The Impact of Operations Management on Organizational Performance

The assignment content comprises various academic articles and online resources on operations management, total quality management (TQM), lean principles, and supply chain management. The papers discuss the impact of TQM on organizational performance, the role of quality management practices in affecting performance, and the application of lean manufacturing tools in different industries. Additionally, there are online resources that provide insights into McDonald's operations management, 5 lean principles for engineers, and the importance of logistics and supply chain management. Overall, the content provides a comprehensive overview of various aspects of operations management.

Running Head: Operations Management
Report: Operations and Information Management
Practices at McDonalds

Abstract:
This report elucidates the importance of an effective inventory management system from the
perspective of an organization. The chosen business for the report has been McDonald’s UAE
that has been operating successfully across the nation through its multiple outlets. The brand
is considered to be one of the leading fast food chains in the country and it is known to serve
high quality of products and professional services to the customers. However, some issues
with the recent quality management techniques and principles have led to substantial
customer dissatisfaction owing to which the management has conducted an analysis into the
current inventory management system. The examination has led to determination of
concerning points such as use of non-recyclable materials such as plastic in packaging that
affects the hygiene of the food items and lack of discipline and professionalism by some of
the staffs in serving the customers. The staffs are not following the principles of TQM
diligently and hence the service is affected. Finally, recommendations have been offered to
the management of the organization to introduce systems such as Lean and Just-in-Time to
plug the existing loopholes in the inventory management system. These are the major
discussions contained in this report.
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Contents
Introduction:...............................................................................................................................3
1. Critical appraisal of inventories and assets management in the production system:.............3
2. Key operations in the production system in logical operational flow:...................................7
3. Two points of failure in delivery system alignment with operational performance
measures:..................................................................................................................................11
4. Ways of utilization of lean approach in the production system to potentially reduce the
failings:.....................................................................................................................................13
5. Three key findings discussing the ways the lean approach may assist the production system
with aligning its operational performance measures:...............................................................15
Conclusion:..............................................................................................................................16
References:...............................................................................................................................17
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Introduction:
This report elicits the operations management functions observed at McDonald’s in the UAE.
Operations management process can be referred to as the system of functions that are
implemented by service organizations as well as manufacturing organizations in conducting
their daily business activities with the objective of achieving a competitive edge in the
industry and also for generating sufficient customer satisfaction.
The purpose of an operations management function is to ensure that the desired objectives of
the organization are met on time. The management should be able to monitor the operations
management functions regularly such that the quality of the products and services are
maintained for ensuring that the highest possible quality of products or services is being
offered to the target customers.
In this report, the analysis of the operations management strategies at McDonald's has been
undertaken for determining the effectiveness of the management in controlling and evaluating
the operations management functions. The operational flow of production within the
company has been analyzed.
Some of the loopholes in the current operations management strategies have been determined
in course of the analysis and the application of the lean approach has been proposed to solve
the issues at the operations management functions. The influence of the lean approach to
quality management and innovation within the operations management functions has been
determined through the evaluation of the process within McDonald’s (Gregory, 2017).
1. Critical appraisal of inventories and assets
management in the production system:
Operation management is the term which is used to define a set of functions which manage
the configuration and administration of processes, supply chain, and functions (Kothari,
2018). It entails the daily functioning of the organizations like the functions of securing
assets, handling and managing inventories and other administrative procedures, etc. so that
the end users get the delivery of the expected services. Operation management has a wide
scope and it is far-fetched. It entails the undertaking of the key strategies and the vital
functions at every level of operation. Operation management perimeter consists of a
delegation of many important tasks like process layout, forecasting, the structure of
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administration, information transfer, cash handling and designing of an effective model of the
supply chain (Foropon & McLachlin, 2012). The operation management of McDonald's has
been analyzed in respect to the critical appraisal of inventories and assets management in the
system of production. The role of operation management is achieving the objectives is quite
significant. The major elements of operational management of McDonald's include the
operations of core functional area, ethical conducts, environmental issues, and the supply
chain. The aim of the inventory handling and asset management is to ensure that the
organization delivers the right quantity with the right quality at right time and the cost of
manufacturing is right (Battistoni & Bonacell, 2013).
In order to ensure that the best quality of products is being offered to the customers at the
right time, right place, at the right price and right quality, the operations management
functions of McDonald’s rely on the E-Procurement Model. McDonald’s offers services
around the world as also in the UAE, primarily through franchising and hence the E-
procurement Model helps in achieving the desired objective of making sure that the raw
materials are being resourced at the right time and the products are being delivered to the
franchisees as per schedule. The model is known as Emac Digital that creates a connection
between the global franchisees, suppliers and the logistics that ensure that the finished
products are being served to the customers and there is matching of the supply with the
demand (Ngambi & Nkemkiafu, 2015).
The McDonald’s inventory from 2006 to 2018 as it can be defined as a total value of
inventories in all the stages of completion. Among the central restaurant supply planning
manager along with the individual restaurants, there are some constant communication which
assist in managing the inventory more accurately. The central team which includes the
employees working for the individual restaurants and the specialists controlling the stock
plays the role of regional planner. Effective along with the accurate inventory management is
crucial to the business as McDonald put effective effort in stock management.
The restaurant management should spend more time which provide effective focus on
delivering the high-quality services with the cleanliness. The whole system is optimized for
decreasing the wastes. With the effective use of the raw materials along with the high
throughput of work in progress which assist in producing and generating the win-win
situation for McDonald’s along with the environment. This software of Inventory
management of McDonalds assists in integrating with the other and different applications as
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well as assist in generating the versatility. This is very useful and essential for the business
which assist in keeping track of their supply chains along with the consumer relations. The
inventory needs to manage and monitor by using the Restaurant inventory Management
Software
Stock management is the main theme of an effective inventory management. The inventory
management includes two important segments one is the forecasting of demands and the
other one is controlling inventory. The forecasting of the inventories is to be done accurately
so that the organization does not face any wastage. The inventory or the stock needs to be
controlled so that the raw materials could be managed efficiently. The inventory management
of the organization takes place quite significantly in McDonald’s. There is a continuous
communication between the managers of the central supply planning of the restaurant and the
managers of the individual restaurants. This makes the communication gets seamless and
effective (Li, 2014). It is seen that each of the regional planners is associated with almost 100
restaurants. It also communicates with each of the restaurants on day to day basis. The ICT
stock control system works with the regional planner to monitor the stock of basic the raw
materials. The regional planner of the company also takes care of the forecasting of the
inventories which are at the basic level. The forecasting helps the company to come up with a
better analysis of the demand and the preparedness in respect to future sales. The company
decides the frequency of the requirement of the inventory and on that basis, it decides its
inventory procurement. The company comes up with an efficient inventory management so
that wastages could be minimized (Foropon & McLachlin, 2012).
Figure 1: Stock-management Problem at McDonald’s
The figure one is related to the stock management problem as they need to make the
decisions related to the different ways which assist in meeting the demands of consumers and
also at the same time need to make trial for decreasing the wastage of resources to the
maximum possible limit.
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Figure 2: Supply planning at McDonald’s
The figure two is related to supply chain planning of McDonald’s as in the first step regional
planner of McDonald’s in the UAE who use the appropriate planning along with the
communication tools such as ICT stock control system and email or telephone and then all
the information about the inventories transferred to the restaurant manager.
The supply chain planning of McDonald’s encompasses several procedures such as the
regional planner of McDonald’s in the UAE works with the chains in the country and stay
connected with each of the outlets through teleconferencing and emails on a regular basis.
The major factors influencing the level of inventory are discussed with the teams in each of
the outlets. The regional planners are experts in the implementation of the ICT Stock Control
System that is referred to as Manugistics for ensuring there is effective utilization of
resources of raw materials such as bread, potato, beef, etc. (Hill, 2002). An array of ad-hoc
factors is utilized by the regional planner in performing the inventory forecasting such that
future demand can be effectively forecasted depending on the past performances and the sales
campaigns to be undertaken in the future. For instance, sale of items such as Big Mac rises
during campaigns such as ‘Buy one and get one free’.
Figure 3: Use of Stock-control Chart by McDonald’s
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The figure third denotes the strong control chart which is use by McDonald’s as this chart
assist in showing the balance of orders for the new stocks against the sales. This system is
based on the figures for the expected sales. This chart is helpful in entering the information
about the order as any system is good as data is offered. So, McDonalds restaurant managers
should ensure that data enter into the system accurately.
A Stock-control Chart is a useful tool that is used by an organization for depicting the balance
pertaining to the orders received for new inventory against the sales from the inventory. The
technique relies on the expected sales figures. For instance, if the inventory of McFlurry, one
of the special desserts from the brand is getting exhausted, it is often countered with
inventories of ice creams that need to be brought into the system. The Manugistics system is
one of the most reputed inventory management systems performing a host of automated
inventory management functions. It needs information such as few years’ product sales
history of McDonald’s for generating forecasts of inventory based on the time series analysis.
The team of regional planner utilizes a unique factor depicted in the graph through the blue
blocks, to the time series analysis for arriving at the forecasted value of inventory. The graph
helps in generating the future forecasted level of inventory (Ahmed, et al., 2014).
McDonald’s also comes up with efficient asset management. The physical assets of the
company are managed and maintained well. The commercial real estate of the company is
managed well by the asset managers of the company. The main aim of an effective asset
management is to ensure that the capital value of the assets of the company and that of the
properties is increased. McDonald’s has an efficient asset management system through which
the properties and the assets of the company are managed well. The human assets are also
included in the asset management of the company. The assets of the company including the
human assets along with the plants, machinery and other equipment are managed well.
2. Key operations in the production system in
logical operational flow:
The success of McDonald's in the UAE can be based on the effectiveness of the production
processes and the delivery system that the management follows in making sure that the best
possible quality of products is served to the target customers in the market segment of the
brand. The company is dedicated to ensuring that the customers are offered with healthy and
hygienic food items that are prepared from the best possible quality of ingredients and raw
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materials sourced from highly trusted suppliers of the brand within the country (McDonald's,
2018). The management specifically focuses on continuous improvement and quality
management principles due to which the company has been able to serve the customers for so
long. The operations in the production system of the company are illustrated with the help of
the following diagrams:
Figure 4: McDonald’s Production Process.
The figure four describe the production process of McDonalds which is classified into three
parts that is input, process and output and then they can collect the feedback from the
consumers after delivering the product to the consumers. It will inform the consumers of the
production process of well-known franchise along with the McDonald brand.
The operations management process at McDonald's starts with the inputs or raw materials
that have been received for the purpose of converting them into the several delicacies offered
by the brand such as burgers, patties, sandwiches, etc. Then the inputs are converted into the
outputs through the production process in which a number of sophisticated equipment and
technology are used for ensuring the safety, hygiene, and quality of the food. Thereafter, the
outputs are generated which are the final food products and, in this stage, the packaging is
done for making the products ready to be sold to the customers. Finally, the feedback loop is
created whereby after each sale and service, feedbacks are collected from the customers
regarding their liking about the product and any negative aspects of the products or services
that they wish to be improved in future (Agyekum, et al., 2015).
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Figure 5: Production and Supply of Meat Products at McDonald’s
From the above flowchart, it can be observed that the meat products at McDonald's are
procured and converted into safe and edible items through a series of functions in the
production system of the company. At first, there is a selection of high quality of beef from
the trusted suppliers. Then such beef is ground and molded into the form of patties. Then
there is metal detection that is undertaken to ensure the hygiene of the meat. Then the beef is
frozen at around -18 Degree Celsius and thereafter, the sorting of the beef patties is done. The
next phase is the packing, casing, and labeling of the beef which is then stored at -18 Degree
Celsius before they are finally delivered to the McDonald's restaurants. This beef is used in
producing the sumptuous and delicious food products of the company such as the burgers and
sandwiches.
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Figure 6: Preparation of Meat Burgers at McDonald’s
The above flowchart depicts the entire production process of burgers and hotdogs containing
meat such as beef or ham. At first, the preparation of the burgers is undertaken through the
process of fermentation and then mixing the dough. Then the first phase of metal detection is
undertaken followed by dividing and molding the ingredient. Then again, the product is
fermented, and sesame seeds are added. Thereafter, the process of baking is undertaken, and
cooling of the products is done. After that, there is a second metal detection and cutting of the
products. Then the burgers are packed, and the final metal detection is undertaken. Finally,
the end products are stored and delivered to the several McDonald's restaurants.
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Figure 7: McDonald’s Order-tracking & Delivery System
The figure 7 describe the Order-tracking & Delivery System of McDonalds as business
organization uses the Just-in-time approach for taking the orders as these orders are based on
the inventory levels such that there is no over-production that leads to wastage of essential
resources. This system has enabled the McDonald’s in maintaining the quality of its products
and services as well as ensuring the minimal wastage of the key resources.
There are different products which can be ordered in McDonald of UAE include beefburger,
Big Tasty, Big Magic, Double Cheeseburger, Veggie Burger, world famous fries, apple bites,
Ketchup, Mayo, garlic Mayo, Sweet Chilli, BBQ and Hot Mustard. McDonalds announced
the changes which assist in reshaping the diner’s experience which assist in expanding its
digital self-serve ordering the stations along with the table to all of its 14000 American
restaurants. Consumers will be able to order food as an old-fashioned way at the counter. But
the move is to self-order systems along with the table service is the effective way in
addressing the biggest problems as the company’s restaurants which have faced in the recent
years by slower the food delivery to the consumers which caused by more items on the menu.
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The thinking is that consumers will be more willing to wait if they are sitting at a table rather
than waiting at a counter.
The delivery being done by the employee who is working in McDonald. And those people
who are doing online orders home delivery needs to be done which help in satisfying the
needs of consumers.
3. Two points of failure in delivery system
alignment with operational performance
measures:
At McDonald's, there has been some issue with the quality management and control system
that has affected the performance of some of the retail outlets in the UAE. The company
currently observes the Total Quality Management process for ensuring the quality of the
products and services across all services and operations. It has been implemented across all
the departments within the organization. The process of TQM is considered to be one of the
most logical and scientific processes of maintaining the quality of products and services for
ensuring that the maximum level of customer satisfaction is achieved through the delivery of
the products and services to the target customers. However, there has been an issue that has
been detected since few months that has restricted the observance of the TQM process in the
domains of packaging and also in delivering the finished products to the franchisees and
target customers (Resta, et al., 2015). The lack of success of TQM is primarily due to the
inefficiency of the employees to work according to the principles and lack of effective
training and development of the employees on TQM.
First Issue with Delivery System:
The problem is that the quality of packaging materials that have been used in some of the
outlets are reported to be of inferior quality and not being complied with the standards of
quality that have been prescribed by the management and at par with the ethical code of
conduct in business activities (Al-Qahtani, et al., 2015). This has caused a lack of satisfaction
with some of the franchise owners as the customers have complained that the packing of their
food items was made using plastic bags that are non-recyclable and affects the food if it
remains in contact for a long time. The packaging of the products is supposed to be made up
of recyclable materials that the company has recently adopted in line with its environmental
safety and sustainability initiatives. But, in some of the franchisees, the franchise owners and
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the customers have complained that the finished food products that are being offered to the
customers are often not packed or packaged using recyclable materials. This is one of the
major failures of the quality control system in place (Alnaweigah, 2013).
Second Issue with Delivery System:
The second issue that is plaguing the entire operations management and the supply chain of
the company is the lack of professional delivery of services to the customers at some outlets.
In some of the outlets of the brand across the UAE, the customers are often complaining of
late delivery of products and at times the even wrong delivery of products. Some of the
customers have also complained that the deliverymen from McDonald's did not even arrive to
deliver their orders even though they have made the payments online with their debit or credit
cards. These quality issues in the service domain have also been responsible for the lack of
customer satisfaction across some of the outlets across the country (Lakhal, et al., 2006).
Hence, the management is inclined to adopt a new quality management process and that is
why the best choice as per the management personnel and the key stakeholders is the Lean
Approach which was first developed and utilized by Toyota in Japan in its production system.
Lean philosophy is based on enhancing the value of the products to the consumers by
removing wastage to the minimum and ensuring the best quality (Harun, et al., 2018).
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Figure 8: Lean Approach Model
The figure 8 denotes the Lean Approach is based on the principles of Waste removal;
Focusing on Process and Flow; Generating Value for the Customers; Continuous
Improvement and Optimization of the Whole Business Functions. This model help in
reducing the lead time for the delivery of the products and services as well as aid in
enhancing the productivity.
Lean Management Principles:
The Lean approach consists of the following elementary principles:
 Value- Value can be defined in respect of the needs and wants of the consumers
related to a product or service such as the production and delivery timeline,
determination of price point, necessary expectations to be met, etc.
 Value Stream- Once, the value which is the end objective has been determined, there
should be effective mapping of the value stream which consists of all the stages and
processes in the supply chain of the product from manufacture to final delivery to the
end-users.
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 Flow- Post the removal of wastes from the value stream, there needs to be assurance
that the remaining stages of operations move seamless and without any barriers or
interruptions.
 Pull- It means that with the achievement of a smooth and systematic flow in the
supply chain, the products and services can be offered at the right time and at the right
place to the customers through adoption of Just-in-Time approach to delivery.
 Perfection- After the lean approach has been implemented into the organizational
system it is essential to embed it into the organizational culture and monitor and
develop it regularly as lean is a dynamic system that needs continuous improvement
(Crawford, 2016).
4. Ways of utilization of lean approach in the
production system to potentially reduce the
failings:
McDonald's has identified that there have been issues with the delivery system. First, it has
been identified in some of the outlets that the quality of packing and packaging of the food
products has not been as per the prescribed standards. Inferior quality of non-recyclable
materials was allegedly used in some of the outlets which infuriated many customers. There
has been a lack of professionalism in the delivery system of some of the outlets across the
country. Many customers have complained about late delivery and wrong delivery. There
have been some of the customers has been found to have accused the delivery professionals
not to arrive at all for delivering their orders even after making online payments through debit
and credit cards. These are the basic issues which have been identified. The management of
the company wants to overcome the issues to increase the value to the customers
(Puvanasvaran, et al., 2010). It has been proposed that the Total Quality Management needs
to be replaced with the Lean Management approach. The main theme of the Lean
Management approach is to increase the value of the customers with the utilization of the
available resources. The process targets to reduce the wastages which only increase the cost
burden and reduces productivity. The lean management would be utilized to ensure
continuous improvement as it is a long-term approach and it is quite systematic in nature. The
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application of the lean management approach would help the company to define the value
from the point of view of the customers (Nenni, et al., 2014). It would be able to identify
every step of the process of the business operations and would eliminate the steps which are
not creating value. For example, every outlet would be asked to use superior quality
recyclable materials for packaging. This would help to create the steps towards the value
which could be repeated on a continuous basis till the issues get eliminated. The customer's
perspectives values would be delivered by the company.
The issues in relation to the delivery of the products would also be taken well care by the lean
management approach. The two main elements of lean management are the aspects of
continuous improvement and respect for the people. The company has to deal with the issue
in delivery with effective measures. The professionalism in a delivery system depends on the
principles which are associated with the lean management approach. The principles of lean
management would make the delivery system more efficient. The company would be able to
track the delivery of each order with the help of technology. The orders should reach within
time and that would be taken well care of by the lean management as there would be
continuous monitoring and invigilation of the system. The operations would be carried on
with the aim of increasing value to the customers. Lean management approach would be used
to identify the value and to map the value stream. It would also create a continuous
improvement in the delivery system with the support of a continuous flow of work. The
approach would also create a pull system which would help the delivery system to get faster
with less effort. The stable and continuous workflow would increase the pace of the
workflow and as a result of which the delivery system could be made faster without wasting
any additional wastages. The approach would be utilized in the best possible way so that the
overall delivery operations get improved on a continuous basis (Lopes, et al., 2015).
5. Three key findings discussing the ways the
lean approach may assist the production system
with aligning its operational performance
measures:
The three major findings depicting the ways the lean approach may assist the production
system with aligning its operational performance measures are given below:
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 The lean management approach would help the company to deal with waste
management. It would assure that the available resources are utilized optimally so that
there would be no wastages. The cost of the company would be controlled and the
company would always be able to operate cost-effectively.
 The lean approach would make the delivery system faster by increasing the value to
the customers. The approach would assist the company to come up with proper
mapping of the workflow. The bottlenecks would be reduced and the roadblocks
would get eliminated. The delivery system would be made faster and the customers
would be getting the delivery of their orders timely with ample efficiency. The pull
system of the lean approach would be able to make the workflow faster and less effort
would be needed.
 The lean approach would be able to make the packaging aspects improved. The value
stream mapping would help the company to generate more values towards the
customers. The modernized system of packaging would be used and the lean approach
would also make the company understand that the customers' value is to be increased
on a continuous basis. The management would be more careful about the use of the
superior quality of packaging materials in every outlet of the restaurant. The company
would be using recyclable materials of packaging of high quality so as to increase the
customers’ value.
Conclusion:
In conclusion, it is comprehended that though McDonald’s is one of the leading fast food
chains in the UAE and has been serving the customers for years by adopting honest and
ethical business practices, of late the company has been facing certain problems with its
operations management functions. On a deeper analysis of the current operations
management systems, it has been identified that the company has been following the Total
Quality Management (TQM) practices so far across all its departments for ensuring that the
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best possible quality of products and services can be offered to the customers. However, it
has been found that there are some major issues within the production and delivery system
such as lack of efficiency in the observation of the quality control and management system by
the employees and unethical delivery practices being followed in some of the outlets by some
professionals such as using plastic which is a non-recyclable material for packing and
packaging which can harm the hygiene of the food and indulging in late delivery of products
to the customers in some of the outlets within the nation. Therefore, the management has to
take a strict and rigid strategy to look into the issue immediately before the extent of damage
increases. Hence, it has been recommended to the management by the analysists that the Lean
Approach should be more useful and effective in plugging the existing loopholes and
ensuring that the brand is able to improve the quality of products and services at per with its
organizational vision and objectives. There needs to be more effective training and
development of the employees on quality control and management and also in effective
handling of inventory through use of JIT and Lean techniques such that the loopholes in the
current delivery system can be successfully overcome. It is essential for McDonald’s to stay
true to its global reputation and attain growth and sustainability in the UAE.
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