“Operations Management in McDonalds”

Operations Management• Operations management focuses on carefully managing

the processes to produce and distribute products and services. Overall activities often include product creation, development, production and distribution.

• These activities are also associated with Product and Service Management. However product management is usually in regard to one or more closely related product -- that is, a product line. Operations management is in regard to all operations within the organization

• Related activities include managing purchases, inventory control, quality control, storage, logistics and evaluations. A great deal of focus is on efficiency and effectiveness of processes.

McDonalds History

• McDonald's Corporation is the world's largest chain of fast food restaurants, serving nearly 47 million customers daily.

• It is the leading global foodservice retailer with more than 30,000 local restaurants serving 52 million people in more than 100 countries each day.

• The business began in 1940, with a restaurant opened by brothers Dick and Mac McDonald in San Bernardino, California. Their introduction of the "Speedee Service System" in 1948 established the principles of the modern fast-food restaurant.

• The original mascot of McDonald's was a man with a chef's hat on top of a hamburger shaped head whose name was "Speedee." Speedee was eventually replaced with Ronald McDonald in 1963.

• The present corporation dates its founding to the opening of a franchised restaurant by Ray Kroc, in Des Plaines, Illinois on April 15, 1955 , the ninth McDonald's restaurant overall. Kroc later purchased the McDonald brothers' equity in the company and led its worldwide expansion and the company became listed on the public stock markets in 1965

McDonald's in Pakistan

• Aiming to be the world's best quick service restaurant, McDonald's Pakistan opened its doors in September 1998 at Lahore and presently operating in six major cities with a network of 20 restaurants.

• With a strong belief in the Ray Krock phrase, “ When you are green you are growing”, McDonald's Pakistan has an aggressive plan to expand in all other cities of Pakistan and is rapidly growing with the focus to provide friendly and quick service restaurant experience to our customers.

• McDonald's Pakistan is a part of the Lakson Group of Companies, with a Head Office in Karachi and a regional office at Lahore. Lakson Group also owned, Lakson Tobacco Co. Colgate Pakistan Ltd, Century Insurance Ltd. Express Newspaper, Cyber Net and various others businesses.

ORGANIZATIONAL STRUCTURE

• The company is basically organized in a lateral form where the CEO is at the top while management of various departments is outsource.

• For instance: Consulting: this groups looks after the financial position and anticipate future financial status of the company. It deals with development and progression strategies, identifying opportunity growth for the company.

Overview

• Managing a company with the size of McDonald's is a mammoth task. As a result, managing its day-to-day operations is a major challenge and that the information and communications technology requirements and infrastructure should be well placed.

Background to McDonalds operations management

• Before the McDonald brothers invented their fast-food production system, some restaurants did make food pretty quickly. These restaurants employed short-order cooks, who specialized in making food that didn't require a lot of preparation time.

• Being a short-order cook took skill and training, and good cooks were in high demand. The Speedee system, however, was completely different. Instead of using a skilled cook to make food quickly, it used lots of unskilled workers, each of whom did one small, specific step in the food-preparation process.

The McDonald brothers' changes also applied to the design of the restaurant kitchen. Instead of having lots of different equipment and stations for preparing a wide variety of food, the Speedee kitchen had:

• A very large grill where one person could cook lots of burgers simultaneously

• A dressing station where people added the same condiments to every burger

• A fryer where one person made french fries • A soda fountain and milkshake machine for desserts and

beverages • A counter where customers placed and received their

orders

Operations and managing things at

McDonaldsWhen you visit one of them and go inside, you almost always place your order and collect your food at a counter

• When you drive through, you place your order at a speaker or a window, and someone hands it to you through a window

• The food arrives individually wrapped and in a bag or on a tray

• You can eat most of the food without using a knife or fork • The food is relatively inexpensive • Individual restaurants in the same chain physically

resemble or are identical to one another • When you visit different restaurants from the same

chain, the menu and food are pretty much the same

• Different regions might have special dishes on the menu, and different countries might have different items and recipes depending on the local culture. But in general, food from a particular chain tends to taste the same no matter which restaurant you visit. There are several reasons behind this:

• The food itself is mass produced in a factory and then frozen. Restaurants store this frozen food in large, walk-in freezers. Cooks reheat it rather than making it from scratch.

• The factory adds artificial and natural flavors to the food to make sure it all tastes the same.

• The equipment in the kitchen cooks all of the food for the same amount of time. For example, in some chains, a conveyor belt carries hamburger patties through a broiler. The broiler cooks the patties on both sides simultaneously, and the conveyor belt makes sure they're cooked for precisely the right amount of time.

• The employees in different restaurants follow the same instructions for cooking, dressing and packaging the food.

The Processes

• The mass-production process requires each restaurant chain to have a distribution network to carry the food to every restaurant. Warehouses store enormous amounts of everything a restaurant needs, including food, paper products, utensils and cleaning supplies. The warehouses then ship supplies to each restaurant by truck. Warehousing and distribution, just like the management of the chain, is centralized rather than handled by each restaurant.

• Often, this distribution process is the responsibility of a distribution company, not of the chain itself. Using this sort of network has several advantages. The chain can keep its entire inventory in several centralized distribution centers rather than in each individual restaurant. The chain can also purchase supplies for all of its restaurants at once rather than having each restaurant find its own suppliers. Since it's buying in bulk, the chain can negotiate lower prices than restaurants could on their own.

• In some chains, managers track the restaurants' inventories of food, wrappers, cups, utensils, cleaning supplies and other necessary items. They then order everything the restaurant needs from the distribution center, which ships it to them.

• In other chains, this process is automated - a computer keeps track of what the restaurant has and should have on hand, or the distribution center ships the necessary items on a regular schedule instead of waiting for a request from the restaurant.

• McDonalds is always keen to take charge of the crucial task of turning the company around to meet customer demands. One of the first steps that it proposes has been to innovate the process of manufacturing and logistics.

• This had been done with the view to increase efficiency of the supply chain in terms of capacity, technology selection and buying policies.

• This have been able to decrease the constraints within the industry. This system has been effective because it has been able to optimize the need of the company, fulfilling the work time constraints at the various outlets. The change in process of manufacturing required training as well.

Strategy

• McDonalds does not believe in opening its restaurants without any knowledge of the local culture and tastes.

• The company caters to a large consumer market with varying tastes and thus cannot afford to introduce products without familiarizing itself with provincial preferences in food. For this reason, McDonalds distributes its products in foreign locations with the help of franchisees who are well aware of what works in their country.

• This is an extremely intelligent distribution method because on the one hand, it does not create rifts between foreign governments and McDonalds officials; and, on the other hand, it helps in providing people with the kind of products they desire. It is important to understand that McDonalds does not change its basic product range for any country but tries to introduce certain changes in secondary products in order to make them more suitable for local tastes.

The Hype

• McDonalds possesses a highly visible and popular brand image around the world. The firm has grown to become one of the most popular food brand names in the world, with continuous increases in exposure in new markets, such as Asia and Europe, amongst others.

• The increasing popularity in new markets has positioned the firm for continued growth in market share and customer buying power. The McDonalds strategy map encompasses four key perspectives: 1) Financial; 2) Customer; 3) Internal Process; and 4) Learning. These perspectives have evolved over time into a well-defined vision for the corporation, which is to become the most positive dining experience in the world

Every one’s Lovin’ it

• The widely imitated success of McDonald's offers an excellent example for today's managers and executives searching for greater production efficiencies.

• Kroc showed the world how to apply sophisticated process management to the most prosaic endeavors. To succeed the McDonald's way, companies must define the basic premise of the service they offer, break the labor into constituent parts, and then continually reassemble and fine tune the many steps until the system works without a hitch.

• Today, companies engaged in delivering pizzas, processing insurance claims, or selling toys benefit from the kinds of systems that Ray Kroc pioneered. To the degree that such operations maintain quality control, and cherish customer satisfaction, profits may flow.