Managing Operations at McDonalds

Managing Operations at McDonalds 1. Define quality characteristics When Ray Kroc purchased the first McDonald’s in 1955, he centered on what people wanted. With this focal point came the utilization of Kroc’s theory of QSC (quality, service, and cleanliness), which still serve as the McDonald’s key quality characteristics. QSC thrillingly got McDonald’s off the ground, but as times changed, the company saw many more market segments and chances. McDonald’s became an expert in marketing toward specific markets by advancing ideas such as breakfast menus, healthier choices and alternatives, and adult foods (Lubetkin and Lattin 21-23). 2. Decide how they measure these characteristics The successful pursuit of a quality program at McDonalds requires the dedication of substantial organizational resources, and it is vital to understand whether and how the program generates value for the organization. It is evident that the US, country where McDonalds originated and which still sets the benchmark to all McDonalds restaurants across the world, is treating quality not just as an organizational issue but as a national one. McDonalds supports a position that all organizations which want to survive and succeed must take quality seriously. McDonalds’ U.S. corresponding store sales for all of 2004 showed reduction in the face of severe competition. For the first four months of 2005, U.S. same store sales grew due in part to promotions. A number of organizational and quality changes were introduced immediately to adequately react to this drop in sales. One sign of a modification in McDonald’s strategy was the expected shift in U.S. management, which franchisees have said would clip layers between the restaurants and top executives (Boje, Driver and Cai 14). 3. What are McDonalds Quality Standards? McDonald’s, which has built its business on the three characteristics of food quality, convenience and price, has clearly developed a unique approach to the idea of full customer satisfaction. McDonald’s has clearly recognized that customer satisfaction in its case goes well beyond simply serving the right food at the right time and price. The first principle demonstrates its commitment to the total McDonald’s experience. The customer should sometimes not mention food but should be impressed by the quality of overall service and the hygiene standards of the washrooms. Customer service for McDonald’s goes well beyond the standard products and services offered, to include the broader aspects of the McDonald’s experience and interaction with the community. 4. Control quality against standards These are the approaches McDonalds uses to control its quality standards Step 1 Set quality standards Step 2 Appraise conformance to standards Step 3 Act when standards are not met Step 4 Plan to make improvements While McDonalds’ executives propose participation as a means of connecting the contribution of people and encouraging a sense of belonging, it remains the case that the approach need not be used in this participative manner. A further tool is the measurement of what mcDonalds calls operating quality costs. These are divided into four self-explanatory categories: ■ prevention costs, including quality planning; ■ appraisal costs, including inspection costs; ■ internal failure costs, including costs arising from scrap and rework; ■ external failure costs, including warranty costs and complaints. 1. Definition of supply chain management Supply Chain Management is often defined as the running of the whole value-added chain, from the supplier to producer right through to the retailer and the final customer. SCM covers three main goals: decrease inventory, boost the transaction speed by swapping data in real-time, and boost sales by implementing customer requirements more accurately. 2. Key elements in McDonalds supply chain The Bullwhip Effect is a main reason for higher costs and problems in supply chains. It depicts how small fluctuations in demand at the client level are augmented as orders pass up the supply chain through distributors, manufacturers, and suppliers. In great variety supply chains, the upstream activities react to forecasts, while somewhere on the downstream part the chain waits for orders to be made. Think about these two former fast food mottos: “We Do it all for you” proposed by McDonalds and “Have it Your Way” by Burger King. McDonald's makes finished hamburgers “to forecast” – McDonalds doesn’t know when people would come in for lunch, but they make burgers in anticipation. Burger King prefers to wait until customers actually place (customizable) orders before the burgers are made. This is more frequently known as the “Build-to-Order” (BTO) model, while McDonalds' strategy up to now is called “Build to Stock” (BTS). Both models have advantages and disadvantages, and McDonalds considers doing a combination of both. 3. Benefits McDonalds purchases its potatoes from corporate farmers in farming states not the commodities market. Consequently it limits its contact with price fluctuations that might have occurred by using the commodity exchange to get those goods. The company has even other matters to think about. Its franchisees have to realize economies of scale to pay the additional franchise fee, royalties and price for the potatoes that produce the French Fries. Constructing a brand name is the most significant thing that McDonald's has today. Therefore by building a complete cycle and depending less and less on the market fluctuations, McDonalds enhances its reputation. Conclusion McDonald’s current strategy is to further promote the image of healthy food that can be found at “New or Re-modeled McDonald’s”. Macdonald’s has been targeted by many health group activists as the company that contributed to obesity problems in America. The response was quick if not immediate. McDonald’s announced it plans to condition out its Super Size French fries and soft drinks after it became apparent that public had adopted different tastes recently. McDonald’s new strategy of presenting its restaurants as the convenient place where healthy food can be found is in line with its recent attempts to create a healthier image for itself. The corporation is planning other menu changes, such as switching to a cinnamon roll and a sausage burrito as its core breakfast offering, while bagels would become an alternative item. Some claim that individuals “confront a future of accelerating McDonaldization” (Ritzer 158). These changes are part of its strategy to offer a range of choices that support a balanced lifestyle, thus to attract new clients and retain old ones. After pursuing sensational expansion in the past, McDonald’s must sharpen its focus on product quality and speed up its decision-making to recover sales and profits in the United States, industry analysts say. “McDonald’s marketing has to be taken up a step further. They have got to find one or more new products or go back to advertising the Big Mac on some grounds that the consumer can understand,” said Ron Paul, president of Technomic Inc, a Chicago-based restaurant consulting firm (Boje, Driver and Cai 52). 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