Management Support Systems of McDonalds Corporation - Case Study Example

INTRODUCTION This paper makes an attempt to study three types of management support systems that are widely implemented in organizations around the world. The three systems under study are the Transaction Support Systems (TPS), Decision support system  (DPS), and Management information systems (MIS). The usability of these three management support systems is studied in relevance to McDonalds Organization. Going with trends in the globalization market and rising competition worldwide, it is necessary for the “Burger King” to timely resort to new technologies and concepts that aim to save time, resources and money and offer faster and efficient services to its customers. COMPANY PROFILE McDonalds Corporation is the largest fast food company in the world. With over close to 32,000 restaurants in its fast food chain spread across 120 countries, and more than 1.5 million employees, serving more than 60 million customers everyday, the company’s last financial year revenues stood at $31.8 million and a growth rate of 23%, as compared to previous year’s at 27%. The company sells products like hamburgers, cheeseburgers, french fries, soft drinks, ice cream shakes, and desserts.Recently, the company has included a range of healthier food items like salads, vegetable warps, and fruits in its menu.   The company was set up by Ray Kroc, in 1955m Illinois. The number of fast food outlets increased to more than 35,000 by 2002. By this time, the company was able to mark its presence in Canada, Europe, Australia, Japan, South Asia, and China.  Every Mcdonald’s outlet employs 60 people on an average who are paid by the hour and are known as Crew members. The main responsibility of the crew members is to prepare the food items, serve the clients and perform other important tasks that are vital to the business of the fast food joint. Every Mcdonald’s outlet is an independent business, with restaurant administration accountable for bookkeeping, finance, operations, inventory control, society associations, training and human resources.   TRANSACTION SUPPORT SYSTEMS AT McDONALDS Transaction processing systems (TPS) computerize the management of data related to company activities or dealings. Data related to every transaction in the business is collected, verified, for acceptance or rejection. Then the accepted transactional data is further stored in the form of reports, or summaries for future analysis and management evaluation.  The purpose of TPS is to develop and enhance the process of various transactions occurring in a company, speed it up, with the use of modern IT softwares, employing less people and increasing accuracy. The main aim of employing TPS within organizations is to possess and provide all business information to the management on time, which is required to keep the business running in a profitable manner. The information processed through the TPS can be in various forms like – report, entries, databases etc. Also Transaction processing systems allows its users to search for any information within its databases. TPS systems handle information on three basic fronts of any business. They are – expenditures (resources and labor), operations (conversion of resources into products) and sales (sale and receipt), (Gerhard and Gottfried, 2002). McDonald’s has implemented the TPS support within its organization, which stores all the business information for the use by its managers. Some examples of TPS implementation at McDonalds are as follows: 1.      The management has implemented a modern form of TPS - OLTP (online transaction processing) in integration with other proven Web technologies like intranet, which allows the suppliers of McDonalds to check the inventories and production agenda in real time. This helps the suppliers to prepare their stocks in advance. Also the advanced real time processing and transaction over the Internet / Intranet has avoided the use of in-store processors at McDonalds, (Gerhard and Gottfried, 2002). 2.      Within the Production and operations management department at McDonalds, TPS has been highly successful in providing complete database and information support for effective and efficient use of managers to deliver excellent results. Transaction processing systems has productively managed the following for the POM department: Storing all relevant information related to In-house logistics and resource administration Keeping detailed and easily accessible records for planning production and operations Maintaining records of every product and their life cycle management from procurement of resources to consumption by the customers 3.      The managers at McDonalds have been implementing TPS along with material planning software which automatically plans the purchase requirements, and other resources that are required based on customer demand patterns. Transaction processing systems effectively offers support in making master production schedule reports for the managers. 4.      TPS also provides detailed reports for Resource planning and cost plan. This includes the costs of various items and the related cash flow. Further, TPS also helps to manage the costs of employees, tools, and time required by each product, (Gerhard and Gottfried, 2002). These type of comprehensive reports have offered unlimited support to the management in analyzing the costs and resources utilized and thereby taking action to decrease costs and increase efficiencies. 5.      Lastly, Transaction processing systems has also been implemented together with Work management systems that supervise the prioritization and allocation of work and resources. DECISION SUPPORT SYSTEMS AT McDONALDS Decision support system is a computer-based information system that helps business managers to take decisions related to management, operation and planning. DSS is based on the knowledge based support systems and can be applied to a variety of techniques. It is usually in the form of software that compiles raw data into useful information to identify concerns and provide solutions, (Behan and Holmes, 1990). DSS are more often used in integration with management techniques that may provide the raw data related to inventory, product quality, packing, sales and order information, and assumed revenue data etc. With a vision to promote the Food chain Company as the most profitable, quick response and service restaurant, it is important that the company managers possess the ability to make quick and efficient decisions for the company. Various intelligent business solutions are serving the purpose – for strategic operations and resource planning. Business managers are now able to access decisive production and sales information effortlessly with the help of wide-ranging and integrated business solutions. Various techniques have been applied to assist the managers in quick decision making for the company. At McDonalds, specific DSS applications like Crystal, AIMMS, and iThink have been employed for extracting raw data and converting it into relevant information for various operational management techniques like batching, JIT, Prediction, Forecasting etc., (Power, 2002). The following section studies the various systems that have greatly helped the McDonalds managers to take faster and more accurate decisions for McDonalds. Dynamic Batching: This technique assists the managers to decide quickly on new orders through out the day. The manager allots a specific priority number and these orders are kept together in a order pool, which segments orders according to their priority. The use of dynamic batching helps managers to place orders at the last minute and also make small alterations in the orders as per client request, (Taylor, Seward, and Bolander, 2003). Faster decision making process with the help of decreased transit times and small batching process has helped the managers to perform much better and maintain efficient completion of customer orders.   Just in Sequence - JIS is another technique that is utilized by managers to offer faster and better solutions to queries based on inventories and resources so that faster decisions can be made to to put the resources for order on time and in sequence for production and utilization. JIS utilizes the direct feedback from the production department of the company for enhanced inventory procurement, and responsiveness in the production line. This also helps to decide on the quantity of buffer stocks that should be maintained for maintaining a consistent production line. It basically improves the flow of resources from one point to other. Table Reservation systems – with the help of table reservation systems, floor managers are able to quickly decide the various aspects of floor management. Every floor manager is assisted with the help of an Electronic Reservation Book and fast access to Internet, which provides easy floor management, customer reservations, customer database management, and can also target marketing mails using the information in the customer database, (Kotler, Keller, and Kevin, 2006). Prediction and Forecasting: The managers at McDonalds employ the aarithmetic forecasting model for predicting and forecasting the demand and supply pattern for the company. This helps to decrease the error that might have occurred during forecasting the production and demand routines. In turn this helps to avoid any kind of late deliveries, buffer stock incompetency, and production concerns. Moreover, managers have been able to exactly quantify the volume of sales based as per the customer orders and ordering patterns. This forecasting method assists the managers to the decision making process for the company supply and demand and consequently reduce the gap. Moreover, Point of sale data (POS) and Vendor Managed Inventory (VMI) is also used by the managers to prevent any type of overstated demand and supply forecasts, (Taylor, Seward, and Bolander, 2003). Quick response systems (QR): In spite of the brand name and high end market stability for Mcdonald’s, the company at times cane face threat due to small and low cost food joints in its vicinity that propose to offer range of menu variety to its customers unlike McDonalds. In view of this, the company managers were quick to resort to Quick response systems which offered a high level of fflexibility to offer a higher range of products with enhanced quality to its customers. With the help of this system, managers are able to make quick decisions about the customer preferences, choice of menus, etc. Accompanied with shorter lead times and fast replenishments, QR systems helps managers to arrive at a conclusion that is better suited for the business.   MANAGEMENT INFORMATION SYSTEM AT McDONALDS Management information systems assist in managing organizations by providing information that is required for various managerial activities. This basically covers all the tasks performed by all the employees of the organization, regardless of their levels, document management, IT technologies, support systems, costing, and accounts / finance issues. Management information system are distinctly different from regular operational management systems that are utilized to perform and enhance operational activities within an organization. This section will study some of the Management information system techniques employed at McDonalds. Bank Reconciliation - Managers very often face problems in managing the company’s numerous bank accounts, financial files, cases and statements. However, Management information system has solved a number of issues related to company bank accounts at McDonalds. A well known Management information system technique- Bank reconciliation system has been employed at various McDonalds centres to manage the accounts. This MIS system automatically updates the checks into the system and enters the cash debited / credited into the company’s Bank account, (O’Brien, 1999). Also, checks can be cancelled online and the reconciliation can be settled with the bank in very less time. Payable account management – This Management Information support software offer efficient support to managers to manage the vendor invoices and cash payments / withdrawals. In case of inventory purchase, the entry is automatically updated into the inventory section, and similar for sales and employee salaries. The invoices can also be entered n various forms – like in the form of a summary, detailed form or blend of both. By creating an incoming invoice into the system, a number of unpaid voices can also be generated to be used in future. This helps to save time on generating invoices every time when they are required, (Lee, 2001). The Management information system also maintains a purchase record of the company which is useful for inventory record keeping. Payroll Management systems – This form of Management information system is to support the activities related to ledger entries, time entry, employee proofs and records, payroll checks, daily / monthly / yearly payroll records and company forms. Other information that can be collected and stored consist of employee salary history, client tips and allocation, tip reporting and tip earnings, (O’Brien, 1999). This software system works in unison with other financial management systems and soft wares. Information from this system is transferred to other integrated softwares and systems at the end of the each day or month (as required). Sales Evaluation and assessment – On time, efficient and accurate analysis of monthly, quarterly and yearly sales is very important for McDonalds. With the help of a management report writer, an MIS support,  managers can easily keep a record of daily sales figures and can use these figures for evaluation purpose. This system works together with Point of sales system which records every data related to sales.  Receiving this real time information from the point of sale assists the managers to decrease the variation that may occur in the inventories which lead to gaps in the supply demand chain. Moreover, this sales data gathered from the point of sale, helps to monitor the inventory costs, thereby giving better profit margins to the company. Schematic Representaion of Management Information Systems at Mcdonalds CONCLUSION This paper studied the implementation of three management support systems at McDonalds. The management at McDonald’s strictly believes in that fact that in order to gain competitive advantage, it is important to use modern and updated IT techniques and software solutions that provide state of the art services to its management and employees. TPS, DSS and MIS have all been successfully implemented at McDonalds and are assisting managers to efficiently perform their duties and improve the vitality of the resources, thereby offering better and sustainable competitive benefits to the company.   REFERENCES  Taylor, S.G., S.M. Seward, and S.F. Bolander,         “Why the Process Industries are Different,” Production and Inventory Management Journal, Vol. 22, Fourth Quarter 2003, PP. 9-24. Behan, K. & Holmes, D., Understanding Information Technology, 2nd Edition, Prentice-Hall, Sydney, 1990. Gerhard Weikum, Gottfried Vossen, Transactional information systems: theory, algorithms, and the practice of concurrency control and recovery, Morgan Kaufmann, 2002  O’Brien, J (1999). Management Information Systems – Managing Information Technology in the Internetworked Enterprise. Boston: Irwin McGraw-Hill.   Kotler, Philip; Keller, Kevin Lane (2006). Marketing Management (12 ed.). Pearson Education.  Lee, Allen S. (2001). "Editor’s Comments". MIS Quarterly 25 (1): iii-vii. Keen, P. G. W. (1978). Decision support systems: an organizational perspective. Reading, Mass., Addison-Wesley Pub. Co. Power, D. J. (2002). Decision support systems: concepts and resources for managers. Westport, Conn., Quorum Books.   Read More