Operation management of McDonalds - Assignment Example

?Operations Management Introduction The goods and services that define our way of life do not just materialise out of thin air. The simplest productsand services, however, require the workings of a complex system of processes, often taken for granted, by which the product is created from its raw form to one that is usable to the consumer and distributed strategically through alternative channels. The creation of these systems, the planning that precedes it and the control that keeps it in check, are the concerns of operations management. This discussion shall examine the tasks and responsibilities of an operations manager, the planning of systems and procedures to support such activities, and the implementation and control exerted in order to meet the goals set during strategic planning. “Operations Management” defined While the meanings of “operation” and “management” taken separately are commonly understood, when the two are combined an entirely different idea is formed. This field of business that seeks to define and standardise things could not itself be fully summed up in one comprehensive idea. Lawson (2002) perceptively pointed out that operations management is conceived of according to varying levels of scope and significance. Operations management has been variably defined as: (1) “The design, operation and improvement of the systems that create and deliver the firm’s primary product and service combinations” (p.4); (2) “The design, operation and improvement of the internal and external systems, resources, and technologies that create and deliver the firm’s primary product and service combinations” (p.5); and “The design, operation and improvement of the internal and external systems, resources, and technologies that create product and service combinations in any type of organization” (p.5). Mosby, Crumbaker & Urban (2009) observed that operations management is focused mainly on making sure that the firm’s business operations function efficiently and effectively, towards greater reliability and availability of the firm’s systems and services (p.15). Among the many duties and responsibilities which the operations manager is expected to fulfil, which generally fall within a five broad roles and responsibilities. These are identified and categorized by Operations Manager.com (2011) as: (1) Logistics management; (2) Budget management; (3) Operational strategizing; (4) Management of support services; and (5) Management of third party relations. According to Pycraft, Singh and Phihlela (2000), the exact responsibilities and role of operations management will depend primarily upon the nature of the organization’s business. In general, the classes of activities that operations managers directly discharge, which apply to all types of operations, include: (1) Understanding the operation’s strategic objectives; (2) Developing an operations strategy for the organization; (3) Designing the operation’s products, services and processes; (4) Planning and controlling the operation; and (5) Improving the performance of the operation (p. 31) In a survey conducted by Professor Arnoud de Meyer and reported in Pycraft, et al (2000, p. 33), a factory manager’s work was analysed and the following breakdown was arrived at: Table 1: Breakdown of factory manager’s work Activity % of time Degree of change (1 = spending less time 7 = spending more time) Direct supervision and support Consulting with plant staff Consulting with upper management Consulting with sales and marketing Communicating with customers Communicating with suppliers Consulting with Research and Development Dealing with the community Training (as trainer) Training (as trainee) 22 16 12 10 7 7 5 5 4 4 3.5 3.9 4.0 4.8 4.8 4.4 4.7 4.5 4.6 4.6 Source: Pycraft, Singh & Phihlela, 2000, p.33 The foregoing table highlights the many varied concerns of the operations manager today. No longer is the manager confined to the manufacturing shopfloor and limited to ensuring that the right number of units are produced. The business processes have graduated to other undertakings, for which reason the field has assumed a new relevance to practically all types of the business, whether it be in goods or services. Operations management is the organised provision of the desired output, whether tangible or intangible, at the desired level of quality and at the expected quantity and cost, with the use of available materials and equipment employed in an economical and sustainable manner, in order to fulfil a real human need. Application of planning and control Planning is “an analytical process which involves an assessment of the future, the determination of desired objectives in the context of that future, the development of alternative courses of action to achieve such objectives and the selection of a course (or courses) of action from among those alternatives” (Scott, 1963 as cited in Camillus, 2007, p. 9). On the other hand, control in its broadest context is “a process intended to increase the probability of achieving the organization’s planned objectives” (Camillus, 2007, p. 11). More specifically, control is a behavioural process involving such concerns as the measurement and evaluation of the performance of organizational units, the identification of deviations from planned performance, initiation of appropriate responses to the deviations identified, monitoring of remedial actions; and aiming at ensuring that managers’ decisions and actions are consistent with the planned organizational objectives (Camillus, 1986, p. 11). Key planning and control tasks are contained in a manufacturing planning and control, or MPC, system in a manufacturing concern. There are several activities spanning the long, intermediate, and short terms. Some of these activities are shown in the flowchart shown in the appendix of this paper. The following discussion is based on the explanation provided by Jacobs, Berry & Whybark (2011, p. 2). In the case of Toyota Motors Corporation, long term planning includes determination of the location and capacity of the manufacturing facility. Toyota has to decide which country it should be setting up subsidiary plants in and how many vehicles to produce in order to find the right locality, determine the equipment to set up, design the buildings to contain the equipment, plan the facilities layout, the suppliers to be sourced, and so forth, at a level that meets present and forecasted market demands. In the medium term, Toyota will need to assess the demand and determine which market segment it would wish to supply, deciding on both volume and product mix. The purpose is to allocate for the exact material and production capacity needed, a general idea of which the firm arrived at in the long-term assessment. Also necessary is determining the volume of material to be ordered and the time and terms of the order. The key innovation at the heart of Toyota’s Production System (TPS) is its revolutionary Just-in-Time, or JIT, inventory system; this involves placing an order such that just the right amount and type of materials are delivered in time for production, eliminating the need for storage of large volumes of materials and thus eliminating storage costs. Medium term production also involves allocating for the right size of workforce to optimize labour costs while ensuring employee satisfaction. This Toyota addressed with its Respect-for Human System, allowing workers to realize their full capabilities through active participation in running and innovating upon their won workshops (Sugimori, Kusunoki, Cho & Uchikawa, 1977). Finally, in the short term, management and planning tasks include the detailed scheduling of resources to meet production requirements. This involves the tracking of time, labour utilisation, material consumption, equipment and facilities utilisation, and prompt completion of customer orders, as well as other measures of production performance. Aside from just metrics, short term planning and control also necessitates quality monitoring and assurance, that is, ensuring that set standards are complied with. In Toyota, this is realized by “The Toyota Way” where defects and problems are identified at the soonest possible time, if necessary to halt production until the problem is resolved, and continuous improvement is stressed (Liker, 2005). Planning and control in a manufacturing concern is oftentimes straightforward and clear because manufacturing deals with tangibles capable of inventory and inspection. In the case of the service environment, however, planning and control can be more subjective and arbitrary because of the intangibility of the thing that is produced. One such service-oriented business is the McDonald’s Corporation fastfood franchise, which while having a tangible good component in the form of coffee preparations or foodstuffs, has a much higher service component and thus much greater intangibility. McDonald’s states as much when it says that its product is more than just the food, it is the experience of dining in any one of its stores worldwide. Essentially, the activities constituting planning and control for manufacturing are essentially the same activities for planning and control in a service environment; they however involve different considerations and therefore different techniques. This is traceable to the differences in the nature of goods and services. Goods are generally tangible, non-perishable, capable of being stored, more susceptible to being standardised, and the production and distribution phases of which are separate and distinct. Services, on the other hand, are intangible and therefore incapable of being stored or inventoried, are perishable, unique for each person, and the customer is involved in the production process so production and distribution are intimately connected if not simultaneous (Lovelock & Wright, 2002). McDonald’s is a business that prides itself in providing same high standard of service wherever a customer may dine in any of its several thousand stores worldwide. The fact that each country where the McDonald’s store may be found has its unique set of menu offerings tailored to the culture of the locality, while maintaining the same strong brand image, is proof that McDonald’s product is the dining experience rather than the food per se. Standardising the experience is no easy feat of planning and control. Since the food must be delivered hot and fresh on demand while the customer waits at the counter, cooking times and procedures are worked out to the fraction of minutes and to the specific routine steps. Employees are trained to execute specific procedures in a prescribed manner contained in the company manual; counter crews are prompted on their electronic displays to offer customers other items on their menu beyond what they had ordered (Kincheloe, 2002; Gilbert, 2009). The need to obtain supplies and ingredients of assured high quality within a determinate time and at a specific quantity is a major planning and control concern in McDonald’s fastfood business. Each country’s operations therefore identify local suppliers which could supply specific local ingredients, and make arrangements for those items contracted through headquarters (McDonald’s, 2011). The logistics system is an extremely complicated procedure among the different stores in the host country, requiring an extraordinarily high level of forecasting and specific plans that are monitored with close control (Kincheloe, 2002). The promise of instantaneous provision of warm, freshly cooked – and now nutritionally prepared – food, upon demand by walk-in clientele, is what enhances the need for tighter planning and control, particularly since demand is difficult to predict for any one day. There are many unpredictable factors and uncertain occurrence that may affect the delivery of the service product. Add to this the need to maintain the cleanliness of the surroundings, internal temperature and ambient noise control, and the staging of a pleasant face-to-face interaction between client and crew in every aspect of the service product, and such spells the particular challenge of service industries with respect to planning and control. Conclusion This discussion has arrived at the definition of operations management as “ the organised provision of the desired output, whether tangible or intangible, at the desired level of quality and at the expected quantity and cost, with the use of available materials and equipment employed in an economical and sustainable manner, in order to fulfil a real human need.” Operations management is an economic activity that seeks to maximize useful goods or services from limited resources. In order to meet this challenge into the future, it is required that the operations manager devise systems and techniques to plan and control the productive processes. Planning and control procedures may be applied not only in the manufacture and distribution of tangible goods, but likewise in the delivery of services that fulfil the needs of the broader society. References Camillus, J C 1986 Strategic Planning and Management Control: Systems for Survival and Success. Lexington Books, an imprint of Macmillan, Inc., New York, NY Gilbert, S 2009 The Story of McDonald’s. Creative Education. Jacobs, F R; Berry, W; & Whybark, D C 2011 Manufacturing Planning and Control for Supply Chain Management. McGraw-Hill Prof Med/Tech. Kincheloe, J L 2002 The Sign of the Burger: McDonald’s and the Culture of Power. Temple University Press, Philadelphia Liker, J K; & Meier, D 2005 The Toyota Way Fieldbook: A Practical Guide for Implementing Toyota's 4Ps. McGraw-Hill Lovelock, C H & Wright, L 2002 Principles of Service Marketing and Management. Prentice Hall. Lowson, R H 2002 Strategic Operations Management: The New Competitive Advantage. Routledge, Abingdon, Oxon McDonald’s Corporation 2011 About McDonald’s – McDonald’s International Website. Accesssed 2 February 2012 from http://www.aboutmcdonalds.com/mcd.html Mosby, C; Crumbaker, R D; & Urban, C W 2009 Mastering System Center Configuratoin Manager. Operations Manager.com Staff 2011 “Operations Manager job description: daily tasks, roles, duties and responsibilities.” Operations Manager.com. 09/10/2011. Accessed 31 January 2012 from http://www.operationsmanager.com/operations-manager-roles-in-the-company/jobs-roles-duties-and-responsibilities/ Pycraft, M; Singh, H; & Phihlela, K 2000 Operations Management. Pearson Education South Africa. Sugimori, Y; Kusunoki, K; Cho, F; & Uchikawa, S 1977 “Toyota production system and Kanban system: Materialization of just-in-time and respect-for-human system.” International Journal of Production Research, vol. 15, no. 6, pp. 553-564 Appendix Source: Jacobs, Berry, and Whybark, 2011 Read More