control for the food processes in the world by making the operations transparent to the customers (Jurevicius, 2018).
Increasing flexibility- With the increasing change in business environment, the company needs to identify the requirements and preferences of the customers. MacDonald’s should confront a movement that can give greater importance to clients for the products, which are offered.
Conclusion
From the above discussion and analysis of supply chain, 4v`s analysis and ultimately identify the strengths and weaknesses of the company. With the trend competition among the corporates, infrastructure plays an important role in deciding the layout designs and locations of the company. This considers both external and internal infrastructure of the company. The company has adopted new manufacturing process by introducing the assembling method to fasten the process of providing the product to the customers in its supply chain (Zhai, Galarraga, and Lados, 2016).
The company introduced new HR practises to reduce the employee turnover. The use of technology is prolific, as the company has started engaging with all the suppliers, franchisees and the employee through e-procurement system. The current performance of the company accomplishes flexibility by offering customers products as per their preferences, maintains its quality, and depends on the supply of raw materials timely so that the customer catering cannot be affected negatively (Latukha, 2015).
References
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Esmaeilikia, M., Fahimnia, B., Sarkis, J., Govindan, K., Kumar, A., and Mo, J. (2016). Tactical supply chain planning models with inherent flexibility: definition and review. Annals of Operations Research, 244(2), 407-427.
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