4/8/12

The McDonalds System the Worlds Best QSR experience

World Market Leader in the QSR area (Quick Service Restaurant) Franchise System (75%) System employees: 1.5 million Customers Per Day: 58 million Corporate Strategy:

QSC&V: Quality, Service, Cleanliness and Value Ray Kroc: None of us is as good as all of us Plan To Win -> Successful business revitalization Growth by getting better

4/8/12

Strategy
Definition of Strategy Strategy is a deliberate search for a plan of action that will develop a business's distinctive competence and compound it. Definition of Operations Strategy An operations strategy consists of a sequence of decisions that, over time, enables a business unit to achieve a desired operations structure, 4/8/12 infrastructure, and set of specific

Order Qualifiers And Order Winners

Order Qualifiers are characteristics that consumers perceive as minimum standards of acceptability to be considered as a potential for purchase .Companies need only be as good as competitor Order Winners are characteristics of an organizations good or services that cause it to be perceived as better than the competition. Companies need to be better than the competition

4/8/12

Criteria for evaluating an Operations Strategy

Consistency (Internal and External)

Between the operations strategy and the overall business strategy Between the operation strategy and the other functional strategies within the business Among the decision categories that make up the operations strategy Between the operation strategy and the business environment.

4/8/12

Criteria for evaluating an Operations Strategy (Cont )

Contribution (to competitive advantage)

Making trade-offs explicit, enabling operations to set priorities that enhance the competitive advantage Directing attention to opportunities that complement the business strategy Promoting clarity regarding the operations strategy throughout the business unit so its potential can be fully realized

Providing the operations capabilities that 4/8/12 will be required by the business in the

Statement of McDonalds Operations Strategy

To provide unmatched consistency in operations in support of high product quality. This must be accomplished with adequate speed, low cost, and process innovation to accommodate changes in consumer tastes.

QSC&V

Quality-Using the high quality material Service-Quickly, kind and correct service Cleanliness Always keep cleaning Value-High quality and satisfaction

From 4/8/12 the statement of McDonalds operations strategy, it is

Dimensi Strategy on Capacity Growth as needed through additional stores but capacity added carefully Well utilized franchisees well being depends on it being used heavily Facilities Distributed facilities, each facility being very similar to the next , all focused around the same menu- although the uniformity is beginning to change. Process High degree of process understanding, emphasis on "foolproof" processes Technolo A leader in the technology of fast-food delivery gy

Vertical Integration Workforce

Partnership arrangement Long-term relationship with suppliers to promote innovation and quality improvement

Franchisees: well-trained, carefully selected, entrepreneurs Operators: high-turnover, cheap

4/8/12 Organizatio Guidelines provided by corporation, but franchisees push to

Workforce
Hamburger University has become the companys global center of excellence for McDonalds operations training and leadership development. The first restaurant company to develop a global training center The only active QSR currently to receive college credit recommendations from the American Council on Education (ACE), the United States oldest and most recognized unifying body for higher education Continually recognized for excellence in training February 24, 1961, Hamburger University's first class of 15 students graduated Since 1961, more than 80,000 restaurant managers, midmanagers and owner/operators have graduated from this facility

4/8/12

Capacity & Facility

McDonald's does business in 119 countries around the world. Approximately 15% of McDonald's restaurants are owned and operated by McDonald's Corporation directly. The remainder are operated by others through a variety of franchise agreements and joint ventures. Business model

Franchise fees Marketing fees, which are calculated as a percentage of sales, McDonald's may also collect rent As a condition of many franchise agreements, which vary by contract, age, country, and location, the Corporation may own or lease the properties on which McDonald's franchises are located. In most, if not all cases, the franchisee does not own the location of its restaurants

4/8/12 As a matter of policy, McDonald's does not make direct sales of food or

Process Technology

Process-based capabilities are derived from activities that transform material or information and tend to provide advantages along such standard competitive dimensions as low cost and high quality. McDonaldss meticulously researched and documented procedures for producing fast food have been its primary defense against hordes of imitators .

4/8/12

Process Technology ( Contd .) McDonalds thrives on some core fundamentals

Standardization a Big Mac is a Big Mac go into any restaurant across world and youll get these same result every time coupled with a fastidious approach to quality A production process approach different work cells combining to make the finished product

Just in Time production make whats needed small numbers of ready finished product

Flexible and multi skilled workforce

Lean production face it the backroom kitchen of a 4/8/12

McDonalds is not massive they have gone to town on

Process Technology ( Contd .)

One way to reduce the uncertainty of service delivery is to use technology to develop a production-line approach to services - Theodore Levitt

Buzzers and lights are used to signal cooking time for frying perfect French fries. The size of the French fryer is designed to produce the correct amount of fries. French fry scoop is the perfect size to

The 4/8/12

Made To Stock

4/8/12

Vertical Integration
Local Sourcing & Partnership Trikaya Agriculture Supplier of Iceberg Lettuce McDonald's provided assistance in the selection of high quality seeds,

Exposed the farms to advanced drip-irrigation technology .

Helped develop a refrigerated transportation system Trikaya Agriculture Export to Middle East and Asia Pacific operations, Gulf , large amount of snow peas to Austrian markets.

Vista Process Foods Pvt. Ltd. Supplier of Chicken and 4/8/12 Vegetable Products

MCDonalds Supply Chain

Delivering a wide range of benefits to our restaurants Common business models and tools

Borderless knowledge transfer Economies of scale Centralized competence Financial strength Easy customer communications

Click to edit Master subtitle styleof services Optimization

4/8/12

Vision of Supply Chain Integration

4/8/12

The McDonalds Supply Chain

Purchasing The 3 legged stool: Corporation Franchisees Suppliers Handshake agreements, Trust Long term win-win partnership, risk sharing Distributor is wholesaler for Restaurants Logistics Exclusive distributors (3PL) Freight consolidation (via freight forwarders) Long term partnerships with service providers, risk sharing Strong quality focus (Cold Chain, HACCP, QIP)

4/8/12

McDonalds Logistics Standards

DQMP (Distributor Quality Management Process) Operations and Customer Relations (Operations Manual) Quality Control (HACCP / QIP) Cold Chain standards Hygiene regulations Product handling standards Emergency and contingency plans Risk & Crisis management Continuous unannounced internal and 3rd party audits for DCs result in superior quality scores regularly.

4/8/12

Organization

McDonald's had a diffuse innovation process. This process produced some big winners, such as the Egg McMuffin breakfast sandwich, the Big Mac and kid-friendly Happy Meal. (Franchise)

Companies that grow and become increasingly complex need to consider adopting processes that are better aligned to their new circumstances

McDonald's approach helps to ensure that it introduces items that have a strong chance of resonating with consumers and generating attractive returns.

4/8/12

For example, one idea for a salad with shrimp was nixed

Evaluation of the Operations Strategy

Internal and external consistency - Looking at the operations strategy along the seven dimensions, they all support the operations mission and the business strategy. Contribution to competitive advantage - Systemic strategy creates unmatched consistency in operations that has been difficult to imitate.

4/8/12

Thank you very much for your kind attention

4/8/12