BMO6508 Operations Management for Service Quality and Profitability

Introduction 

The report here gives an overview of operations management of a fast food industry in Australia. Here the chosen fast food chain is McDonald, considered the largest in the world. The report begins with a discussion on the established and emerging value propositions of McDonalds. There is a vivid description of how McDonalds is trying to adopt means for enhancing its value to the customers so that amongst all its competitors, McDonalds becomes a choice of the mass. The report also describes about the manufacturing excellence of McDonalds with special focus on product quality, training, customer satisfaction, continuous improvement, application of six sigma and reduction in product cycle time. There is also a discussion between the service quality and profitability of the fast food chain. There is also discussion on the operational challenges faced by the fast food industry like McDonalds. In the report, one can also find a process map that describes the order fulfillment process of the fast food chain. Further, there are also recommendations on how the fast food chain can improve its service.

Established and Emerging Value Propositions in the Fast Food Industry

The fast food chain chosen here is McDonalds, Australia. McDonalds have adopted certain value propositions for convincing the potential customers to buy their products. The idea behind establishing the value proposition is to ensure that customer specifically opts for McDonald’s products in a market that offers similar products (McDonald and Wilson 2016). The established value proposition of the fast food chain includes focusing solely on the needs and wants of the customer by providing superior service and high quality food offered in a welcoming as well as clean environment. Moreover, the fast food chain also aligns the pricing of the product, food standards and operational processes to meet the customer demand. The consistent globalization of the standards and the power of branding is something that sets it aside from the competitors. The fast food chain not only offers food at a cheaper rate but also at a convenient option.

The company has some emerging customer value proposition.  As a part of this plan McDonalds has introduced cappuccinos, lattes and mochas as a part of the McCafe section of the menu. The introduced coffee not only tasted better but also gave a tough competition to the coffee makers like the Star bucks (Leekha and Sharma 2014). Mcdonald’s have not only introduced various chicken and dessert items but also premium and iced coffee. The fast food chain has also launched a McDelivery service for the convenience of the customers. They have also started revamping their restaurants and introducing the concept of McPick 2 where customers allowed to order minimum two items by paying a price of $5 along with a beverage priced at $1.  The fast food chain has also ensured rolling out a menu with ingredients of higher quality (Badal 2017).

Application of Manufacturing Excellence (TQM) of McDonalds

The total quality management (TQM) in McDonald focused on constant improvement of products and customer service to fulfill the needs and wants of the customers (McDonald and Meldrum 2013). Therefore, the fast food chain increases its level of efficiency through constant improvement of product quality, training, constant improvement, customer satisfaction and human resource services.

 

 

The fast food chain like McDonald has focused on the improvement of its food quality. Thus, McDonalds have ensured the maintenance of a menu, the nutritional value of which tested in accredited laboratories so that they do impose any adverse effect on the customers who are prone to food allergy (Ryu, Lee and Gon Kim 2012). Thus, in order to improve the food quality the fast food chain has ensured variation in serving sizes, techniques for preparation, sources of supply and product testing.

 

 

McDonald’s focuses on the training of the employees as a part of the total quality management. The fast food chain trains the employees to be at work on time wearing proper and clean uniform. The employees trained to ensure that the customers receive quality and safe food thereby making a rule for them to wash off their hands on a frequent basis. Employees are also trained to follows certain standard operational procedures in order to ensure exceptional service and quality to the customers (Prajogo, Tang and Lai 2012). While preparation of food the employees must not only wear gloves but also ensure that the fish and meat fried properly. They must also ensure that the vegetables washed properly when using them in food. The fast food chain also focuses on the fact that the employees work as a team and possess high energy so that they can ensure effective service.

 

 

Fast food chain like McDonalds primarily focuses on the satisfaction of the customers through improvement in quality standards of food and ensuring well-trained employees (McDonald Karg and Vocino 2013). They also make sure that the customers left with no scope of dissatisfaction towards the company.

 

 

The fast food chain like McDonalds focuses on continuous improvement in terms of employee training, food quality and other developments that control the overall functioning of the organization (Poksinska, Swartling and Drotz 2013). These steps enabled fulfilling the desires and want of the customers but also helped the company in gaining a competitive advantage.

 

 

According to (Basu and Wright 2012) Six Sigma revolves around certain key concepts based on customer liking, failure to delivery, variation, stability in operations and process adopted for improvement. However, if the fast food chain explained in the context of Six Sigma then one can observe that the company has incorporated Good Manufacturing Practices (GMP), approved Hazard Analysis Critical Control Point (HACCP) plan, sanitation and food security program for the purpose of maintenance of quality (Weltman and Swink 2015). The Fast food industry also tries to repair the damages cause by customer dissatisfaction. The Fast food chain also tried incorporate variation in the menu and maintain a stable operation.

 

 

As a part of the total quality management (TQM), McDonalds has tried to reduce its cycle time through the introduction of 24-hour services like McDelivery and Drive-thru (Venkataraman et.al 2014). Thus, the fast food chain tries to simplify the work process amongst the departments and removal of unnecessary steps for ensuring a successful TQM.

Relationship between Service Quality and Profitability

Service quality of McDonald depends on its reliability, assurance, tangibility, empathy and responsiveness. McDonald makes sure that the fast food chain has the ability to perform the promised service not only accurately but also dependably. The fast food chain also ensures assurance through delivery of courtesy and knowledge of the employees and at the same time helps in conveying confidence and trust. The fast food chain also attains tangibility through its equipment, physical facilities, communication materials and personnel (Rahman, Khan and Haque 2012). McDonalds also empathizes with its customers through the provision of individualization and care. This fast food chain also has the willingness in helping the customers by providing prompt service.  The service quality is important as it helps in maintaining a positive relation with the satisfaction and behavioral intentions and people thereby driving them more towards the fast food chain that in a way helps in increasing its profitability. The food chain giant believed to generate revenue of of $1.66 billion (Parsa et.al 2012).

Operational Challenges  

The operational challenges faced by fast food chain like McDonalds include:

1. Winning Back Customers: The fast food industry of Australia is highly competitive. The presence of such scenario forces McDonalds to face a constant challenge of losing on its customers (Zanoni and Zavanella 2012). Therefore, the managers are in constant need for incorporating methods for winning back its customers.
2. Attracting Low Income Customers: McDonalds also faces the challenges of adopting means for attracting the low-income customers otherwise they will lose them out to the competitors
3. Taking a Stand on the Food Safety Scandals:The fast food chain McDonald has a reputation of offering poor wages to its staffs. This has led McDonald’s to be hit massive protest from the workers. Therefore, there was pressure from the shareholders in marinating a balance between the salary of the managers and the workers (Hill and Hill 2012). Moreover, the company forced to operate without a public relations officer.
4. Reduce Cost by Slimming down Menu: McDonald in order to cater healthier alternatives have enhanced its menu that has made it complicated. Moreover, bigger additions to the menu not only made the operations of the kitchen complicated but also made the customers wait for a longer period (Dekker, Bloemhof and Mallidis 2012).

Process Map 

                                                                 Figure: Process Map for McDonald Order Fulfillment Process

                                                                            Source: (Dumas, La Rosa and Mendling 2013)

Recommendation 

The recommendation on improving the service operations of the fast food centre includes for increasing its profitability includes:

Focusing on the Value: McDonald can enhance its service operations by inclusion of value items like few preferred entries, two or more beverages and a desert item

Promoting New Items: The new items included in the menu promoted in order to not only appeal a variety of diners but also ensure balancing the special price menu through the elimination of too many options.

Valuing Old Staff: Trained old staffs should be valued and compensated adequately so that they are able to provide quality service for pleasing customer experience

Using Advertising Tie-up: Taking up successful food promotions through tie-ins can lead to improvement of service operations of McDonald.  This can involve choosing an event that not only promotes the brand but also advertise the sporting events.

Conclusion 

The report ends in the light by providing recommendations on how the fast food industry of Australia can improve its service through adoption of steps like promoting new items, using advertising tie-ups, focusing on value and valuing their old employees. There is also process map that provides a description of the order fulfillment process undertaken by McDonalds.  The report also describes the operational challenges faced by the managers of McDonalds. Through the report, one can also gain an insight into the profitability and service quality of the fast food chain. There is also discussion on the fact that McDonalds can gain excellence in manufacturing through continuous improvement, customer satisfaction, product quality, training, and reduction in product cycle time and application of the six-sigma concepts. There is also clear description of how McDonalds is adopting means for its customer value so that it becomes the choice of the mass among all its competitors. Therefore, the report has done an analysis on the established and emerging value propositions of McDonalds. Thus, the report satisfactorily describes the operations management of McDonalds quite successfully covering all the necessary points. 

References

Badal, P.A., 2017. McDonald’s Corporation-2015 (MCD).

Basu, R. and Wright, J.N. eds., 2012. Quality beyond six sigma. Routledge.

Dekker, R., Bloemhof, J. and Mallidis, I., 2012. Operations Research for green logistics–An overview of aspects, issues, contributions and challenges. European Journal of Operational Research, 219(3), pp.671-679.

Dumas, M., La Rosa, M., Mendling, J. and Reijers, H.A., 2013. Fundamentals of business process management (Vol. 1, p. 2). Heidelberg: Springer.

Hill, A. and Hill, T., 2012. Operations management. Palgrave Macmillan.

Leekha Chhabra, N. and Sharma, S., 2014. Employer branding: strategy for improving employer attractiveness. International Journal of Organizational Analysis, 22(1), pp.48-60.

McDonald, H., Karg, A.J. and Vocino, A., 2013. Measuring season ticket holder satisfaction: Rationale, scale development and longitudinal validation. Sport Management Review, 16(1), pp.41-53.

McDonald, M. and Meldrum, M., 2013. The complete marketer: 60 essential concepts for marketing excellence. Kogan Page Publishers.

McDonald, M. and Wilson, H., 2016. Marketing Plans: How to prepare them, how to profit from them. John Wiley & Sons.

Parsa, H.G., Self, J.T., Gregory, A. and Dutta, K., 2012. Consumer behaviour in restaurants: assessing the importance of restaurant attributes in consumer patronage and willingness to pay. Journal of Services Research, 12(2), p.29.

Poksinska, B., Swartling, D. and Drotz, E., 2013. The daily work of Lean leaders–lessons from manufacturing and healthcare. Total Quality Management & Business Excellence, 24(7-8), pp.886-898.

Prajogo, D., Tang, A.K. and Lai, K.H., 2012. Do firms get what they want from ISO 14001 adoption?: an Australian perspective. Journal of Cleaner Production, 33, pp.117-126.

Rahman, M.S., Khan, A.H. and Haque, M.M., 2012. A conceptual study on the relationship between service quality towards customer satisfaction: Servqual and Gronroos’s service quality model perspective. Asian Social Science, 8(13), p.201.

Ryu, K., Lee, H.R. and Gon Kim, W., 2012. The influence of the quality of the physical environment, food, and service on restaurant image, customer perceived value, customer satisfaction, and behavioral intentions. International Journal of Contemporary Hospitality Management, 24(2), pp.200-223.

Venkataraman, K., Ramnath, B.V., Kumar, V.M. and Elanchezhian, C., 2014. Application of value stream mapping for reduction of cycle time in a machining process. Procedia Materials Science, 6, pp.1187-1196.

Weltman, D. and Swink, M., 2015. Numerous Sigma Level Tables Need Correction: Commonly Used Tables Ignore Permitted “Left-Side” Defects. INFORMS Transactions on Education, 16(1), pp.1-5.

Zanoni, S. and Zavanella, L., 2012. Chilled or frozen? Decision strategies for sustainable food supply chains. International Journal of Production Economics, 140(2), pp.731-736.