Operations Management Models and Strategies for Business Excellence

Introduction

In all the various aspects of a business, operations can be easily described as the major focus and where the majority of direct employee and resource involvement in terms of labor occurs. According to Philip (2016) operations within a product manufacturing industry are often more centralized and following the development of the product from its inception through to its completion. However within service oriented industries, operations are more task-oriented and will adopt clear and precise stages and steps until the service is completed. Regardless of which industry however, operations are critical to the outcome and success of an organization and as such must be effectively and efficiently carried out at all times. This necessitates the development and application of operations management models and processes such as the 4Vs Typology, the transformation model, operations performance objectives as well as process design and layout analysis all of which are extensively discussed within this report.

Food and Beverages Industry

Fast Food Restaurants

The fast food industry is one of the key industries across the world especially with the current average population entailing working class individuals who have little to no time of engaging in the preparation of their own meals within a work day. According to Franchise Help (2021) up to 50 million Americans are estimated to eat at one of the more than 200,000 fast food restaurants in the United States every day. These restaurants employ more than 4 million people in various departments and divisions of the business to manage various aspects and operations within the company including cooks, cashiers, servers, cleaners as well as managers. On the global scale, fast food generates up to $570 billion while in the United States alone the sales often tops $200 billion annually. The industry is further expected to experience an annual growth of 2.5% in the next several years despite the shift in the taste and preference among customers to more healthy diets and food types. McDonalds is one such fast food franchise with multiple restaurants all across the globe.

McDonald’s is a quick service restaurant (QSR) chain based in the US and was founded in 1940 by brothers Richard and Maurice McDonald (Smith, 2021). Over time, it was transformed by a production line system that rolled out burgers in a quick service style. The company business model of producing and serving fast food prioritized on efficiency, calculability, predictability, standardization, and control to be able to capture and maintain its market (Lock, 2021). Among its key advantages currently and one that ensures its continuous profitability and success is the company’s operations. In addition to optimized and precise operations tasks and activities divided among all available employees, the company also adopts adequate operation management models and strategies which enhanced continued success and profitability. Some of the operations management strategies and models are discussed in this report.

The Transformation Model and 4Vs Typology

Operations in whichever industry typically involves a sequential process where input in terms of resources are transformed into finished products and services for customers. The transformation model involves the visual representation of the three components of operations including input, transformation processes and output (The Open University, 2020). And the premise of the model as an operations management strategy is to ensure the systemic direction and control of the processes involved in the transformation of the resources to products or services. However the transformation process of the inputs to outputs can occur in consideration of four different factors according to Philip (2016) including the Volume, Variety, Variation and visibility aspects commonly referred to as the 4Vs.

Volume

According to Hattangadi (2021) volume in the operations process highlights how much physical units of a given product is required and produced in order to satisfy the market demand. It can also refer to how much time is taken in the delivery of a service that is satisfactory to the market demand. The volume of products and services produced by a company signifies the confidence that the buyers have in the product or service. The fast food business within the Foods and beverages industry for instance represents good example of the significance of volume in operations management. At McDonalds for instance due to the more affordable nature of the food a big number of customers have confidence in their product and they as such have to produce such foods in high volumes everyday to meet the necessary demand. Volume offers a basis in getting insightful information about the potential market however it is not enough to be used individually in price and sales pattern determination.

Variety

Variety relates to the range of products or services being produced and that are available for the customers. According to Thomas (2016) variety is all about diversity and the more variety a company produces within their operations the more flexible are their production operations and ease to match consumer needs. Variety and volume are often inversely related and as such companies that engage in high volume production are less likely to produce a large variety of inventory. It is for this reason that fast food joints like McDonald often produces limited variety of food products but in high volume compared to their restaurant counterparts which produce low quantities of highly variable food products and meals.

Variation

The variation dimension looks at how much the levels of demand of a given product or service changes overtime due to external factors (Thomas, 2016). Organizations have to be able to predict such changes and incorporate them within their operations to ensure adequate use of resources and production of highly viable products and services. McDonalds can evaluate within their listed offerings which products are losing popularity overtime while which ones are gaining popularity within the same period. In this way the operation processes can be altered sequentially to ensure production of the more on demand products and services.

Visibility

Phillip (2016) defines the visibility dimension to include the ability of the customers to be able to track an organizations experience or order through the operations process. High visibility dimensions include courier services or an online or retail store where customers can order products and services and track them as they are delivered to their homes. Fast food restaurants like McDonalds provides another good example of operations within the visibility spectrum as they have a large number of physical restaurants world wide and can also deliver food products directly to customers.

Operations Performance Objectives

Operational Performance Objectives refer to the different aspects of operational performance that an organization maintains track of and engages in improving with an aim of achieving more productivity and profitability to ultimately meet set corporate strategies. According to LaMarco (2019) an organization effectively identifies operational performance objectives based on the developed corporate strategies and configures their business environment to optimize the achievement of the objectives. While these objectives are generally similar across different industries and sectors different organizations may have unique or additional objectives as a result of specific operations involved that are not involved in others. Hoc (2021) highlights the five fundamental performance objectives to include: quality, speed, dependability, flexibility and cost

Speed – speed relates to the timing aspect of organizations operations. It entails how fast it takes to develop, create and produce products and services and generates sales quotes (LaMarco, 2019). Tracking and management of speed enables a company to meet consumer demands and targets effectively to optimize the entire business process.

Quality - Quality describes a measure of how well the product or service conforms to a set standards and specification. It also alludes to how desirable different features of a product or service are including how adequately it performs its intended functions, how reliable at performing the task it is, how durable it is as well as how much the market believes in its value (La Marco, 2019). These are some of the relevant measures of quality that companies maintain surveillance on during its operations.

Dependability - Dependability highlights the quality of being able to deliver on time for customers exactly what they need (Hoc, 2021). Customers will only be able to judge the dependability of a company’s operations after the delivery of the product or service in a unique and intentionally intended manner. Companies as such have to watch out to ensure their products, based on the operational flow followed, is ultimately dependable over long time periods.

Flexibility – How flexible are a company’s operations in terms of adapting to any changes within the market or adapting the products and services to fit new consumer and market requirements. Companies should be able to produce different quality product varieties as well as adapt its operations to fit different market conditions and delivery schedules.

Cost – Companies are not only interested in ultimately having competitive prices, but are also looking to minimize their costs to lowest possible for a more realistic profit margin. Through its operations, companies must ensure adequate efficiency to impact the lowest possible prices in order to reach a much wider market and make better sales.

McDonalds with a long standing trademarked name along with multiple customer testimonials already has an approved quality operations which ensures the production of dependable products. Customers are aware of the quality of the food served at McDonald and are sure to be served within the shortest time possible to enable them resume their own daily endeavors like work schedules. The brands operations as such already exhibit marks of quality and dependability. Considering that the fast food restaurant also serves up millions of people all across the world different types of fast foods at affordable prices on a daily basis, all the operational performance objectives are adequately and effectively achieved by the company everyday which subsequently explains the company’s significant profitability and success.

Process Design and Layout Analysis

Process design and layout looks at the sequential breakdown of the different tasks and activities within the operations of converting input to output. In manufacturing industries for instance the development of a product goes through multiple processes and steps which include different individuals with different set of skills. The process design involves the sequential arrangement of a particular number of processes and steps in the development of a product from its inputs while the layout analysis looks at how individuals will maneuver all these processes and tasks throughout the operations carried out (Drane and Faramarzi, 2020). Process design and layout analysis are mostly indulged within the inception and design phase of a products development and generally entails insightful research into different process alternatives that could be adopted for a more optimum usage of available resources.

Operational Challenges

Among the two critical operational challenges within the fast food restaurant which are both caused by recent trends in the industry include a shift to healthier options of food among customers as well as the increasing trend of ordering food by customers. According to Business Wire (2020) consumers are increasingly adopting healthy diets which require them to eat more healthy foods often as compared to fast foods. In addition to the healthy and organic types of food being expensive and difficult to source their process of preparation are often specific based on an individual and takes a significantly longer time than the preparation of fast foods. The additional time and wide variety of requirements when it comes to healthy eating significantly impacts the operations within fast food joints like McDonalds.

In addition, with the recent development of ecommerce and a wide range of businesses adopting online platforms for optimized services customers are taking advantage of the delivery services to order almost everything including food and have them delivered to their location. Infiniti Research (2017) advance that consumers currently prefer to order and consume food within the comfort of their homes rather than have to access physical stores for themselves. This certainly impacts the supply and delivering system of the company leading to increased costs of transportation to deliver the food. Both of these trends despite being better for business in general significantly impact the operations at fast food restaurant leading to potential losses in finances and customers.

Operations Solutions

In both scenarios, the best solution is assimilating into the new systems and using it to optimize organizational operations to subsequently enhance organizations profitability. For instance as a result of the increasing number of individuals preferring to order for their meals online and have them delivered to them at home, the company can adopt delivery services through contracting services of a third party logistics company to handle the delivery. As a result of the need for the third party to implement product deliveries to clients from whichever location they are in the general cost of the product increases slightly to cover the delivery fee. This also adds an additional task in the company’s operations which is to ensure that the food is delivered adequately to the customers that order them.

The company also faces a challenge as a result of the significant changes in taste and preferences when it comes to the food. Consumers are more attracted to healthy foods which take longer and more advanced culinary skills to make. The general operations of cooking is as such significantly impacted and altered. McDonalds can remedy this challenge by developing a wide variety of the products offered in addition to the normal fast food which has not completely lost its appeal among customers. The franchise can also develop restaurants serving healthier foods with much longer timelines to cook and an exclusive clientele who are looking to adopt healthier diets.

Conclusion

Ultimately, organizations operations are a critical aspect of success and productivity, and more often than not how adequately an organization manages and conducts its operations is directly related to the organizations success. Despite the multiple operational management strategies and models including the 4Vs Typology, Operations Performance Objectives and process design and layout analysis maintaining smooth running operations ultimately ensures continuous operations and sales of products into the market. Maximizing on operational efficiency enables an organization to use resources such as raw materials and employee time, skills and talents sparingly and optimally for an eventual increase in productivity and success.

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References

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Smith, C., 2021. 50 Amazing McDonald's Statistics. [online] DMR. Available at: [Accessed 8 November 2021].

The Open University, 2020. Understanding operations management. [online] Open Learn. Available at: [Accessed 8 November 2021].

Thomas, K., 2016. What are the 4 v's of operational management and what are some examples?. [online] Quora. Available at: [Accessed 8 November 2021].