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Operations Management (McDonalds Case Study)
INTRODUCTION - OPERATIONS MANAGEMENT:
Operations management can be defined as the planning, scheduling , and control of the activities that
transform inputs into finished goods and services. In other words, it is a field of study that focuses on
the effective planning , scheduling, use, and control of a manufacturing or service organisation through
the study of concepts from design engineering, industrial engineering, and management information
systems, quality management, production management, accounting, and other functions as the affect
the operation. (APICS Dictionary, 1995)
Operations management concerns making the most efficient use of whatever resources an organisation
has so as to provide the finished goods or services that its customer need in a timely and cost effective
manner. (Barnett ,1996).
Operations management is related with the strategy of the organisation. In this coursework, we will
demonstrate the relationship between the operations management and the strategy of the organisation
with the help of a corporate entity.
The corporate entity chosen is McDonald's Corporation.
COMPANY BACKGROUND
.
In all its restaurants around the globe, there are a number of operations that has a relationship with the
overall strategy of the organisation. Let us know discuss the key operations decisions and its relationship
with the strategy.
PRODUCT PLANNING. 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 McDonalds Restaurants, product planning is a key operation. It has to keep on 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 PLANNING
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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: www.mas.dti.gov.uk http:// /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.
LOCATION PLANNING
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 location that are suitable for
raw material delivery, that is availability of ample space for deliveries of raw material.
PROCESS PLANNING:
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)
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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.
JOB DESIGN
Job design consists of formal specifications and informal expectations of an employees work related
activities. The job design should try to meet the needs of both the job holder and the organisation. Thus
each job must be reasonable compromise of technical, economic, and behavioural feasibility.
Technical feasibility : The person holding the job must be capable of performing the required tasks with
the resources available to them.
Economic feasibility: The cost of providing a salary to the employees, providing equipment and
maintaining the organisational environment must remain within the organisations capabilities.
Behavioural feasibility: The feeling that people derive from a job affects their motivation to perform it
Job designing is also an important operation in McDonalds restaurant. Each employee is designed a
particular set of jobs. For example, some crew members cook food items in kitchen, some crew member
work on the counter, while others look after the customers in the lobby. Also there are employees who
manage all the crew member and look after overall wellbeing of the restaurant. While designing these
jobs the technical, economical and behavioural feasibility is taken into consideration.
SUPPLY CHAIN MANAGEMENT
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and customers, controlling inventory, forecasting demand and getting constant feedback on what's
happening at every link in the chain. (Kay, 2001; p1)
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 needs and 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
organizations assets. /
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:
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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.
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