JIT and lean processing has improved not only overall operations at McDonalds but also provide ample support on the decision-making process for the organization’s managers. Through this philosophy, McDonalds now does not require a vast amount of inventory to fulfill its customer’s demands, this inventory takes a lot of space in the workplace and adds to that the very short shelf-life of raw materials for McDonald’s product, and it would be an added cost if all inventories were not utilized properly.
The “Just in time” system solved these problems and offers a more systematic approach on making sure that all raw materials are available and would be used accordingly meeting the demand. The focus now by managers of McDonald’s especially when dealing with suppliers is not entirely on the price of raw materials; but on the supplier’s capability to guarantee schedule of delivery, the quality of products and add to that the foundation of cooperation and mutual trust.
In operations, the focus of decision making is to consistently make improvements in quality, lead time reduction, the importance of switch to “pull production” and reorganize the work environment to ensure the smooth transition and application of JIT. Decision making for both the lean and JIT program is based on efficiency for operations and with the minimum-cost objective in mind. The results are minimal costs via a precise inventory management that relates to a higher customer satisfaction rating since customers do not have to wait that long for their specific orders and they could expect fresh food all the time.
With the current benefits JIT and Lean provides McDonald’s the firm continues to adopt consistently improving operations to better serve customers and also increase overall revenue. Lean focuses on eliminating unnecessary wastes in a particular process. A perfect example is that if a Big Mac used to take 5 minutes from the point of the customer’s order, to preparation and finally to serve, with the help of Lean concepts, the lead time now has reduced to 2 minutes (mcspotlight. org, 2010).
According to an article from mcspotlight. org in which an interview was done with two London based McDonald’s managers: “We at McDonald’s are taking the business of making hamburgers more seriously than anyone else, At McDonald’s everything is very tight. Waste is counted every 2 hours, yields such as number of milk-shakes from each packet are worked Out weekly, and control over labour costs is extremely tight and there’s pressure on everything – labour costs, food, soaps – to make as much profit as possible.
” (2010) And lastly, managers now guided by this approach, steer away of outdated traditional concepts, ensures that this new method will actually work with the ability to correct all perceptible errors instantaneously and have the mindset that there are no boundaries when it comes to potential improvements (Aghazadeh, 2004 p. 2). 2) What are the benefits and difficulties does McDonalds face in implementing JIT concepts? If they cannot use JIT, what other practices could be more suitable?
In the pursuance of McDonald’s to achieve great amounts of efficiency and productivity, it was beneficial most of the time for the organization applying the JIT concepts, it has also its own shares of difficulties in making JIT work. For the main benefits of JIT implementation McDonalds now has the ability to produce faster, order preparation until the moment it is served is reduce thus inevitably increasing customer service satisfaction. It has also allowed the company to effectively adapt to customer’s demand on its products.
Another benefit gained from this philosophy is that McDonald’s now serves fresh, in essence better food at relatively low cost, which translates to higher overall revenue. From an operational standpoint, besides achieving efficiency, McDonald’s also reached the “sustainable supply chain” in which meeting the three facets of ethical, environmental and economic areas are fulfilled and satisfied. McDonalds also has the benefit of an “increased emphasis on supplier relationship, since this part of the operational cycle is crucial due to the reliance of the company from suppliers in delivering its goods when they are needed” (Radisic, n.
d. p. 6). Some of the difficulties of McDonald’s with the implementation of JIT is with their workforce trying to adopt with the new concept. Some workers are having difficulties on being flexible, which is one of the requirements to ensure JIT would work flexibility in terms of working hours in production time and the concept of standardization which has led to an increasing trend of employee turnover (mcspotlight. org, 2010).
If McDonald’s for some reason decides to abandon the philosophy of JIT, they can opt to use almost the same method which is called the “ Economic Order Quantity Model or (EOQ)” (Piasecki, 2010), which basically is a application based on cost effective procurement of supplies when there is the need to do so. It is also considered an inventory management but the key factor here for this to work is the precise projection of the rate of demand. References Aghazadeh, S. (2004). Does Manufacturing Need to Make JIT Delivery Work?
Management Research News. Vol. 27, Issues. 1/2. Patrington mcspotlight. org (2010). McSTART: Working for Big Mac. [Online] Retrieved from http://www. mcspotlight. org/media/reports/trans. html Piasecki, D. (2010). Optimizing Economic Order Quantity (EOQ). Retrieved from http://www. inventoryops. com/economic_order_quantity. htm Radisic, M (n. d. ). Just-in-Time Concept. [Online] Retrieved from http://www. zlw-ima. rwth- aachen. de/mitarbeiter/dokumente/2-Mladen-Radisic-JIT. pdf