Mcdonald\'s What Type of Process

McDonald's

What type of process design did McDonald's first use in its operations? What conditions are important for this type of system to operate successfully?

McDonald's first used a classic 'push' system, where forecasting data determined how many goods would be produced on the line. McDonald's managers examined historical sales trend to forecast how many Big Macs or Quarter Pounders would be ordered during the next 15 minutes, and cooks would make the sandwiches and wait for the customer orders to come. The difference between this and a traditional factory push-driven operation of stockpiling goods was the emphasis on speed -- orders were stocked up for a projected demand on a minute-to-minute basis. McDonald's approach was heavily reliant on accurate forecasting, and a limited menu selection. There were only so many variations of orders, although customized orders could slow down the line.

How did McDonald's redesign its operations? What factors were considered important in the redesign?

However, inaccurate forecasting causes waste, and in the food industry, while delivery has to be quick, the goal is that wastage is kept to a minimum, ideally at absolutely zero. Forecasts have to be continually reevaluated to scale the push system to varying levels of demand. Fast food applies a factory, standardized system to the usually individuated process of creating food. But as customers tastes became more varied, and menu options became more complex in response to this demand, minute-by-minute demand became harder to predict. Over time, more food is likely to be wasted, and more stockpiled, assembled food became cold.

McDonald's, in a desire to further diversify its menu and improve the quality of its food, looked to its rival, Burger King for inspiration. Burger King, instead of stockpiling fully wrapped sandwiches, stockpiled menu components like burger patties, and made their sandwiches to order, thus responding to actual demand, rather than projected demand. This slightly slower 'pull' system can allow for more customization, there is less waste, and greater variety in menu options is allowed.

Explain what is meant by a "push" or "pull" system. When would an organization want to use either of these systems (push vs. pull)?

In a push system, predetermined goals, based upon forecasting, drives production standards. In a pull system, immediate customer demand pulls or drives production goals. The greater the customization demanded by customers; the more fragile the product may be, and the more quickly demand is likely to fluctuate and elude forecasting data of the past, the more a pull system, despite its potential for being slower, is attractive. Even a diner must use a pull system when making eggs, for example, because it cannot 'hold' eggs for very long. A customized dress maker cannot predict what type of garment his or her customers will desire, and customization is part of the service the high-end are paying for, when they ask for a garment. A push system is best when demand is predictable, and when the products take a long time to produce. A Christmas tree farmer must use the data of the past, as trees cannot be grown within a few months, and demand is more predictable and less likely to seasonally shift than other goods.

How does McDonald's current process design give it a competitive advantage? How is a firm's process design important to the overall organization?