Food Service Management: Sourcing, Procurement, and Ethical Practices in McDonald's

This document explores the sourcing and procurement processes in McDonald's, and evaluates different operation management strategies within the company. It also discusses the importance of ethical management for the success of McDonald's and presents an improvement plan for the organization.

Food Service Management

TABLE OF CONTENTS
INTRODUCTION...........................................................................................................................1
LO 1.................................................................................................................................................1
Overview of different food service context................................................................................1
Type of supply chain approaches and procurement strategies with different key stakeholders
in process.....................................................................................................................................1
Principles of effective procurement and sourcing process for food service operation...............3
The way food supply chain approaches and procurement strategies can enhance organisational
effectiveness................................................................................................................................3
LO 2.................................................................................................................................................3
Application of different analytical tools used in McDonald's for effective management
strategies......................................................................................................................................3
Different management practices for successful business operations in McDonald's..................5
Critical evaluation of management tools and practices that support business operations..........5
Recommendations to support management practices and strategies that enhance business
operations....................................................................................................................................6
LO 3.................................................................................................................................................6
Ethical practices in McDonald's and its impact on business success..........................................6
Critical analyses of various specific ethical practices in McDonald's and its impact on overall
business success .........................................................................................................................6
LO 4.................................................................................................................................................7
Current management practices and operational performance of McDonald's............................7
Alternative management strategies in order to resolve issues....................................................8
Management strategies in order to improve productivity and performance...............................8
Implementation Plan for putting solutions to practices within McDonald's...............................9
Metrics for monitoring and evaluating the plan........................................................................10
CONCLUSION..............................................................................................................................10
REFERENCES..............................................................................................................................11

INTRODUCTION
Food Service Management is basically daily operation of restaurants in order to prepare
and serve different food and beverages. There are different staff members that ensures that the
customers are satisfied in order to make business profitable. Present study is based on the fast
food restaurant McDonald's having its headquarter in Chicago, US. Report will investigate the
sourcing and procurement processes in McDonald's and will evaluate different operation
management strategies within McDonald's. Report will include the importance of ethical
management for success of McDonald's and at last report will present an improvement plan for
McDonald's organisational challenge.
LO 1
Overview of different food service context
There is a huge diversity with respect to food service context and basically there are two
types of food and beverages that are served to the customers that is commercial and non-
commercial food service(Schifferstein, 2017). Commercial food service is a market oriented
food service and it is the largest form of food service operation all over the world. The major
target of these services is to provide food and beverages to customers in order to have huge
profits. McDonald's is also giving commercial food service to all its respected customers.
Another type of food service is non-commercial food service that is cost oriented enterprises and
they serves meals as a secondary support service to many organisations including educational
institutions, military, schools or giving for some health facilities.
Type of supply chain approaches and procurement strategies with different key stakeholders in
process
Supply chain management is the management of flow of goods and services and contain all
steps that contain all stages from raw material transformation to production and transportation of
good to the final destination place. Varied sort of supply chain management approaches is given
below. Face to face short supply chain: Under face to face short food supply chain producer
and consumer meet face to face and exchange food items. This sort of food supply chain
is used when location is small and producer supplier as well as consumer operate in same
area (Short food supply chains as drivers of sustainable development., 2013). Hence, due
to small location all three entities meet each other in easy way.
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 Proximate short food supply chain: Proximate short supply food chain is one under
which producer and consumer does not have direct interaction with each other. However,
there is higher level of proximity between producer and consumer. Important point to
note is that in this supply chain good are produced and sold within specific region.
 Extended short food supply chain: Extended short food supply chain is one under which
firm customers live in distant places and due to this reason firm contact with retail stores
and make available its products (Christopher, 2016). This is the supply chain which is
commonly used by the business firms.
Varied sort of procurement strategies is followed by the business firms and under
this either they directly purchase raw items from the producers or through intermediary
they obtain items produced by the producers. Both approaches seem suitable for the firm.
In direct with producer major benefit is that firm can get raw material at cheaper price
(Monczka and et.al., 2015). Hence, it is better to eliminate intermediaries from supply
chain system.
Stakeholders refers to the entities that have interest in the firm business operations and
performance of business activities heavily affect them. Some of the stakeholders in the supply
chain system are given below. Agriculture product producer: These are one of the main stakeholders in the entire
supply chain management system because they provide raw item to the business firms. if
supply chain does not work well demand of raw items may decline which ultimately lead
to low earning. Moreover, because of presence of intermediary relevant stakeholders earn
less in supply chain. Intermediary: These are those who act as bridge between firm and agriculture product
producers (Fahimnia, Sarkis and Davarzani, 2015). If firm demand less raw material or
purchase same directly from producer’s intermediary earn less in business. Firm: It is one of the main stakeholder because if due to rain or any natural calamity
agriculture production reduced then cost of procurement increased in the business.
 Customers: These are those who make purchase of the firm product and if cost of supply
chain increased consistently they have to pay more to the business firm for purchasing a
product.
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Principles of effective procurement and sourcing process for food service operation
The major goal of the procurement process is to ensure that the foods and beverages are
provided to the respective customers with effective quality and quantity and also at a favourable
price that customers can afford. The procurement process implemented by food service operation
in McDonald's is as following:-
 Relationship with suppliers:- The most impressive thing of McDonald's is that it is
having capability to maintain long standing relationship with its respective suppliers in
providing the respective material for preparing its daily menu items(Moretto, Ronchi and
Patrucco, 2017).
 Changing with time:- McDonald's also bring change in its business operations with the
respective time change and as a result organisation have developed global sustainability
framework in order to find the suppliers that can produced more sustainable products for
their organisation.
 Devoting resources to planning and forecasting:- McDonald's have worked hard and
have created Restaurant supply planning department in order to help the restaurant
owners for better job at procurement management. It resulted in an effective planning and
forecasting.
The way food supply chain approaches and procurement strategies can enhance organisational
effectiveness
Different approaches related to supply chain and strategies related to procurement can
enhance McDonald's effectiveness as having transparency in the procurement management can
help the organisation to win its respective customers. The food supply chain approaches helps
McDonald's in increasing their competitive advantage and it also reduces the costs of its
operations through global sourcing. Having effective supply chain management results in
coordination and minimising of total cost. Fewer conflicts arise in the chain partners of the
organisation and this directly results in organisational effectiveness(Gelderman, Semeijn and
Verweij, 2017).
LO 2
Application of different analytical tools used in McDonald's for effective management strategies
The different analytical tools used for effective management strategies are as following:-
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SWOT analyses:- This analytical tool helps McDonald's to understand its respective strength
and weaknesses for having effective management strategies.
Strength
 It is tenth most valuable brand
 Implementing self service with Kiosks
and payment systems. It also boosts the
experience of customers with
personalize offerings.
 The Highest brand value in fast food
brands.
Weaknesses
 There are some interruptions in supply
chains due to the most engaged food
chains and it also limits the availability
of products that is critical for its
business operations(Akman, 2019).
 Lack of employee satisfaction is also
seen in McDonald's due to low wages
given to them.
Opportunities
 Company have to put efforts to
introduce Innovative products for its
customers(McDonald, 2016).
 As company have struggled a lot in
international market due to its image,
there is opportunity for McDonald's to
Rebuild its brand image.
Threats
 As company is operating in
international market, multiple number
of cultural threats are causing harm to
image of brand.
 Constant environmental concerns are
pressurising the organisation for
minimising the waste as it leads of
pollution of environment.
PEST analysis:- This analytical tool helps the business to understand wider business
environment and to anticipate future difficulties in order to take effective actions with effective
strategies.
Political:- As there are different governmental conflicts arising in overseas, its is creating
problem for McDonald's to supply its products in global market. An effective strategy have to be
implemented by the organisation in order to overcome these conflicts(Perera, 2017).
Economic:- There are different economic changes that directly and indirectly affects the business
of McDonald's. McDonald's is having opportunities by producing its goods and services to
developed countries with effective business strategies.
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Social:- As McDonald's is having a negative brand image in market, it is becoming tough for the
organisation to make its customers convince. However, McDonald's have to work effectively by
producing healthy products as people are giving preference to healthy diet.
Technological:- Company is in need to have moderate research and development in order to
bring opportunity for its firm as competition is increasing in market(Duggal and Alexander,
2018).
Different management practices for successful business operations in McDonald's
The different management practices that can lead to successful business operations in
McDonald's is as following:-
 Product and process design:- This process helps McDonald's to meet the respective need
of the customers by achieving the level of quality, speed, flexibility and cost of the
products and services that McDonald's provide. This can be achieved by designing the
effective products and process.
 Supply chain planning and control- There are different activities like purchasing of raw
material, distribution, logistics etc. that is essential for the business to run smoothly. It is
responsibility of McDonald's to identify long term strategic changes which can affect the
operations and accordingly manage the supply chain in order to run the business
operations effectively(Hazen And et.al., 2018).
 Inventory planning and control:- For effective business operations it is every important
for organisation to count and main the inventory items in McDonald's and in order to
manage them effectively, its is very important for them to forecast the inventories.
 Quality management:- Most of the customers of McDonald's are having trust on the
organisation for its quality of products. It is therefore very important for the organisation
to maintain its quality with the help of effective planning and control on the business.
Critical evaluation of management tools and practices that support business operations
The different management tools and practices that McDonald's uses in order to support its
business operations helps the organisation in many ways. However, it is very important for
McDonald's to use these tools effectively as many times wrong strategy affect its business
negatively. Designing of products and services must have high quality and also speed delivery.
However, McDonald's is lacking in terms of foods quality as people are having perception that
fast food is not healthy for them. It is therefore important for the organisation to work and
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provide healthy diet to its consumers. On the other hand, another management tool that is supply
chain and control is also very important to run its business smoothly. However, due to different
political and economic factors, it becomes tough for the organisation to have better relationship
with the supply chain(Luthra, Garg and Haleem, 2015).
Recommendations to support management practices and strategies that enhance business
operations
For having an effective management practices and strategies, McDonald's have to work
effectively by improving the quality of foods and services that they provide to its customers. This
can be possible with the help of effective technology in order to provide fast delivery options to
the customers and also working on healthy food diet as option for the customers who prefer
healthy diet(Tzempelikos and Gounaris, 2015).
LO 3
Ethical practices in McDonald's and its impact on business success
There are different ethical practices that McDonald's follow in order to work effectively.
McDonald's is involved in different CSR activities and works for different charities in order to
sustain their CSR. Company is helping different communities and it is leading somehow to its
positive reputation. These ethical practices are leading to customers loyalty and also helps the
business to avoid legal problems. It also creates positive work environment of McDonald's and
retaining employees for long period(Eckenwiler, 2016).
Critical analyses of various specific ethical practices in McDonald's and its impact on overall
business success
McDonald's is working effectively with respect to different ethical practices like
following CSR activities and working for benefits of different communities. However,
McDonald's is not able to provide an effective working conditions to its working employees and
treating its employees in illegal manner. There are many unsatisfied employees and are not
getting minimum wages that are set by the government because of which employees have also
done strike for the same. Company also have been accused for the negative impact on its
business operations on environment as it is leading to pollution due to use of paper and
plastic(Khan, 2019).
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LO 4
Current management practices and operational performance of McDonald's
The current management practices of McDonald's is as following:-
 Design goods and services:- McDonald's is having different strategies for its operational
management in order to provide affordable products to its customers. However, company
is minimising the size of the food products in order to make the products affordable to its
respective customers. This management practice helps McDonald's to improve its
business operations as it leads to increase in sale of the products and services offered and
that helps the business to have effective positioning in market. Having goods and services
at an affordable range helps the business operations as it opens new markets for its
growth.
 Quality management:- McDonald's works to maximise the quality of its products that is
within price limits. However, company is lacking behind in quality due to public image
that fast foods are not healthy for them. McDonald's have to work on improvement of its
product with respect to quality in terms of health issues that people face. With quality
management, business operations get improved as it leads to greater efficiency and less
wastage of different business resources. It also brings better understanding of customers
needs that help in improving the business operations and performance.
 Process and capacity design:- Process and capacity design is centered on efficiency for
cost minimization in order to support strategies of McDonald's. In this organisation, the
production line method maximizes efficiency and capacity utilization. Its helps the
business operations as it reduces the resource costs and identifies the least expensive
ways to meet the resource needs. This improves the business operations of McDonald's
and it ensures the availability of resources in an effective manner in order to improve the
operational performance of the business.
 Supply chain management:- McDonald's implement strategy of supply chain
diversification in order to have better decision area of operations management. These
strategies reduce McDonald's supply chain risks. Managing the supply chain results in
effective management of business operations as it results in higher efficiency rate and
also reduces cost effects with high outputs. Supply chain management directly impacts
the business operations and boost cooperation in the organisation by enhancing the
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supply chain network. This improves operational performance of the McDonald's with
less supply chain risks.
 Inventory management:- McDonald's works to minimise inventory costs in order to
support restaurant operations and there are local and regional intermediaries that
coordinate with McDonald's in order to manage inventories. Having an effective
inventory management results in improvement of operational performance by achieving
efficiency and productivity of McDonald's. This also helps in integrating the entire
business and maintain customer happiness.
Alternative management strategies in order to resolve issues
In order to resolve different issues that McDonald's face, following strategies have to be
Used:-
 Better pay to employees:- As most of the employees leave the organisation due to
minimum paid wages. McDonald's have to work for satisfying its employees by paying
the minimum wages and making them intellectually and emotionally satisfied. This
strategy will help the organisation to have happier and loyal employees. It results in
better productivity and better retention of the respective working employees.
 Offer healthy and balanced choices:- There are many customers that are not loyal
towards the offering of McDonald's as they have perception that the fast foods offered by
them is not healthy and there are better options in market as healthy diets. In order to
improve the negative reputation in market and having loyal customers, McDonald's have
to adopt strategies that leads to healthy and balanced choice for the respective customers.
 Introduce effective technology for business operations:- As competition is increasing
and McDonald's is facing issue related to market share and competition, Company have
to work in bringing effective technology so that they can deliver the products and
services with speed and with quality of offerings.
Management strategies in order to improve productivity and performance
The management strategies that McDonald's can focus on to improve its productivity and
performance is as following:-
 Working on Quality:- Restaurant have to ensure that it is having quality of processes
and activities in order to raise its productivity. The reason is quite clear that customers
prefer quality products that are available in market due to high competition.
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 Have flexibility in business:- The business have to be flexible with respect to ability to
change an operation in order to increase business performance and raise business
productivity. With flexibility McDonald's can save time and money by increasing speed
and service delivery.
 Ask employees and customers feedback on productivity:- The business productivity
can be best explained by the respective employees that are working in McDonald's. So,
organisation have to ask the feedback of employees as well as customers on daily bases
so that the respective changes can be brought that can match with customers demand. It
finally leads to satisfaction of the customers needs.
Implementation Plan for putting solutions to practices within McDonald's
The respective plan can be put to practices within McDonald's in following ways:-
 Benchmarking:- It is very important for McDonald's to measure its performance and
then put the respective solutions. Identifying the opportunities of improvement is very
important for McDonald's by measuring the performance with another business.
 Assign Accountability:- The strategic execution have to be directly connected with the
respective job responsibility so that employees feel as part and sense of ownership. A
strategic review meetings have to be ensured for all the respective individuals so that they
are on right track.
 Break down your targets:- It is very important to implement the solutions by breaking
down the respective targets in order to achieve the ultimate goals. This helps the
organisation to bring effective change and work effectively to overcome the respective
gaps coming in organisational growth.
 Consider where your funds are allocated:- In order to ensure the new strategies for
successful implementation it is very important for the organisation to invest effectively
for these strategies. McDonald's have to ensure that allocation of funds is proper so that
respective solutions can be implemented in an effective manner.
 Create focus:- It is very important to align the respective goals of employees and track
their progress in order to contribute effectively. For the same McDonald's have to place
weekly meetings for achieving the respective goals and progress.
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Metrics for monitoring and evaluating the plan
In order to monitor and evaluate the plan, respective steps have to be followed by
McDonald's:-
 Performance indicators:- In order to evaluate the success of McDonald's with respect to
implementation of strategies, it is very important to evaluate the success of organisation
with respect to different activities in which company is involved.
 Formal surveys:- In order to collect the standardized information from sample of people,
survey helps in collecting comparable information that can help the organisation to
analyse whether business is going in right direction or not.
 Rapid appraisal method:- Rapid appraisal method is having multiple evaluation
methods and techniques so that systematically data can be collected and evaluated for
understanding the performance of the organisation.
CONCLUSION
From the above study it is been concluded that there is a huge diversity with respect to
food service context and different type of supply chain approaches and procurement strategies
with different key stakeholders in process. Report also concluded that there are different
principles of effective procurement and sourcing process for food service operation and there are
different ways the food supply chain approaches and procurement strategies can enhance
organisational effectiveness. Report concluded that there are different application of analytical
tools used in McDonald's for effective management strategies. The management practices for
successful business operations in McDonald's is very effective. Report also concluded that there
are different support management practices and strategies that enhance business operations.
Further report will conclude that there are different ethical practices in McDonald's and its
impact on business success. Finally, report concluded that it is very important to have
improvement plan in order to overcome organisational challenges within McDonald's.
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