Table of Content ChapterTitle Page1.0 Question-1 2-72.0 Question-2 7-113.0 Reference 121McDonalds Corporation Case Study1. Review the service delivery system. How does this meet the needs ofthe business !ntroductionTheservicedeliverysysteminaMcDonaldsRestaurant isacomprehensivedesignthatincludes an efficient layout of facilities and equipment and clearly defined procedures, roles,responsibilities and standards. Increasing fierce competition and consumers demand forquality and value within the fast food maret has had a significant impact on every aspect ofthe McDonalds organisation. !t the same time" the recession has amplified the mutual needto improve service delivery system as well as reduce cost. McDonald has set about achievingthis by adopting an increasing #lean focus."limination of waste$ean philosophy can be defined as the quest towards #meeting demand instantaneously, withperfect qualityandnowaste. %ources of wastewhichtheleanbusiness must strietoeliminate are overproduction, waiting time, transport, process, motion and defectives.#verproduction&istorically, McDonald would prepared finished food in large batches ahead of time and eptthem heated in warming bins ready for sale. 'hilst this ensured a quic ( reliable service, italso earned them a poor reputation for quality and waste. !s maret share began to diminish anew system was introduced. )ow, a limited stoc of patties, salad ingredients and other fooditems are pre*prepared but the restaurant only combines them into finished sandwiches asthey are ordered. The duration of this process is less than + minutes in total, which enables aquic response to any une,pected change in demand -thereby reducing the ris of2overproduction..Theproductionisguidedbyacomputerpacage. Theschedulemanager-either the restaurant manager or the first assistant manager. prepares a dailychart ofpro/ected sales by hour throughout the day. The previous three wees sales and the sales forthe same period last year are used as inputs to the schedule managers prediction. 0rom thesales forecast, the computer pacage generates proposedbinlevels byproduct for theproduction area. The resulting chart displayed on the wall is used by the production person asa guide and to spot more precisely a surge or fall in demand. The lean organisation shouldultimatelyeliminateallinventories,asholdingstocoftenincursanopportunitycostandwastage. &owever, McDonalds must also be able to meet demand at all times. Therefore inaddition to the processes, a sophisticated stoc control system e,ists to manage this processthroughout the supply chain.$aitin% TimeModern technology has facilitated the #made to order process by slashing waiting time, bothintermsofproductionandforthecustomers. 1omputerbasedsystemscommunicatethecustomersorderdirectlytotheproductionstaff, andthemoderncooingequipment canprepare a batch of hamburger patties in less than 2 minute. McDonalds have a multi*silledworforce, so they can also assemble other parts of the order during this time. These factorsenable the restaurant to adopt a lean strategy whilst providing a fast service* a eyperformance measure within the industry. 1ollectively all of these factors produce an efficientsystem that has predictable outcomes.That is a ey aspect to the service delivery system thattiesinwiththeserviceconcept. 'ecanthavespeed, consistencyandlowcostwithoutdesigning that into the service delivery system. 3verything prepared in advance, everythinguniform. !ll geared to heavy volume in a short amount of time. The themes of nowing whatto e,pect in terms of product quality and speed of service at a reasonable price, in clean andbright surroundings are also aspects of service delivery in McDonalds. If an item of food is3not availablein theproductionarea,the counterpersonscalls the ordertotheproductionperson who calls the food order to the grill area. The item is then prepared as a priority. Inslac periods, certain standard items with low demand are only cooed to order. 'hen anorder is not immediately available, the counter person taes the money for the order, as thecustomer to stand aside and wait, and starts to deal with the ne,t person in the line. !t theservers discretion, the customer is requested to tae a seat and the order is brought over bythe staff. This might apply to an elderly customer or a parent struggling with several children.If a customer requests a non*standard item,the counter person identifies the non*standarditem when punching the order into the till. This causes a #grill slip to be printed at a terminalinthegrill area. 'hentheitemoffoodisprepared, thegrill slipstravelswithit totheproduction area and then the production person then calls the counter person to indicate thattheorder isavailable. Therestaurant aimsnot toe,ceedama,imumtimeforcustomerwaiting in line of two minutes and a ma,imum waiting time of one minute from the orderbeing placed. 4eriodically, actual performance on waiting times is checed with a stopwatch.Transport& 'rocess ( MotionTransport waste occurs as a result of e,cess handling of goods aroundthe operation.McDonalds have become pioneers of the fast*food itchen layout which lends itself well tothis aspect of lean philosophy. The #%peedy %ystem originally designed by the McDonaldbrothers -and based on a car assembly line. is still in place today. This system unites theentire operation so that all preparation facilities are lined in order of the assembly line inwhich each worer has a specific tas. 5eing in close pro,imity to the counter itself eepstransport waste to a minimum. This ties in with the idea of process and motion waste" theassembly line eliminates any unnecessary processes and each tas is simplified to ensure thatvalue is added throughout.The counter person employs two selling techniques, the first isnownas#sellingup whichinvolvesaugmentingtheorderbyeithersuggestingalarger4portionoranadditional item, suchasadrin. Theother techniqueiscalled#suggestiveselling. &ere an order would be greeted by suggesting to a customer the nearest 3,tra 6alueMeal alternative that would cost a little more the original order but give better overall value.%uggestive selling aims to increase sales as the alternative offered includes additional items,such as drins or fries.Staff Mana%ement$eanproductionreliesupongettingthingsright first time, with7erodefects. McDonaldsinvests heavilyinstaff trainingandmotivatingthemtoachieve the highest standards.%implified tass also help reduce the amount of defective goods. The restaurant has a policyof #first in, first out ensuring that the customers receive fresh food every time.It seems that McDonalds restaurants have the philosophy that 8discretion is the enemy oforder8.In simple words9they do allow many people to have discretion or decision maingauthority.If there were too many people with decision maing authority, there would be nospeed and consistency. 0orms of waste underline the importance of total employeeinvolvement in a lean organisation. McDonalds place a huge emphasis on woring as a teamandinvolveseveryonefromsupplierstocrewmembersinordertofoster aleanculturethroughout the business. The assembly line systemfosters a high degree of personalresponsibility for each tas, whilst multi*silling enables staff to learn very stage ofoperation. There are only effectively one or two people in a McDonalds that mae decisions. 3verybody else reacts * the bu77er goes to tae the burgers out, put 0rench fries in a pacagewith a scoop that is designed to give /ust so many 0rench fries in a pacage, mi, somethingup according to a recipe.3veryone there is controlled by equipment, standards and timers. The decision maing authority is centrali7ed within one or two e,perienced people.5The ma/ority of employees at McDonalds are very young and most of them have not yetfinishedhighschool. &owdoesthisfit withtheserviceconcept: It fitsinasensethatMcDonaldsservesaffordablefood. Inorder tohaveaffordablefood, youhavetohaveaffordable labour. 5y employing young people and probably giving them their first /ob inlife, they are achieving a low cost of production. McDonald;s would logically have a highturnover of staff as employees will move on to university or higher paying /obs. 1onsequentlytheydonot givetheseyoungpeoplealot of highlevel decisionmaingauthority. It isessential thatthestaffsarefamiliar with goodteamworandfamiliaritywiththesetroutinessothattheyarewell equippedtodealwithcustomers, storageoffoodandfoodpreparation. The staff are e,pected to reach a set*level of e,pertise, designated bservation 1hec $ist->1$.. 3ach>1$detail preciselythestepstoprepareaproduct. Togain1$sforeachareaofoperation.Therestaurantmanager andeach area leader carryout one >1$ eachday. The firstsection coversfoodpreparation and second general issues, such as neatness and cleanliness of uniform. !ll >1$sare filed. In this and other ways, the corporate tradition of managing all outlets under themotto @%1(6 -@uality, %ervice, 1leanliness and 6alue. is reinforced.Continuous !mprovement$ean philosophy is fundamentally based on a set of ideals such as #perfect quality and nowaste. It would be unrealistic to suggest that McDonalds has achieved them in full, howeverthe belief is that the organisation should strive to get closer to them over time. Thereforecontinuous improvement, as opposed to transitory is a vital element on which the company6places a constant focus via regular audits and sharing best practices. !s result of competitionin the fast*food industry and increasing consumer preference for healthier food, McDonaldshas steadily e,panded the range of food and drins provided from the original offering ofburgers, drins and fries to include breafast, sandwiches and salads. In addition to beingsold as individual items, many of the products are pacaged into special offers, listed as 3,tra6alue Meals as well as special promotional items are also added from time to time.). Reviewthe recent chan%es inthe business. $hat has beentheirimpact0or years, critics have been taing on McDonalds, questioning its practices in anincreasinglyhealth*conscioustime. Themost famousassault onthecompanysreputationwas probably Morgan %purlocs A%uper*%i7e Me,B the ?==C >scar*nominated documentarythat suggested a month of eating only McDonalds meals might hasten your death. 5ut thathashardlybeentheonlygrenadelobbed inthecompanys direction.)ow McDonaldsisfightingbac, quietlylaunchingama/orcounteroffensiveofitsown.!ndit isntsimplytrying to eep its current customers happy" its also hoping to convince McDonalds septicsthat theyre wrong.Healthier *ood Selection 1onsumer tastes and preferences are changing and the fast*food industry need to be able toadapt to them. There is a huge opportunity to develop new products that appeal to the healthconscious customer. To be more specific, they developed new products that appeal to young,health conscious generation. 5ecause consumer tastes are changing there is an opportunity todevelop new healthier product lines that appeal to the new tastes of consumers that satisfiedtheir tastes. It seems only logical to at least attempt to develop a new product that has thepotential to be a very successful product in an ever growing industry. In its attempts to turn toturnthetide, oneofthemorestraightforwardstrategieshasbeentorevampthemenutoinclude items such as chicen, pancaes, sandwiches and salads.There is so much potential7for generating high sales from the development of a new product because consumer trendsand tastes change faster than ever. >nce a new product is developed and is successful, thenMcDonald;s can focus on increasing production in their functional areas of the heavy usersegment. !lso, McDonald;s should want to peruse other alternative once a new product havebeen developed and has become successful" it;s more of a long*run alternative.+ew Service Delivery System Theme&owever, to restore the glory days it taes much more than a new menu and some additionsto the portfolio. ! more fundamental development was the introduction of #made for youservice delivery system. This was launched to increase sales by improving product quality inthe face of stiffening competition from other fast food outlets. The new thining was to doawaywiththoseprecooedslabsofmeat andpreparesandwichestoorder, withfreshlytoasted buns too. In order to mae this happen, each store installed an array of equipment.4entiumIII computers was installed to coordinate the orders, #rapid toasters, andtemperature*controlled#launching7ones toreplacetheoldheatlampsandholdingbins.McDonald has also developed a high*profile partnership with Disney, targeting families with&appy Meals, introducing play areas for children and even inviting senior citi7ens to somerestaurants to play bingo. Developments ( Renovations!s well as the more straightforward menu changes, other regional development has taenplace. Incertaincountries lie 0rance, the restaurants are remodelledoncontemporaryarchitecture. There also has been on*going attempt in the Dnited Eingdom to create menusmore suited to local tastes. 0or Dnited %tates, the plan is to renovate every restaurant olderthan 2< years and this has meant that some have been created with a #Diner inside to providetwo different e,periences in a single store. In recent years, +,=== McDonalds in the Dnited%tates have been redesigned, including F== /ust recently, another 2,=== or so are slated to be8rebuilt or renovated. >n average, these restaurants e,perience G to H percent sales growthover the marets increase, according to McDonalds. The new buildings have helped burnishMcDonalds image. This is change directed at everyone -and customers have reported that thefood actually tastes better in a remodeled McDonalds.. 'ublic Conscious 'ro,ectsThe company is also trying to improve its image and reputation through involvement andsustainedinvestment inpro/ects suchas#sportscoachingandits commitment tosocialresponsibility lie 0ree %port 1oupon. This strategy is made for the e,isting consumers wholie to consume less healthy food in Mc. Donald9 after the fifth time they come to McDonald,they deserve for swim free coupon. This free coupon will give the consumers a chanceto e,ercise themselves and change their behaviour toward e,ercise. McDonald has tocollaboratewiththee,isting sportcentre to build this strategy. This strategy isa form ofpositive reinforcement with reward. The consumers e,pected to learn that e,ercise is reallygood for their life style balance.'ith their remodeled restaurants, additions to the menu andat leastonenontraditional ally,e,ecutivesaretryingtopresent agreener,morehealthfulMcDonalds. !nd in some ways the company is indeed changing. 0or the first time last year,McDonalds sold more pounds of chicen than pounds of beef, a seismic shift that would belie%tarbucssellingmoreteathancoffee. 5everages, thanstosmoothiesandespressodrins, arenowaIFbillionannual business for McDonaldsintheDnited%tates. Therestaurants themselves are changing, too, adding 'i*0i, colorful chairs, tables that wouldntbe out of place in an IE3! catalog and, in some 'est 1oast test marets, flat*screen T6s "-tensive .dvertisin%0or McDonalds psychographic segmentation and the need of passing different messages, the&3!$T&campaignfocuses onadvertisingonT6or radioor maga7ines, print suchas9brochures, posters, scientific reports and 4ublic Relations such as event, endorsements, andsome new channels lie internet and cell phone, etc. Introducing of a new clown, Ronald isnow familiar with white*face, in a canary*yellow /umpsuit, and a fire*engine red wig. Ronaldisstill beingstrategicallyre*fashioned. In2FFJ, refashionRonaldshairandincreasethewidth of the red stripes on his socs. The idea is to introducing the new endorser into Mc.Donald, calledRonnie. 'iththisproduct linee,tension-inthis case, thenewproductrepresented by the new character., we would lie to represent the healthier food with Ronnie.Ronnie is the same e,act character lie Ronald" the only things that differentiate the two ofthem are their colour. If Ronald has red to dominate his cloth, Ronnie has green. The colourgreen represents life" !bundant innature, green signifies growth, renewal, health, andenvironment. The strategy is to put them together in every occasion so that people will noticethat here in Mc. Donald" they have different approach in public health awareness."ncoura%in% Donations4eople will feel good when they generate their money for other people who need it. 'ith thisconsumers behaviour they can create the donation program. 0or every healthy food that theybuy from McDonald, they will generate 2K from the total amount of the transaction. Thisprograme,pectedtocreateagoodbu77about McDonaldespeciallythehealthymenuinMcDonald. Thisevent canchangeMcDonaldimageinthesociety,theywill noticethatMcDonald do have healthy menus.Conclusion&owever, despite McDonalds claimthatthe quality of itsproducts hasindeedimproved,waiting times in the restaurant have doubled to an average of ?*+ minutes per order, slow*lane performance in the cut* throat fast* food business. The McDonald 1orporationsmanagement however have argued that the doubled time promises a better offer for customers10as the 6alue Meals offers a variety mi, of main course meals with drins and side orderswhich proves to be more economical for the customers rather than purchase separately.Reference2. &owMcDonaldscame5ac5iggerThan3ver.The)ew LorTimes.Retrievedfrom http://www.nytimes.com?. McDonalds)ew1ommunication%trategyon1hanging!ttitudes and$ifestylesInternational Mournal of Mareting %tudies.Retrieved from http://www.ccsenet.org+. The 3ffect of 1hanging Tastes on McDonalds.McDonald Maret %hare.Retrievedfrom http://www.123helpme.com11