MGMT20130: OPERATIONS MANAGEMENT AND BUSINESS ANALYTICS

TERM 1, 2023

ASSESSMENT ONE

Operation Management Report of McDonald’s

Student name: Snehal Vipulbhai Patel

Student Id: 12130780

Tutor name: Dr. Imran Ali

Campus (tick one): MEL  SYD  BNE  DST  Other (write): ____________

Executive summary

This Operations Management Report analyzes the supply and value chains of McDonald’s with an emphasis on comprehending these crucial ideas and how they apply to the fast-food sector. The report begins with an introduction to the topic, followed by an analysis and discussion section. The key ideas of the “value chain and supply chain” are explained, and their importance in operations management are discussed. The report then delves into the specific value chain and supply chain of McDonald’s, analyzing each step and identifying areas for improvement. The value chain analysis examines McDonald’s “inbound logistics, operations, outbound logistics, marketing, and service activities”. The supply chain analysis covers the sourcing of raw materials, production, distribution, and delivery to the end customer. Based on the analysis, the report provides recommendations to improve McDonald’s operations management. These include enhancing supply chain visibility and collaboration with suppliers, implementing sustainable sourcing practices, increasing automation in food preparation, and improving customer experience through personalized digital solutions.

Table of content

Introduction

A worldwide cheap food chain with tasks in the north of 120 countries and domains is McDonald’s (IvyPanda, 2022). Other drive-through joints that contend with the business incorporate “Wendy’s, KFC, Dunkin’ Donuts, Burger King, Subway, and Arby’s” (Gregory, 2022). To help business methodologies that rely upon low creation costs, McDonald’s takes a stab at the most extreme effectiveness and efficiency in its tasks. The business utilizes the 10 tasks the executive’s key choices to further develop activities and oversee rivalry (Gregory, 2022). The plan of labor and products, the plan of cycles and limits, area technique, format plan, the plan of occupations and HR, store network the executives, stock administration, booking, support, and quality administration are a few instances of these choices (Gregory, 2022).

In terms of supply-chain management, McDonald’s seeks to deliver the appropriate goods and services at the fitting time, in the right amount and quality, and for a reasonable price (IvyPanda, 2022). To increase the value of its goods and services, the company also employs total quality management. To create and maintain a sufficient workforce for its business development, McDonald’s has established standardized training programs (Gregory, 2022). To achieve its goals at the lowest possible cost, the company also uses inventory control and just-in-time methods.

Overall, McDonald’s employs operations management to streamline operations and fend off rivals. To help business systems that rely upon low creation costs, the organization takes a stab at greatest proficiency and efficiency in its tasks (Lewis, 2019). To raise the value of its goods and services, McDonald’s employs the ten operations management strategic decisions, such as supply-chain management, inventory control, and just-in-time methods. Additionally, the business employs total quality management to guarantee that its goals are achieved at the lowest possible cost.

Analysis and Discussion

Understanding the Key Concept of Value Chain

A business concept known as “value chain analysis” alludes to the different cycles and steps engaged with making an item or completing a help (Tardi, 2023). The analysis can incorporate a few phases of the lifecycle of a thing or administration, such as creative work, transactions, and in-between phases (Stobierski, 2020). An important value chain investigation aims to determine how much value an organization is putting forth and identify development opportunities (Stobierski, 2020).

The value chain is a method for gradually transforming an idea into a physical object or system of operations (Tardi, 2023). The goal is to give an organization the upper hand by forward efficiency while keeping reasonable price. Each stage of the value chain adds more value. The chain hypothesis examines a organization’s five core activities and four support activities, such as acquisition, innovation improvement, human resource management, and firm framework (Tardi, 2023).

Value-based management (VBM) is a related concept that focuses on how organizations use finite future incomes to make both significant and routine working decisions (Firk et al., 2021). The future incomes a still uncertain, and esteem is possibly made when associations contribute capital at returns that offset the expense of that capital (Nowotny, 2022). By zeroing in on how associations use them to settle on both huge and routine working choices, VBM grows these ideas (Firk et al., 2021).

Figure: Basic steps for value chain

Source: (Edrawsoft, 2023)

Understanding the Key Concept of Supply Chain

The best balance of responsiveness and proficiency for the market being served is achieved by members of a production network coordinating production, stock, area, and transportation. It is important to respect the flow of labour and products from their end of origin to their end of use. (Tzortzopoulos ET AL., 2020). Quality, delivery, price, customer experience, and productivity of labor and products are influenced by the inventory network of the board (McKinsey and Company, 2022). Enhancements in client care principles, interior working productivity, and the store network, in general, must all happen all the while for the production network and the board to be successful (McKinsey and Company, 2022). Two essential obligations of the store network the board are recorded underneath. Ensuring clients can purchase the item is the initial step. It is in the business’ well-being to have the item accessible when a client orders it or visits a store searching for it (Castelo-Branco et al., 2022). Dealing with the store network that gets the item to the client is the second significant obligation. This involves finding the materials, a maker, a conveyance administration, and a simple merchandise exchange. It is fundamental to have a store network that increments efficiency, keeps up with creation, extends inside the market, and offers the most helpful experience for the client (Castelo-Branco et al., 2022).

Supply chain management is essential for remaining competitive and maintaining a strong customer base. In a Deloitte survey, it was discovered that almost 80% of companies with efficient supply chains outperformed their rivals (Deloitte, n.d.). Use cases for supply chain management can increase output, maintain production, expand the store, and give customers the most advantageous experience. For efficient supply chain management, incorporating new technologies into supply chain functions is also crucial (Castelo-Branco et al., 2022).

Figure: Supply chain management

Source: Box Around the World (2019)

Analyzing the Value Chain of McDonald’s

Mcdonald’s value chain examination incorporates essential and backing exercises that increase the value of the eventual outcome of the organization (Edrawsoft, 2023). The essential exercises incorporate inbound strategies, activities, outbound coordinated operations, showcasing and deals, and administrations. Inbound coordinated factors include getting and putting away unrefined components, like meat, vegetables, ketchup, and napkins, from pre-chosen, minimal-expense providers (Dudovskiy, 2022). Activities include utilizing these unrefined components to deliver burgers and other menu things. Outbound planned operations include conveying the completed items to McDonald’s eateries. Promoting and deals include publicizing through online entertainment, print, and announcements, and giving preparation to workers to further develop client support (Dudovskiy, 2022). Administrations include giving extra comforts, like play regions for kids, to emphatically add to client care insight. Support activities include acquisition, innovation improvement, human resource management, and framework. (Usmani, 2022). Obtainment includes purchasing materials and supplies at limited costs, diminishing expenses for McDonald’s (Edrawsoft, 2023). Innovation advancement includes utilizing innovation to work on the effectiveness of tasks and client care. Human asset the executives includes giving pay rates and educational cost help to school-going staff. The foundation includes leaders and zonal presidents regulating the organizations’ activities (Usmani, 2023).

Inbound Logistics: McDonald’s supply chain is basic for the productive conveyance of unrefined substances to cafes. The company sources its raw materials from different suppliers worldwide, with strict quality control procedures in place. McDonald’s also relies on efficient inventory management to reduce waste and minimize the need for storage space. The company’s focus on a centralized supply chain management system allows for cost savings and consistency in food quality across its restaurants (Edrawsoft, 2023).

Operations: McDonald’s has a highly streamlined operating system, which allows it to maintain consistency in the quality of its products and services. All the firm has presented a typical menu across its eateries, permitting it to smooth out tasks and increment efficiency. Besides, McDonald’s has an exceptionally mechanized assembling framework, which assists with limiting work costs while likewise considering fast and exact dinner planning (Edrawsoft, 2023 Dudovskiy, 2022).

Outbound Logistics: McDonald’s outbound planned operations center around proficient dissemination and conveyance of food items to its eateries. The organization has laid out a vigorous organization of conveyance focuses and stockrooms internationally to work with the ideal conveyance of its items. Moreover, the organization has additionally carried out inventive innovations like computerized requesting, portable requesting, and conveyance administrations, to further develop the client experience and increment income (Edrawsoft, 2023 Dudovskiy, 2022).

Marketing and Sales: McDonald’s has a strong marketing and sales strategy, which focuses on brand recognition, menu innovation, and customer engagement. The company utilizes various marketing channels such as TV, social media, and billboards to promote its products and services. Additionally, McDonald’s continually innovates its menu offerings to meet evolving consumer needs and preferences, while also leveraging technology to enhance customer experience (Edrawsoft, 2023 Dudovskiy, 2022).

Service: McDonald’s places a strong emphasis on customer service and experience. The company has implemented various measures such as employee training, store design, and technology-enabled services, to ensure that customers receive the best possible experience when visiting its restaurants. McDonald’s also places a significant focus on hygiene and safety, which is increasingly important in today’s health-conscious environment (Edrawsoft, 2023 Dudovskiy, 2022).

Figure: Value chain process

(Source: Assessment 1 OM Report ppt, 2023)

Mcdonald’s value chain analysis helps the company reduce costs and create separation. McDonald’s can choose range for development and courage that will benefit customers and their business by looking into their current practices (Hart, 2022). Eliminating inefficient business practices accelerates creation, gives one the upper hand, and increases overall revenues. McDonald’s primary goal is to give customers with subpar eating items, and the value chain process helps the company achieve this goal (Hart, 2022).

Analyzing the Supply Chain of McDonald’s

McDonald’s manages a complicated worldwide supply chain with multiple parts and operations, such as acquiring raw materials, producing goods, moving them, storing them, and dispensing them. These actions are interrelated and help deliver goods to clients effectively and efficiently.

Figure: The Supply Chain of McDonald’s 

(Source: Ray, 2023)

The first phase in the supply chain for McDonald’s is sourcing raw materials. McDonald’s sources a different types of products from different vendors, including beef, poultry, potatoes, lettuce, and tomatoes. The business has created stringent criteria and routinely audits its suppliers to guarantee consistent quality and safety (Tien et al., 2020). The process of turning raw resources into final goods is called manufacturing. McDonald’s has forged alliances with several producers, including Tyson Foods, OSI Group, and Cargill. Following the company’s guidelines, these producers turn the components into goods including patties, buns, and sauces. Another essential link in the supply chain of McDonald’s is transportation. The corporation ships its products all through the world utilizing various method for transportation, including air, ocean, and land. Transport of the goods between production facilities, distribution hubs, and individual restaurants (Langert, 2019). A crucial part of McDonald’s supply chain is warehousing, where goods are kept until being delivered to restaurants. To guarantee prompt product delivery to restaurants, the business set up multiple distribution centers across the world. The last stage of the McDonald’s supply chain is distribution. Individual restaurants receive the items through delivery from the distribution centers. Products are delivered to restaurants by their demand according to the company’s just-in-time (JIT) stock administration framework. The items are kept fresh thanks to this technique, which also minimizes waste (Jian et al., 2019). McDonald’s has an intricate worldwide supply chain with both major and auxiliary operations. 

Figure: The supply chain model of McDonald’s

(Source: Edraw max official, 2022)

“Inbound logistics, operations, outbound logistics, marketing and sales, and service” are among the main pursuits. To guarantee continuous quality and safety of raw materials, McDonald’s has formed agreements with manufacturers and suppliers. To assure prompt delivery of supplies to restaurants, the firm has developed distribution centers all over the world and employs a variety of forms of transportation to carry goods around the planet (Rajawat et al., 2020). McDonald’s reaches its consumers through a variety of marketing platforms, including social media and digital marketing, and employs a just-in-time inventory management system to guarantee that its items are always fresh. “Procurement, technological development, resource management, and infrastructure” are examples of support activities. To buy the goods and services necessary for business operations, McDonald’s has forged agreements with suppliers throughout the globe. The business employs technology to improve customer experience and streamline operations, such as point-of-sale systems and mobile ordering (Pourmohammad, Karimi & Rezaei, 2021). To maintain smooth operations, McDonald’s offers training and development programs to its staff. The business has built distribution hubs all around the world and leverages technology, such as GPS monitoring devices, to guarantee prompt product delivery to restaurants.

In conclusion, the McDonald’s supply chain consists of several elements and operations, both primary and auxiliary. The firm is a leader in the fast food sector because it adopts technology and a JIT inventory management system. To ensure the swift and successful delivery of goods to customers, McDonald’s has formed agreements with manufacturers, suppliers, and logistics firms across the world (Jian et al., 2019). To maintain efficient operations, the company’s support activities, such as infrastructure development, technological development, human resource management, and procurement, are essential.

Recommendations

The long-term tactics of Ray Kroc, upon which the McDonald’s supply chain management system is built, are effective (Thomasnet, 2019). The expert organization and execution of cycles across a tremendous organization of sellers, specialist co-ops, and establishment proprietors is the way in to the business’ prosperity (Thomasnet, 2019). The primary activities and supporting activities that significantly enhance the end product are all identified by McDonald’s value chain analysis. The company understands its value chain and the tasks that go along with it (Edrawsoft, 2023).

To enhance its supply chain and value chain, McDonald’s might need to implement cutting-edge advancements like blockchain, the Internet of Things (IoT), and cloud ERP. With the help of blockchain technology, McDonald’s can track the place of origin of its products, ensuring supply chain transparency and accountability. IoT can assist McDonald’s in real-time inventory monitoring, allowing the business to streamline its supply chain and cut waste (Edrawsoft, 2023). McDonald’s can manage its supply chain more effectively thanks to cloud ERP, which offers real-time information on inventory levels, production schedules, and delivery times (Thomasnet, 2019). McDonald’s has already put in place a highly effective e-procurement system that greatly aids supply chain management. Franchises can purchase materials and supplies at lower prices through the procurement site, which streamlines the process and lowers costs for McDonald’s (Edrawsoft, 2023). By implementing more cutting-edge technologies, McDonald’s can expand on this success and further optimize both its supply chain and value chain.

Conclusion

In conclusion, McDonald’s has had success with its supply chain, value chain, and marketing management strategies. To inform its marketing strategies, McDonald’s has developed a well-thought-out strategic marketing plan that includes knowing what its customers need, updating its restaurants, and conducting primary market research. The business has also been successful in managing its supply chain thanks to an effective E-Procurement system that greatly aids in this endeavor. To provide value to its customers, all facets of the “value chain, including inbound logistics, operations, outbound logistics, marketing, and sales” have been improved by McDonald’s. McDonald’s has been able to establish a strong position in the industry, not just concerning deals volumes yet in addition as far as benefit rates and market valuation, as a result of its successful marketing management, supply chain, and value chain strategies. The company’s ability to deliver consistent quality at reasonable value pricing that is delivered quickly and uniformly throughout the world has contributed to its success. McDonald’s has also been successful in improving the perception of its customer service by including extra benefits like Playplace play areas for kids in many of its restaurants.

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