Analysis of Operations and Process Management at McDonald's

This report analyses the operations and process management of McDonald's, one of the largest chain of hamburgers in the world. It examines the nature of the transformation process, impact of the '4Vs', performance objectives and current performance, location and layout, supply chain management, and the use of information technology and human resources to support the operations. The report concludes by focusing on the strengths and weaknesses of the processing system of McDonald's.

OPERATION AND PROCESS
MANAGEMENT

OPERATION AND PROCESS MANAGEMENT: 1
Contents
Introduction...........................................................................................................................................2
Analysis of the operations of the selected organisation.........................................................................2
Nature of the transformation process-................................................................................................2
Impact of the ‘4Vs’,...............................................................................................................................3
Volume dimension.............................................................................................................................4
Variety dimension.............................................................................................................................4
Variation dimension..........................................................................................................................4
Visibility dimension..........................................................................................................................5
Performance objectives and current performance..................................................................................5
Speed.................................................................................................................................................5
Cost...................................................................................................................................................5
Quality...............................................................................................................................................6
Dependability....................................................................................................................................7
Flexibility..........................................................................................................................................7
Location and Layout..............................................................................................................................7
Layout Design.......................................................................................................................................7
Supply chain management.....................................................................................................................9
The use of information technology and human resources to support the operations............................10
Identification of the major strengths and weaknesses..........................................................................10
Strengths..........................................................................................................................................10
Weaknesses.....................................................................................................................................11
Conclusion...........................................................................................................................................11
References...........................................................................................................................................13

OPERATION AND PROCESS MANAGEMENT: 2
Introduction
McDonald’s is one of the largest chain of hamburgers in the world that serves more than 60
million customers in 119 countries on daily basis. The company is headquartered in United
States. In UK, it operates more than 1200 restaurants (McDonald’s Corporation, 2017). The
company has a workforce of 67000 people working in both the company owned branch or
franchisees. The objective of this report is to analyse and examine the performance of process
management and operations of the company in order to focus the supply chain. This report
concludes the discussion by focusing strengths and weaknesses of the processing system of
McDonald’s (McDonald’s Corporation, 2017).
Every company relies on external environment of business to grab the opportunity to grow.
Moreover, apart from the opportunity, the external environment brings threats the risk that
creates dynamic situation for the organisation. While considering the natural environment,
global warming is an issue that creates negative impact on economies. Global warming is
severely affecting the supply chain and transportation system of McDonald’s. Indirectly the
quality of the food products of company will be affected because of global warming which
contribute to the damage of seafood and agricultural products (McDonald’s Corporation,
2017).
Analysis of the operations of the selected organisation
The operational management is a process that considers the production and finally deliver the
goods to customers. Operational activity is the core activity of the company especially while
considering the size of the McDonald’s. Managing its regular operations is a challenge.
McDonald’s have its establishment in different regions which has different dishes in the
menu.

OPERATION AND PROCESS MANAGEMENT: 3
Nature of the transformation process-
McDonald’s follows a manufacturing process, which is completely transparent to the
customers. The company follows a transformation process of inputs into outputs. It handles
the input and output servicing which maintains quality services. The specific operation has a
flow input-transformation-output. This system has a set of elements that work for a particular
aim by acting on inputs to produce outputs. This flow adds economic value to the product.
Inputs in the below flow chart are land, labour, capital, and material. The process includes
roasting, wrapping, assembling that helps to obtain the output (Lee, and Vachon, 2016).
(Source: Lumencandela, 2018)
The arrow-based flow chart of transformation is the critical element, which determine the
way organisation produces goods and services that can meet consumer needs.
Impact of the ‘4Vs’,
All the operational processes are similar in the process as they all indulge in transforming
inputs to derive output. The distinguishing point depends on the peculiar process of what is
the variety of outputs. The operational process of McDonald’s is described by analysing the

OPERATION AND PROCESS MANAGEMENT: 4
four relevant aspects, which are known as- Volume, variation in demand and consumer
preferences, variety, Visibility.
Volume dimension
McDonald’s serve millions flavours of hamburgers in the world. The high volume of
production is organised by the McDonald’s operational department because of repetition of
same task by the same people. The work is executed in a systematic manner by
accomplishing standard procedures. The organisation fixes procedures related to manual and
volume production by following proper instruction of the manager. Moreover, the company
uses special technology to reach the efficiency and high volume processes to get the items at
low cost
Variety dimension
McDonald’s has a variety of hamburgers with huge volume. Nevertheless, the demand
preferences of the customers differ from region to region. With the localisation of the store,
the company has provided the flexibility to the variety of burgers in the menu. McDonald’s
deliver the goods in a standardised manner (Steenkamp, 2014).

OPERATION AND PROCESS MANAGEMENT: 5
Variation dimension
McDonald’s has a high and considerable variation in its product`s demand. As it offers huge
range of products to the customers such as cold drinks, ice cream, and hot food. The
preferences differ on seasonal basis such as customers prefer ice cream and cold drink in the
summer season.
Visibility dimension
It is a considerably difficult dimension of the operational approach. This dimension considers
how transparent the production process to the customers is. Customer-processing and
information-processing operation is exposed to the customers. Undoubtedly, McDonald’s
shows a high degree of operational transparency while executing the operational activities to
the customers. The company undertakes steps to ensure transparency in the operations of the
shops.
Performance objectives and current performance
To order to maintain and manage the quality and quality of resources while allocating it into
the operations, it is necessary to monitor, check, and review the performance of operations.
The quality control processes identify the appropriate measures of operational performances
that relates to internal and external factors, which are relevant to organisational
competitiveness. The operational management of the McDonald’s can analysed on the basis
of five performance objectives such as quality, dependability, cost, speed, and flexibility.
Speed
Speed defines the time that the customer has to wait for the product or service. To improve
the performance McDonald’s have to modify the policy and system in which it operates to
serve the customers on time rather they would leave the store or food court if they find delay
in the services. To perform and manage customer’s base, the company serves the customer
who arrived the store first. After the first customer, the system should serve the customers in
a sequence through first-in-first-out (Lee, and Lambert, 2016).

OPERATION AND PROCESS MANAGEMENT: 6
Cost
Multinational companies focus on cost of their product. Cost reduction is the main objective
of the McDonald’s. If the producer is able to produce the product at lower cost, it will be able
to provide the same product at low cost. The prices of McDonald’s is reasonably cheaper as
compared to other companies. As more and more burgers are produced and sold, the average
cost of production decreases considerably well. Moreover, the company have sought to
increase its efficiency in producing the goods by minimising the cost of the inputs. The
company follows JIT (just in time) to manage the inventory system.
Quality
Nearly in 2014, the company suffered violations from the key supplier in china. The issue
brought out the relabeling of expired meat. This problem has affected the reputation of
McDonald’s among the customers especially regarding the quality of food. To control the
quality of products and services, it involves specific measures on the behalf of business that
work to maintain and improve the procedures of managing the quality. The company also
applies the program Hazard analysis and critical point control (HACCP) to ensure safe supply
chain of its food products (Raju, Singh, and Tariyal, 2015).
(Source: Business and technology, 2012)

OPERATION AND PROCESS MANAGEMENT: 7
Total quality management (TQM) undertakes to meet a long-term success by satisfying the
customer needs. The focus of this approach is to improve the quality of final goods and
services by making continuous improvements in internal practises. There are certain
principles of TQM specified as customer-focused, process-centred, strategic, and systematic
approaches, continual improvements in the process, information based decision-making,
integrates system, and employee involvement (Business and technology, 2012).
Dependability
As the company operates at such a high level. The company has fix opening hours and
ensures that the availability of stock and raw material is available constantly dusting the
whole day. However, in this way customers receive order on time.
Flexibility
McDonald has introduced a digital menu board that provide a versatile digital menu as per
the key customer demographics. Moreover, it is trying to change to adapt the changing nature
of customer preferences such as involving the healthier food (Whitten, 2017).
Location and Layout
Layout defines the way that diverse machines are arranged in the departments to ensure the
reduction in overall cost of production and time taken. This leads to achievement of
maximisation of turnover of factory output and work-in-progress. The demand strategy
addresses the issue of adjusting and facilitate the location. Directly or indirectly, it helps to
serve the market customers effectively and satisfying the long-term demand forecasts. The
company selects the area of location on different perception such as it mainly establish its
store or shop in a particular area, when the area is either regarded as business area or
shopping areas. By opening the store in the business area, it can target working class and
business people (Crawford, 2015).

OPERATION AND PROCESS MANAGEMENT: 8
Layout Design
The design of layout is an important issue in manufacturing the products as per the current
market situation. The facility layout problem (FLP) is an issue that costs high for the
premises. Any transformation, change, or modification indicates an increase in the heavy
expenses that cannot be attained easily. The company implements innovative strategic plans
to hire or built the layouts for the store that should consider exterior and interior
infrastructure of the store (Serban, 2015). For maintaining the exterior infrastructure,
company set the premises for how it would handle and cater the entry of the customers. The
design of the store should be standardised as the company has high brand image in the
market. Moreover, it should be in accordance with difference in location worldwide. The
selected layout should save time and satisfy maximum customers. The exterior appearance of
the store distinguishes it from other brands and make a recognisable image among the
customers (Chen, and MacDonald, 2014).
As far as interior of the store of the company is concerned, the design pattern should be
standard for all shops across the world. The company is maintaining its interior by indoor
seating, adding the breakfast to the menu, play areas, and drive through the window. In
addition to it, the company introduced the retail design called “Experience of future” that
provides direct interaction in the store such as touch screen ordering, table service and
customised and also adding the ingredients as the per the requirements and taste of the
customers by touch ordering.
A new bun-toasting machine is included in the processing of the burgers and at the same time
positioning of condiment containers in the process. It has established a new kitchen that led to
save huge cost every year. The company has started following the assembling method
elaborated in the flowchart below.

OPERATION AND PROCESS MANAGEMENT: 9
McDonald’s assembly line
(Source: Warren, 2017)
Supply chain management
It is the sum of various key business processes from procuring the raw materials to serving
the end customers. Almost MacDonald’s operates nearly 1200 restaurants in UK, 65% of
which are franchised and rest 35% have whole company stake. The source of raw material for
UK branches is from the suppliers of Ireland. The supply chain involves nearly $500 million
every year to avail them with ingredients. The CEO of the company has introduced a business
model named as “three-legged stool” where suppliers, workers and the franchisees play a
crucial role Esmaeilikia, Fahimnia, Sarkis, Govindan, Kumar, and Mo, 2016). The company
coordinates with many suppliers who provide food, packaging, and equipment that is based
on rigid rules and guidelines to confirm that the stores in local area provide the best quality
products with special standards and TQM principles.

OPERATION AND PROCESS MANAGEMENT: 10
All the stakeholders such as suppliers, employees, and the franchisees are connected to each
other through Electronic-procurement platform (E-procurement). This system manages global
franchises and enable to collect the information more effectively and efficiently as compared
to traditional Dial-up networking. E-procurement system is the backbone to not only logistics
but also the whole supply chain. A company named “Emac Digital” provides the website for
the McDonald’s corporation that serves 27000 franchises.
The use of information technology and human resources to support the operations
McDonald’s is the largest and well known global foodservice company which has more than
30000 restaurants in around 119 countries with the workforce of 42000 people. HR
department of the company formulates the policies and programs to ensure the performances
of the workforce. The link of what is necessary for maintaining the integrity of products. Four
steps such as procurement, transportation, retailing of food product and warehousing helps to
achieve this system (Latukha, 2015). Moreover, along with applying the practises to attract
and retain the desired employees. Employee turnover is the major problem faced by the
organisations and McDonald`s could not hide from the same problem. In 2016, fast food
workers fought for their rights that led to largest global strike. It took place 300 cities in
every part globe. The company has a special infrastructure, which separates the processing
lines of chickens and vegetable food. Transportation system carries refrigerated trucks to
distribution centre that connect to suppliers by a centralised procurement. The truck
transports all the required provisions to the store outlets or to the place where they are serve
customers (Bernal, and Alesón, 2015).
Identification of the major strengths and weaknesses
After analysing the operations of McDonald’s, recognition the strengths and weaknesses is
possible-

OPERATION AND PROCESS MANAGEMENT: 11
Strengths
Brand Recognition- By selecting the appropriate location and layout designs; it has enabled
the company to build a brand image, which has won minds of customers (Bhasin, 2018).
McDonald’s strong supply chain- It is the integral and inseparable part of the company
operation`s success. It provides another competitive advantage to operational activities
(Krishnaswamy, 2017).
Increasing flexibility- the company is planning to introduce healthy food in its menu.
Moreover, it has increased the flexibility of business so that it can address the competition
and dynamic market situations (Jurevicius, 2018).
Weaknesses
Low wages- The workers play an important role in executing and running the supply chain.
In various countries, the company should consider the labour rights and their low pay. To
reduce the labour turnover, the company should provide necessary recognition when an
employee works in the organisation for more than five years (Bhasin, 2018).
Bad image- Due to food scandals, MacDonald’s has suffered image loss such as in the case of
china where it marked the expired meat from the suppliers. The company have faced lack of
control for the food processes in the world by making the operations transparent to the
customers (Jurevicius, 2018).
Increasing flexibility- With the increasing change in business environment, the company
needs to identify the requirements and preferences of the customers. MacDonald’s should
confront a movement that can give greater importance to clients for the products, which are
offered.
Conclusion
From the above discussion and analysis of supply chain, 4v`s analysis and ultimately identify
the strengths and weaknesses of the company. With the trend competition among the

OPERATION AND PROCESS MANAGEMENT: 12
corporates, infrastructure plays an important role in deciding the layout designs and locations
of the company. This considers both external and internal infrastructure of the company. The
company has adopted new manufacturing process by introducing the assembling method to
fasten the process of providing the product to the customers in its supply chain (Zhai,
Galarraga, and Lados, 2016).
The company introduced new HR practises to reduce the employee turnover. The use of
technology is prolific, as the company has started engaging with all the suppliers, franchisees
and the employee through e-procurement system. The current performance of the company
accomplishes flexibility by offering customers products as per their preferences, maintains its
quality, and depends on the supply of raw materials timely so that the customer catering
cannot be affected negatively (Latukha, 2015).

OPERATION AND PROCESS MANAGEMENT: 13
References
Bhasin, H. (2018) SWOT analysis of McDonalds – McDonalds swot analysis. [online]
Available on: https://www.marketing91.com/swot-mcdonalds/ [Accessed on 10/10/18]
Business and technology (2012) Total Quality Management (TQM) by Operational
Excellence Consulting. [online] Available on: https://www.slideshare.net/oeconsulting/total-
quality-management-by-operational-excellence-consulting [Accessed on 10/10/18]
Chen, L., and MacDonald, E. (2014). A system-level cost-of-energy wind farm layout
optimization with landowner modeling. Energy Conversion and Management, 77, pp. 484-
494.
Crawford, A., (2015) McDonald's: A Case Study in Globalization. Journal of Global
Business Issues, 9(1), p.11.
Esmaeilikia, M., Fahimnia, B., Sarkis, J., Govindan, K., Kumar, A., and Mo, J. (2016).
Tactical supply chain planning models with inherent flexibility: definition and
review. Annals of Operations Research, 244(2), 407-427.
Bernal, G. J. and Alesón, R. M., (2015) Why and how TQM leads to performance
improvements. Quality Management Journal, 22(3), pp.23-37.
Jurevicius, O. (2018) SWOT analysis of McDonald's (5 Key Strengths in 2018). [online]
Available on: https://www.strategicmanagementinsight.com/swot-analyses/mcdonalds-swot-
analysis.html [Accessed on 10/10/18]
Krishnaswamy, S., (2017) Sources of Sustainable competitive Advantage: A Study &
Industry Outlook. St. Theresa Journal of Humanities and Social Sciences, 3(1).

OPERATION AND PROCESS MANAGEMENT: 14
Latukha, M. (2015). Talent management in Russian companies: domestic challenges and
international experience. The International Journal of Human Resource Management, 26(8),
1051-1075.
Lee, A. and Lambert, C., (2016) Special sauce in sesame seed buns: legal strategy and public
policy in the fast-food industry. London: Sage publications.
Lee, K. H., and Vachon, S. (2016). Supply Chain Sustainability Risk. In Business Value and
Sustainability (pp. 245-280). London: Palgrave Macmillan.
Lumencandela, (2018) Introduction to Operations Management. [online] Available on:
https://courses.lumenlearning.com/boundless-business/chapter/introduction-to-operations-
management/ [Accessed on 10/10/18]
McDonald’s Corporation, (2017). McDonald’s corporation 2017 annual report. [online]
Available on:
http://www.annualreports.com/HostedData/AnnualReports/PDF/NYSE_MCD_2017.pdf
[Accessed on 10/10/18]
Raju, N., Singh, S. and Tariyal, M., (2015) Service Quality of McDonald's. Global Journal of
Enterprise Information System, 7(3).
Serban, A. I., (2015) Managing Transformation: Business Process Reengineering or Total
Quality Management. International Journal of Academic Research in Business and Social
Sciences, 5(5), pp. 81-86.
Steenkamp, J. B. (2014). How global brands create firm value: the 4V model. International
Marketing Review, 31(1), 5-29.

OPERATION AND PROCESS MANAGEMENT: 15
Theinsightpartner, (2017) internet of Things Market to Global Analysis and Forecasts by
Component, Connectivity Technology, and Application. [online] Available on:
https://slideplayer.com/slide/11797193/ [Accessed on 10/10/18]
Warren, A. (2017) Operations Management. [online] Available on:
https://slideplayer.com/slide/11874639/ [Accessed on 10/10/18]
Whitten, S. (2017) four ways McDonald's is about to change. [online] Available on:
https://www.cnbc.com/2017/03/01/4-ways-mcdonalds-is-about-to-change.html [Accessed on
10/10/18]
Zhai, Y., Galarraga, H. and Lados, D.A., (2016) Microstructure, static properties, and fatigue
crack growth mechanisms in Ti-6Al-4V fabricated by additive manufacturing: LENS and
EBM. Engineering failure analysis, 69(1), pp. 3-14.