The Benefits of Effective Service Process System at McDonald's - Case Study Example

?McDonalds The service process type McDonalds has established itself as the world’s most popular and best known quick service restaurant. This chain of fast food restaurants has been there for about half a century and has captured the world with its healthy food, hygienic environment and universally approved taste. To achieve such excellence they have climbed the ladder gradually and with much care taking all aspects into account. McDonalds has never compromised on quality, customer satisfaction and employee loyalty and comfort. McDonalds is one of the world's ruling entrepreneurial success stories and have reached about 30,000 locations, in more than 120 countries around the globe and serves billions of customers each day. It has become a need for most and strives to satisfy their taste buds and continues to grow (Cantalupo, 2004). Each country has its own Country Manager and General Manager that look after the proceedings of the network existing in that country. Furthermore management is diversified in each city and each outlet to make the responsibilities defined yet all the outlets are connected in a chain and part of a supply chain that ensures safe and healthy food for the valued customers. Its various departments work efficiently and coherently with each other to achieve good quality and excellent service. Time management is the major factor in running such a vast chain of quick service restaurants. For this the supply chain management module is the key to everything. Suppliers need to be trusted and responsible identities as the supply of raw material should be smooth and timely. They have to keep backup of stock so that there is no possibility of shortage or unavailability of order (Lessnau, 2004). For this they need to keep a constant track of each and every supply of raw materials and require coordination among all departments. During our interview at McDonalds I was told that they forecast three months while managing their supply chain. For instance, now in the month of April, they were forecasting the supply until July and keeping all factors in mind to ensure that there is no shortage or other issues. This requires a coherent hierarchy of authorities and coordination among departments thus giving rise to proper and smooth vertical as well as horizontal communication (Phillips, 2004). The service process at McDonalds is based on Physical or service product bundle theory. They are a restaurant that has its USP not just in the product they are providing but also the service that accompanies with it. Another major aspect of the design process of McDonalds is their face to face interaction with their customers. All of their sales take place after interaction with a McDonalds rep and this is why they play such an integral role in the whole design process. Whether it is the restaurant counter, drive through or hotline for delivery, customers make their purchase through the representative (Chase, Jacobs & Aquilano, 2004). With so many channels of sale in place, it is imperative to have a service process that is flawless. With millions of customers rolling in everyday all around the world and tones of food being sold, any glitch in the design process could prove fatal. In this report, we will be studying the current service process system in place at McDonalds and proposing a new and improved one for them. The service design blueprint The process in place in McDonalds is structured on exquisite supply chain management module that makes it the success it is today. Following is a blueprint of the ordering process when a customer places an order at McDonalds. The above blue print explains how the restaurant backroom functions when a customer places an order. This shows the movements of the ingredients from the time the order is placed till the time the order is finally delivered to the customer. However, one thing missing in this is the process where the raw material or the supply chain is being handled. Following is a separate module that McDonalds have in place for that: As displayed in the process blueprint in the above diagram, the supply chain is currently a separate function from the ordering process for customers. This means that there is always a chance of a supply chain mishap or the restaurant run out of raw materials. The following part of the report will highlights flaws in the current system (Howard, 2003). Problems in the Service Process The one major that thing that will be noted in the above design blueprint of McDonalds is that the ordering process and the supply chain are not connected with each other. The current system is based on manual handling of the raw materials. This means that there is no check and balance of how much raw material is being used when an ordered is delivered and what is the current status of that particular raw material in stock (Kerin, Berkowitz, Hartley & Rudelius, 2003). There is no Just In Time system in place where an indication is triggered once a particular item in stock nears ending. For a big name like McDonalds that serves hundreds and thousands of customers at each outlet daily, this system can cause havoc in case a particular raw material goes missing or is being restored after a delayed time. McDonalds has developed a reputation around the world where customers believe that they get 100 percent from them. They have a belief that no matter what they will always get the worth of the money they pay for the food and service at the restaurants. However, if this problem is not solved, there could be adverse situations ahead for McDonalds. The previous system used by the department was only capable of handling inventory in isolation with the ordering system. The rest of the functions that are now coordinated by the same module, were done manually. Many charts, cost sheets, budgets etc were stored in MS Excel format and were subject to human error. Record keeping, updating etc were also manual. With the increasing number of customers, the processes needed to be speeded up in order to save time and give most of it to the customers. The most problems arose while coordinating activities with other departments. The info coordinated has to be accurate and real time. The main reason was because two of the main systems of the service process were not aligned with each other. This meant that coordination not only consumed a lot of effort but also consumed enormous amount of time affecting the overall productivity of the restaurant (Phillips, 2004). Also, since stores around the country were also not coordinated by a centralized system, it was difficult to track inventory levels in different stores around a city. Because the supply chain system was not centralized it was difficult to get regular updates from restaurants all over the region. This way, the restaurants were facing problems when it came to inventory handling. The department had no safe or intricate backups for its information resources. This was subject to environmental factors and created hurdles in retrieving data in a timely manner when needed. McDonalds’ various functions were dependent on its database and it was imperative to have a secure system to make them safe. The employees used to manually integrate information coming from diverse sources. Information regarding demand patterns, consumer behavior, consumption patterns, seasonal change in preferences, holiday and other special occasions etc were all manually integrated by the employees to make sense of things around them. Operations were done in a haphazard fashion and the ordering often went awry and unchecked. The consequences became more devastating as McDonalds’ expanded its chains and restaurants around the country. According to the SERVQUAL theory, McDonalds was performing as follows: Reliability: Satisfactory Responsiveness: Unsatisfactory Competence: Satisfactory Access: Satisfactory Courtesy: Satisfactory Communication: Satisfactory Credibility: Satisfactory Security: Unsatisfactory Understanding the customer: Satisfactory Tangibles: Satisfactory The New System The new service process system will integrate all the above functions, through various ways. Now the system calculates demand according to set criteria. The employees check the order and make a few changes, then the order is placed through the Information system, it is tracked by the system, the finances are controlled by it and finally the warehouse check is kept by the supply chain module. Technology will be put in place to monitor the supply chain system and will use the following features: (i) Tabulation: The most important feature which is the high light of “supply chain module” is that it can calculate forecasted demand. This is done on basis of a specialized formula which has been created according to set patterns. The demand is calculated for different products. Care is also taken of the time framework. This tabulation is fool proof to human error and thus this feature is valuable to McDonalds. (ii) Procurement: Once the demand has been calculated by the system, it is checked by the employees. The employees adjust it on the basis of many factors. These factors consist of the permission of the general manager and country manager, the space in the ware house etc. (iii) Supplier Relationship Management: Once the system places the order, the next step is to develop relationships with the supplier. This includes forming business agreements, authorization from international head quarters, quality check. These however are customized, and McDonalds has its own secret ingredient. Therefore, confidentiality reports have to be made. The information system supplements this. (iv) Tracking: Once the order has been placed, and measures have been taken to ensure confidentiality. The shipment occurs and the information system springs into action by keeping tabs on it. For instance if meat is being imported from Australia, the information system would keep up to date with the progress of the journey. If any delays occur it informs the employees, by pop ups on screen. This enables the employees to look into the matter, identify the cause and then find solutions for the problem. (v) Ware Housing: The information system is also responsible for acknowledging the successful reception of goods. It then informs the employees responsible for managing the ware house about the arrival of the goods. Again pop ups are the source through which acknowledgements are given. (vi) Finance: The new system helps in calculating the cost of the total order by analyzing the quantity and the price. Therefore the calculation does not have to be manual anymore. One more function of the new system is to keep a tab on aging accounts, which are the accounts payable. They keep track on the payments that have happened and those that are due. The system keeps on reminding the employees through pop ups on their screens. Conclusion In conclusion, following is how McDonalds will benefit with the new service process system: The new system integrated many functions from different departments in to one centralized module. Less manual work required. Less chances of human error. Things were done more efficiently, more quickly. Real time info co ordination became effective and speedy. Keeping track of store inventory and warehouse became manageable and easy The ineffective handling of outside affairs was amended. Almost no deadlines are missed ever since the new systems are implemented. This helped improve relations with suppliers and other stakeholders. Keeping info resources was also facilitated by technology and data and other resources were stored safely and handled by technology. There is a ‘potential cost’ benefit involved with the implementation of the new system. For instance, the new system keeps track of goods ordered and schedules of delivery. Thus they never miss out on dates etc (Zuber, 2001). Decision making is very much facilitated. The system generates patterns of demand and seasonal trend and behaviors and helps the managers predict on more accurate criterions. True, the main decisions are still taken by management but the factors over which they base their decisions are much better and accurate than those with the previous systems on. They are provided with better, more concise, more relevant, valid, accurate, real time, updated info to base their decisions on. Pro forma, invoices, billing etc was very efficiently done with the new system. Since the system integrated many departments and outside organizations like distributors, banks, sellers etc, financial and monetary activities were very efficiently handled. References Cantalupo, J. (2004) “McDonald’s Revitalization Plan.” October 29, 2003. Accessed online on October 26, 2004 at < http://www.mcdonalds.com/corp/invest/pub/ revitalization.RowPar.0001.ContentPar.0001.ColumnPar.0004.File.tmp/mcd_revit alization_plan.pdf>. Chase, R., Jacobs, F. & Aquilano, N. (2004) Operations Management for Competitive Advantage (10th Edition). McGraw-Hill Irwin; Boston; 2004. Howard, L. (2003). “Suppliers.” June 19, 2003. Accessed online on November 8, 2004 at: . Kerin, R., Berkowitz, E., Hartley, S. & Rudelius, W. (2003) Marketing (7th Edition). McGraw- Hill Irwin; Boston; 2003. Lessnau, R. (2004) Current McDonald’s Owner. Personal Interview, October 28, 2004. “McDonald’s Worldwide Corporate Responsibility Report 2004.” Accessed online on October 26, 2004 at: . Phillips, E. (2004), Prior McDonald’s Manager (1998 – 2003). Personal Interview, October 27, 2004. Phillips, K. (2004) Current McDonald’s Manager. Personal Interview, October 27, 2004. “Restaurant Management.” McDonald’s Restaurant Management Careers. Accessed online on October 27, 2004 at: http://www.mcdonalds.com/usa/work/manage.html. Zuber, A. (2001) “Big Mac, Big Value: McD to Lower Prices;” December 10, 2001. Accessed online on October 26, 2004 at http://www.findarticles.com/p/articles/mi_m3190/is_50_35/ai_80748686. Read More