Innovations at McDonald’s Indoor seating (1950s) Drive-through window (1970s) Adding breakfast to the menu (1980s) Adding play areas (late 1980s) Redesign of the kitchens (1990s) Self-service kiosk (2004) Now three separate dining sections Innovations at McDonald’s Indoor seating (1950s) Drive-through window (1970s) Adding breakfast to the menu (1980s) Adding play areas (late 1980s) Redesign of the kitchens (1990s) Self-service kiosk (2004) Now three separate dining sections Six out of the seven are layout decisions! McDonald’s New Layout Seventh major innovation
Redesigning all 30,000 outlets around the world Three separate dining areas Linger zone with comfortable chairs and Wi-Fi connections Grab and go zone with tall counters Flexible zone for kids and families Facility layout is a source of competitive advantage Strategic Importance of Layout Decisions The objective of layout strategy is to develop a cost-effective layout that will meet a firm’s competitive needs Layout Design Considerations Higher utilization of space, equipment, and people Improved flow of information, materials, or people
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Improved employee morale and safer working conditions Improved customer/client interaction Flexibility We open Chapter 9 (Layout Strategies) with the story of the 7 strategic changes at McDonald’s since 1950. All but one have been major layout redesigns (eg. , indoor seating, drive thru, play areas, self-service kiosks, etc. ). Adding breakfast foods to the menu (in the 80? s) was the one product change–until now. The front page article in The Wall Street Journal (Dec. 27,2010) details two brand new strategies–the 1st a product decision and the 2nd yet another layout change.
Under pressure from market-share competitors of all types–from 7-Eleven and Starbucks to smoothie outlets and gas stations– the 14,000 US McDonald’s have broadened their fare. As of now, there are fruit smoothies, oatmeal, carmel-mocha drinks, flatbread sandwiches, and “garden” snack wraps. This new product development strategy (Ch. 5) has created so many choices that the company has been running ads reminding us it still sells Big Macs. Using manufacturing technology, McDonald’s has made many new items from existing items’ ingredients.
Chicken wraps use Chicken Selects’ meat and breakfast burrito tortillas. This simplifies preparation and lowers costs. But new layout costs have blunted franchisee enthusiasm. The food assembly line (see Figure 9. 12 in the text) had to be changed to make wraps. And an even bigger modification was the addition of the $100,000 McCafe drink stations– one of the most expensive changes in years. (The corporation picks up $30,000 of that cost). Stores had to be redesigned to make room for space next to the pick-up window to accommodate the 4 pieces of drink equipment.
Some franchisees balked at the price tag and low drink sales volumes, claiming “we are not even paying for the electricity to run the machines”. Discussion questions: 1. Why did McDonald’s make these two strategic changes? 2. Ask your students to rank the importance of the 9 changes, referring to the Global Profile in Ch. 9. 3. How has the average McDonald’s changed in the past decades? Are all of the layout strategies still in place? OM in the News: Product Enhancement and the McDonald’s Happy MealJuly 27, 2011 tags: Ch. 5, Happy Meals, McDonald’s, product enhancement y Barry Render Under pressure from 550 health organizations to stop marketing “junk food” to children and to retire Ronald McDonald (the clown mascot), McDonald’s has chosen the path of product enhancement (Ch. 5) as a preemptive strike. The New York Times (July 27, 2011) reports today that the firm will start to fill its Happy Meal boxes with apple slices and smaller portions of french fries this September. By next April, the new menu will be rolled out to all 14,000 restaurants. The food industry overall has come under increased scrutiny as childhood obesity levels have risen.
San Francisco last year banned the inclusion of toys in kids’ meals unless there is a fruit and vegetable included. New York City has a similar rule in the works. Instead of developing all new kids’ products (or including vegetables), McDonald’s is responding with 1/2 the number of fries and a 20% lower calorie count. The new Happy Meal, containing 4 chicken nuggets and a small Coke, weighs in at 410 calories (vs. 520 in the older product), 17 grams of fat (vs. 23 g), and 58 grams of carbs (vs. 69 g). The firm decided against making apples a total replacement for fries when only 11% of customers showed an interest in that option.
While some critics praised the changes (Mrs. Obama called them “positive steps”), one NYU prof called the move a “sham”, in part because McDonald’s is not limiting sodas. In fact, sugar levels go up with the Coke and apple together. Discussion questions: 1. What are the operations challenges in changing the Happy Meal? 2. Do students believe legislation is an appropriate means to make menus healthier? 3. How are other restaurants responding with children’s menu options. Mc Donald’sOne of the most important strategic decisions made by a company like McDonald’s is where to locate their operations.
Location options include maintaining current sites while adding another facility elsewhere. (Heizer, 2001) Their facilities are located all over the world due to their franchising system. In the early 1990’s, McDonald’s began working with major oil companies to pioneer a new format for developing a restaurant, convenience store and fueling facilities on a single site. By co-developing sites, fueling facility operators and McDonald’s could offer the busy consumer the ultimate in convenience ? one stop shopping for great food, branded fuel and convenience store items.
According to Operations Management, McDonald’s has revolutionized the restaurant industry by inventing the limited-menu fast-food restaurant. Some innovations it has made are the introductions of indoor seating and drive-through windows, which were strategic issues of facility layout. By adding breakfasts to the Is this Essay helpful? Join OPPapers to read more and access more than 460,000 just like it! get better grades menu, they incorporated a product strategy. Another layout decision was the addition of play areas. McDonald’s continues to improve their operations by innovating a new layout to facilitate a mass customization process.
Some of the restaurants now have the “Made for You” kitchen system, where sandwiches are assembled to order and production levels are controlled by computers. This new layout is intended to both improve the taste of food by ensuring that it is always freshly made, and to facilitate the introduction of new products. Total production process time was shortened and other adjustments were made to save even more time and to work in conjunction with the new layout. This new layout will be more efficient, and save more time and money. It achieves a higher utilization of space, equipment, and people.
A process strategy that may apply to McDonald’s is a repetitive process. They moved from process focus to repetitive focus. They are now trying to add more Facility Layouts Of Mcdonalds- India, Pizza Hut-India ; Dominos Pizza- IndiaINTRODUCTIONIn order to maximizing the effectiveness of production processes and meeting employee needs ; desires Facility layout and design plays a key role in business’s overall operations. It entails in determining the placement off departments, work group within the departments, workstations, machines & stock holding points within a production facility.
DEFINITION: “The physical arrangement of everything needed for the product or service, including machines, personnel, raw materials, and finished goods. The criteria for a good layout necessarily relate to people (personnel and customers), materials (raw, finished, and in process), machines, and their interactions. “- Howard J. Weiss and Mark E. GershonFACTORS IN DETERMINING LAYOUT & DESIGN: There are many operational factors which need to consider while construction or renovation of a facility for maximum layout effectiveness.
It includes: * Ease of future expansion or change: Facilities should be designed so that they Is this Essay helpful? Join OPPapers to read more and access more than 460,000 just like it! get better grades can be easily expanded or adjusted to meet changing production needs. * Flow of movement: The facility design should reflect recognition of the importance of smooth process flow. The flow need not be a straight line. Parallel flows, U-shaped patterns, or even a zig-zag that ends up with the finished product back at the shipping and receiving bays can be functional.
However, backtracking is to be avoided in whatever pattern is chosen. * Materials handling: It is essential to ensure the facility layout makes possible to handle materials (products, equipment, containers, etc. ). It should be in an orderly, efficient—and preferably simple—manner. * Output needs: The facility should be laid out in a way that is conducive to helping the business meet its production needs. * Space utilization: This aspect of facility design includes everything from making sure that traffic lanes are wide enough to making certain that inventory storage warehouses or rooms…