Operations case study- McDonald's ROLE OF OPERATIONS MANAGEMENT TEST QUESTIONS FULLY SOLVED & UPDATED 2024

Cost leadership The large turnover of stock means that McDonald's has the power to employ economies of scale to create a cost advantage over competitors Globalisation has enabled the integration of economies which has allowed Mc Donalds to transfer capital, labour and intellectual property to nearly 38,000 restaurants in 120 countries Brainpower Read More Previous Play Next Rewind 10 seconds Move forward 10 seconds Unmute 0:00 / 0:00 Full screen Technology McDonald's uses self-serve kiosks, display screens, pre-ordering through app, digital menu boards, partnership with Uber Eats for home delivery, automatic drink dispensers Government Policies The Australian government develops policies to encourage healthy eating & lifestyles & require kilojoule counts to be displayed on menu boards and nutritional panels to be available for all products Legal regulations The McDonald's Enterprise Agreement states an employee may be required to work overtime except in situations that may pose a risk to the employees health & safety. It states that after 4 hours, they are entitled to drink breaks. Environmental sustainability -100% of McDonald's Australia branded packaging is made from recyclable sources -In Australia, restaurants are fully equipped with LED lights from the kitchen to the car park, which uses 50% less energy than fluorescent lights. Cost-based competition -Spare change menu (cheap options) -Cutting down on unnecessary ingredients to minimise costs of inputs & maximise potential inputs Quality expectations In 2018, McDonald's US introduced fresh instead of frozen beef patties in their restaurants for a fresher and juicer burger in order to improve the perception people have of the brand. Corporate Social Responsibility McDonald's works with its suppliers to ensure that products sourced responsibly & ethically Transformed resources -Materials: locally sourced ingredients, drink cups, cutlery and packaging for its burgers and fries -Information: McDonald's uses information on customer satisfaction that can influence operational processes. Customers complained about the quality of the coffee so they changed their coffee blend. Transforming resources -Human resources: McDonald's employees 106,000 people. This includes the Front-counter crew, the hosts & kitchen crew -Facilities: McDonald's kitchen staff uses grills, fridges & fryers. Front counter staff use cash registers to complete transactions. Influence of volume, variety, variation in demand and visibility -Volume: McDonald's accurate inventory management allows them to respond in changes to customer demand. Customer demand may be seasonal for products such as soft serve -Variety: Originally McDonald's offered a simple menu but now offer over 50 McCafe items. -Variation in demand: In the 2011 floods in Bangkok, changes were made to inventory management. Stores that remained open substituted ingredients in order to maintain a full supply. -Visibility: Customers are able to provide feedback using an online form or calling the customer service line. Sequencing & Scheduling -McDonald's sequences it processes at the store level so that the assembly of a hamburger can be managed in a way that promotes efficiency & consistency. -Screens at the service area allow staff to monitor, process & complete the orders Technology, task design & process layout -Technology: Mobile ordering through MyMacca's ordering app & DriveThru services that use automated drink dispensers -Task design: serving a customer and assembling a burger follows specific steps -Process layout: The kitchen & restaurant layout is organised in a manner the promotes work flow and ease of access to required equipment and machinery Monitoring, Controlling & Improvement McDonald's managers consistently measure & review aspects of the operational process such as lead times, Drive-Thru wait times, inventory turnover, wastage & cost analysis. They can then take corrective action. Outputs Customer service: They value their customers and seek feedback through questionnaires in-store & on their website Performance objectives -Quality: McDonald's emphasises the need to source quality raw materials such as fresh vegetables and meat. They ensure hygiene and compliance with the company's Hazard Analysis & Critical Control Point Program -Speed: it takes 11 seconds to toast a bun, 20 seconds to assemble a burger, 14 seconds to wrap the burger. The DriveThru serves customers in 30 seconds or less -Flexibility/Customisation: launched the Create Your Taste menu where customers can build a burger from 38 ingredients -Cost: The rise in minimum wages have meant McDonald's have had to increase the price of their outputs. Menu items have increased in cost by 17% A way to combat this additional cost has been by using self-service kiosks New product or service design & development -Barista made coffee in their DriveThru -Gourmet Creations which uses popular ingredients from their Create Your Taste Menu -Delivering services have been introduced to differentiate itself from its fast-food competitors -Children's birthday party packages, play areas, meeting rooms & Wi-Fi Supply chain management Logistics: McDonald's has established independently owned & operated distribution centres to ensure reliable supply to its restaurants. In the past, they imported frozen ingredients from China & the US. Outsourcing -Outsources operations functions such as management IT services & POS software, inputs (ingredients) & logistics -The business' reliance on overseas suppliers has been problematic. In 2014