Operations and Information Management Practices at McDonald's: Report

This report provides a detailed analysis of the operations and information management practices at McDonald's UAE. It begins with an abstract highlighting the importance of effective inventory management and the issues faced by McDonald's, including the use of non-recyclable packaging and inconsistencies in service quality. The introduction sets the stage by defining operations management and its role in achieving organizational objectives. The report then delves into a critical appraisal of inventories and asset management, exploring the E-Procurement model, inventory forecasting, and the ICT stock control system. Key operations in the production system are examined, along with two points of failure in the delivery system and the potential for using a lean approach to improve the system. The lean approach is discussed, including how it can reduce failings and align operational performance measures. The report includes figures illustrating stock management problems, supply chain planning, and the use of stock-control charts. The conclusion summarizes the key findings and offers recommendations for improvement, such as implementing Lean and Just-in-Time systems. The analysis emphasizes the importance of efficient inventory management, effective asset management, and the role of the regional planner and ICT systems in optimizing operations. The report underscores the significance of these practices in achieving customer satisfaction and maintaining a competitive edge in the fast-food industry.

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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