Critical Analysis On Mcdonalds Operation Management
Assessment 4 is an individual research report that is focused on ensuring that students
are able to do quality research (peer reviewed articles (most important), textbook, reports, etc.) into how to effectively and efficiently operate a business the fast food industry. Students are expected to answer the following questions:
• Identify both established and emerging consumer value propositions within the fast found industry.
• Provide a process map (or flowchart) of a fast food restaurant’s order fulfilment process.
• Discuss how Blockchain may enhance the supply chain performance in the fast food industry?
• Review the relationship between service quality and profitability with the adoption of Blockchain in the supply chain.
• Describe the potential operational challenges faced by managers of your chosen restaurant to implement a Blockchain solution.
• Provide recommendations for improving the service operations of the fast food restaurants. To successfully complete the assessment, students will need to explain in depth and within the permitted word limit of 2500 words the stated questions. This word limit includes the title page, the table of contents and the references list. Students research must be done by undertaking quality research (peer reviewed articles (most important), textbook, reports, etc.) in order to achieve high marks for the ‘Research Section’ of the marking criteria which is worth 45%.
The present report discusses the McDonalds operation management which is a fast food industry. As a part of its business company services various snacks items such as burger French fries, wraps, salads, desserts and various mock-tails. McDonalds has multiple outlets in around 100 countries of the world with around 68 million customers present in all those countries. It has a 3 legged stool system of its supply chain wherein suppliers, operators and employees are the 3 parties which drives a successful supply chain for the company. In the fast food industry the supply chain remains quite large and hence it becomes difficult to identify the loopholes in the chain. Thus, adoption of Blockchain technology could help curbing the problems of existing inefficiencies of supply chain practices and shapeup the McDonalds operation management. Blockchain makes it quite easy to trace the level at which malpractices are undertaken in the entire supply chain. Thus it helps in maintaining the safety and quality standards of its products and services leading to higher profitability on account of gaining more trust of its customers.
Established and Emerging Value Propositions in the fast food industry
Nowadays, a strong framework of customer value proposition it is of utmost importance for a business organization to know exactly who the customers it is targeting in the market are and what actually they value in context of its product or service (Merritt, 2020). Like any other industry customer value propositions holds due relevance in Fast Food Industry as people have their own values and tastes while preferring to the fast food for them.
Existing Customer Value Propositions at McDonalds
Few of the established value propositions of McDonalds operation management for its customers are as follows:
- Convenient Locations: McDonalds being a food chain with its multiple outlets in almost all the cities of the world makes it convenient for its customers to visit its outlet.
- Comfortable Seating Facilities: The McDonalds outlets provide customers a comfortable seating arrangement wherein they can spend reasonably longer hours enjoying their meals and time.
- Quick and Efficient Service: McDonalds allows its customers all the options of food servicing i.e. the over the counter deliveries, take home services and online order deliveries. Facilities like home deliveries add a good value to its services because in today’s busy world people do not often get time to go out for their breakfast, lunch or dinner rather they opt for ordering their food at the very places at which they are. McDonalds understands the importance of delivering the food in the quickest possible time and hence it successfully delivers its food orders in minimum time.
- Consistency in Quality: It is the consistent quality that the customers of McDonalds know well before they order the food from it. McDonalds operation management is very effective as they provide hygienic food and its quality of food has the trust of its customers all across the world (Finch & Beak, 2020).
- Variety of Products in Menu: McDonalds has wide range of fast food items to offer to its customers such as Hamburger, Cheeseburger, Fries, Puffs, Cold-drinks, shakes and other types of beverages. Hence, its product range does not remain confined to its specialty burgers but also it provides various other add-on items to its customers so that a proper meal could satisfy their food cravings.
- Value offering and Prices: At McDonalds, a person can order his entire dinner meal for around $5 and could receive his order in nearly 20-30 minutes.
In general, the above discussed values based on the McDonalds operation management pertains to the entire fast food industry as customers in this industry looks for these values in the products and services for their selection of food brands.
Emerging Customer Value Propositions
The above mentioned values appeals different target customer markets depending on their needs and desires. However, apart from this established customer value proposition, McDonalds operation management is also looking forward to create more difference to its services so as to stand out in the competitive world and as an emerging CVP it is looking forward to provide more convenience to its customers by strengthening McDonalds operation management online and also providing them innovative solutions like wifi at the restaurants to enhance their comfort to carry out their work spending more and more hours at its outlets (Klein, 2018).
Process Map for Order Fulfillment in Fast Food Industry
Order Fulfillment is a key part of supply chain process of any business organization. It involves multiple activities such as receiving of order, processing it and making it delivered to the end user or customer (Croxton, 2018). In fast food industry following is the process map that is generally followed:
Application of Blockchain in fast food industry
Existing Supply Chain Mechanism of Fast Food Industry
The existing supply chains in the entire fast food industries have to face multiple challenges like inefficiencies, frauds or scandals. The fast food industry as a whole fails to achieve the transparency of the supply chains working in it. Supply chain of McDonalds or any fast food business operators are traditionally involved in the manual systems which fail to detect and prevent the food adulteration issues. McDonalds operates through around 38000 outlets across the world and caters to around 69 million customers requires wide range of ingredients to procure in order to deliver its food products to the customers (Market Realist, 2019). It does not prepare any of the raw material on it owns rather it has contracts put in place with its suppliers to deliver it raw materials that are required by it on time to time basis. Suppliers of McDonalds are third important parties of its business wherein the other two are its operators who actually runs its outlets and employees. The three parties create a three legged tool supply chain framework for the company (Market Realist, 2019). The success of the entire fast food industry lies in its supply chain’s success of maintaining proper communication and collaboration of all the parties of its supply chain network. Hence, the companies in this industry must think about the ways that could improve their supply chain mechanisms.
Impact of Blockchain Technology for supply chains in fast food insdustry
The use of Blockchain Technology could be made in order to promote better transparency of its supply chains of fast food industry (QSR Web, 2019). Hence, aligning the system of supply chain on blockchain technology will create a wholesome transparent process making it easily traceable from end to end. Each of the entity that is involved in the supply chain (farmer, confectionary retailers or wholesalers, warehouses, manufacturing factories, outlet operators, delivery partners etc.) will act as a node on the network of blockchain which will make it very convenient to identify the source of food supply from farmers to restaurant service providers. The use of blockchain will provide accountability as well as traceability feature thus it will help companies like McDonalds in preventing the probable disasters related to food safety (Zhang, 2019). The IoT devices could be used in place of manual recording and for verification purposes (Dai,Zheng & Zhang, 2019). The IoT devices will facilitate McDonalds with various environmental or chemical based sensors which could be deployed to pass on the information of movement of food products from one point to another of supply chain in real time (DZone, 2019). Such features will not merely amount to reduction of human efforts but also promotes overall operational efficiency of food retailers like McDonalds. With its overall features, blockchain can offer more visibility of the multiple functions of supply chain. Moreover, the adoption of system of blockchain will also enable the McDonalds operators and its suppliers to create better access to the McDonalds operation management of supply chain as suppliers could remain properly informed about the demands of their supplies, inventories could be recorded with complete accuracy and the quality checks are performed precisely. This will result in reducing the food wastages at the end of both suppliers as well as operators.
Relationship between service quality and profitability
Impact on Service Quality
The blockchain technology has a sheer potential of streamlining various processes in the fast food industry. Thus it could certainly help the businesses adopting it with the benefits of maintaining higher safety standards and ultimately enhancing their product and service quality in comparison to those who are not using it. An appropriate authentication of entire journey of products in the entire supply chain network through the use of blockchain transactions ledger would help McDonalds in sustaining its products claims and thereby building more trust and confidence among all its customers (Kamilaris, Fonts & Prenafeta-Bold?, 2019). The adoption of blockchain technology will give a standard for its quality of products and services which will ultimately attract more and more customers towards it.
Impact on Profitability
As a consequence of increased trust among the people in the brand firms adopting blockchain technology in fast food industry will be able to generate higher revenues and profitability and provide a positive impact on McDonalds operation management (Tripoli & Schmidhuber, J., 2018). Further, as it is clear that implementation of technologies like blockchain will reduce the chance of food related disasters and scandals, it will consequently result in better meeting of the regulatory standards by McDonalds leading to reduction of governmental interventions like fines, penalties, dispute resolution charges and so on, to a great extent. Furthermore, besides the benefits related improved quality and reduced frauds, blockchain’s use will also facilitate the company with prompt and fairer payment mechanism so as to improve the efficiency of its cash conversion cycle (Noel, 2018). Thus adoption of blockchain will bring in both the improved quality and enhanced profitability for the McDonalds operation management.
Potential operational challenges of implementing Blockchain
The above discussion has made it clear that the implementation of blockchain will certainly help McDonalds to address its current issues of inefficient supply chain operations and thereby increasing its overall performance quality and profitability (Forbes, 2017). But, at the time it is also important to take into account the potential operational challenges that it might have to face will implementing solutions like blockchain.
How adopting blockchain technology at a wider stage improve McDonalds operation management?
The supply chain network of McDonalds comprises of various parties from the food ecosystem and in order to reap out the benefits of blockchain solution it will require greater efforts at each of the layer from where the procurement of food is made from base to ultimate level thus requiring all the participating entities of supply chain network to adopt the said technology for the successful and uninterrupted integration. However, it might not be financially feasible for all the parties to supply chain of McDonalds to adopt it due to the fact it requires significant investment coupled with intense training or already trained and skilled workforce to operate business on this technology especially at the initial phase.
Requires explicit training and skills set
For a proper McDonalds operation management, a dedicated workforce for Blockchain is highly indispensible for its adoption in the business.
Data loss risk
Apart from the economic restrictions, McDonalds would also have to bear a risk of data loss if it adopts blockchain technology as any information technology system is vulnerable to information security risk due to its online presence. The important and sensitive data of fast food service operators like McDonalds requires high confidentiality might be lost on online platform because of reasons like data corruption, data hacking, data manipulation or data theft. Such information security breaches may cause huge losses to the business and affects McDonalds operation management if the information related to its techniques and strategies are revealed out to its rival firms (Olsen, Borit & Syed, 2019).
To improve the McDonalds operation management and financial success with excessive focus on its products and processes it is important for the company to focus on its employees and their performances and to adopt such ideas which could improve their efficiencies. Further, it is also recommended to give enough value to its customer’s feedbacks which they given on the basis of their experience. It is necessary to impart proper awareness among the employees about hygiene and safety concerns related to their food services. Also, it would be highly recommended to adopt solutions like Blockchain Technology to streamline its processes and to meet the quality standards as required in order to implement McDonalds operation management successfully in today’s highly competitive fast food industry (Banerjee, 2018). The company must also give due consideration to other facilities it could provide to its customers who visit its outlets. Such facilities could range from providing comfortable seating arrangements wherein they can even undertake their professional meets in friendly manner with easy access to Wi-Fi.
From the above discussion, it can now be concluded that though McDonalds is operating its business as a giant player in the fast food industry all across the world, it is important for it to further improve McDonalds operation management considering the intense competition in the industry wherein it is operating. It must take into account all the opportunities coming its way such as rapid advancement of technologies providing enormous benefits to the businesses and must proactively make use of such modern concepts to combat other rivalries. As the current supply chain mechanism of McDonalds operation management is facing issues of lack of transparency leading to various food related scandals it would be beneficial for the company to go for the adoption of block chain technology which will improve its overall performance quality and in turn it will offer higher profitability to the business on account of increased customer base.
Banerjee, A., 2018. Blockchain technology: supply chain insights from ERP. In Advances in computers (Vol. 111, pp. 69-98). Elsevier.
Croxton, K.L (2018). [Online]. The Order Fulfillment Process. McDonalds operation management Available at: https://pdfs.semanticscholar.org/182f/b7c9a6cecd0ac2cd6bd9d45c49f71326dcc1.pdf
Dai, H.N., Zheng, Z. and Zhang, Y., 2019. Blockchain for internet of things: A survey. IEEE Internet of Things Journal, 6(5), pp.8076-8094.
DZone. (2019). [Online]. Blockchain Use Cases: How Blockchain Will Transform the Food Supply Chain. Available at: https://dzone.com/articles/how-blockchain-will-transform-the-food-supply-chai
Finch & Beak (2020). [Online]. The Mcdonald’s Business Model Canvas. Available at: https://www.finchandbeak.com/1072/the-mcdonalds-business-model-canvas.htm
Forbes (2017). [Online]. How Focus On Technology Can Drive Sales For McDonald's. Available at: https://www.forbes.com/sites/greatspeculations/2017/06/27/how-focus-on-technology-can-drive-sales-for-mcdonalds/#1cd4a79a434b
Kamilaris, A., Fonts, A. and Prenafeta-Bold?, F.X., 2019. The rise of blockchain technology in agriculture and food supply chains. Trends in Food Science & Technology, 91, pp.640-652.
Klein, D (2018). [Online]. McDonald's Value Strategy Takes a Turn. Available at: https://www.qsrmagazine.com/finance/mcdonalds-value-strategy-takes-turn
Market Realist (2019). [Online]. McDonald’s Supply Chain: A Must-Know for Investors. Available at: https://marketrealist.com/2019/11/must-know-mcdonalds-supply-chain-2/
Merritt, C. (2020). [Online]. Value Proposition vs. Customer Value Proposition. McDonalds operation management Available at: https://smallbusiness.chron.com/value-proposition-vs-customer-value-proposition-76843.html
Noel, A. (2018). [Online]. Six Ways Blockchain is Being Used in Food and Agriculture Supply Chains. Available at: https://medium.com/cultivati/six-ways-blockchain-is-being-used-in-food-and-agriculture-supply-chains-68a7305fd533
Olsen, P., Borit, M. and Syed, S., 2019. Applications, limitations, costs, and benefits related to the use of blockchain technology in the food industry. Nofima rapportserie.
QSR Web. (2019). [Online]. McDonald's joins blockchain pilot to improve ad spend efficiency, supply chain transparency. Available at: https://www.qsrweb.com/news/mcdonalds-joins-blockchain-pilot-on-ad-spend-efficiency-supply-chain-transparency/
Tripoli, M. and Schmidhuber, J., 2018. Emerging Opportunities for the Application of Blockchain in the Agri-food Industry. FAO and ICTSD: Rome and Geneva. Licence: CC BY-NC-SA, 3.
Zhang, J., 2019. Deploying Blockchain Technology in the Supply Chain. In Blockchain and Distributed Ledger Technology (DLT). McDonalds operation management IntechOpen.