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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, andmanagement 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 timelyand cost effective manner. (Barnett ,1996).

Operations management is related with the strategy of the organisation. In this coursework, wewill 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

McDonald's Corporation is the world's largest chain offast-foodrestaurants. The businessbegan in1940, with arestaurantopened by siblingsDick and Mac McDonaldinSan

Bernardino,California. Their introduction of the "Speedee Service System" in1948established

the principles of the modernfast-food restaurant. Today McDonald's restaurants are found in 120

countries and territories around the world and serve nearly 54 million customers each day.

( Source:http://en.wikipedia.org/wiki/McDonald's )

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 decisionsand its relationship with the strategy.

Operations Management: An Active Learning Approach By John Bicheno

PRODUCT PLANNING

Organisations exists to provide products and services which can be purchased by other

organisations or an individual. Therefore planning of products and services is one of the mostimportant operation of any organisation. It involves designing products with both economy andquality 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 adding new

products to its menu so as to meet the needs of the customers as their needs and preferences are
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constantly changing. 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 fordifferent seasons, for examples hot coffee in winter and milkshakes in summer.

CAPACITY PLANNING

The second operation decision important for organisations is capacity planning. Capacityplanning 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:http://www.mas.dti.gov.uk/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 ofingredientsto prepare food items which is very important because if one ingredients fallshort 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 isessentially 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 importantfor 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, availabilityof resources, and availability of right labour.

McDonalds Restaurants also have to plan their location in such a way so that maximumcustomers visit their restaurants. Therefore McDonalds prefer locationssuch 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 beneeded to achieve required level of output of the planned goods and services at right quality
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standards. Organisation considers both the traditional methods in which the organisation has

handled and processed its products and services and the possible alternatives which currentlypresent themselves. That is, it considers the advancement of technology, computing power, and

evolving managerial expertise. (Bicheno, 2002; p99)

In McDonalds restaurant also, the operations manager develop and establishes the process ofcooking 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, safetyand 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 methodsof 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 ofthe 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 workrelated 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, andbehavioural feasibility.

Technical feasibility : The person holding the job must be capable of performing the requiredtasks 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 toperform it.

(Greasley, 1999; p75)


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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

In the simplest terms, supply chain management (SCM) lets an organization get the right goods

and services to the place they're needed at the right time, in the proper quantity and at anacceptable cost. Efficiently managing this process involves overseeing relationships with

suppliers and customers, controlling inventory, forecasting demand and getting constant

feedback on what's happening at every link in the chain. (Kay, 2001; p1)

In McDonalds Corporation , the restaurants also have certain suppliers who supply them the with

the raw materials like buns, beef, patties, ketchup, sauce, mayonnaise, disposable cups, foodpackaging materials etc. Therefore it has to manage its relationship in a effective manner so as to

get the raw materials at the right time, in proper quantity, and at acceptable cost.

INVENTORY MANAGEMENT

Inventory management is another important operation of any organisation. It involves choosingthe 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 toensure 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 isstored 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 thereputation 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 whichMcDonalds 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


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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, maintenanceis way of protecting your production workers, office workers, drivers, and all the other users of

your organizations assets.(http://www.maintenanceresources.com/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. Anotherimportant things that needs maintenance are hygiene, costs, quality etc.

CONCLUSION:

Therefore we conclude that operations management is very important for any organisations asthey 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 managethe operations of the business as it has a massive effect on the strategy of the organisation.


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