Operations and Information Management at McDonalds UAE

This report analyzes the production system of McDonalds UAE, including inventory management, key operations in production system, and operational flow. It also provides insights on how the company can overcome its failings by using lean production system.

Running Head: OPERATION MANAGEMENT 1
Operations and Information
Management

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Table of Contents
Introduction.................................................................................................................................................3
Company Description..................................................................................................................................3
Inventory Management...............................................................................................................................4
Just-In-Time Approach.............................................................................................................................4
Stock Control Charts................................................................................................................................4
Ordering..................................................................................................................................................5
Key Operations involved in Production System...........................................................................................5
Operational Flow.....................................................................................................................................7
Failure..........................................................................................................................................................8
Delay in Food Serving..............................................................................................................................8
Overproduction.......................................................................................................................................9
Use of Lean Approach..................................................................................................................................9
Key Findings...............................................................................................................................................10
Conclusion and Recommendations...........................................................................................................12
References.................................................................................................................................................13

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Introduction
Operations Management is the process of converting a wide range of inputs into usable inputs by
utilizing different physical processes. The major objective of operations management process is
to effectively use the available resources and assets, develop products which fulfill the needs and
wants of customers (Slack, Chambers and Johnston, 2014). The major aspects of this process are
such as handling of product and process design, capacity management, production system and
techniques, system development and supply chain strategy. Production system forms a major part
of operations management of any organization.
The purpose of this report is to analyze the production system of McDonalds UAE that is one of
the largest fast food chains across the world. While working with McDonalds UAE, it was a
great experience that assisted to become familiar about its production system and other internal
processes. This report includes different aspects of operations management in context of
McDonalds UAE, such as inventory management, key operations in production system and
operational flow. Furthermore, it includes the failure in company’s delivery system and then it
provides the insights on how this company can overcome these failings by using lean production
system.
Company Description
McDonalds is a leading fast food organization that has established its operations in United States
in the year 1940. Since its foundation, the organization is bale to expand its operations in various
nations across the world. Now, McDonald’s is the largest fast food chain in the world in terms of
revenues. It is serving more than 70 million customers routinely in over 100 nations
(McDonalds, 2018). As of 2016, it has total 36,900 stores where it has employed approximately
235000w employees. It offers a wide range of products like hamburgers, French fries, soft
drinks, coffee, ice tea, milkshakes, chicken, flavored tea etc. In addition to this, the restaurants of
McDonalds also offer different breakfast items in UAE and in other markets (McDonalds, 2012).
Its breakfast category includes cookies, muffins, sandwiches, biscuits, hotcakes etc. This
organization has launched its offerings under some brands like Big N’Tasty, McFlurry,
McNuggets, Mcuffin etc.

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Inventory Management
Under Operations Management, Inventory Management is one of the major strategic decision
areas that assist the organization to manage the receipt and utilization of materials for its
production process. As a largest fast food chain in UAE, the organization is very much focused
on managing its inventory effectively (McDonalds UAE, 2018). It is using significant processes
and practices so that it can minimize its inventory costs while assisting the restaurant operations.
In its operations, McDonalds does not directly provide its products to the restaurants. In its place,
local distributors and intermediaries communicate with the McDonalds’ restaurant managers to
manage the inventory efficiently.
McDonalds UAE implements various practices to manage its stock and inventory which are
discussed below:
Just-In-Time Approach
One of the most significant techniques of inventory management which McDonalds uses to
manage its stocks effectively is Just-in-Time approach. In UAE, the restaurant of McDonalds
uses this inventory strategy to enhance its efficiency and eliminate the wastage by getting the
materials only when they are required in the production process, thus decreasing the costs of
inventory (Chiu, Yang and Lin, 2017). At its restaurant, when customer orders the food, the
chefs do not start to prepare the food. It assembles and reheats the burger as per the specific
order. With the assistance of Just-in-Time inventory management system, McDonalds precook a
lot of burgers and store than under the heat lamps. The restaurant stores them as long as possible
and finally disposes what cannot be sold. It assists the company to manage its inventory and
serve the customers more quickly.
Stock Control Charts
Stock control chart is one of the major components that assist the organization to manage its
stocks and inventory. Stock Control chart is the document that demonstrates the balance of
orders for new stocks against company’s sales. This system is totally dependent on the data for
forecasted sales. For instance, if sales of hamburgers are running out of system then inventory
for beef patties require to be approaching into the system. Moreover, if the sale of McFlurry is
going out, then inventory of ice-cream will need to be coming in the stock. The Manugistics
system uses the product sales worth of two years for the restaurant. At McDonalds UAE, the

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restaurant practices time series analysis (Mahadevan, 2009). The local planner will implement
casual factor (blue boxes) to time series for the starting and ending date of material forecast. By
the use of complex calculations, then the graph generates a forecast in the red circle.
Ordering
Ordering process of McDonalds plays an important role in effective management of inventory
and stocks. Under this process, store managers of McDonalds utilize a simple web based
communication technique that is known as “WebLog”. This tool is used to see and make changes
in the Order Proposals of UAE’s store. At its restaurant, every day WebLog makes a proposed
order for its manager to evaluate and change if required. This web-based tool allows the central
planners and restaurant managers to check what quantity of material has been ordered, current
level of stock and what quantity of stock is due to be sent at a time (Fitzsimmons, Fitzsimmons
and Bordoloi, 2008). By using this tool, restaurant’s managers are able to manage the ordering
and delivery of required materials. Previously, managers of restaurant would have to see the
delivery for shortages and input the materials which they had obtained. Now, this new technique
generates a delivery note automatically which provides the details about actual quantities and
delivery. All of the managers just need to click on the ‘confirm’ tab on WebLog. It assists them
to save time and makes the inventory management process more cost-effective.
Thus, by using above techniques and processes, the restaurant of McDonalds in UAE manages
its inventories/assets within production system.
Key Operations involved in Production System
As mentioned above, McDonalds has been a leading player in the fast food industry since the
mid twentieth century. The organization is facing intense competition since then that has
impacted each and every aspect of McDonalds (Wild, 2011). The organization has maintained its
position in the restaurant industry in spite of competition by implementing lean focus. Lean
production system of McDonalds includes various aspects strategies like waste management,
avoiding overproduction, reducing waiting time etc. Key operations which are involved in
McDonalds’s production system are discussed below:
Purchasing of Machines and equipment

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This is the first step in overall production system of McDonalds where the company needs to
make a capital fund investment so that it can purchase required machineries and equipment. The
restaurant purchases the machines which correspond to restaurant. Especially, organization buys
soda machine, fry machine, grill machine, coffee machine and Mcflurry machine etc. For this,
restaurant connects with its suppliers to purchase these machines (Johnson, 2014).
Sourcing of Raw materials and ingredients
At this step, the purchasing department of the restaurant is responsible to source and purchase the
required raw materials and ingredients. This department researches the market and evaluates the
quality and prices of suppliers. For McDonalds, it is very important to have right supplies and
materials. It believes that if the restaurant does not contain right supplies and materials to
produce and provide the food then its operations will not get succeeded. Under materials and
supplies, the restaurant ensures that it has boxes and paper to wrap the burgers, fry boxes, cups
for beverages, straws, cutlery, napkins and bags to take away the food (Rungfapaisarn, 2011).
Additionally, ingredients at McDonalds are the essential part of its production system. Without
required and suitable ingredients, there will not be production. At this step, the restaurant sources
the milk, condiments, meat, buns, cheese, vegetables, burger toppings, salt, crème for coffee etc.
It will store the above raw materials and ingredients by using the most appropriate techniques.
Storing and Issuing of materials
After receiving the materials, it is the responsibility of assigned store man to store the supplies
and issue it to different departments accordingly. Then, the person updates the database of
restaurant stock and manages both new and old stock. He keeps the stock records to the latest
date.
Customer Order placement
This is the step when a customer arrives to the restaurant for having food. This is the very
important step for the organization. The person on counter greets the customer and attends
him/her. The employee takes the order and sometimes they suggest the best combo offer
according to the requirements of customers.
Service and Product Design

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Under this step, the major goal of McDonalds UAE is to provide the customers with the quality
products on affordable prices. It produces the ordered food by using quality and fresh ingredients
so that they can satisfy their customers (Kane, 2016). Prices and serving sizes of McDonalds’
products are decided on the basis of regular customer expectations. However, some of its
products are reduced in size so that they can make it more affordable.
 Quality Management Method
In the process of product designing, quality management is a significant process that is used by
McDonalds. This organization targets to enhance the quality of products within constraints like
costs and price limits. It practices a production line approach so that it can maintain the quality
consistency of products (Goetsch and Davis, 2014). This consistency in product quality fulfills
the needs and expectations of customers about the restaurant. It assists the organization to
maintain an effective brand image in UAE restaurant and fast food industry.
Customer Service
McDonalds has designed its customer service process in a manner that customers need to pick
their ordered food from the counter. They prepare the food in just 15 to 20 minutes. In order to
serve the customers effectively, the restaurant has used effective HR strategies that assist in
developing training skills required in production method in restaurant kitchen. Under this step of
operational flow, organizational and individual learning are also focused to assist the
organizational culture McDonalds (New, 2015).
Customer Feedback
In the operations and production system of McDonalds, this is the most significant step that the
restaurant follows. At this step, the organization takes the feedback of customers as it is valuable
for the growth of restaurant. Considering this feedback, it makes changes in the food menu and
services accordingly. It assists the organization to improve its service delivery.
Operational Flow
The operational flow of McDonalds’ production system is presented below:

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The above diagram reflects the overall process of McDonalds’ operational and production
system. By using this, the organization is able to manage it’s all the processes and retain a larger
customer base than other fast food outlets in UAE (Shyamo, 2014).
Failure
In its production and operations system, there are some major points where McDonalds’ delivery
system can fail. The company needs to consider these points and work on them effectively. Two
of these major points are discussed below:
Delay in Food Serving
In any fast food business, each and every second counts and customers are very much concerned
towards waiting time after placing the order for food. It is very common issue at food or fast
food restaurant because of which customers can shift to other competing brands. This is one of
the issues which can be faced by McDonalds and this restaurant can be failed to align its
performance measures. The restaurant may fail to serve the food in the fixed or given time when
there will be rush in the restaurant. It looks very professional to the customers and they prefer to
shift to other restaurants. One of the major reasons behind this delay in service may be the
Purchasing materials
Sourcing of raw materials
Storing and issuing
Customer Order Placement
Service and Product Design
Customer Service
Customer Feedback
Quality
Management
Training of
employees

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shortage of workers in the restaurant. It is very challenging for the organization to find the full
time employees like waiters, cooks, delivery executives, counter executives etc. It can affect the
brand image of the organization and change the perception of customers towards McDonalds’
services (Baertlein and Hampton, 2017). At this point, this restaurant may fail to attain
operational performance objective i.e. speed.
Overproduction
In addition to above, the organization may face the situation of overproduction. The organization
may fail to produce the appropriate quality of food that can increase the wastage of food
products. Sometime, McDonald’s restaurant prepares the burgers and sandwiches in batches and
stores them in warming bins. The outlet does this to reduce the food serving time, but it caused
them a bad image and increased the wastage (Jaulus, 2017). Thus, the organization can face the
risk of overproduction. Under the traditional system of McDonalds, the food is cooked at a level
which results in higher inventories. It is because that food is available very fast. After some time,
the unsold food is scrapped. This can ultimately increase the costs of McDonalds.
Thus, these are the two major situations where the production and delivery system of McDonalds
may fail.
Use of Lean Approach
Nowadays, most of the organizations are looking to implement effective and systematic
production system which can improve their manufacturing processes. In order to deal with
different issues, they use lean production techniques (Hopp, 2018). About lean approach, it can
be stated that it is a systematic production method which is used to eliminate wastage in the
production system. McDonalds also can use this approach to reduce the above two failings in its
delivery system. Major practices of lean production at McDonalds are explained below:
 At McDonalds, the primary principle of lean approach will be to instantly meet the
demand and maintain the quality and reduce the wastage.
 Under lean approach, the restaurant can use modern technology that will assist the
organization to reduce the waiting time. In this process, a computer system conveys the
order placed by the customers to production employees. Additionally, the restaurant can
hire skilled employees and use innovative cooking equipment so that they can prepare the

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food in less than one minute. In this way, the entire order process will take only three
minutes (Jasti and Kodali, 2016).
 To eliminate the failure of overproduction, the restaurant can start to keep the salad,
patties, buns and other sides ready. When the order is placed by customers, the
production employees can combine them into final products. It will take few minutes to
prepare the food and eliminate the risk of overproduction in McDonalds’ delivery system.
 Moreover, there will be the practice of processing wastage as there is need of excessive
handling of products. Under its lean method, McDonalds can use Speedy System for
preparing the order. It can unite and link all the operations in an assembly line. It will
reduce the handling of items and eliminate the waste in order processing.
 As per the lean approach, a company should get freed of the inventory as holding because
it causes opportunity cost. As McDonalds needs to meet the customer demands all the
times, so to fulfil this requirement, it can develop refined stock control system that assists
to organize the process and avoid the wastage because of overstocking (Raghavendra and
Nijaguna. 2015).
 Just-in-time is one of the key principles of lean production approach. As mentioned
above, McDonalds is using this approach for managing its inventory. This approach will
benefit the restaurant to provide better food at reduced costs. The restaurant can use this
technique to enhance the quality and reduce the costs. With enhancing quality,
McDonalds can offer fresh and tasty burgers. Under this technique, it waits till the
customer gives the order (Filippini and Forza, 2016). It means there will not be
challenges related to the special orders for the customer.
Thus, the utilization of lean approach will enable the McDonalds UAE to provide quality food
services at given time. The organization will be able to avoid the potential failing which are
discussed in above point.
Key Findings
From the above analysis, it can be found that lean approach chosen by McDonalds can assist the
restaurant’s production system with aligning its operational performance measures. This
approach can support its processes and operations significantly. The major findings of the report
are discussed below:

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 McDonalds involves each and every employee
Before implementation of lean culture, McDonalds will place a focus of importance on the
involvement of employees. This emphasis will be put on performing as a team and engage
everyone in the production and delivery process. Each person, from suppliers to production
employees and servers will be involved in this process and nurture the lean culture. It will assist
them to learn about new things in lean production system. The restaurant will ensure that every
employee is aware of each production stage (Thakkar and Thatte, 2014). It will help develop
skills and build knowledge in the team. Moreover, assembly line production system provides a
sense of responsibility and ownership to every person engaged in operational process. In this
way, this will support the organization to meet its operational performance measures as all the
employees will work actively for the benefits of organization.
 Elimination of Wastage
It can be found out that implementation of lean production method will support McDonalds to
overcome the above failures i.e. wastage, overproduction and delay in food serving. The extent
of lean production’s significance is higher at McDonalds. By eliminating the wastage, the
organization will be able to reduce the food costs (Nicholas, 2015). This cost saving will pass on
better value for customers’ money. In this way, the organization can sell the products on most
affordable prices that will assist the restaurant to attract more customers.
 It assists in management of inventory
In addition to above findings, it can be stated that lean production approach will also help
McDonalds in effective management of its inventory. To manage the inventory, the organization
can use the just-in-time philosophy of lean production that will entail the production and delivery
of the materials in the quantity when the customers need them. Just-in-time will not only benefit
the McDonalds but it will also increase its organizational value (Yang, et al, 2015).
In this way, the utilization of lean production will assist McDonalds to a higher extent so that it
can meet its operational performance measures.

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Conclusion and Recommendations
In the limelight of above discussion, it can be concluded that McDonalds is using effective
processes and methods to manage its inventories and other related operations. Being a largest
fast food chain, the organization is very much concerned about its operation management. In the
above report, various operations of McDonalds’ production system are discussed. By using lean
production system, the organization can improve its operations and reduce the risks of failure. It
is hereby recommended to McDonalds that it should make constant efforts to reduce the risks of
overproduction and wastage. Considering the needs and wants of customers, it should make
changes in its food menu and operations. It will assist the organization to provide successful
service delivery to the targeted customers.

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