Question 1-A: Introduction of McDonald’s Operations
The McDonald’s Corporation is the largest food service operation in the world in terms of system-wide sales. At the beginning of 2000, it was operating more than 25,000 restaurants in 116 countries. A modest estimate of its current worldwide workforce would be around 1.5 million people, and 10 million people are estimated to have worked for the corporation since it was formed. In 1955, Ray Kroc founded McDonald’s Corporation intending to build an innovative supply chain system for his growing restaurant business. Ray Kroc aligned McDonald’s interests with its franchisees’ by profiting from excellent restaurant operations. McDonald’s established strict standards for the ingredients and appearance of each product. Kroc terminated those suppliers that could not consistently provide high quality and dedicated service but he rewarded those that did with loyalty and volume. The operations of McDonald’s is characterized as a three-legged stool, made up of employees, owner/operators, and suppliers.
Question 1-B Transformation Process
Question 1-C: Capacity Management
Capacity management is an important aspect of operations management. Capacity management is concerned with the matching of the capacity of the operating system and the demand placed on that system. Capacity management involves the study of anticipated demand patterns for the medium- to long-term, and the organizing of resources to meet this demand. The organizing of resources includes acquiring resources, training people and the development of strategies for meeting changes in demand.
McDonald’s is a quick service restaurants that is known for its quality products and prompt service. It manages its capacity for producing products. The policy of the company is never to keep customer waiting. In order to do this, McDonald’s keep a surplus of capacity for most of the time. The aim will be to avoid adjusting capacity by having available surplus capacity. It is more likely, however, that it will not always be possible to have sufficient capacity to meet every demand. McDonald’s hold stocks of resources and customers are buffered from waiting by being supplied from stock. McDonald’s stores anticipate when customers are due and have a stock of made-up products such as hamburgers. To maintain quality of food, the store policy is that products will only held for a designated time before being discarded. Thus the aim is to prevent customers waiting by having a buffer of stock and the store accepts that some stock may be wasted.
Question 2-A: Quality
The core values at McDonald’s are quality, service, cleanliness, and reasonable prices. Quality is assured by strictly defined selection criteria, storing rules and food preparation regulations, strict quality checking and use of standardized equipment. Service is provided by kind and prompt employees who are trained to perform their duties and to maintain the quality of McDonald’s products. Cleanliness requires planning and checking. Reasonable price maintenance together with top quality products requires qualified and well-trained staff.
Question 2-B: Ways of Improving Profitability through Quality
Quality Planning
In the quality planning stage, the management needs to identify the customers and determine the needs of the customers through an analysis of their behavior, by direct communication, and by becoming a customer. The management must also make sure that the groups within the company correctly interpret customer needs. When the needs of the customers are identified, the firm needs to develop a product or service that will respond to customers’ real, stated, and perceived needs and create and sustain a process that can produce a product or service of desired features.
Quality Control
Quality control is the means of directing activities to meet standards. Managers are responsible for observing and comparing worker performance to company standards and must act if workers do not meet standards (Nersesian 2000). Quality control is used to ensure that the organization’s operations maintain the planned quality level. The purpose of quality control is to maintain the quality of the company’s projects. In order to maintain quality an organization must choose a control mechanism by which signs of a problem can be detected. It must also select a unit of measure for a product or service feature or a process. The goal must be measurable, equitable and has official recognition. The actual performance must be compared with the set standards and corrective measures must be taken should discrepancies are identified.
Quality Improvement
Quality management is the last step in the Quality Trilogy. This level of quality management deals with the problems that arisen during the first two steps of the quality management. In order to effectively improve the quality of the firm’s product or service, it should establish a corporate infrastructure for annual quality improvement and identify the areas that need improvement. The firm also needs to specify improvement projects and organize a project team for each improvement project with clear responsibility for concluding the project. The management is responsible for providing the resources, motivation, and training needed by the teams to diagnose causes, determine a remedy, improve quality, and establish controls to hold on to improvement gains (Nersesian 2000).
Questions 2-C: Improving Quality through Pareto Chart
A Pareto chart is a bar chart that shows the ranking or importance of a particular category of something. The categories might be types of defects, expenditure categories, and reasons for a situation, categories of complaints, and others. Pareto analysis allows users to see the relative importance against or occurrence of the different categories in a group. The Pareto principle says that 80 percent of problems or defects are driven by 20 percent of the causes. The idea is that if the user knows what category of defects or causes the company is experiencing the most, he will know what to work on. Working on the category with the highest occurrence has the potential to give the company the most benefit (Carreira and Trudell 2006). Pareto Analysis is a technique for identifying and concentrating on the minority of things, both positive and negative, that are thought to contribute most to the operations of an organization. It is sometimes referred to as the ’80:20 rule’, or ‘the law of the trivial many and critical few’ (Statt 2004). The Pareto analysis is so named because of the observations of Vilfredo Pareto in the late 1800s. The Pareto analysis has proven to be a very useful and durable tool. Applying the Pareto principle, or ’80-20 rule’, as it is sometimes called, to problem diagnosis suggests that among any group of items or factors influencing the outcome, relatively few will account for most of the effect (Gottlieb 2003).
Causes
Percentage of Total
Cumulative Percent
Staff
61%
61%
Service
13%
74%
Value for Money
11%
85%
Food
10%
95%
Ambiance
5%
100%
Question 2-C: Organization Requirements for a Total Quality Environment
William Edwards Deming was one of the pioneers of the Total Quality movement. He is considered as one of the prominent figures of Total Quality Management and his works on this field continues to influence management thinking up until now. To Deming, quality was more than just a set of techniques for quality control and standardization. Quality had to become a mindset, embraced by the entire company (Witzel 2003). In order to achieve a total quality environment, Deming asserts that the management must embrace the 14 Principles for Transformation. These are:
1. Create constancy of purpose to improve product and service.
2. Adopt a new philosophy for the new economic age, with management learning what their responsibilities are and assuming leadership for change
3. Cease dependence on mass inspection to achieve quality, by building quality into the product
4. End the awarding of business on price; award business on total cost and move towards single suppliers
5. Aim for continuous improvement of the system of production and service to improve productivity and quality and to decrease costs
6. Institute training on the job
7. Institute leadership with the aim of supervising people to help them to do a better job
8. Drive out fear so that everyone can work effectively together for the organization
9. Break down barriers between departments. Encourage research, design, sales and production to work together to foresee difficulties in production and use.
10. Eliminate slogans, exhortations and numerical targets for the workforce since they are divisory
11. Eliminate quotas or work standards and management by objectives or numerical goals; leadership should be substituted instead
12. Remove barriers that rob people of their right to pride in work.
13. Institute a vigorous education and self-improvement programme.
14. Put everyone in the company to work to accomplish the transformation (Beckford 2002).
References
Beckford, J. (2002). Quality. London: Routledge.
Carreira, B. and Trudell, B. (2006). Lean Six Sigma That Works: A Powerful Action Plan for Dramatically Improving Quality, Increasing Speed, and Reducing Waste. New York: American Management Association.
Gottlieb, M. R. (2003). Managing Group Process. Westport CT: Praeger.
Nersesian, R. L. (2000). Trends and Tools for Operations Management: An Updated Guide for Executives and Managers. Westport CT: Quorum Books.
Statt. D. A. (2004). The Routledge Dictionary of Business Management. New York: Routledge.
Witzel, M. (2003). Fifty Key Figures in Management. New York: Routledge.
Credit:ivythesis.typepad.com
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