McDonald’s Operation Management & Supply Chain

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Need to write a McDonald’s operation management assignment? This case study on McDonald’s operations explores the issues of the company’s supply chain & production system strategy.

Table of Contents

Introduction
Background Information
Operation Management
Conclusion
References

Introduction

Operations management is defined as the planning, scheduling, and controlling of all the activities that can transform organizational inputs into finished goods and services. It focuses on effective organization and control of manufacturing through the application of such concepts as engineering, quality management, production management, accounting, and management systems. In addition, it entails making use of all the resources available to produce finished products or services and to meet the customers’ needs in a cost-effective manner. Research of McDonald’s operation management will provide an understanding of its success with customers and in the industry.

The processes involved in operations management are the creation of the products, development, production, and distribution. Other activities that are related to the phenomenon are the regulation of purchases, control of inventory, quality, storage, and overall logistics. They can be realized through efficient and effective processes (Heizer, 2022). Operations management places a significant focus on the management of the processes involved in the creation and distribution of the products.

McDonald’s Case Study: the Background

McDonald’s is the largest and most popular of the fast-food chain restaurants in the world. It was founded by Dick and Mac McDonald in California in the year 1940 and facilitated by the initiation of franchised restaurants by Ray Kroc. MacDonald’s serves approximately 47 million clients per day.

They have approximately 30,000 outlets located in various parts of the world and subsidiaries in over 120 countries and territories.

In all the McDonald’s restaurants in the world, there are several operations that have a relationship with the overall strategy of the organization. In this portfolio report, the details of McDonald’s competitive strategy, supply chain, quality management, raw materials, and forecasting are reviewed.

Among the foods that are sold at McDonald’s are hamburgers, cheeseburgers, French fries, milkshakes (chocolate, strawberry, and vanilla), coke, orange, root beef, and coffee. McDonald’s menu is synchronized into beef, chicken, bread, and potatoes.

MacDonald’s operations are concentrated in the service industry, and the greatest challenge in the industry is that there is much need for warmth and friendliness in order to meet the customers’ satisfaction. It is the largest food services company in the world, and it is considered the leader in global food service retailers (Sinha, 2023).

The main operation that can take place at McDonald’s is services, which are realized through taking orders by the staff and getting the same orders ready for the customers.

McDonald’s Operation Management

McDonald’s Supply Chain

Supply chain management enables organizations to get the right goods and services to the place they are needed at the exact time, at proper quality and quantity, and at an affordable cost.

Managing the supply chain process involves overseeing the relationship between suppliers and customers, controlling inventories and forecasting demand, as well as getting feedback concerning what is happening at whichever link of the chain.

In McDonald’s Corporation, the restaurants also have various and particular suppliers that provide them with raw materials like buns, patties, beef, sauce disposable cups, and other food packaging materials. This stresses the fact that the corporation has to manage its relationships with the suppliers in order to receive its raw materials at the right time, with proper quality, and at an affordable price.

McDonald’s supply chain is that of a three-legged stool where there are the corporation, suppliers, and operators. The supply chain involves purchasing and logistics. The supply chain of McDonald’s encompasses the following challenges: a strong focus on quality and freshness, product innovation, fluctuation of customer demand, and order inventory management.

McDonald’s Global Business Strategy

With the boom experienced in the fast-food market, McDonald’s has developed a strategic plan that will enable it to be at the top of their competitors by selling their goods at affordable and friendly prices, providing more healthy meal options for their consumers, and great and quality services for their customers.

McDonald’s competitiveness is based on different aspects, including pricing, quality, employee training, and management. Consumers have confidence in the products of McDonald’s due to their nature of using tested and trusted brands that families buy and use in local grocery shops (McDonald’s, 2022). Its only competitive advantage is that McDonald’s shopping cart is usually bigger.

McDonald’s restaurants operate in a competitive and challenging environment, and they achieve their competitive edge by providing customized products and services. Without strategies, ineffective competitors cannot withstand the market competition.

To maintain its competitiveness, McDonald’s employs a competitive strategy that enables it to compete in various aspects, for instance, the speediness of its services, meeting nutrition demands, and meeting customer satisfaction, as explained below.

Speed: This is the ground that prompts McDonald’s to provide speedy and affordable services. After performing comprehensive market research, McDonald’s realized that its customers stressed the desire for speedy services as their top priority.

This made it endeavor to provide fast, friendly, and accurate services in order to meet customer demands. McDonald’s deems it necessary to measure their speed performance and compare it with their desired targets. This is normally reported to the quality management department. This speed enables the company to sell their products at a lower cost.

Cost: Offering their services at a lower cost requires an effective and efficient process. This efficiency is stressed and well indicated in the company’s goals and vision statement. To offer value for money, McDonald’s has employed several strategies, which include a value meal where customers can buy goods at a discounted price, especially when they purchase sandwiches, French fries, and beverages together.

McDonald’s provides seven to twelve meals at one meal menu. Secondly, McDonald’s has applied the strategy of a dollar menu, which encompasses several individual products that are sold at the price of only $1 each. This proved to be successful when it was tested in southern California and was later incorporated into several of their shops.

McDonald’s operations management has also included several promotions to boost their sales. The popular promotions are the $0.39 hamburger on Wednesdays and other big occasions and the Big Mac Monday.

Nutrition: This is the third competitive strategy for McDonald’s. This has been prompted by the change in health and consumption trends and, hence, the need to promote better nutritious options. The offering of Go-Active meals, which include salad, bottled water, and a step-o-meter to track customer steps daily.

There are several health options in various countries depending on the diet of that region. McDonald’s is always considerate of the needs and desires of its customers and their health.

This has been achieved by assembling their Global Advisory Council on balanced lifestyles, which can advise and assist in exercise and obesity measures. This is to ensure that McDonald’s takes responsibility for helping its customers achieve optimal health.

McDonald’s also utilizes modern technology to enhance the efficiency of its services so that customers can select their menu combination over the Internet and conduct nutritional analysis on their menu selection (WBR Insights, 2023). This has given McDonald’s an edge over its competitors.

The driving objective of McDonald’s is to make their customers happy through the enhancement of their competitive dimensions of speed, price, nutrition, and customer satisfaction.

When we rate and compare McDonald’s with its competitors like the Charlie Trotters in Chicago, McDonald’s competes on the platform of cost or price, flexibility, and delivery of services, where they offer their goods at a cheaper cost, deliver their products within minutes of the order, and they embrace flexibility in their product choice. In contrast, Charlie trotters compete to provide top-performance quality with excellent meals, but they are expensive (Khan, n.d.).

McDonald’s Operation Management & Production Process

Since it is a fast-food company and serves dynamic customers with different tastes and preferences, McDonald’s Corporation has developed special dishes on the menu based on various factors, including the country, population, culture, and recipes.

To realize quality operations, McDonald’s employs advanced technology in calculating the time a particular process can take. They have also created a database for observing time and making improvements.

One of the particular specific measurement tools is the Total Time in Line, which computes the time a customer spends in the McDonald’s line from the time of ordering until the time he begins to be served, and the target time in this process is 90 seconds.

There is also a system that supports fulfilling speedy orders like the Made for You system, which utilizes the Kitchen-video-System, which eases the process of data entry for the staff.

McDonald’s also utilizes technology in the drive-through area. This is whereby, when a drive-through worker is making an order, the order is displayed straight on the screen available for the customer, which is called the Customer Order Display (COD).

Through this screen, the customer can make changes or correct mistakes incurred in the ordering process. This makes ordering processes precise and efficient, hence minimizing time spent.

Regarding the use of technology, McDonald’s operates an automated system where a computer keeps track of what is available in the restaurant (“McDonald’s value chain analysis,” n.d.). It also monitors what the distribution center needs to ship to the restaurant on a regular basis instead of having to wait for inventory requests from the restaurants.

The Internet is also used at the McDonald’s to advertise their products. McDonald’s offers sales promotions online through coupons, and they also have sweepstakes and online contests.

The Internet is utilized by McDonald’s as a platform for performing public relations and individual selling. Their official website is well known; it is a comprehensive one with all the requisite information needed by the customers, including the menu, location, and pricing.

McDonald’s Commitment to Quality

McDonald’s commitment to quality is measured through the time it takes to process orders and customer products, which can be realized through effective and efficient operations.

To enhance its quality, McDonald’s must ensure that inspection is carried out on all foods. Every McDonald’s restaurant should check on food temperatures, dates of expiry, and several other food hazards every day.

The restaurant has a comprehensive standardized food safety operation that is made available to all restaurants, and it contains the food items that should be measured.

Consequently, periodic controls and corporate inspections are regularly undertaken, whether with or without notice, and there are a minimum of two inspections every year in all restaurants. Furthermore, to ensure quality, store managers in every restaurant perform inspections frequently.

McDonald’s also applies the five Ps policies to enhance their quality. These are people, price, promotion, product, and place. People are the individuals who are employed in McDonald’s chains and are represented by services, hospitality, and pride.

McDonald’s staff are trained and retained in order to save the cost incurred in training short-term and inexperienced workers. Product includes taste, quality, and price of their products. This is usually dynamic since they are dictated by the customer’s tastes and preferences as defined by the market. Maintaining the quality of food is always a top priority at McDonald’s.

Place indicates a clean, relevant, and modern store in all the McDonald’s surrounding environment, be it the restaurant, the kitchen, or the restroom. This is aimed at ensuring safety and comfort for their consumers. Promotion concerns marketing, leadership, and trust; this has earned the company a reputation for quality food for its customers.

McDonald’s Inventory Methodologies

Inventory management is a critical operation in any organization. This is because it involves identifying and selecting the best method of inventory control. Before selecting the organization’s method of controlling inventory, it is imperative to factor the product demand into mind.

There are different modes that companies consider in selecting their inventory methods, but the common denominator is that companies should ensure that their mix of inventory types can satisfy the demands of the customers and that it can deliver the needed profit and cash flow.

In McDonald Corporation, the inventory is managed on a First-In-First-Out basis. This is necessary and applicable due to the fact that their inventory entails perishable items, and as such, the deliveries are made twice or three times a week based on the restaurant business.

Consequently, the inventory is stored in freezers that have proper packaging to maintain the freshness of the items. These activities and other issues regarding inventory are undertaken by the inventory management of the organization.

In particular chains, restaurant managers are charged with the task of tracking inventories of food, wrappers, and cleaning suppliers. Other orders required by the restaurant are sourced from the distribution center and then shipped to the restaurant.

McDonald’s Management System

Managing McDonald’s is a heavy task, and being in charge of its daily operations is an enormous duty and quite a challenging one.

To achieve and manage McDonald’s successfully, it is imperative that there should be adequate infrastructure and up-to-date information and communication technology. Animal welfare is at the center of McDonald’s company policies. They communicate their policies, including their animal welfare policy, to all those in the supply chain.

The following is the leadership structure of McDonald’s:

The CEO at the top has the responsibility of overseeing the major activities of the company; below him are the managers who are in charge of operations, development, finance, marketing, and sales. The supply chain unit falls in the department of finance.

McDonald’s & New Markets

McDonald’s corporation is organized in a lateral manner where the CEO is at the apex of the management, whereas the managers of other departments are outsourced. Other parts of the structures that reflect outsourcing are:

Consulting: McDonald’s always considers the company’s present and prospective financial position. The consultants deal with matters of development, strategies, and identifying the opportunities for growth for the organizations.

McDonald’s is a visible and popular brand in the world. It has developed to be one of the food chains with popular food brands around the globe.

With the current increase in exposure to new markets, especially in the emerging markets of Asia and Europe, McDonald’s continues to witness unprecedented growth in its operations in order to tap into these new markets. McDonald’s strategy encompasses four main dimensions: financial, learning, customer, and internal process.

Conclusion

Operations management is an important function in an organization since it concerns the relationship with the company strategy. Operations management plays a key role in the development of a company strategy, hence enhancing the competitive advantage of the company.

An example is the planning process that will assist an organization in minimizing costs while gaining an advantage in competitiveness and cost. It is, therefore, necessary for an organization to manage its operations as a measure of boosting its organizational strategy.

From the analysis of McDonald’s operation strategy, it is evident that consistency and quality of services are order winners, whereas speed, cost, efficiency, and innovation are the order qualifiers. This has resulted in an enhanced market share and massive consumer buying power.

McDonald’s is a market leader and a household name in the fast-food industry. Its marketing strategy is very strong, and it is placed under the supervision of the mother company, irrespective of its outlet in the world. Their prices, customer service, and quality are unparalleled.

References

Heizer, J. (2022). Sustainability and supply Chain (14th ed.). Pearson.

Khan, B. (n.d.). Operations management in McDonald’s. Scribd. Web.

McDonald’s Value Chain Analysis. (n.d.). Edrawnax. Web.

McDonald’s. (2022). Our purpose & impact. McDonald’s. Web.

Sinha, S. (2023). How McDonald’s became the world’s largest fast-food chain. Medium.

WBR Insights. (2023). McDonald’s successful rollout of mobile ordering and self-serve kiosks across the US. Future Stories.

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