5014 YPCBMA

Quality and Operation Management

1 Executive Summary
To sustain its viability in a competitive market, the McDonalds Corporation sets
its overall goal of making its customers happy. To reach this broad goal, McDonalds
mainly focuses on competitive bases of speed, cost, and nutrition. The corporation also
recently created dramatic strategy changes to its stores internal processes by introducing
the Made for You System, and McDonalds also created a Revitalization Plan which
encompasses all areas of the business to make its customers happy.
Quality management at McDonalds is one of the major factors that make the
corporation one of the most successful fast food restaurants in the world. The
corporation uses computerized information systems and strict corporate quality
standards to maintain quality at their restaurants. To enforce the standards, the
corporation undertakes exhaustive inspections on each restaurant two times per year.
Also, thorough training processes ensure that all McDonalds employees have the
proper knowledge to meet the corporations standards, which will in turn make their
customers happy.

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2 Introduction
2.1 McDonald in Taman Dagang
The story of McDonalds has become almost legendary, from a small, familyowned restaurant to a multi-billion dollar global giant with more than 30,000
restaurants. Between incorporation and the millennium, McDonalds saw prots
increase in every consecutive quarter. McDonalds currently accounts for 43 per cent of
total US burger sales, McDonalds discovered something surprising about their barbecue
restaurant80 percent of their sales came from hamburgers. Seeing the potential in the
business, the salesman quickly became the buyer. Kroc bought the rights to franchise
the brothers restaurants across the country, and in 1955 he opened his first McDonalds
in Des Plaines, Illinois (McDonalds Surprising Start, 2015). Taman Dagang
McDonalds branch. Since 2009 they have been operating in that area. Taman Dagang
McDonalds is at attach with a PETRONAS oil station.

2.2 Number of Employees

Sarah Casanova is the director of managing, she has been McDonald's Malaysia
and Singapore regional manager, says: In terms of new restaurants, it will mainly be
drive-thrus to provide convenience to consumers without having to leave their cars
when making purchases (DHESI, 2016).In Taman Dagang McDonalds branch only hire
around 43 employees. These employees including the front office and back office.
Different outlet they have different requirement. (Bloomberg.com, 2016) The
McDonalds Corporation employs well over 2 million people in around 29,000
restaurants world-wide. It is the most well-known brand in the world, the largest food
service system in terms of sales and is valued at over $40bn (Royle, 2002).

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2.3 Type of Industry

McDonald's franchises and operates McDonald's branded restaurants all over the
world. The company is one of the world's largest foodservice retailing chains, preparing
and serving a range of food products and beverages. As of December 31, 2015, the
company operated 36,525 restaurants in 119 countries, of which 6,444 were companyoperated and 30,081 were franchised or licensed. The franchise agreements include
conventional franchise arrangements as well as developmental license agreements and
foreign affiliates. Of the total franchises, 21,147 restaurants were franchised to
conventional franchisees, 5,529 were licensed to developmental licensees and 3,405
were licensed to foreign affiliates. Under the conventional franchise arrangement, the
company owns or secures leases for the land and building while franchisees provide a
portion of initial capital in the form of equipment, signs, seating and decor. These
franchisees, in turn, contribute to the company's revenue through the payment of rent
and royalties based on a percentage of sales along with minimum rent payments and
initial fees (COMPANY PROFILE McDonald's Corporation, 2016).

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3 4Vs
3.1 Volume
Industrial enterprise is the most effectively meet the needs of target market,
which means promptitude of product delivery in required volume with appropriate
quality level based on rational use of resources. In its turn, it leads to the problem
solution of clear proportions compliance between market demand level and using of
production capacities (Kolyasnikova et al., 2016). McDonalds has a high repeatability
of task because they managers already fix for 43 employees in Taman Dagang including
part timers and full timers. The high repeatability of task because they main product is
burgers with low cost. The volume of their operation is key, their employees are doing
as well as the systemisation of the work, where standards and procedures drive the way
in which each part of the job is carried out. McDonalds kitchen has three main parts
which grill sections (Big Mc, Double Cheese and GCB), frying area for (nugget, patty,
fillet o fish, Mc Chicken and Pies) and there is a place to prepare buns, put in vegetables
and add mayonnaise. Theres section only for French fries and a place for making
porridges.

3.2 Variety
The competition on the market is intense and companies try to defend their
market positions by diversifying their product offerings i.e. mass customization. The
amount of customization has a negative effect on productivity [1] and is challenging
(Johansson et al., 2016). McDonalds is not flexible with customers request.

3.3 Variation
Production planning and scheduling problem deal with the challenge of
efficiently allocating resources for the fulfilment of customer demands, which usually
implies balancing conflicting objectives. The problem involves medium-term and shortterm decisions, such as production lot sizing and sequencing of production runs,
respectively (Fachini, Esposto and Camargo, 2016)

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3.4 Visibility
As both practice and research has shown, order information often gives a
delayed and distorted picture of end customer demand and what actually happens in the
market. The distortion tends to increase upstream in the supply chain, making demand
look variable and unpredictable even when end customer demand is level. This means
that one level of order batching is removed, allowing for more accurate, more rapidly
available, and more level demand information (Smros et al., 2003).

4 Methodology
The findings are based on primary research examining operation management of
McDonalds fast-food industry. The study began by focusing on the McDonalds
Corporation in the process of how the managers management that control the whole
branch. A variety of methods have been utilised in the study, including periods of direct
observation, interview and questionnaires were also distributed, and these were
complemented by a qualitative interviews and an analysis of documentation provided by
manager that in charge in Taman Dagang Branch. The bulk of the findings presented
here are, however, primarily based on the McDonalds interview material. Interviews
were taped, semi-structured and between half an hour and one hours in length and were
conducted.

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5 Theoretical concept and Analysis

5.1 Order Winner
Hill [14] proposed specific steps to connect the manufacturing strategies of
corporations with market strategies, and provided 14 order winner and qualifier criteria
to help corporations to elucidate market demands and analyse competitive situations in
the market, and subsequently to develop competitive strategies to win client orders. The
14 attributes of order-winners and qualifiers are price, delivery reliability, delivery
speed, quality conformance, demand increases, product range, design, distribution,
design leadership, being an existing supplier, marketing and sales, brand name,
technical liaison and support, and after-sales support.

5.2 Order Qualifier

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5.3 Distinctive Competence

Distinctive competency is a competency unique to a business organization, a
competency superior in some aspect than the competencies of other organizations,
which enables the production of a unique value proposition in the function of the
business. A distinctive competency is the basis for the development of an unassailable
competitive advantage. The uniqueness differentiates this competency from all others,
whether a core competency or simply a competency (Createadvantage.com, 2016).
a. Speed of delivering the food
The experienced and well trained staffs are the strength of McDonalds. The
operating practices are systematically personalized within the workers' understanding
and attitude through high level training standards. Formal training programs are
conducted at Hamburger University and individual training is done within the restaurant
outlets itself. Quick service is one of their strength in the fast food industry.
b. Variety of Product
The McDonalds exhibits a long range of product varieties and segmentations are
made on the basis of demographics too. The company recipes vary from country to
country based on the cultural and social factors. This is the source of their competitive
advantage as they are able to market their products by blending with the cultural
differences while maintaining the international standards. Example- Lamb burgers are
served in India and separate entrances are provided for the families and single women in
the Arabian countries (ManagersDoor.com, 2016).

c. Economies of large scale and cost leadershipAs the company enjoys economies of large scale, it is successful in large scale operations and reducing
the per unit cost by making the product cheaper while maintaining its quality.

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5.4 Inputs outputs Model

Inputs
Transforming

Transformed

Staff

Information order

Facilities
Menu
Table and Chairs

5.5 Front and Back Office

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Transformations

Output

Cooking Burger

Customer Satisfaction

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6 House of Quality
7 Cycle of Services
8 Service Product Bundle
8.1 Supporting Facilities
8.1.1 Locations
A geographic diversification strategy thus resembles a chess game: each move
depends not only on the boardan array of potential locationsbut also on the pieces
in playfirm heterogeneityand, more importantly, on the interaction between players
strategic interaction (Alccer, Dezs and Zhao, 2014).

8.2
8.3
8.4
8.5

Facilitating Goods
Information
Explicit Services
Implicit Services

9 Layout and Flow

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10Reference
1. McDonalds Surprising Start, 7. (2015). McDonalds Surprising Start, 75 Years Ago - Hungry
History.

[online]

HISTORY.com.

Available

at:

http://www.history.com/news/hungry-

history/mcdonalds-surprising-start-75-years-ago [Accessed 24 Oct. 2016].

2. DHESI, D. (2016). No slowing down for McDonalds - Business News | The Star Online. [online]
Thestar.com.my. Available at: http://www.thestar.com.my/business/business-news/2013/04/06/noslowing-down-for-mcdonalds/ [Accessed 31 Oct. 2016].
3. Bloomberg.com. (2016). Stocks. [online] Available at:
http://www.bloomberg.com/research/stocks/people/person.asp?
personId=208777636&privcapId=139488 [Accessed 31 Oct. 2016].
4. Royle, T. (2002). Just vote no! Union-busting in the European fast-food industry: the case of
McDonald's.

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Relations

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33(3),

pp.262-278.

Available

at:

http://eds.b.ebscohost.com/eds/pdfviewer/pdfviewer?sid=d5e374f7-13fa-4260-b06e-e6c671c4933f
%40sessionmgr102&vid=0&hid=120 [Accessed 28 Oct. 2016].
5. COMPANY PROFILE McDonald's Corporation. (2016). Mcdonald's Corporation Marketline
Company Profile, [online] pp.1-33. Available at:
http://eds.b.ebscohost.com/eds/pdfviewer/pdfviewer?sid=7fbcfe65-ce56-4059-9fb4e5d4a4dfbc13%40sessionmgr103&vid=0&hid=120 [Accessed 28 Oct. 2016].
6. ManagersDoor.com. (2016). Top 5 - The Four Vs of Operations Management - ManagersDoor.com.
[online] Available at: http://www.managersdoor.com/topic/top-5-the-four-vs-of-operationsmanagement/ [Accessed 31 Oct. 2016].
7. UK Essays. (2016). Operations Management At Mcdonald's. [online] Available at:
https://www.ukessays.com/essays/management/operations-management-at-mcdonalds-managementessay.php [Accessed 31 Oct. 2016].
8. Eshelby, P. (2016). The 4 Vs of Operation Management. [online] Linked in. Available at:
https://www.linkedin.com/pulse/4-vs-operation-management-philip-eshelby [Accessed 31 Oct.
2016].
9. Createadvantage.com. (2016). Distinctive competency. [online] Available at:
http://createadvantage.com/glossary/distinctive-competency [Accessed 31 Oct. 2016].

10. Referenceforbusiness.com. (2016). Service Operations - strategy, organization, system, examples,

model, hierarchy, business, system. [online] Available at:
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http://www.referenceforbusiness.com/management/Sc-Str/Service-Operations.html [Accessed 1 Dec.
2016].
11. McMishaps and McVictories. (2007). Strategic Direction, [online] 23(8), pp.12-14.
Available at: http://search.proquest.com/docview/218613598?accountid=12118 [Accessed
18 Oct. 2016].
12. Kolyasnikova, L., Streltsov, A., Brazhnikov, M., Khorina, I. and Minina, Y. (2016). System
Development of Estimated Figures of Volume Production Plan. INTERNATIONAL JOURNAL OF
ENVIRONMENTAL & SCIENCE EDUCATION, 11(13), pp.6876-6888.
13. Johansson, P., Mattsson, S., Moestam, L. and Fast-Berglund, . (2016). Multi-variant Truck
Production - Product Variety and its Impact on Production Quality in Manual Assembly. Procedia
CIRP, [online] 54, pp.245-250. Available at: http://ac.els-cdn.com/S2212827116305194/1-s2.0S2212827116305194-main.pdf?_tid=93e70118-bf82-11e6-a3d000000aab0f6c&acdnat=1481448002_1a8b6459ea4f53f81aa1491128d724bb [Accessed 14 Oct.
2016].
14. Fachini, R., Esposto, K. and Camargo, V. (2016). Glass container production planning with warmups and furnace extraction variation losses. The International Journal of Advanced Manufacturing
Technology. [online] Available at: http://download.springer.com/static/pdf/719/art
%253A10.1007%252Fs00170-016-9369-7.pdf?originUrl=http%3A%2F%2Flink.springer.com
%2Farticle%2F10.1007%2Fs00170-016-9369-7&token2=exp=1481456987~acl=%2Fstatic%2Fpdf
%2F719%2Fart%25253A10.1007%25252Fs00170-016-9369-7.pdf%3ForiginUrl%3Dhttp%253A
%252F%252Flink.springer.com%252Farticle%252F10.1007%252Fs00170-016-93697*~hmac=3d36a852fe47168a49dac553d6646d970169c69d9b60ed21b8e8b2372fdd8bd5 [Accessed
14 Oct. 2016].
15. Smros, J., Lehtonen, J., Appelqvist, P. and Holmstrm, J. (2003). The impact of increasing demand
visibility on production and inventory control efficiency. International Journal of Physical
Distribution & Logistics Management, [online] 33(4), pp.336-354. Available at:
http://www.emeraldinsight.com/doi/pdfplus/10.1108/09600030310478801 [Accessed 13 Oct. 2016].
16. Alccer, J., Dezs, C. and Zhao, M. (2014). Location choices under strategic interactions. Strategic
Management Journal, [online] 36(2), pp.197-215. Available at:
http://eds.a.ebscohost.com/eds/pdfviewer/pdfviewer?sid=d6780a76-cf76-432c-ac86-3451c06122be
%40sessionmgr4007&vid=0&hid=4113 [Accessed 11 Oct. 2016].

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11Appendixs
11.1 Interview
1. When was these McDonalds open?
Year = 2010
How many employees = 43
Managers = 8
2. Store Manager - the whole outlet
Department Manager

People Manager ( Scheduling @ Payroll @ Uniform [Linen] );

Customer Manager ( Handle Customer Complaints & Customer Service ( Monitor Sales, Target )
Drive Thru )

Food Quality Manager ( Take charge in ordering stock with suppliers & equipments )

Shift Managers -3 (Take charge only shift no other specialization)

Suppliers is managed by the HQ. The have the system can access by all the outlets. There is a person
who handle the machine repairing. Just give it a call only.
No delivery - drive thru & Front counter
3. Target Customer
They target all but surrounding place encourage more family due to housing area
4. Backstage activities

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Kitchen - Frying area (nugget, patty, fillet o fish, mc chicken, pie) 1 place [Batch Vats] have cabinet
which can hold the heat for 30 minutes
Grill area (Big Mac, Double Cheese, GCB) Chicken and Meat is separated in the grilling.
Part of the Process of making burger - Bun Toss (Initiator) take order to know how much to toss the bun.
Assembler (responsibility to put the sauce, vegetables and patties). Assemblers plays the important role
in the kitchen if he/she does wrong then the whole process is gone so they need to hire an expertise.
Porridge got another crew Cook porridge only
Fry Chicken is same as porridge sections
Fries is not at kitchen is near the front counter
Service area - Front Counter (Fries)
To fasten the service
1

Order Taker person that takes the order

Runner person that responsible of taking burger & fries & Ice cream , apple pies

Drink Drawer can help to do ice cream if theres less customers

Runner only have 2 people, who helps the order takers and these runners have to communicate with each
others.
Theres a screen in the kitchen section so if one order done the screen order then the order is disappear
from the screen and the next order will appear.
In this branch how many runners - only 2 people
Peak hours - 1-3pm (lunch) dinner (6-9pm)

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Handle drive thru - 3 people

1

take order

runner

presenter give the product to the people

If they open another counter, which means the runner must be 3 person to handle.

5. McDonald Objective - Overall

1. First Choice Customer (when they wake up the first thing that comes in mind is McDonalds they and
no other foods)
Branch Target - Target buy large meal company target 70%
- Lessen the missing item at (Drive Thru)
6. Store Manager
a) When enter work, must check the from outer lobby check kitchen area drive thru , cold and dry
storage and also staff room
b) Must check any faulty machines or nt
c) If anything seems wrong they have to ask explanation from the shift managers
d) Store manager also be shift managers
1 shift manager (responsible for the whole shift); 2nd manager (production manager) responsible for
production.
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7. How do you motivate your workers?

Kind of challenging people with different backgrounds
If receive any pressure from the top manager
- The manager will have management meeting with the managers (Communications)
- The other managers should inform the staff (Communications)
If one of the staff rude or conflict
- The manager will talk with the involved staff talk personally
- What is the problem, what they want from me, then tell what the manager wants.
[win-win situations] if u want something, i also want something

8. Challenging Situations
a) When the customer complaint, the store manager should call the customer.
b) Some customers doesn't want to talk they want to talk someone higher.
c) When cannot achieve more than the target the company targeted.
d) No explanation is entertained by the authorities
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11.2 Prove

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