Description
The documentation about Mcdonald's World's class operating system.
McDonald’s Corporation: World Class Operating System
Q1. Which World Class Manufacturing traits do you notice in McDonald’s? Ans: McDonald’s provides its customers a unique and uniform experience in all its restaurants. It does so by practicing an operating system that ensures product and process uniformity throughout the chain. Following are the World Class Manufacturing traits noticed in McDonald’s:? ? McDonald’s maintains uniformity in both process and product throughout the chain. To suit the local taste and the culture McDonald’s customizes its products as per the regions requirement. As for example the Indian menu includes McAloo Tikki Burger, Chicken Maharaja etc. and the South Korean menu includes Bulgogi Burger, Kimchi Burger etc. ? ? ? ? McDonald’s maintains exceptional quality throughout its stores. Therefore they coined McDonald’s guidelines for quality which they strictly adheres to. McDonald’s provide quick service to their customers and for this they used to follow the Speedee Service System. Value at McDonald’s was the total experience customers received for what they paid. Cleanliness in the kitchen, dining areas and even the parking lots was McDonald’s principle from day one. The worker’s guidebook highlighted: “Once you touch your hair or apron, no matter what, you have to go wash your hands again.” ? ? ? ? To accommodate high volume McDonald’s followed assembly line procedures of production. McDonald’s provides adequate training to their staff so that their staff is equipped to handle any situation. To ensure the safety and temperature of their products, McDonald’s followed the Food and Drug Administration procedures. To enforce quality, McDonald’s monitored suppliers and franchisees scrupulously. The company issued strict specifications to the kind of ingredients it required from the suppliers. ? ? McDonald’s considered suppliers as partners and treated the suppliers with due respect. To develop franchisees, Kroc worked closely with them and started a Franchisee development program.
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Q2. The case states “Though the company’s operational system is a model of excellence, McDonald’s is currently plagued with a series of problems ranging from industry saturation to poor service standards at its restaurants.” With reference to the above comment on the following: a) What are the models of excellence operational system at McDonald’s? b) What brought McDonald’s to the current situation?
Ans: a) McDonald’s very strongly believed that efficient management of operations was an important parameter for their restaurant’s success. They expanded the volume of business through a combination of lower prices, speedy service, standardized menu and product uniformity. To streamline the operations, all hamburgers were prepared with standard ketchup, mustard, onions and two pickles. McDonald’s launches innovative new products – like its new healthy menu – to stand out from the competition. And through its Monopoly contests and co-marketing programs, it continually invests in new ways to achieve customer intimacy. But what made McDonald’s the empire that it is today was Ray Kroc’s dedication to Operational Excellence. Thanks to his dedication to consistency, discipline and repeatability, no matter where in the world one goes, he/she knows what a McDonald’s looks like, he/she knows that he/she is going to pay a reasonable price, and knows exactly what he/she is going to get when we order a hamburger. The operational strategy of McDonald’s was to provide fast and standardized service. Customers arriving at McDonald’s would find food products designed in a more standardized way to improve the process work flow efficiencies. McDonald’s also maintains a small inventory of food, i.e., finished goods inventory that was ready to sell to its customers on demand. The types and quantities of food are determined by historical customer demand patterns by the time of day. At the restaurant, every job was broken down into a series of small steps that even a new employee could easily grasp. As McDonald’s refined the production techniques, crew members began to perform specialist functions. Each task was then broken down into detailed procedures designed to save time. As volumes increased and orders became more predictable, McDonald’s began the practice of cooking and packing the food products in anticipation of orders rather waiting for customers. This system helped the restaurants to serve the customers within 30 second during peak hours. Standards were also developed on when to discard cooked products that had not been purchased. On a global scale this consistency has enabled McDonald’s to operate like a well oiled machine, the epitome of Operational Excellence. 3
b) McDonald’s is currently plagued with a series of problems ranging from industry saturation to poor service standards at its restaurants. Following are the issues:? ? ? ? ? McDonald’s is facing increased competition from Burger King and Wendy. Customer preferences are changing and as a result customers have become very health conscious. McDonald’s concentrated on increasing the number of its restaurants rather than on improving the menu. Opening a number of outlets in a given suburban area angered the existing store operators because it cut into their margins. Menu items failed to wet the adult appetite. Adults would rather visit Burger King or Wendy’s, the No. 2 and No. 3 fast food restaurants in the US, which have positioned themselves by primarily offering adult-oriented menu. ? ? ? ? ? ? ? McDonald’s deteriorated its relationships with the franchisees. Customer perception of McDonald’s as fast food joint or family restaurant. McDonald’s had a lack of long term focus on its policies. McDonald’s disintegrated itself from the practice of training the employees. This industry started getting saturated. Dwindling revenue per franchisee as the franchisee density started increasing in a given region. McDonald’s major presence was in the developed economies and during that time the developed countries experienced recession due to the global turmoil and as result McDonald’s sales dipped. ? Mad cow disease started spreading in Europe and USA and this also resulted in falling of McDonald’s sales.
4
doc_165358225.docx
The documentation about Mcdonald's World's class operating system.
McDonald’s Corporation: World Class Operating System
Q1. Which World Class Manufacturing traits do you notice in McDonald’s? Ans: McDonald’s provides its customers a unique and uniform experience in all its restaurants. It does so by practicing an operating system that ensures product and process uniformity throughout the chain. Following are the World Class Manufacturing traits noticed in McDonald’s:? ? McDonald’s maintains uniformity in both process and product throughout the chain. To suit the local taste and the culture McDonald’s customizes its products as per the regions requirement. As for example the Indian menu includes McAloo Tikki Burger, Chicken Maharaja etc. and the South Korean menu includes Bulgogi Burger, Kimchi Burger etc. ? ? ? ? McDonald’s maintains exceptional quality throughout its stores. Therefore they coined McDonald’s guidelines for quality which they strictly adheres to. McDonald’s provide quick service to their customers and for this they used to follow the Speedee Service System. Value at McDonald’s was the total experience customers received for what they paid. Cleanliness in the kitchen, dining areas and even the parking lots was McDonald’s principle from day one. The worker’s guidebook highlighted: “Once you touch your hair or apron, no matter what, you have to go wash your hands again.” ? ? ? ? To accommodate high volume McDonald’s followed assembly line procedures of production. McDonald’s provides adequate training to their staff so that their staff is equipped to handle any situation. To ensure the safety and temperature of their products, McDonald’s followed the Food and Drug Administration procedures. To enforce quality, McDonald’s monitored suppliers and franchisees scrupulously. The company issued strict specifications to the kind of ingredients it required from the suppliers. ? ? McDonald’s considered suppliers as partners and treated the suppliers with due respect. To develop franchisees, Kroc worked closely with them and started a Franchisee development program.
2
Q2. The case states “Though the company’s operational system is a model of excellence, McDonald’s is currently plagued with a series of problems ranging from industry saturation to poor service standards at its restaurants.” With reference to the above comment on the following: a) What are the models of excellence operational system at McDonald’s? b) What brought McDonald’s to the current situation?
Ans: a) McDonald’s very strongly believed that efficient management of operations was an important parameter for their restaurant’s success. They expanded the volume of business through a combination of lower prices, speedy service, standardized menu and product uniformity. To streamline the operations, all hamburgers were prepared with standard ketchup, mustard, onions and two pickles. McDonald’s launches innovative new products – like its new healthy menu – to stand out from the competition. And through its Monopoly contests and co-marketing programs, it continually invests in new ways to achieve customer intimacy. But what made McDonald’s the empire that it is today was Ray Kroc’s dedication to Operational Excellence. Thanks to his dedication to consistency, discipline and repeatability, no matter where in the world one goes, he/she knows what a McDonald’s looks like, he/she knows that he/she is going to pay a reasonable price, and knows exactly what he/she is going to get when we order a hamburger. The operational strategy of McDonald’s was to provide fast and standardized service. Customers arriving at McDonald’s would find food products designed in a more standardized way to improve the process work flow efficiencies. McDonald’s also maintains a small inventory of food, i.e., finished goods inventory that was ready to sell to its customers on demand. The types and quantities of food are determined by historical customer demand patterns by the time of day. At the restaurant, every job was broken down into a series of small steps that even a new employee could easily grasp. As McDonald’s refined the production techniques, crew members began to perform specialist functions. Each task was then broken down into detailed procedures designed to save time. As volumes increased and orders became more predictable, McDonald’s began the practice of cooking and packing the food products in anticipation of orders rather waiting for customers. This system helped the restaurants to serve the customers within 30 second during peak hours. Standards were also developed on when to discard cooked products that had not been purchased. On a global scale this consistency has enabled McDonald’s to operate like a well oiled machine, the epitome of Operational Excellence. 3
b) McDonald’s is currently plagued with a series of problems ranging from industry saturation to poor service standards at its restaurants. Following are the issues:? ? ? ? ? McDonald’s is facing increased competition from Burger King and Wendy. Customer preferences are changing and as a result customers have become very health conscious. McDonald’s concentrated on increasing the number of its restaurants rather than on improving the menu. Opening a number of outlets in a given suburban area angered the existing store operators because it cut into their margins. Menu items failed to wet the adult appetite. Adults would rather visit Burger King or Wendy’s, the No. 2 and No. 3 fast food restaurants in the US, which have positioned themselves by primarily offering adult-oriented menu. ? ? ? ? ? ? ? McDonald’s deteriorated its relationships with the franchisees. Customer perception of McDonald’s as fast food joint or family restaurant. McDonald’s had a lack of long term focus on its policies. McDonald’s disintegrated itself from the practice of training the employees. This industry started getting saturated. Dwindling revenue per franchisee as the franchisee density started increasing in a given region. McDonald’s major presence was in the developed economies and during that time the developed countries experienced recession due to the global turmoil and as result McDonald’s sales dipped. ? Mad cow disease started spreading in Europe and USA and this also resulted in falling of McDonald’s sales.
4
doc_165358225.docx