Managing Business Operations Assessment 2: Data Analysis Case Study Please refer to the given case study and answer the
Posted: Thu Apr 28, 2022 2:33 pm
Managing Business Operations Assessment 2: Data Analysis Case
Study
Please refer to the given case study and answer the four
questions given at the end. You are encouraged to refer to external
sources and references to back up your arguments.
McDonald’s Corporation
Case synopsis Operations Management Overview of McDonald’s
Founded in the 1940s, McDonald’s is the best-known fast-food
brand in the world with over 36,000 restaurants in 100
countries. McDonald’s serves approximately 70 million
customers a day. The company has franchised majority of its
restaurants, and this serves as one of their main revenue sources.
Other revenue sources include royalties and rent collection
(Vignali 2001). Additional revenue comes from the sales at the
restaurants directly run by the company.
The company offers a wide range of foods such as French fries,
cheeseburgers, chicken, milkshakes as well as a variety of deserts.
The food retail giant has continually recorded high sales and
profits such as the record sale of 100 billion hamburgers in 1993.
According to Gilbert and Veloutsou (2006), one of the reasons
behind the company’s success is their policy of introducing
new items in their menu to attract new customers.
McDonald’s has come to epitomise the ‘fast-food’ industry.
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:
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.
It applies a “pull” system which is referred to as Kanban in the
control of production and raw materials.
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:
Uniform and smooth production flow
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 below:
Dorchester, 1 drive-thru branch, 123,900 visitors expected over
the weekend
Slough, 3 drive-thru branches, 318,930 visitors expected over
the weekend - 106,310 per store
Hereford, 1 drive-thru branches, 102,159 visitors expected over
the weekend
Guildford, 6 drive-thru branches, 509,643 visitors expected over
the weekend - 84,941 per store
South West London, 3 drive-thru branches, 230,698 visitors
expected over the weekend - 76,899 per store
North London, 3 drive-thru branches, 224,025 visitors expected
over the weekend - 74,675 per store
Halifax, 1 drive-thru branches, 72,591 visitors expected over
the weekend
West London, 2 drive-thru branches, 138,527 visitors expected
over the weekend - 69,264 per store
Harrow, 3 drive-thru branches, 198,764 visitors expected over
the weekend - 66,255 per store
Questions
Provide information about the company. Make sure you cover
areas such as the Strategic direction, the product and
services.
You will also need to touch on the current situation (covid19
and the lockdown).
Note: Answer all questions. Each question carries 25
marks.
What approach(es) does McDonald’s seem to take for its
capacity management to reconcile capacity and demand? 600 words
Analyse the implementation of the four Ds by
the McDonald’s restaurants? 600 words
Evaluate what the five performance objectives mean for the
operationin McDonald’s? 600 words
At the Dorchester McDonald’s branch, cars arrive at
the Drive-Thru at a rate of 25 (300words)
per hour and only one drive-thru till is open. The
average time it takes for an order and collection is 5 minutes.
Assuming that the interarrival time and the service time are both
exponentially distributed. Calculate the average number of
customers arriving at the till and the average time they must wait
before exiting McDonald’s Drive-Thru. You are encouraged to
use calculations to prove any challenges if there is any and
suggest any solutions, based on the calculations.
Study
Please refer to the given case study and answer the four
questions given at the end. You are encouraged to refer to external
sources and references to back up your arguments.
McDonald’s Corporation
Case synopsis Operations Management Overview of McDonald’s
Founded in the 1940s, McDonald’s is the best-known fast-food
brand in the world with over 36,000 restaurants in 100
countries. McDonald’s serves approximately 70 million
customers a day. The company has franchised majority of its
restaurants, and this serves as one of their main revenue sources.
Other revenue sources include royalties and rent collection
(Vignali 2001). Additional revenue comes from the sales at the
restaurants directly run by the company.
The company offers a wide range of foods such as French fries,
cheeseburgers, chicken, milkshakes as well as a variety of deserts.
The food retail giant has continually recorded high sales and
profits such as the record sale of 100 billion hamburgers in 1993.
According to Gilbert and Veloutsou (2006), one of the reasons
behind the company’s success is their policy of introducing
new items in their menu to attract new customers.
McDonald’s has come to epitomise the ‘fast-food’ industry.
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:
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.
It applies a “pull” system which is referred to as Kanban in the
control of production and raw materials.
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:
Uniform and smooth production flow
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 below:
Dorchester, 1 drive-thru branch, 123,900 visitors expected over
the weekend
Slough, 3 drive-thru branches, 318,930 visitors expected over
the weekend - 106,310 per store
Hereford, 1 drive-thru branches, 102,159 visitors expected over
the weekend
Guildford, 6 drive-thru branches, 509,643 visitors expected over
the weekend - 84,941 per store
South West London, 3 drive-thru branches, 230,698 visitors
expected over the weekend - 76,899 per store
North London, 3 drive-thru branches, 224,025 visitors expected
over the weekend - 74,675 per store
Halifax, 1 drive-thru branches, 72,591 visitors expected over
the weekend
West London, 2 drive-thru branches, 138,527 visitors expected
over the weekend - 69,264 per store
Harrow, 3 drive-thru branches, 198,764 visitors expected over
the weekend - 66,255 per store
Questions
Provide information about the company. Make sure you cover
areas such as the Strategic direction, the product and
services.
You will also need to touch on the current situation (covid19
and the lockdown).
Note: Answer all questions. Each question carries 25
marks.
What approach(es) does McDonald’s seem to take for its
capacity management to reconcile capacity and demand? 600 words
Analyse the implementation of the four Ds by
the McDonald’s restaurants? 600 words
Evaluate what the five performance objectives mean for the
operationin McDonald’s? 600 words
At the Dorchester McDonald’s branch, cars arrive at
the Drive-Thru at a rate of 25 (300words)
per hour and only one drive-thru till is open. The
average time it takes for an order and collection is 5 minutes.
Assuming that the interarrival time and the service time are both
exponentially distributed. Calculate the average number of
customers arriving at the till and the average time they must wait
before exiting McDonald’s Drive-Thru. You are encouraged to
use calculations to prove any challenges if there is any and
suggest any solutions, based on the calculations.