McDonald’s Operation Management

Executive Summary

This report will present an analysis of the design and strategies within Operations using McDonald’s as the key organization in focus. Starting off it will elaborate on the main stages and determinants of Operations that form its design and structure. Then it will go on to explore McDonald’s Operation design and strategies and how it helped the company reach productivity and efficiency goals. It will then move on to discuss McDonald’s adoption of Operation Research and what implications it had for the firm regarding growth. This report will then go on to do an analysis on McDonalds operation design and explore issues such as trade-offs and how they are important in the context of strategic decision making. Lastly, this report will try and emphasize the importance of continuously improving these operation designs and in doing so will provide recommendations on how an efficient allocation of resources can be ensured.

Introduction

This report will explore the arena of Operations Management and its design, along with evaluating its importance, impact and future implications. The organization that will be used to carry out this analysis is McDonald Cooperation, as it will serve as the center point through which this report will critically evaluate the impact of operations design.

Operations Strategy can be defined as a system of actions and decisions that form the basis of the long-term vision, mission and objectives of these operations and how these impact an organization’s strategy and planning (Slack & Lewis, 2017, as cited by Slack & Brandon-Jones, 2018). The importance of this operations strategy can be evaluated by how successfully they lead to advantages for an organization in the areas of sales and supply of their products (Slack & Brandon-Jones, 2018).

The determinants of Operations Strategy and Design

This section will elaborate on what Operation Strategy constitutes and what are determinants are important in understanding the concept.

Four Stages of the Operations Model

Hayes and Wheelwright describe the four stages of the Operations Model. Stage 1 deals with correcting and working on the worst problems. Stage 2 involves the adoption and implementation of the best mode of practice. Stage 3 requires the linking of operations with the required strategy and lastly, Stage 4 focuses on operational advantages. With the help of these four stages both the impact of strategies and capabilities of the operations are bolstered. (Hayes & Wheelwright, 1984, cited by Slack & Brandon-Jones, 2018).

Five Operations Performance Objectives

While talking about the determinants of operational performance, it is important we talk about the five performance objectives paramount to operations. These are quality, dependability, speed, flexibility and cost. These become the foundation of operational management as the element of trade-off comes in when an organization chooses between which objective to focus as per their needs. It is also really important for an organization to understand how to apply these objectives as they determine the performance of these operation strategies. (Slack & Brandon-Jones, 2018).

McDonald’s Operation Design and Strategies

Main determinants of McDonald’s Operation Design

McDonald’s is one of the biggest multinational food chains in the world and is always in the spotlight for their management and operation structures catering to such a huge customer base all over the world. An article highlights ten important decision areas McDonald focuses on under operations management, which are, design of their goods and services, quality of management, process and capacity design aimed at efficiency, location with maximum market reach, layout and space design, human resources and training, supply chain diversification, inventory management aimed at minimizing costs, scheduling addressing fluctuations in demand and maintenance (Gregory, 2017). By continuously focusing on and adopting these strategies, McDonald’s has not only achieved increased productivity, but made sure that effectiveness and efficiency are maintained at each operational level. These clear-cut strategies also link with the five key performance objectives we touched on in the previous section, and thus makes sure that strategies align with the targets and goals of the organization.

McDonald’s and Operations Research

In 2004, the idea of operations research was introduced and adopted by Ken Koziol at Mcdonald’s, as recognizing the company’s major issues regarding operations and identifying the problems in an efficient manner, in order to achieve progress at a restaurant level (Cramer, 2009). The article also points out how this enabled the company to carry out rigorous experimentations and decision analysis, as an employee stated that they were not only able to increase their value through innovation but also managed to reduce their overall cycle time, which allowed them to conduct 50,000 experiments(Cramer, 2009). This adds to the list of ways McDonald’s has enhanced operational management, as it taps into the field of research to find more efficient ways to implement these operation strategies. This approach also aligns with the four stages of operations identified by Hayes and Wheelwright and thus the impact of these strategies, as defined earlier, is enhanced.

Critical Evaluation

As assessed before, McDonald’s has not only been able to use these ten aforementioned operation strategies in enhancing productivity and effectiveness but also used intensive research regarding these operations to make them more efficient and up to date. Having said that, one important thing to consider while evaluating these strategies is Trade-off and how there exists an opportunity cost when choosing between operational decisions in order to improve existing systems. There is a well-known trade-off between variety and cost-efficiency.

The diagram illustrates this tradeoff, as for any level of variety there exists a cost-efficient level of operation which is optimal. So, if McDonald’s decides to increase their variety of burgers, their costs could increase but this efficiency frontier shows us that point (B2) which illustrates the best company can do in terms of cost for a given level of variety (Slack & Brandon-Jones, 2018). In doing so, McDonald’s or any other company can efficiently allocate their resources and put them to the best of their use.

Conclusion and Recommendations

As mentioned above, successful operation management design not only requires a clear and connected process aimed at enhancing productivity, but also steps to make sure the strategies have long lasting impacts. An important concept in regards to this is Sustainable Operation Management (SOM), which is defined in a paper as designs, strategies, techniques and policies, pertaining to operations, that push for both environmental and economic goals (Gunasekaran & Irani, 2014). In talking about the importance of SOM, the paper states that researchers acknowledged the significance of SOM as a means to achieve cost-effectiveness and allow supply chains to cater to the needs of the consumers, by being more responsive and minimizing cost, along with ensuring resources for the upcoming generations (Gunasekaran & Irani, 2014). This will ensure that operation processes optimize on their strategies and adopt more greener ones, thereby reducing both wastage and minimizing environmental damage.

References

Cramer, M., 2009. The Emerging Role of Operations Research at McDonald’s. OR/MS TODAY.

Gregory, Lawrence. 2017, McDonald’s Operations Management, 10 Decisions, Productivity, Paramore Institute

Gunasekaran, A. & Irani, Z., 2014. Sustainable Operations Management: design, modelling and analysis. Journal of the Operational Research Society: Special Issue: Sustainable Operations Management: Design Modelling and Analysis, 65(6), pp.801–805.

Slack, N. and Brandon-Jones, A., 2018. Operations and process management: principles and practice for strategic impact. Pearson UK.