“Operations Management in

McDonalds”
 Operations Management
• Operations management focuses on carefully managing
the processes to produce and distribute products and
services. Overall activities often include product creation,
development, production and distribution.

• These activities are also associated with Product and

Service Management. However product management is
usually in regard to one or more closely related product
-- that is, a product line. Operations management is in
regard to all operations within the organization

• Related activities include managing purchases, inventory

control, quality control, storage, logistics and
evaluations. A great deal of focus is on efficiency and
effectiveness of processes.
 McDonalds
History

• McDonald's Corporation is the world's

largest chain of fast food restaurants, serving
nearly 47 million customers daily.

• It is the leading global foodservice retailer with

more than 30,000 local restaurants serving 52
million people in more than 100 countries each
day.
• The business began in 1940, with a restaurant opened by brothers
Dick and Mac McDonald in San Bernardino, California. Their
introduction of the "Speedee Service System" in 1948 established
the principles of the modern fast-food restaurant.

• The original mascot of McDonald's was a man with a chef's hat on

top of a hamburger shaped head whose name was "Speedee."
Speedee was eventually replaced with Ronald McDonald in 1963.

• The present corporation dates its founding to the opening of a

franchised restaurant by Ray Kroc, in Des Plaines, Illinois on April
15, 1955 , the ninth McDonald's restaurant overall. Kroc later
purchased the McDonald brothers' equity in the company and led its
worldwide expansion and the company became listed on the public
stock markets in 1965
 McDonald's in Pakistan

• Aiming to be the world's best quick service restaurant, McDonald's

Pakistan opened its doors in September 1998 at Lahore and
presently operating in six major cities with a network of 20
restaurants.

• With a strong belief in the Ray Krock phrase, “ When you are green
you are growing”, McDonald's Pakistan has an aggressive plan to
expand in all other cities of Pakistan and is rapidly growing with the
focus to provide friendly and quick service restaurant experience to
our customers.

• McDonald's Pakistan is a part of the Lakson Group of Companies,

with a Head Office in Karachi and a regional office at Lahore.
Lakson Group also owned, Lakson Tobacco Co. Colgate Pakistan
Ltd, Century Insurance Ltd. Express Newspaper, Cyber Net and
various others businesses.
 ORGANIZATIONAL
STRUCTURE

• The company is basically organized in a lateral

form where the CEO is at the top while
management of various departments is
outsource.
• For instance:
Consulting: this groups looks after the financial
position and anticipate future financial status of
the company. It deals with development and
progression strategies, identifying opportunity
growth for the company.
 Overview

• Managing a company with the size of

McDonald's is a mammoth task. As a
result, managing its day-to-day operations
is a major challenge and that the
information and communications
technology requirements and
infrastructure should be well placed.
 Background to McDonalds
operations management
• Before the McDonald brothers invented their fast-food
production system, some restaurants did make food
pretty quickly. These restaurants employed short-order
cooks, who specialized in making food that didn't require
a lot of preparation time.

• Being a short-order cook took skill and training, and

good cooks were in high demand. The Speedee system,
however, was completely different. Instead of using a
skilled cook to make food quickly, it used lots of unskilled
workers, each of whom did one small, specific step in the
food-preparation process.
 The McDonald brothers' changes also applied to the
design of the restaurant kitchen. Instead of having lots of
different equipment and stations for preparing a wide
variety of food, the Speedee kitchen had:

• A very large grill where one person could cook lots of

burgers simultaneously
• A dressing station where people added the same
condiments to every burger
• A fryer where one person made french fries
• A soda fountain and milkshake machine for desserts and
beverages
• A counter where customers placed and received their
orders
 Operations and managing
things at
McDonalds
When you visit one of them and go inside, you almost
always place your order and collect your food at a
counter
• When you drive through, you place your order at a
speaker or a window, and someone hands it to you
through a window
• The food arrives individually wrapped and in a bag or on
a tray
• You can eat most of the food without using a knife or fork
• The food is relatively inexpensive
• Individual restaurants in the same chain physically
resemble or are identical to one another
• When you visit different restaurants from the same
chain, the menu and food are pretty much the same
• Different regions might have special dishes on the menu, and different
countries might have different items and recipes depending on the local
culture. But in general, food from a particular chain tends to taste the same
no matter which restaurant you visit. There are several reasons behind this:

• The food itself is mass produced in a factory and then frozen. Restaurants
store this frozen food in large, walk-in freezers. Cooks reheat it rather than
making it from scratch.

• The factory adds artificial and natural flavors to the food to make sure it all
tastes the same.

• The equipment in the kitchen cooks all of the food for the same amount of
time. For example, in some chains, a conveyor belt carries hamburger patties
through a broiler. The broiler cooks the patties on both sides simultaneously,
and the conveyor belt makes sure they're cooked for precisely the right
amount of time.

• The employees in different restaurants follow the same instructions for

cooking, dressing and packaging the food.
 The Processes
• The mass-production process requires each restaurant chain to have a
distribution network to carry the food to every restaurant. Warehouses
store enormous amounts of everything a restaurant needs, including
food, paper products, utensils and cleaning supplies. The warehouses
then ship supplies to each restaurant by truck. Warehousing and
distribution, just like the management of the chain, is centralized rather
than handled by each restaurant.

• Often, this distribution process is the responsibility of a distribution

company, not of the chain itself. Using this sort of network has several
advantages. The chain can keep its entire inventory in several
centralized distribution centers rather than in each individual restaurant.
The chain can also purchase supplies for all of its restaurants at once
rather than having each restaurant find its own suppliers. Since it's
buying in bulk, the chain can negotiate lower prices than restaurants
could on their own.
• In some chains, managers track the restaurants'
inventories of food, wrappers, cups, utensils, cleaning
supplies and other necessary items. They then order
everything the restaurant needs from the distribution
center, which ships it to them.

• In other chains, this process is automated - a computer

keeps track of what the restaurant has and should have
on hand, or the distribution center ships the necessary
items on a regular schedule instead of waiting for a
request from the restaurant.
• McDonalds is always keen to take charge of the crucial
task of turning the company around to meet customer
demands. One of the first steps that it proposes has
been to innovate the process of manufacturing and
logistics.
• This had been done with the view to increase efficiency
of the supply chain in terms of capacity, technology
selection and buying policies.
• This have been able to decrease the constraints within
the industry. This system has been effective because it
has been able to optimize the need of the company,
fulfilling the work time constraints at the various outlets.
The change in process of manufacturing required
training as well.
 Strategy
• McDonalds does not believe in opening its restaurants without any
knowledge of the local culture and tastes.

• The company caters to a large consumer market with varying tastes

and thus cannot afford to introduce products without familiarizing
itself with provincial preferences in food. For this reason, McDonalds
distributes its products in foreign locations with the help of
franchisees who are well aware of what works in their country.

• This is an extremely intelligent distribution method because on the

one hand, it does not create rifts between foreign governments and
McDonalds officials; and, on the other hand, it helps in providing
people with the kind of products they desire. It is important to
understand that McDonalds does not change its basic product range
for any country but tries to introduce certain changes in secondary
products in order to make them more suitable for local tastes.
 The Hype

• McDonalds possesses a highly visible and popular brand

image around the world. The firm has grown to become
one of the most popular food brand names in the world,
with continuous increases in exposure in new markets,
such as Asia and Europe, amongst others.
• The increasing popularity in new markets has positioned
the firm for continued growth in market share and
customer buying power. The McDonalds strategy map
encompasses four key perspectives: 1) Financial; 2)
Customer; 3) Internal Process; and 4) Learning. These
perspectives have evolved over time into a well-defined
vision for the corporation, which is to become the most
positive dining experience in the world
 Every one’s Lovin’ it

• The widely imitated success of McDonald's offers an excellent

example for today's managers and executives searching for greater
production efficiencies.

• Kroc showed the world how to apply sophisticated process

management to the most prosaic endeavors. To succeed the
McDonald's way, companies must define the basic premise of the
service they offer, break the labor into constituent parts, and then
continually reassemble and fine tune the many steps until the
system works without a hitch.

• Today, companies engaged in delivering pizzas, processing

insurance claims, or selling toys benefit from the kinds of systems
that Ray Kroc pioneered. To the degree that such operations
maintain quality control, and cherish customer satisfaction, profits
may flow.