McDonald Lean Principles & Process Management

Discuss about the Lean Principles And Process Management of Mcdonald’s.

Lean manufacturing is an important concept that helps to improve quality of services and also helps to reduce cost of production. Lean principles are also applied in factory setting and help to make the work of people more efficient. The managers and the owners take the decisions according to the operations and production capacity of the organization. Each organization selects manufacturing or service process design according to the requirements and some conditions also affect the decisions. The process design an organization selects, determine efficiency and effectiveness of production (Lyons et al., 2013). Today many organizations are applying lean principles in the manufacturing process design through which organizations are getting many benefits. Companies are not only focusing on production or manufacturing process but also giving focus on customer service. The lean philosophy can also be known as lean manufacturing, lean thinking or Toyota production system. In mid-50’s the concept of lean philosophy was given by Japanese and many companies are being familiar with the concept. Earlier only manufacturing companies were applying lean principles for lean manufacturing or lean production but now service sectors are also using lean principles to improve service level. Many service industries have applied lean principles and also got benefits. In service industry, lean principles are mainly applied to increase customer satisfaction level (Chase & Apte, 2007). Many researchers have contributed in developing lean philosophy. For better understanding the lean philosophy, some concepts are included in the report such as introduction of lean principles and applicability of lean principles in service process design. The company that is taken for the research is McDonalds.    

McDonalds is a famous American company. The company was founded in 1940 by Maurice McDonald and Richard McDonald in San Bernardino, California. It is one of the largest fast food restaurants. The company follows “Speedy service system” process. First franchise of McDonald’s opened in 1953 in Phonex, Arizona. Company’s headquarter is in Oak Brook, Illinois in United States.  Today McDonald’s is the biggest restaurant chain and the company is providing services to almost 68 million consumers each day. According to the report generated in 2016, it was observed that more than 375,000 people are working in this company. Currently there are 5669 company owned locations and franchised locations are around 21,559. Today there are approximately 36900 outlets that are operating in 120 countries. Andrew J. McKenna is the chairman and Steve Easterbrook is the president and CEO. McDonald’s famous products are Hamburgers, French fries, chicken, soft drinks, milk shakes, coffee, breakfast and desserts. In 2016, the company’s revenue was recorded as US$24.622 billion. The company uses different business models at different places. Ireland and United Kingdom business model is totally different from US business model. The company is focusing to provide high quality nutritious food in low cost to customers. The company is committed to enhance customer experience by continuously improving the operations. The company is popular due to its excellent customer service (Mcdonalds, 2017). 

Service Process Design

The McDonald’s company uses service process design. The company focuses on both goods and services. In McDonald’s customers can interact face to face with service providers. McDonald’s has a large customer base providing services to many customers in a day. Company deals with so many customers in a day and focuses to satisfy them with the services. The technology McDonald’s is using is providing competitive advantage to the company as the company is able to handle so many customers at one time. Company is using modern microwaves, fryers and automatic drink makers to provide fast services to customers. The company is constantly working to provide latest technology services to customers. Company’s service process design needs to be flexible to meet the needs of consumers (Leavy, 2010)  

In the current scenario lean manufacturing is a significant tool and many industries are using lean concept. The research papers related to lean implementation concept have been published in many reputed journals. In the research papers many researchers have given their opinion on lean implementation. Lean tools are applicable in various sectors like manufacturing, service, trading and other sectors.

Researchers Salem et al., 2016, did complete research on lean concepts, tools , techniques and principles in various industries in Qatar and  identified lean benefits and challenges. The researchers collected important information from different 333 organizations related to various sectors like academic institutions, service sectors and oil and gas sector by online survey. The results helped to understand that in Qatar the industries require to give more focus on lean concept in order to compete at global level. The research also helped to know that in different industries there are differences in level of awareness and recognition of lean concept.

Famous researchers Chaple, Narkhede & Akarte, 2014, investigated the barriers and enablers in applicability of lean concept. It can be easily identified by analyzing manufacturing or service model of Indian industries. The researchers have analyzed that automobile and electronic industries are majorly applying lean concepts than other industries. The researchers also identified that in any industry mainly managers are responsible for implementation of lean concept. Many managers give major contribution in decision making activity. The success of the organization mainly depends upon the capabilities of managers.

Two popular researchers Chikhalikar & Sharma, 2015, did research on lean implementation on engine manufacturing unit. The country selected for the research is India. The research explored that some factors like improper information transmission, waste, improper control on inventory management, transportation problem and inadequate material flow create barriers in lean implementation. The problem can be solved by implementing Six sigma, Kanban, JIT, Kaizen and TPM.

Kumar  & Kumar, 2015 did research to make connectivity between lean manufacturing elements and Indian manufacturing industry. They identified the benefits of lean manufacturing as the concept helps in cost cutting, quality improvement and in inventory management.

The researchers, ?iarnien? & Vienažindien?, 2014, revealed the barriers and challenges the organization faces while implementing lean concept. Lean concept helps to create value to the company and also to the end customers. In lean philosophy companies’ focus to reduce waste and also use waste management methods. Three barriers organization faces are process barrier, people barrier and sustainability barrier. The barriers can be handled by using effective tools and methods. Human motivation can help to remove people barrier. The top management should give contribution in implementation of lean concept in the organization and the lean concept should be applied through formulating appropriate strategy. The organizations should give focus on value to the customer, continuous flow, waste elimination and pull driven system.

Literature Review

The research conducted by Almeida Marodin & Saurin, 2015, helped to identify some risks that can give negative impact on lean production implementation process. The researchers also showed the classification of risks and the interrelation between risks. The researchers used various sources like interview, document analysis and observation to collect data. The researchers identified that internal risks affect the system more than external risks. There are two important stages in risk management like risk response and risk monitoring or controlling. From the exploratory factor analysis the researchers identified 14 risks. Top managers, middle level managers and lower level managers involvement is required in lean implementation process.

Shah & Ward, 2007, defined that lean implementation is a combined social technical system and the main aim is to reduce waste by concurrently reducing internal variability. According Gîfu &Teodorescu, 2014, Lean concept is globally adapted standard that helps to do assembly of different parts. Successful lean implementation helps in problem solving. Proper employee involvement is required for implementation of appropriate methods and practices.  

In the research Chauhan & Singh, 2012, depicted about JIT, elimination of waste and customer value. In lean manufacturing some parameters are important such as JIT deliveries, multifunctional teams, vertical information system, pull, zero defects, and elimination of waste. Many companies are using JIT approach for providing value to customers. 

Lean manufacturing theory mainly focuses on waste reduction. The organization focuses to achieve more with fewer efforts. Organizations use some resources in some activities that are actually not required as the resources are not contributing in value. Lean principles can be applied on manufacturing, design, distribution activities and in customer service processes. The concept was founded by Taiichi Ohno, a Toyota executive during the reconstruction period of post-world war in Japan and Daniel T. Jones and James P. Womack are the persons who popularized the concept and these authors also described lean manufacturing in their book published in 1996. In lean philosophy the companies try to shorten time between customer order and product delivery. Long production time increases cost of production of goods. In lean production, companies focus to reduce cycle time. Lean manufacturing gives emphasis on 3 points – elimination of waste, strategy and shorten lead times (Corbett, 2007).

Process management can be defined as planning and monitoring of business processes. Business processes can be understood as manufacturing processes, business process reengineering and business process management. Proper knowledge, measure, skills, control, tools, techniques are required to improve business processes with the purpose to meet organization’s goals and customers’ requirements. In process management some activities are involved like defining a process, assigning responsibilities, analysis of process performance, explore opportunities for improvement.

The lean manufacturing concept is based on 5 major principles that promote lean thinking. Namely the lean principles are - specify value, value stream, flow, pull and perfection.  The principles are based on continuous improvement, elimination of waste, just in time production and quality management. Waste elimination can be controlled by reducing over production and over processing and by monitoring unnecessary motion, wastage of inventory, production defects, waiting time and transportation time.

Each organization needs to understand the value customer perceives for product or service. The value of product or service helps to determine the money customers can pay for it. Toyota and many other companies have used top down target costing approach for products or services. Target costing mainly gives focus on buyers as how much money buyers can pay for particular product, service and feature. The cost of the product is calculated by this method. It is company’s work to reduce waste and control cost so that good level of profit can be earned through customers.

The value chain includes the complete flow in product development process from availability of raw materials to the final delivery of product to the customer and produces the outcome that can generate value. The company uses the principle in manufacturing process to maintain cost of the product and to monitor the waste production in manufacturing process. For entire value chain stream companies focus to manage supply chain relationship. Value stream includes three steps namely they are – concept generation, information management and physical transportation (Oliver, Schab & Holweg, 2007).

In organization the work should be performed speedily without interruption. Proper work flow should be maintained to reduce cost and time. If the work flow stops due to any reason then there are chances that more waste will be produced in the situation. There should be proper synchronization among work activities so that delay situation cannot be occurred. The flow process should be designed carefully. The lean principle helps to remove obstacles and bottlenecks that can create problem in flow process (Vinodh & Joy, 2012).

This lean principle concept focuses on customers’ demand. The companies that do not follow lean concept use push system and the company performs operations according to the convenience of work operators. In this system sometimes company produces the output that is actually not in demand. Lean organizations react to the demands of customers. Companies pull the work by the system. The pull system concept means the companies do not produce anything until customer gives order for the product or service. To achieve this greater flexibility and short cycle time are required in production and delivery of the product or services. Companies need to ensure that customers’ demands should be satisfied within the given time limit.

The first four lean principles are related to implementation but the last one is related to improvement. The lean manufacturers focus to get perfection and generate ideas for more improvement. A perfect system delivers right value to the customers. The lean manufacturers ensure that each process step should add value to the output.  Products should be produced in desired quality (Lee, Olson & Trimi, 2010).

In the mid twentieth century many companies faced problems due to rise in competition and McDonald’s too faced some problems. The company maintained high position by improving services. McDonald’s company can gain more benefits by applying several lean principles. The lean principles help to increase value and reduce waste. Some lean principles can be implemented in McDonald’s service process design. The key lean principles like value, pull, establish flow and perfection can be applied in McDonald’s (Suárez-Barraza, Smith & Dahlgaard-Park, 2012). In McDonald’ some persons take orders from the customers and in just few minutes provide the delivery to them. Customer can select from the available products like cheeseburgers, combo pack, hamburgers can also tell additional requirements to the service provider like extra cheese, spicy or normal. Company can use value principle by providing the products and services that can give satisfaction to the customers. Today many people like to place order on website and telephone, the company can increase the value by providing the services according to the demand of customers (Jain & Lyons, 2009). If customers get good services they like to use services again. Customers like McDonald’s services because they get fast delivery. Value lean principle can applied by McDonald’s members by ensuring that customers are not waiting in the queue for long time and the staff members are taking the orders by interacting with customers face to face (Ng et al., 2010). By the use of modern technology waiting time can be reduced. A computer system can be used to manage the work. Customer can get fast delivery of food by using modern cooking equipment. Highly skilled workforce can also help to deliver the order fast. Earlier McDonald’s was using batch production method to prepare sandwiches. In batch production Method Company used to make many sandwiches at one time and then keep the sandwiches warm in the warming bins but later company released that through this method waste production is increasing. Lean principles can help to deal with this situation. The lean principle, implement pull supports just in time approach. In this approach the service provider starts operation when customers’ order is received. Just in time approach will not only provide benefit to McDonald’s but also will increase organization’s value. Just in time approach is possible in McDonald’s because the company is using many automatic machines through which the customers can get fast services. Through the automatic machines the customers’ can get quick delivery.

Company needs to give focus on flow of information. From placing the order to the delivery to the customer the cycle time can be reduced by maintaining proper flow of information. At right time the information should be transmitted to right person so that delay cannot be occurred in the process (Dora et al., 2014). Proper flow helps to reduce time, cost and waste.  

Company focuses to deliver best quality food in short period of time so that customers need not to wait for long time. The lean principle, perfection can be applied in McDonald’s as continuous improvement can give many benefits to the company. Perfection in services process design can give competitive advantage to the company as continuous improvement attracts more and more customers. By continuous quality improvement and by reducing cost, perfection can be implemented (Womack & Jones, 2010). New improved concepts help to increase demands of customers as customers like to try something new.  Perfection can be achieved by reducing unnecessary motion, by maintaining suppliers and the customers, by reducing wastage production and by focusing on customer service. The organization needs to implement some changes in the system according to the environment.  Although McDonalds’s company has received worldwide popularity but the competitors of the company are increasing rapidly because of the attractiveness of the industry.  There are so many competitors of McDonald’s such as Starbucks, Yum Brands, Subway, Panera, Burger King, and Wendy’s. McDonald’s has to compete with some local competitors too. So the company needs to adapt appropriate lean principles to hold the top position in the market. By applying lean principles the company can maintain customers’ loyalty also gain efficiency. For applying lean principles in the system people involvement is required. All the team members need to know their roles and responsibility so that proper coordination in the work can be established. Each person should understand the responsibility and should perform the work properly because the complete system can be failed if one person does not perform his work. Supplier, service provider and customers are the important part of the system. Each staff member should have knowledge of every step of the system. This can help to develop knowledge in team members.

Conclusion

McDonald’s is one of the major key plays in fast food market. The company is popular and has established good brand image in the market because of its quality and services. It can be concluded from above discussion that McDonald’s which one of the popular companies in fast food industry can improve the customer service process by applying lean principles. Lean principles can help McDonald’s to reduce cost and to improve customer service. Company can improve quality of products and services by applying lean principles. Five major lean principles are discussed in the report are principle of value, principle of value stream, principle of flow, pull system and perfection (Hanna, 2007). McDonald’s company can implement lean principles like value, pull system, perfection and flow. These lean principles can help in eliminating waste, controlling overproduction, reducing waiting time, managing inventory level and reducing number of defects. For applying lean principles the company needs to include everyone for achieving improvement.

References

Almeida Marodin, G. and Saurin, T.A., 2015. Managing barriers to lean production implementation: context matters. International Journal of Production Research, 53(13), pp.3947-3962.

Chaple, A.P., Narkhede, B.E. and Akarte, M.M., 2014. Status of implementation of Lean manufacturing principles in the context of Indian industry: A Literature Review. In 5th International & 26th All India Manufacturing Technology, Design and Research Conference (AIMTDR 2014) December 12th–14th, IIT Guwahati, Assam, India.

Chase, R.B. and Apte, U.M., 2007. A history of research in service operations: What's the big idea?. Journal of Operations Management, 25(2), pp.375-386.

Chauhan, G. and Singh, T.P., 2012. Measuring parameters of lean manufacturing realization. Measuring Business Excellence, 16(3), pp.57-71.

Chikhalikar, P. and Sharma, S., 2015. Implementation of Lean Manufacturing in an Engine manufacturing Unit-A Review. International Journal of Mechanical Engineering and Robotics Research, 4(1), p.404.

?iarnien?, R. and Vienažindien?, M., 2014. How to facilitate implementation of lean concept?. Mediterranean journal of social sciences, 5(13), p.177.

Corbett, S., 2007. Beyond manufacturing: The evolution of lean. McKinsey Quarterly, 3, pp.95-96.

Dora, M., Van Goubergen, D., Kumar, M., Molnar, A. and Gellynck, X., 2014. Application of lean practices in small and medium-sized food enterprises. British Food Journal, 116(1), pp.125-141.

Futurestate, 2017. 5 Lean Principles. Viewed on 21 July, 2017 < https://www.futurestate.ie/index.php/5-lean-principles/>.

Gîfu, D. and Teodorescu, M., 2014. Communication process in a Lean concept. International Letters of Social and Humanistic Sciences, 28, pp.119-127.

Hanna, J., 2007. Bringing ‘lean’principles to service industries. Harvard Business School Working Knowledge.

Jain, R. and Lyons, A.C., 2009. The implementation of lean manufacturing in the UK food and drink industry. International Journal of Services and Operations Management, 5(4), pp.548-573.

Kumar, R. and Kumar, V., 2015. Lean manufacturing in Indian context: A survey. Management Science Letters, 5(4), pp.321-330.

Leavy, B., 2010. Design thinking–a new mental model of value innovation. Strategy & leadership, 38(3), pp.5-14.

Lee, S.M., Olson, D.L. and Trimi, S., 2010. Strategic innovation in the convergence era. International Journal of Management and Enterprise Development, 9(1), pp.1-12.

Lyons, A.C., Vidamour, K., Jain, R. and Sutherland, M., 2013. Developing an understanding of lean thinking in process industries. Production Planning & Control, 24(6), pp.475-494.

Mcdonalds, 2017. Our history. Viewed on 22 July, 2017 from < https://www.mcdonalds.com/us/en-us/about-us/our-history.html>.

Ng, D., Vail, G., Thomas, S. and Schmidt, N., 2010. Applying the Lean principles of the Toyota Production System to reduce wait times in the emergency department. Canadian Journal of Emergency Medicine, 12(1), pp.50-57.

Oliver, N., Schab, L. and Holweg, M., 2007. Lean principles and premium brands: conflict or complement?. International journal of production research, 45(16), pp.3723-3739.

Salem, R., Musharavati, F., Hamouda, A.M. and Al-Khalifa, K.N., 2016. An empirical study on lean awareness and potential for lean implementations in Qatar industries. The International Journal of Advanced Manufacturing Technology, 82(9-12), pp.1607-1625.

Shah, R. and Ward, P.T., 2007. Defining and developing measures of lean production. Journal of operations management, 25(4), pp.785-805.

Suárez-Barraza, M.F., Smith, T. and Dahlgaard-Park, S.M., 2012. Lean Service: A literature analysis and classification. Total Quality Management & Business Excellence, 23(3-4), pp.359-380.

Vinodh, S. and Joy, D., 2012. Structural equation modelling of lean manufacturing practices. International Journal of Production Research, 50(6), pp.1598-1607.

Womack, J.P. and Jones, D.T., 2010. Lean thinking: banish waste and create wealth in your corporation. Simon and Schuster.