Operation Management in

McDonalds in Malaysia
1.0 Operation Management 3
This report focuses on the subject of Operation Management where the
McDonald’s Corporation in Malaysia will be used as the real-life example
to illustrate and explain the distinct mechanics and elements present
within Operation Management. To obtain the data and information
necessary to accomplish this report, the non-participant observation
method was utilized by the author to gather primary data while
secondary data was mostly sourced through online sources.
This report will comprise of two main sections, where the first being
focused on understanding McDonald’s current operational standards and
activities so as to identify any potential operational improvements for
smoother and quicker procedure for food preparation as well as to
provide a better service experience. On the other hand, the latter is
concerned with establishing and understanding the roles and
responsibilities held by the manager in the selected branch of
McDonald’s as well as to analyze and diagnose any challenges that are
currently being faced so as to propose a suitable solution for matter at
hand.
The findings of this report provide an insight into the operation
management and the standard operational activities carried out within
McDonald’s Malaysia. Besides that, steps which can be taken to improve
upon the current operational standards of McDonald’s to ensure a
smooth were discussed along with providing solutions and
recommendations for the overcoming the challenges that were identified.
As seen in the case of McDonald’s, proper operation management is
crucial in ensuring the success of any organization in effectively carrying
out its standard operational activities as well as ensuring the activities
are done efficiently to reduce and eliminate wastages of resources and
time, which ultimately would then further bolster the organization’s
profitability and boost its overall competiveness.
Table of Contents
Order: Title: Page No:
1.0 Operation Management 3
2.0The McDonald’s Corporation in Malaysia 3 – 4
2.1World’s Leading Quick-Service Restaurant Brand 4
2.2 The Operations Function of McDonalds 4
2.3 The Speedee Service System 4 – 5
2.4 “Just-in-Time” and the Modern McDonald’s 5 – 6
2.5 Recommendation for Improvement 6 – 7
3.0 Operation Managers 7
3.1 Roles and Responsibilities of Operation Managers 7 – 8
3.2 Overcoming Operational Issues as a Manager 8 – 9
4.0 Conclusion 9
5.0 References 10 – 11
1.0 Introduction
Operation Management can be defined as the administration of business
activities that are concerned with the conversions of inputs (resources
such as labor and raw materials) into outputs (good and services) in
achieving the highest level of efficiency to maximize the profitability of
the organization (Kamauff, 2010). Hence in a nutshell, Operation
Management is the managerial activity that is concerned with
streamlining the activities involved in the production of an organization’s
goods and services to enhance the overall efficiency of the organization
through the use of effective planning, sourcing and management of
inventory and production. The roots of Operation Management can be
traced back to Frederick Taylor’s theory of scientific management in the
early 1910s, where the subject of Operation Management has since
grown to incorporate other elements such as the Six Sigma, Toyota’s
Lean Manufacturing and the Kanban (JIT) production systems (Shim and
Siegel, 1999).
In this report, the McDonalds Corporation will be used as a real-life
example to illustrate the principals and elements present within the
subject of Operation Management. The McDonald’s outlets selected for
this report would be the one located at Jalan Mustapha Al-Bakry in town
and the branch at Persiaran Kuala Kangsar respectively, where the
author used the non-participant observation approach to obtain the
necessary information to accomplish this report. The outlet located in
town was chosen as this is the oldest branch of McDonald’s in Ipoh while
the other branch is selected to identify any potential variations in its
operational patterns between the two.
2.0 The McDonald’s Corporation in Malaysia
The McDonald’s Corporation is one of if not the most famous hamburger
and fast food chains across the globe, with more than 35,000 outlets
across 119 countries. According to its official website, McDonald’s first
began its humble existence as a hamburger/barbeque drive-in restaurant
operated by the two McDonald brothers in California in the early 1940s,
and it wasn’t until 1955 when Ray Kroc partnered with the brothers and
established the McDonald’s Corporation as the modern franchising
business. In 1982 McDonald’s opened its first branch in Malaysia at
Jalan Bukit Bintang, and currently has a total of 250 branches
throughout the country which serves an average of 13 million customers
on a monthly basis. The success of the McDonald’s Corporation can be
attributed to several factors, where one of the main factors involved
would be its highly efficient Operation Management function and
systems as well as the constant improvements in its operations.

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2.1 World’s Leading Quick-Service Restaurant Brand

As with any fast-food restaurant, McDonald’s specializes on providing
Low Cost, High Volume, High Speed products with a strong focus on
providing its customers with efficient and responsive services. Hence to
differentiate itself from competitors such as KFC, Wendy’s and Burger
King, McDonald’s aims to be the world’s leading quick-service
restaurant. In order for McDonald’s to achieve its goals, it would need to
have to structure and manage its operations in a specific manner which
will be analyzed in the following sections.
2.2 The Operations Function of McDonald’s
The term Operation Management is normally associated with the activity
of managing an organization’s resources that is used to produce and
deliver its good and services, while the term Operation Function is more
specific in the sense that it signifies the specific part of overseeing and
controlling the activities producing the organization’s goods and services
(Collins, 2008). To ensure a complete understanding of McDonald’s
Operation Functions, the early Speedee System and its modernized
“JIT” system will be explained and analyzed in the following paragraph.
2.3 McDonald’s “Speedee Service System”
The origin of McDonald’s operation management function can be traced
back to its “Speedee Service System” which was built for the sole
emphasis of speed, volume and lowering costs that was incorporated
into McDonald’s in 1948 (Highwayhost.org, 2015). Prior to the
introduction of the Speedee Service System, McDonald’s operational
pattern was similar to other dine-in and drive-ins that employed a host of
carhops and waitresses as well as hiring skilled short-order cooks. The
operational costs involved such as wages as well as the need to
constantly replace the short-order cooks which were in huge demand at
that time lead to the McDonalds brothers to come up with the Speedee
Service System.
The Speedee Service System reconfigured the entire procedure of food
preparation and changed it to something which is similar to that of an
assembly line, where one employee would specialize in cooking the
burger patties while another prepares the French fries, thus eliminating
the bottle-neck that was previously faced when a single chef is required
to prepare both items (Schlosser, 2001). In addition to that, the Speedee
System eliminated the need for waitresses and car-hops and introducing
the Customer Self-Service system which further reduces McDonald’s
operational costs, thus increasing its efficiency and lowered the prices of
its products, ultimately increasing the number of customers. In its
essence, the Speedee Service System revolutionized the restaurant
businesses were done and became the precursor for the modern
operation management function that is being practiced in McDonald’s
today.
2.4 “Just in Time” and the Modern McDonald’s
As with the Speedee Service System, the modern McDonald’s daily
operations function emphasizes on the need for efficient workflow
processes to minimize the occurances of delays, bottlenecks and
unnecessary procedures which will impede its performance. To
effectively do so, McDonald’s focuses on managing its food preparation
processes to account for every second, as service time is the single
most crucial factor for customer satisfaction within the fast-food industry
(Dentch, 2009).
True to its motto of Fast Service and Fast Food, the modern McDonald’s
system functions in the manner where a customer places an order and
pays at the counter, and then the order will be prepared by other staffs
within a short time frame. As McDonald’s targeted service time is to be
not more than 90 seconds, its operation functions and process workflow
is structured in a manner where there is minimal bottlenecks; there are
dedicated staffs who handle specific roles such as one employee who
cooks the burger patties, another who applies the sauce and seasoning
to the burger buns and another who will then finally prepare the finished
burger and package into its box and then serve it to the customer
(Wilson, 2015). The other food items such as it French fries, soft drinks
and deserts will have their own specialized workstations/departments
where these items can be prepared independently, hence cutting down
on waiting time.

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With such systems in place, McDonald’s is able to effectively serve its

customers on a timely basis and incorporating a just-in-time (JIT)
approach to its food preparation process, it ensures that the food
remains fresh and unnecessary wastage or spoilage of food is avoided
ultimately. As explained in the book Making Fast Food, McDonald’s
operations functions that incorporates the just-in-time (JIT) system and
multi-function workers has granted McDonald’s an effective means of
mass producing its foods in a way that is not only uniformed and
consistent across all its branches but also guarantees a quick and
efficient service experience to its customers (Reiter, 1991).
2.5 Recommendations for Improvement
Based on the author’s observation, the standard operational standards
of the McDonald’s branches located at Jalan Mustapha Al-Bakry can be
furthered improved by eliminating the bottlenecks effect present in the
area of its service time. A bottleneck effect can be explained as the
specific part or stage of a process where the capacity is at its lowest,
which could be due to factors such as a long processing time which then
acts as the weakest link in the entire process (Terwiesch, 2014).
In the case of that particular McDonald’s, the main bottleneck being
faced would be its point of service during peak hours as there ratio of
counters to the total number of customers in queue is out of balanced.
For example, it is not uncommon to see more than ten customers lining
up behind a single queue and many a times multiple customers who
have already paid for their food can be seen hanging around while still
waiting for specific items such as their French fries to be prepared.
To an extent this bottleneck can be somewhat minimized by the
presence of a dedicated drive-thru counter which radically cuts down the
length of queue when comparing the McDonald’s at Jln Kuala Kangsar
to the older branch in town that doesn’t offer the drive-thru service. The
comparison was made by the author by benchmarking the total time
taken for both branches to serve a customer as well as how long it takes
for the queue to clear during peak hours. Other than to incorporate a
drive-thru into its operations, the McDonald’s in town will be able to
eliminate its bottleneck by increasing the number of point of sales
(counters) so that more customers can be served at the same time. The
only downside of this would be the possibility of the extra counters
becoming redundant when there isn’t enough customers at hand.
As for faster food preparation, hiring additional staffs would be a critical
step in reducing the total customer waiting time as based on the author’s
observation, the major contributor to customer waiting time would be
slowdowns caused by insufficient staff in preparing certain food items.
For example, at times there is only a single staff that has to juggle
between frying the French fries and manning the counter which then
creates a bottleneck in the entire process when he or she is unable to
finish preparing the fries when the rest of the customer’s set meal is
ready.
3.0 Operation Managers
As with Operation Management and Operations Function, the Operation
Managers play a critical role in ensuring the effectiveness the of an
organization’s operation as these managers are responsible for the
management of the organization’s resources that is part of the
Operations Functions.
3.1 Roles and Responsibility of Operation Manager
Within each branch of McDonald’s there will be at least two managers; a
general manager/restaurant manager and an assistant manager where
each will their own roles and responsibilities which will be discussed
below.
The general manager/restaurant manager plays the all important role of
controlling and overseeing the restaurant’s daily operations and ensuring
that the outlet and all its activities are running as smoothly as possible.
In addition to that, the general manager is also in charge of other
aspects such as controlling the profitability and sales as well as
optimizing the management of the restaurant, human resources and
team management in their respective stores (McDonald’s Malta, 2015).

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On the other hand, an assistant manager’s role would be to assist the

general manager in his or her management tasks and plays the
important role of filling in for the general manager and running the
restaurant should the general manager be absent. The specific role of
assistant managers would be to supervise the training and recruitment
efforts as well as to ensure that the quality levels and safety level is up to
standards as well as to carry out sales forecasts and to analyze
operational standards and results. In addition to the general manager
and the assistant manager, larger branches would have a dedicated shift
manager who is tasked with ensuring that everything is in order during
their shift and to keep track of the outlet’s inventory levels and
maintenance of equipment (McDonald’s Malta, 2015).
Diagram: Sourced from McDonald’s Malta (2015)
3.2 Overcoming Operational Issues as a Manager
As discussed in the previous section, the issues that are being faced in
the selected McDonald’s can be overcome through effective operational
planning of the manager. To prevent problems such as insufficient or
inadequate number of staff during peak hours, the manager should
consider hiring additional number of staffs to cope with the increase in
number of customers during the its peak hours. As the crowd usually
tends to gather from 12pm to 3pm in the afternoon and from 6pm to
9pm, the manager can effectively schedule and arrange for an extra staff
or two to come in to work at these times to work on a shift basis. With
the sufficient number of staff, the operations of McDonald’s will be
efficient and the bottlenecks that were mentioned in the previous section
can be effectively eliminated. A long term solution to the problem would
be to restructure the working schedule of the employees where there will
be more employee working during peak hours.
4.0 Conclusion
In a nutshell, Operation management safeguards the success of an
organization by effectively overseeing and controlling the standard
operational activities to ensure that these activities are done in an
efficient manner to reduce and eliminate wastages of resources and
time, which ultimately would then further bolster the organization’s
profitability and boost its overall competiveness. As seen in the report,
Operation Management plays a vital role in ensuring the long term and
sustainable success of any organization, where the usage of the
example of McDonald’s proves itself to be a testament to the
effectiveness of proper operation management and operations functions
and its impact on the organization. Hence it can be said that without any
form of proper operation management, McDonald’s would have been a
far cry from the global fast-food giant that it is today.
5.0 References
Aboutmcdonalds.com, (2015).History of McDonald’s ::
AboutMcDonalds.com. [online] Available
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history.html [Accessed 2 Jun. 2015].
Collins, K. (2008).Exploring business. Upper Saddle River, NJ:
Pearson/Prentice Hall.
Dentch, C. (2009).McDonald’s Speeds Orders by Seconds to Keep
Customers (Update3) – Bloomberg. [online] Bloomberg.com. Available
at: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aGL2u
S5ybOyk [Accessed 3 Jun. 2015].
Highwayhost.org, (2015).Mcdonald’s Self-Service System: page 1 of 7.
[online] Available
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2 Jun. 2015].
Kamauff, J. (2010).Manager’s guide to operations management. New
York: McGraw-Hill.
McDonald’s Malta, (2015).A Closer Look to Each Role | McDonald’s
Malta. [online] Available at: http://mcdonalds.com.mt/employment/a-
closer-look-at-each-profession [Accessed 1 Jun. 2015].
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Accessed 3 Jun. 2015].
Reiter, E. (1991).Making fast food. Montreal [Que.]: McGill-Queen’s
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Schlosser, E. (2001).Fast food nation. Boston: Houghton Mifflin.
Shim, J. and Siegel, J. (1999).Operations management. Hauppauge,
NY: Barron’s Educational Series.
Slack, N., Chambers, S. and Johnston, R. (2010).Operations
management. Harlow, England: Financial Times Prentice Hall.
Terwiesch, C. (2014).Operations Management Basics: Capacity,
bottleneck, process capacity, flow rate and utilization. [online]
Scn.sap.com. Available at: http://scn.sap.com/community/uac/learning-
center/blog/2014/08/28/operations-management-basics-capacity-
bottleneck-process-capacity-flow-rate-and-utilization [Accessed 1 Jun.
2015].
Understanding Operations Management. (2011). 1st ed. [ebook]
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content/uploads/2013/04/BUS300-1.1_Understanding-Operations-
Management.pdf [Accessed 1 Jun. 2015].
Wilson, T. (2015).Mass-produced Food – HowStuffWorks. [online]
HowStuffWorks. Available
at: http://science.howstuffworks.com/innovation/edible-innovations/fast-
food1.htm [Accessed 2 Jun. 2015].
Workflow101’s Blog, (2009).McDonald’s and Workflow: Every second
counts. [online] Available
at: https://workflow101.wordpress.com/2009/12/14/mcdonalds-and-
workflow-every-second-counts/ [Accessed 3 Jun. 2015].
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