McDonald’s Operation management

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 Executive Summary
To sustain viability in a competitive market, the McDonald’s Corporation sets its overall goal
of “making its customers happy.” To reach this broad goal, McDonald’s mainly focuses on
competitive bases of speed, cost, and nutrition. The corporation also recently created
dramatic strategy changes to its stores internal processes by introducing the Made for You
System, and McDonald’s also created a Revitalization Plan which encompasses all areas of
the business to make its customers happy.
Quality management at McDonalds is one of the major factors that make the corporation
one of the most successful fast food restaurants in the world. The corporation uses
computerized information systems and strict corporate quality standards to maintain
quality at their restaurants. To enforce the standards, the corporation undertakes
exhaustive inspections on each restaurant two times per year. Also, thorough training
processes ensure that all McDonald’s employees have the proper knowledge to meet the
corporation’s standards, which will in turn make their customers happy. Many suppliers aid
McDonald’s success by supplying their raw materials efficiently and on time.

McDonalds reassures that their product is fresh by choosing suppliers near the restaurants,
to minimize transport time. To ensure quality of products and reduce cost between the
restaurants and their suppliers, the McDonalds Corporation publishes specific guidelines to
ensure that the restaurants receive the best quality materials. McDonald’s ensures
consistent products by enforcing strict standards and frequently inspecting its suppliers. The
corporation participates in a very efficient supply chain network. The corporation also takes
advantage of long-term relationships with suppliers to ensure consistent products.

McDonald’s also takes active steps to avoid bad products and reduce overall costs.
Forecasting is in large part down by the corporation as their responsibility to the franchisees
and shareholders. In summary, the entire McDonald’s corporation revolves around its goal
to make its customers happy. McDonald’s works toward this broad goal with strong
competitive bases, quality management, an efficient supply chain with quality products, and
continuous forecasting.

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Introduction
The purpose of this report is to know how the Operation Management Strategies and
Quality Management Strategies occur in Fast-food sector, especially in McDonalds,
and how these strategies are implemented.
The basic Operations Management Strategies are: -

1. Design of goods and services

2. Managing quality
3. Process strategy
4. Location strategy
5. Layout
6. Human resource
7. Supply chain management
8. Inventory management
9. Scheduling
10. Maintenance

Some features of quality management strategies are:

1. Product Quality
2. Training
3. Continuous Improvement
4. Customer Satisfaction
So we will analyze how these strategies are being implemented in McDonalds.

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Methodology
In this report, we studied all the above mentioned operational strategies and tried to
get the theme of these strategies. Also, got some information from internet and then by
analyzing the base of these strategies we implemented our knowledge in practical
working environment of the organization i.e. McDonalds.

From day one, McDonald’s believed in forging

new opportunities. The same holds true today,
and it’s this kind of philosophy that will launch
your career. For starters, Ray Kroc, founder
and inspiration, parlayed exclusive distribution rights of an innovative milkshake maker
into the first-ever franchise in Des Plaines, Illinois.

Later, Ronald McDonald proved another huge idea from a set of

wonderful folks. Introduced in his first TV appearance, Ronald
became recognized as “the smile known around the world.” Today,
he is as recognized as Santa Claus.

In yet another example of empowered big-thinking,

franchisee Jim Delligatti invented the Big Mac and changed
hamburgers forever. As you can see, broad vision, big
ideas, and a family of great people fuel our success. It’s
true, new employees today are our leaders tomorrow.

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McDonald's a Global Phenomenon
Formed in 1954, McDonald's brand is the leading global foodservice retailer with more
than 30,000 local restaurants serving nearly 50 million people in more than 120
countries each day. The rich history began with founder Ray Kroc's strong foundation.
McDonald's vision and commitment of our talented executives is to keep the shine on
McDonald's arches for years to come.

McDonald's in Pakistan
Aiming to be the world's best quick service restaurant experience, McDonald's started
its operations in Pakistan in September 1998 and is a leading fast food service retailer
for its valued customers. With a strong belief in the phrase when it's green it's growing.
McDonald's Pakistan is growing with the focus to provide friendly and quick service
experience to our customers.
Today millions of Pakistanis place their trust in McDonald’s every day to provide them
with food of a very high standard as well as good service. In the past five years, the
response to McDonalds coming to Pakistan has been overwhelming. Today Lakson
Group Companies has taken over McDonalds Corporation, USA and a local partner
making it a 100% owned and operated Pakistani company. McDonalds located in
Pakistan are currently employing about 3,000 Pakistanis and each store is managed by
Pakistani managers. They have also contributed in other ways than food service.
McDonalds has investment of over Rs. 30 billion in the country and payment of taxes
and duties amounting to more than Rs 10 billion Since McDonalds is doing so well in
Pakistan they will continue to grow and add more stores in more cities in the future.

The Team
To realize the McDonald's service vision, we believe in strengthening our team and
ensure to deliver the right skills and knowledge to the right person for getting the right
job. Our strength for making our strong team players to shine under the Golden Arches
lies in the People Promises, we focus to deliver:

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McDonald's 5 People Promises
1. Resources Recognition
2. Values Leadership Behaviors
3. Competitive Pay Benefits
4. Learning Development Personal Growth
5. Resources to get the Job Done

McDonald's Mission
McDonald's mission is to be our customers' favorite place and way to eat with inspired
people who delight each customer with unmatched quality, service, cleanliness and
value every time ...we invite you to be the part of this winning team and give yourself an
opportunity to grow with the family of people striving to create smiles on the faces of
millions of people every day.

Management Development Program

McDonald's Management Development Program provides with an opportunity to
develop your knowledge base with hands on practical exposure to turn into a diversified
business entrepreneur. And with the recent job openings McDonald's welcome you to
the world of opportunities under the golden arches!!!
Operations Management in McDonalds

From our research, we came up with the following operation management strategies
being implemented by McDonalds:
 Goods & Service Design
 Quality
 Location selection
 Layout Design

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  Human Resource
 Supply Chain Management
 Maintenance
The McDonald has the above stated strategies out of the 10 OM strategies. These are
explained as under:

Goods & Service Design

The tangible goods and intangible services are provided by McDonalds and the
homogeneity is maintained globally. The goods and services are provided on in a
package that’s why the company lies in 50% in goods production side and 50% in service
providers. In Pakistan, the same level of services is offered by McDonalds, compared to
international level.

Strategies

a) Advertisement: McDonalds implements this strategy by making aware

people about their products and services through advertising on TV,
newspapers, brochure.
b) Customers Relationship: The personals of customer relationship department
convince the people and customers about services.

Results

1. Inside the McDonalds:

a) Achieving Objectives: By implementing this strategy McDonalds is achieving

its objectives, i.e. it’s earns profit, customers are satisfying, and the services
offered to customers sharing in revenue growth of the country. So it helps to
make further plans, strategies, making strengths, expansion of franchises etc.
b) Business Development: As customers become attractive therefore
McDonalds opens new branches. So it helps in expansion of business.

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 2. Outside the Organization:

Improving social life: These strategies are improving quality of life as well as
the social and environmental awareness in public.

Quality
The company really maintains its product quality. A lot of expenditure is made in the
quality maintenance and improvement researches. McDonalds maintains the following
quality rules:
 Maintaining strict standards of quality and safety, so that the customers can
feel comfortable fitting any of the food products into their personal eating
styles.
 Serving a variety of nutritious, high-quality food products and portion sizes,
including new salad, fruit, and vegetable offerings and Happy Meal choices.
 Providing nutrition information to help customers make smart choices that
address their individual lifestyle needs.
 Informing the customers about energy balance and fun, practical ways to
incorporate physical activity into their everyday lives.
 Motivating kids to be active by engaging Ronald McDonald as ambassador
for play and activity.

 Sponsoring major sports competitions, including the Olympics and the FIFA
World Cup soccer matches.

Process of food in McDonald’s:

The food manufacturing process at Mc Donald’s is completely transparent and the
whole process is visible to the customers. In fact, the fast food joint allows its customers
to view and judge the hygienic standards at Mc Donald’s by allowing them to enter the
area where the process takes place. The customers are invited to check the ingredients
used in food.

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Quality can be defined in the terms of:
(1) INTRINSIC QUALITY – Quality of Product
(2) EXTRINSIC QUALITY – System of Production & Process.

Quality Assurance Team is responsible for monitoring the quality of Food both in
Restaurants as well as the Supplier Warehouses.

Consideration:
(1) Hazard Analysis and Critical Control Point. (HACCP)
(2) Good Manufacturing Practices (GMP)
(3) Sanitation Standard Operating procedures (SOPs)
Location Selection
McDonalds Restaurants also must plan their location in such a way so that maximum
customers visit their restaurants. Therefore, McDonalds prefer locations such that it can
have large customer base, transport access and availability of parking space. Moreover,
it also prefers location that is suitable for raw material delivery that is availability of
ample space for deliveries of raw materialGenerally, it has been observed that
McDonald follows the different locations and outlets per the specific area.

Strategies

McDonalds makes and implement its location strategy in following way: -

a) Business Areas: They open their branches in business areas where they target
the corporate people and the working class to dine in and have their timeout for
breakfast and lunch.
b) Play Lands and Shopping Areas: They try to introduce their services as per target
customers, i.e. capture the customers in the amusement parks and in markets
such as the branch in Fortress Stadium, Model Town link road etc.

Results

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 a) Convenience: Customers feel comfort ability when a branch is in near vicinity to
their work place.
b) Customer Gaining: Due to the good environment, the company has an ability to
gain their customers to their locations.

LAYOUT DESIGN:

This strategy refers to the overall working and general environment offered by
McDonalds. It includes the personnel level, service and product layout, interiors and
exteriors etc.

Strategies

a) Exterior: McDonalds sets its premises in proper manner to handle any number of
customers easily. The building design is standard world wide but it may be have
some difference in size or in exterior according to the location. It enables them
to save time, satisfy their customers, comfortable environment for both
employees and customers.
b) Interior: McDonalds uses the same interior pattern as it’s used internationally. It
may vary according to the premises size.

Results

a) Brand Recognition: Homogeneity in layout design and franchise settings strikes a

clear brand image in the minds of the customers. The efficiency level of
personnel also leaves a good impression on the minds.
b) Customer Satisfaction: Through a universal image, layout design and the brand
image in the minds of customers results in customer satisfaction.

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Kitchen Layout
A kitchen layout is provided which includes a plurality of work areas and devices
arranged to promote efficient cooking and handling. The kitchen includes a food cooking
area for cooking food items which require further processing and assembly into a
finished product. The food cooking area contains various food cooking devices, such as a
grill, an oven or a fryer.

A cooked-food assembly area containing an assembly area is spaced apart from the food
cooking area. The cooked food items are assembled into finished products within the
cooked-food assembly area in response to customer orders. A cooked-food buffer area
is provided intermediate the food cooking area and the cooked-food assembly area and
proximally located to both the food cooking area and the cooked-food assembly area.

The cooked-food buffer area contains a cooked-food buffer device for holding a supply
of cooked food items at elevated temperature for extended periods of time while
maintaining the taste, texture and appearance of the food items prior to subsequent
processing and assembly. The cooked-food buffer device includes a holding cabinet
having a food inlet, a food outlet and an interior for holding food items. The holding
cabinet is positioned within the buffer area such that the food inlet provides a
passageway from the food cooking area to the interior of the device and the food outlet
provides a passageway from the interior of the device to the assembly area.

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Cycle process time:

• BUN Toasting (11 Seconds) – A new machine toasts the BUNS at 545 degrees
Fahrenheit for 11 Seconds, Eliminating the need to Pretoast. This Process use to
take 20 to 30 Seconds.
• ASSEMBLY (20 Seconds) – The Sandwich use to be completely assemble at this
point.
• Wrapping (14 seconds)-A hot chicken patty is placed on the assemble bun and
the sandwich is wrapped. This is the point when sandwich is micro waved.
• This order is supposed to be picked up immediately to keep it fresh.
• Customer service (45 seconds)-Time to take the order handle the payment and
assembled the meal

Human Resource

Being partially in pure services and goods production sector, McDonalds exercises a
good strategy for its human resources e.g.

Right Person on Right Job: McDonalds allocates its human resource in different
areas according to the abilities, qualifications and experiences of employees. They
appoint a marketing expert for marketing, accountant for accounts etc.

Trainings: McDonalds provide training opportunities for its employees who need
training in a area. So it enables the organization to achieve its goals efficiently.

Separate Departments for Different Functions: McDonalds has different

departments for different functions. Marketing department consists of marketing
experts who perform marketing analysis and finance department consists of finance
experts who arrange and manage finance etc.

Proper Utilization of Resources: As there are many experts in different areas, so

they use all available resources and opportunities properly. They provide services to
their customers efficiently, which satisfies customers and they achieve their goals
successfully.

Employee’s Job Satisfaction: McDonalds provides training opportunities to its

employees to improve their skills. So it results in enhanced employee performance

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 and they become more interested to work in good manner, which gives a good
reputation to the organization.

Competency: McDonalds trains it’s employees of all departments to enhance their

capabilities and to improve their skills and therefore employees provide right
product to right customers on right time. So it enables the organization to compete
in the market.

Supply Chain Management

These strategies determine what is to be made and what is to be purchased. So

McDonalds follow these strategies and have a just-in-time inventory system. Which
means that the orders are placed as the raw material comes to near finish. McDonalds
maintain no inventory levels for perishable goods.

Suppliers

The major suppliers of McDonald’s in Pakistan are as follows:

 Dawn Breads for Buns

 Choudhry Dairy Limited for dairy products
 Walls Ice Cream
 Coca-Cola Ltd. for drinks
 Packages for packin

Maintenance

The overall maintenance process of McDonalds is that they emphasize on the

maintenance of the product quality, the human resources used within the organization,
its location and layout designs.

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They train their employees of all department6s regarding their job, so they can handle
their customer and work as well which helps to maintain their status quotas. McDonalds
is among the companies which are partially involved in the production of goods and
services, so a proper maintenance system within the organization strengthens the
goodwill and reputation.

Total Quality Management

Management of an entire organization so that it excels in all aspects of products and

services that is important to the customer. In simple words we can narrate total quality
management as a continuous quality improvement process.
So, McDonalds also practice the strategy of total quality management and tries to
enhance its efficiency & affectivity level by working in different areas such as continuous
improvement, quality of goods and services, training, and customer satisfaction.
Product Quality
The ability of a product or service to meet customer’s needs is termed as quality.
Therefore, McDonalds works a lot in the quality improvement of its goods by improving
ingredients and nutrients of the food stuff.
Some recent nutrient’s quality improvement information is as under:
 For people concerned about food allergies, we have consolidated all allergen
information into the ingredient statement for each menu item so that you
have one current source of information. Please check these listings regularly
as ingredients in menu items may change.

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Popular kid’s meal choices:
 Happy Meals
 Mighty Kids Meals

The nutrition information is derived from testing conducted in accredited laboratories,

published resources, or from information provided from McDonald’s suppliers. The
nutrition information is based on standard product formulations and serving sizes. All
nutrition information is based on average values for ingredients from McDonald’s
suppliers throughout the world. Variation in serving sizes, preparation techniques,
product testing and sources of supply, as well as regional and seasonal differences may
affect the nutrition values for each product. None of our products are certified as
vegetarian. This information is correct as of January 2007,.
Training
In the next step of TQM, McDonalds puts it attention on its human resources. The
objective of training their human resources is to create a balance in the overall working
of employees. Thus, they try to create a connection between the quality of a product
and the ability of the employees. In McDonalds, nearly every employee is given training
for its work. e.g. the cashier is trained for all the cash handling, floor manager is polished
against his degree in hotel management. And all the other staff is trained accordingly.

Continuous Improvement
The quality management strategies of McDonalds for product quality improvement and
employee training and development put the company on the road of continuous
improvement in all its functions. Continuous improvements fulfill the needs of the
customers per their desires or requirements and also make its products more
competitive. This continuous improvement also includes some other factors like
employee empowerment, benchmarking a quality standard & maintaining just in time
inventory system etc.

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Customer Satisfaction
McDonalds pays a lot of attention on the satisfaction level of its customers. The
improved quality standards, well trained employees and a continuous learning desire of
McDonalds results in increased level of satisfaction of the customers. Like when the
quality is improved and the personnel attending the customers is well trained and the
overall service environment is improved then there is no room left for customer dis-
satisfaction.

After the analysis of our project regarding the application of Ten OM Decision and TQM
we have concluded our report as under:
 McDonalds is maintaining its product quality according to the international
standards
 The customization of the product and services according to the culture of
Pakistan has resulted in customer satisfaction
 McDonalds has properly covered the business areas with in cities e.g. Lahore
 McDonalds maintains a good environment in every premise.
 McDonalds has a learning environment for employee development and
customer satisfaction.

Recommendations:
In the end of our report we have following suggestions:
 McDonalds should revise its product prices.
 Company should work on all its products
 There is still a lot of opportunities for McDonalds to increase number of
outlets
 Increase and Provide Delivery Services to every Potential Customer-Potential
Segment
 McDonalds in Pakistan should follow its international trend of sponsoring
mega events e.g. Domestic Cricket Tournaments.

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References:
www.mcdonalds.com
www.mcdonalds.com.pk
www.answers.com/what_is_TQM
Bibliography
Operations Management by Jay Heizer & Barry Render 7th Edition

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