University of Greenwich ASSIGNMENT SUBMISSION COVER SHEET
SUBJECT CODE
: OPER1027
SUBJECT TITLE
: Operation Management
PROGRAMME
: BABM
SEGi ID
: SC-KL-00048114
UOG ID
: 000918149
LECTURER’S NAME
: Mr Rodrigo
LEARNING CENTRE
: SEGi COLLEGE KUALA LUMPUR
SUBMISSION DATE
: November 7 2015
Page 1 of 11
Table of Contents Introduction ................................................................................................................................ 3 The process designs of MacDonald’s restaurants ...................................................................... 3 The Drive through ............................................................................................................................... 4
Customer value .......................................................................................................................... 4 Values attribute as perceived by customers....................................................................................... 5
The five performance parameters .............................................................................................. 7 Speed .................................................................................................................................................. 7 Flexibility ............................................................................................................................................. 8 Cost ..................................................................................................................................................... 8 Dependability...................................................................................................................................... 8 Quality................................................................................................................................................. 8 The trade off ....................................................................................................................................... 9
Conclusion ................................................................................................................................. 9 References ................................................................................................................................ 10
Page 2 of 11
INTRODUCTION McDonald's is the world's largest chain of hamburger fast food restaurant. McDonald was started as a drive in restaurant by two brothers, Richard and Maurice McDonald in California, United States in 1973. McDonald a chain of family restaurant and currently operates in 121 countries and having more than 30000 restaurant around the world with serving more than 60 million customer every day. (Scribd, 2015). The objective of this study is to analyze the process designs of MacDonald’s restaurants including the service at the tills, the drive through and New Product Development. Additionally, customer value will be discussed by referring to the MacDonald process to meet the customer requirements. Lastly, the discussion about the five performances parameters will be done in order to determine how those factors contribute to meet the customers’ requirement.
THE PROCESS DESIGNS OF MACDONALD S RESTAURANTS ’
Source: Selectsmart.com McDonald's Production Process Flowchart
Page 3 of 11
According to the Business Dictionary Process design is the activity of determining the workflow, equipment needs, and implementation requirements for a particular process. For any business especially for a fast-food restaurant, it is essential to choose a strategy which will help the organisation to work in the most effective and fastest way (Acklin C. 2010). When it comes to a fast food chain such as McDonald which usually deals with many customers, the ordering and paying process must be developed and established in a way that will help the organisation to maintain a high speed of processing as well as producing a high quality of food. Therefore McDonalds products are precooked stocked and will be assembled according to the customer’s order. This excellent process design will help to reduce the waiting time and will drive to respond quickly to the demands in peak hours which are very important for a fast food restaurant like McDonalds.
The Drive through Additionally, the organization has implemented the drive through system which allows customers to get meals while being in the cars. The process starts when the customer arrives at
the speaker point to make their orders. Once the customer’s order has been taken, it will directly appear on the screen of the workers. Then, the customer will progress to the drive thru casher in order to pay the bills which the amount has been already told during the orders. After that, the customer will be directed to the next counter where the food should be collected. Since it implementation, the drive through has significantly contributed to the success of McDonald as up to 70% of its sales come from that process (Complex 2013). Moreover, it is important to design new product in order to gather the needs and choices of the customers which are tirelessly evolving (Patti P. 2010). For examples the increasing of customers’ preferences toward healthy food will contribute in improving the brand image, as nowadays people likely prioritise healthy foods.
CUSTOMER VALUE Customer value is the benefits that a customer will get from a product or service in correlation with the price. This benefit may be measured in financial term as well as the
Page 4 of 11
enjoyment that a customer receives from a product or service (wiseGEEK 2015). It has been understood that value proposition doesn’t just involve the price, services and benefits but also the overall experience the customer gets when selecting and using the service or products. Customers tend to look for the value proposition which a company has made a commitment to deliver. These methods of processing have guaranteed McDonald’s to keep on meeting its customer needs.
Source: Finch, Byron J. Operations now: profitability, processes, performance 3 rd edition
Values attribute as perceived by customers The value transfer model suggests several strategies to add value in products and services. Each value created is converted into perceived value and provides an avenue for enhancing customer’s value perceptions. When it comes to McDonald, the value attributed involves quality, cost and response in time. Perceived quality refers to the consumer’s judgment about a product’s overall excellence or
superiority. McDonalds’ value proposition keeps offering customers something that have
Page 5 of 11
strong appeal and exclusivity which drives the fast food chain to be ranked as a brand with the strong perception for constantly providing a great quality (Seppänen M., Paananen A.). Perceived Cost can be defined as the worth that a product or service has in the mind of the
consumer. It is indeed a fact know, that price has a greater importance in McDonald customer s’ mind. Therefore, periodic pricing such as discount during breakfast lunch and dinner time are essential in delivering values to customers since customers are always expecting a delicious meal which will cost them less(123helpme.com). . Response in time is one of the most important values that McDonald offers to its customers.
As the result, the organization has been ranked in 2013 as the brand with the strongest perceptions for fast service. By establishing a fast process to respond in time to several customers’ demands, McDonald reduces perceived sacrifice and thereby increases perception of value.
Page 6 of 11
THE FIVE PERFORMANCE PARAMETERS
The food business is a high competitive industry and every organization being involved should have the capacity to separate itself from its rivals, in order to better stand out. Therefore, McDonald’s has successfully implemented the five performance parameters in which Speed and Quality have been prioritised over others parameters in order to successfully meet the customer’s values (Scribd 2015).
Speed Speed refers to the ability to produce something or to perform a service at an acceptable rate of time (TheFreeDictionary.com). When it comes to McDonald, the operations process is so well designed that every customer who comes is served quickly. The company has set a preparation time for burgers and other menu items which will ensure customers to receive the orders within 3-4 minutes, even during the busy hours.
Page 7 of 11
Flexibility Flexibility points out to versatility of the procedures and change in the assortment of product or service rolling out operations to be more adaptable to improvements in customer requirements. As customer tastes change, McDonald's need to expand the scope of new meals that it offers. McDonalds offers a great flexibility to meet customers' first choices. It offers an adjusted accumulation of culturally significant menu in the markets, for both adults and kids and is increasing the choices. McDonalds has many prepared staff keeping in mind the end goal to be flexible. It keeps up movement based arrangement of work among the team individuals permitting them to be sufficiently flexible in the work they do.
Cost Cost refers to minimizing the expense of the procedure, prompting a less expensive service. The most ideal method to cut down the expenses is to concentrate on the customer requirements i.e. satisfying the quality goal in both product design and operation, as a method of removing eliminating rework and waste. McDonalds have a very much arranged expense control system. It has a well-established low cost supply chain. They endorsed Just-In-time process that minimizes the expense of irrelevant storage and waste. Therefore, food can be sold at a lower cost in light of the fact that the cost does not retain the expenses of unsold food. Eventually this implies lower expenses for McDonald's (Barbra Dozier's Blog 2015).
Dependability Dependability as the quality of being able to be counted on or relied upon is very essential to develop a good reputation of respecting promises to deliver on time. McDonald's has a more dependable process for the customers by offering the orders on time. They have qualified staffs that make sure that customers will get their orders in a specific time.
Quality Each organisation has the willing to provide product with zero defect. This will contribute to gain an advantage over it competitor as customers are always looking for high constant quality. In addition, quality target drives to certain policies and procedures in operations in order to provide a service that the customer requires. At McDonald's the representatives are prepared to plan and present suppers as indicated by certain methodology that are entirely upheld, particularly in the planning and treatment of crude and cooked items.
Page 8 of 11
The trade off Since the implementation of the drive thru process, customers have been complaining about the waiting time for their meals to be ready especially in busy times . By noticing that the cars are getting stuck in the queue and as the line is getting longer, many customers choose to bypass the restaurant drive thru and get their food from other restaurants competitors.
CONCLUSION Operation management function exists in each organisation. It is focusing on accomplishing the process conversion of raw materials into a completed item. Also viable operation management enhances performance in the process. McDonald's Corporation is a standout among the most recognized organizations worldwide. By implementing, operational management process, the organization has the objectives to reduce expenses, enhance product quality, punctual delivery of their product to customers and constant performance of every single operational activity.
Word count: 1474
Page 9 of 11
REFERENCES 123helpme.com, (2015). Mcdonald's Case Study :: Business Case Study. [online] Available at:
http://www.123helpme.com/mcdonalds-case-study-view.asp?id=166353
[Accessed
4
Nov. 2015]. Acklin, C. (2010). Design-Driven Innovation Process Model. Design Management Journal , 5(1), pp.50-60. Barbra Dozier's Blog, (2015). Critical Evaluation of McDonald’s Performance Objectives. [online] Available at: https://barbradozier.wordpress.com/2015/06/08/critical-evaluation-ofmcdonalds-performance-objectives/ [Accessed 4 Nov. 2015]. BusinessDictionary.com, (2015). What is process design? definition and meaning . [online] Available at: http://www.businessdictionary.com/definition/process-design.html [Accessed 3 Nov. 2015]. Freeonlineresearchpapers.com, (2015). Total Quality Management (TQM) 5 performance objectives. [online] Available at: http://www.freeonlineresearchpapers.com/total-qualitymanagement-objectives [Accessed 4 Nov. 2015]. Mcdonaldsoperations.blogspot.my, (2009). McDonalds Operations. [online] Available at: http://mcdonaldsoperations.blogspot.my/ [Accessed 4 Nov. 2015]. Paananen, A. and Seppänen, M. (2013). Reviewing customer value literature: Comparing and contrasting customer values perspectives. IC , 9(3). Phillips, J. and Phillips, P. (2010). The power of objectives: Moving beyond learning objectives. Performance Improvement , 49(6), pp.17-24. Scribd,
(2015). Mcdonald's.
[online]
Available
at:
http://www.scribd.com/doc/24502172/Mcdonald-s#scribd [Accessed 4 Nov. 2015]. TheFreeDictionary.com,
(2015). speed .
[online]
Available
at:
http://www.thefreedictionary.com/speed [Accessed 4 Nov. 2015]. UKEssays, (2015). Over View Of Mc Donalds Fast Food Company Marketing Essay . [online] Available at: http://www.ukessays.com/essays/marketing/over-view-of-mc-donaldsfast-food-company-marketing-essay.php [Accessed 4 Nov. 2015].
Page 10 of 11
wiseGEEK, (2015). What is Customer Value? (with pictures). [online] Available at: http://www.wisegeek.com/what-is-customer-value.htm [Accessed 3 Nov. 2015].
Page 11 of 11
