SOE09403: McDonald's Operations Management and Strategy Analysis

This report provides a comprehensive analysis of McDonald's operations management, focusing on its contribution to organizational performance and competitive advantage. The report examines key operational areas, including quality management, supply chain management, process design, and inventory management. It delves into McDonald's operational strategy, particularly its adoption of lean manufacturing principles to eliminate waste, maintain product quality, and meet customer demand. The analysis further evaluates the implications of honesty and transparency in McDonald's operations, considering traceability and vulnerability. Finally, the report concludes with recommendations for McDonald's to maintain competitiveness in a dynamic global business environment, including suggestions for addressing new trends such as veganism and environmental consciousness. The report is based on a case study approach, drawing on secondary sources to illustrate the concepts discussed.

Running Head: Operations Management
Operations Management
Name of the Student:
Name of the University:
Author’s Note

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EXECUTIVE SUMMARY
The following assignment is based on the case study of McDonalds. The report is
classified o the operational function of the management and it’s functioning in the areas of
inventory, supply chain, customer satisfaction and other aspects. The operational system of
McDonald’s caters to a form of partnership with the franchise and the suppliers with an intention
to improve the operational management innovatively and assist in launching new products. The
report provides a study of McDonald’s and its operational management, process, total quality
management which is imbedded in different process that provides its customers at the
acceptances cost.

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Table of Contents
Introduction......................................................................................................................................2
Operation contribution of McDonald’s.......................................................................................3
McDonald’s competitive advantage:...........................................................................................4
Quality management....................................................................................................................4
Supply chain management...........................................................................................................5
Process design..............................................................................................................................6
Inventory and maintenance..........................................................................................................7
McDonald’s operational strategy.................................................................................................8
Eliminating waste........................................................................................................................8
Maintenance of the quality in product and process...................................................................10
Meeting customer demand.........................................................................................................11
Evaluation of “Honesty and transparency make you vulnerable”.............................................12
Recommendation.......................................................................................................................13
Conclusion.....................................................................................................................................15
Reference.......................................................................................................................................17

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Introduction
Operation management is referred to as the administration where the industry practices
and creates the highest level of competence which is probable within the organisation (Heizer
2016). The unit is concerned with the conversion of material and labour into finished goods and
services as professionally as possible with an intention to increase the profit margin. The aim of
the report is to critically reflect on the operational management of McDonald’s organisation
performance. The operational system of McDonald’s caters to a form of partnership with the
franchise and the suppliers with an intention to improve the operational management
innovatively and assist in launching new products (Vivaldini and Pire 2016). With maximum
gains and minimal risk the business has continued to contribute in market and also in achieving
in international market. The organisation makes it a point to maintain a control by imposing rules
and standard procedures. Further in the assignment the competitive advantage of McDonald’s is
classified based on the quality management, process design, supply chain and inventory and
maintenance. In the second section of the report the operational strategy is implemented along
with several principles (Vivaldini and Pire 2016). The implementation is leaned to the practices
in McDonald’s which is identified on the source of maintain quality of the product and secondly
on meeting the demands of the customers. The report provides a study of McDonald’s and its
operational management, process, total quality management which is imbedded in different
process that provides its customers at the acceptances cost.
McDonald’s is a fast growing food chain and service retailer with an approx estimation of
more than 32,000 restaurants and it caters to more than 60 million people in more than 100
countries on a regular basis. More than 80% of the franchisee worldwide are operated by the
local people. At the time when Richard and Maurice McDonald had introduced their restaurant

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they had developed an idea on the basis of assembly line where the reduced menu could facilitate
cheaper cost (McDonald and Eisenhardt 2019). Lastly the recommendations made in the report
are based two criteria one is the organisation’s innovative and special items for the vegan
customers and secondly McDonald’s implementation on dynamic strategy for highlighting the
CSR and in order to attract environmentally conscious customers.
Operation contribution of McDonald’s
According to McDonald’s case study by Slack et.al the operational management is a
support to the company’s position as a largest fast growing food bistro chain in the world. There
are four strategic areas in which the retail chain represents the various strategic areas such as
quality management, supply chain management, inventory and maintenances and lastly its
process design (Stowell, Moore and Schumacher 2017). The global business entails a huge
variety of its strategic needs for the operation management. It is important for McDonald’s to
address the impacts of tough competition with the presences of other firms such as Subway, KFC
and Wendy’s. In order to formulate this McDonald’s needs to apply the strategies and suitable
policies in various fields. The founder of McDonald’s, Ray Kroc has managed to bring in the
concept of providing with limited amount of menu and run the entire process in restaurant
format.

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McDonald’s competitive advantage:
Quality management
The quality management of McDonald’s is the act of overseeing the activities of the
organisation and strategically estimates the task which is accomplished just to maintain a desired
level of excellence (Jensen, Cobbs and Turner 2016). It includes the determination of an amount
of quality policy, implementing quality and creating them. Keeping in mind about the
competitors in the market, McDonald’s maximizes its quality because it ensures to stay ahead of
its competitors. It is in the mindset of the customer that the retail outlet must look for high
quality products. The organisation on the other hand makes it significant for its customer to
provide with good quality products and also facilitate them with a take away policy (Jensen,
Cobbs and Turner 2016). This leads the customers to gain a competitive advantage and the
quality object leads to take certain action and policies in operating its product and service which
the customers want.
In order to keep it different and unique McDonald’s has made it a point to serve a variety
of high quality and nutritious food that includes fruits, salad and vegetables. From the case study
of McDonald’s it can be analyzed that the firm aims to concentrate more on the quality
management aspect which constrains the price and cost limits. McDonald’s utilizes a particular
production line that maintains the product quality consistency (Jensen, Cobbs and Turner 2016).
The consistency is important for the business to maintain as the brand stays focused in its
strategic decision and area of operational management.
The employees at McDonald’s are trained to prepare quality services and present the
meal according to the procedure that is specified to them in the training. The presentation and

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managing of food is strictly enforced to prepare and handle the raw and cooked product (Slack
and Brandon 2018). With instances in the case study it can be reflected that McDonald’s
provides a ten minutes holding time to ensure that the burger or French fries are of maximum
quality and the consumers can see a reflection of freshness in the food. The business meets all
the hygiene specified which also includes the hand washing procedures.
Supply chain management
The supply chain management of McDonald’s is interconnected with all the retail outlet
and firms that are related to each other in downstream and upstream linkage between the
different process and procedure in serving the customers (Vivaldini and Pires 2016). The supply
chain works in a systematic manner and in a following sequence:
 Coordinate the system of delivery in products from the supply chain
 Recording the demands of particular item
 Catering the customer requirements
 Supply of raw materials
 The operational resources
 Required time, quality and quantity.
The supply chain is concerned with the management that caters the flow of services and
information between the operations which forms the chain of supply network (Slack and
Brandon 2018). The organisation ensures that the suppliers follow the quality standard,
cleanliness and value set by the management. With the aim of tracing the types of product

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ingredients there is more emphasis which is placed so that the organisation are able to take
control in every link in the supply chain. McDonald’s has created a suppliers quality index in
which the suppliers are calculated (Slack and Brandon 2018). It permits the company to
monitor the performance of the suppliers which comes in non-agriculture and agricultural
products and services purchased.
Process design
The process design is the development of the functional requirements of the customers
which is able to satisfy the thoughts and shapes the resources and activities that comprise of a
product or a service and transform it (Dai, Peng and Li 2017). The process at McDonald’s begins
when the customer places the order and then after he or she receives the order, this process or
design must be completed and delivered. With the inclusion of the operational management the
organization aims to deliver a reasonable product which is placed in a rational time. The nature
of the employee working in the organisation should be to provide the customer with food within
the time limit (Dugmore and Wang 2018). The process of placing order and passing message to
the appropriate crew member requires developing of strategy and standards. The crew members
either cook burgers or within few minutes place the patties in the bun. In case of French fries the
potato is refrigerated and later deep fried. The process flow in the following manner:
 Customer places order.
 Toast bread products

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 Cook frozen products
 Place products in packaging
 Add ingredients
 Hold the cabinet
 Deliver it to the customers.
Having a well designed process design, McDonald’s is capable to produce customer
satisfaction in maintaining their quality, cleanliness and reduce the waiting time of the customer.
The flexibility is maintained in wide variety and changes the cost of the items by eliminating the
waste.
Inventory and maintenance
Inventory planning and maintenance is the control compensation that creates the
difference between supply of a product and demand f the same. It is the way of McDonald’s
which keeps the burger lanes full during the peak hours as it is a recognizable strategy of a pull
system. The organization has catered to billion of hamburgers which uses the elements of “just in
time” from the time or order till payment made by the customers (Pritchard and Mitchell 2016).
McDonald’s uses the lean production system which comprise of just in time planning and it takes
control to meet the target and demands of the customers. This as a result reduces the wastage of
stick and manages the correct demand that gets forecasted so that the services do not get
dispatched (Berholt and Bohman 2017). The advantage of using this method is that McDonald’s
produces goods which are of high quality and keeps its range of products at a low cost. This
method facilities the production to be faster. The delivery of McDonald’s inventory happens to
be recorded twice and more than that which depends on the business of the food outlets.

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However, the inventory is stored in the refrigerator in proper packaging where the beef Pattie are
processed and kept. The use of seasonal potato is also cut and freshly blanched in salt water so
that later on it can be directly deep fried when ordered are placed. All such activities are recorded
under the inventory management system of McDonald’s. apart from the frozen items the stock
are packaged in clear bags, boxes, bottles and for take away meals there are storage of paper
bags, drinking can and straw.
McDonald’s operational strategy
McDonald’s has adopted the lean manufacturing strategy that assists the organisation to
improve the quality of the service and also caters to help in reduction of cost of production. The
lean principle is applied in the services that help to make the work for the people more effective.
The owner and the manager of the retail outlet take the decision to operate and produce the
capacity of the organization (Dixit 2017). This process of lean manufacturing helps in
eliminating waste, maintain the quality in product and process and lastly it helps to meet the
demand of the customer. The process design by McDonald’s is designed effectively and
efficiently as it caters the principles of getting many benefits.
Eliminating waste
With concerned to eliminating waste, McDonald’s has designed its system of functioning
in a synchronized manner. Each of the crew members in the working station has its own job role

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and follows the system of just in time delivery to the customer. The concept of just in time
means that the produced good and service is placed exactly when they are needed. The customer
is offered with a waiting time of ten minutes and within that time phrase the entire order needs to
be placed (Wang and Chang 2016). This strategy of just in time planning aims to meet the
demand in a right way which comprise of perfect quality and also not generating waste. The lean
itself means waste elimination which is faster, produces high quality products and is more
dependable and also operates low costs.
McDonald’s uses the strategy of lean production which caters to minimizing the waste
accurately, develop correct demand and manage stock so that the products are not wasted or
discarded later (Wang and Chang 2016). For example the retail outlet does not starts cooking or
deep frying the French fries until the order is not placed by the customers. The firm is able to
make the products as soon as possible with the help of the technology they uses like the bun
toaster. McDonald’s provides with fast service and on the same time the finished products are
placed in inventory. The major advantage of implementing the reduced wastage skill helps in
lowering the cost and also maintains a better quality to the customer service (Wang and Chang
2016). The ordering cost of McDonald’s could be made higher with ordering of the fast food that
really is not fast.

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Maintenance of the quality in product and process
The total quality management is improving the operational management of McDonald’s
and is also helping in development of a structured root that is improving the corporation
presentation (Gorham, Gibson and Irlbeck 2016). The five major objectives that make the
presentation are speed, cost, quality, dependability and flexibility. The major concern here in that
why does McDonald’s set in coordination of its service. To which it can be explained that the
quality service of McDonald’s is maintained high and is possibly making its meals agree to the
others to which it is concerned with the staffs who are serving the clients. There are times where
McDonald’s make a point for surprise quality check. In every retail chain the restaurants go
through periodic examination which is also applied on the canister to check the additional stock
checks (Berholt and Bohman 2017).
Most of the customers are looking for products that are high in quality and the
organisation provides fault free products for their impending customers and as a result gains
competitive advantage (Gorham, Gibson and Irlbeck 2016). The quality objective of McDonald’s
leads to certain policies and action in operation just to provide a service that the customers want.
The retail outlets of McDonald’s provide a variety of high quality food products, salad, French
fries, vegetables and many more. The employees of McDonald’s are provided with training to
prepare and present the meals in accordance with the specified procedure that are strictly
enforced, especially in handling of raw materials and processed foods. The organisation meets all
the hygiene factors and specification that includes the hand washing format. The retail chains
have succeeded on the feedback form from the customers who make a visit in the store to
maintain and check on the areas that require improvement in quality and service.