McDonald’s Operations Management, 10 Decisions, Productivity

McDonald’s 10 strategic decisions areas of operations management, productivity case study and analysis
The McDonald’s in Times Square, New York City. McDonald’s operations management covers the 10 strategic decisions to ensure high productivity in all business areas. (Photo: Public Domain)

McDonald’s Corporation’s operations management (OM) supports the company’s position as the largest fast food restaurant chain in the world. The 10 decisions of operations management represent the various strategic areas of operations that must be coordinated for optimal productivity and performance. McDonald’s global business entails a wide variety of strategic needs for its operations management, such as strategic HRM and supply chain development. McDonald’s also needs to address the impacts of tough competition with firms like Subway, KFC and Wendy’s. To do so, McDonald’s must apply suitable policies and strategies in all the 10 decision areas of operations management.

McDonald’s maintains effective policies and strategies for the 10 strategic decisions of operations management to maximize its productivity and performance as a global leader in the fast food restaurant industry.

McDonald’s Operations Management, 10 Decision Areas

1. Design of Goods and Services. McDonald’s goal in this strategic decision area of operations management is to provide affordable products. As such, the serving sizes and prices of its products are based on the most popular consumer expectations. However, some McDonald’s products are minimized in size to make them more affordable.

2. Quality Management. The company aims to maximize product quality within constraints, such as costs and price limits. McDonald’s uses a production line method to maintain product quality consistency. Consistency satisfies consumers’ expectations about McDonald’s and its brand in this strategic decision area of operations management.

3. Process and Capacity Design. McDonald’s process and capacity design is centered on efficiency for cost-minimization that supports the company’s strategies. This strategic decision area of operations management focuses on maintaining process efficiency and adequate capacity to fulfill market demand. At McDonald’s, the production line method maximizes efficiency and capacity utilization.

4. Location Strategy. McDonald’s goal in this strategic decision area of operations management is to establish locations for maximum market reach. McDonald’s marketing mix includes restaurants, kiosks, and the company’s website and mobile app as venues. Through these locations/venues, McDonald’s reaches customers in traditional and online ways.

5. Layout Design and Strategy. McDonald’s uses practicality for this decision area of operations management. The strategy involves maximizing space utilization in restaurants and kiosks, rather than focusing on comfort and spaciousness.

6. Job Design and Human Resources. McDonald’s human resource strategies involve training for skills needed in the production line in restaurant kitchens or production areas. For this decision area of operations management, individual and organizational learning are also emphasized to support McDonald’s organizational culture.

7. Supply Chain Management. The firm’s global supply chain supports its various locations around the world. McDonald’s has a strategy of supply chain diversification for this decision area of operations management. Such strategy involves getting more suppliers from different regions to reduce McDonald’s supply chain risks.

8. Inventory Management. McDonald’s goal for this strategic decision area of operations management is to minimize inventory costs while supporting restaurant operations. The company does not directly sell products and ingredients to its restaurants. Instead, local and regional intermediaries and distributors coordinate with McDonald’s restaurant managers to manage their inventory.

9. Scheduling. McDonald’s uses corporate conventions for scheduling, based on local market conditions and laws, as well as supply chain needs. For example, the company’s strategy involves regular and seasonal schedules to address fluctuations in local market demand. Thus, in this decision area of operations management, McDonald’s is flexible and adapts to local market conditions.

10. Maintenance. McDonald’s lets restaurant managers or franchisees select maintenance service providers. However, for kitchen/production equipment, McDonald’s Corporation also has certified/approved maintenance providers. Thus, the company addresses this strategic decision area of operations management through local and corporate control.

Productivity at McDonald’s

In the 10 strategic decisions of operations management, McDonald’s works toward maximum productivity in all of its business areas. The following are some notable productivity measures or criteria used in McDonald’s business:

  1. Order fulfillment rate (McDonald’s restaurant productivity)
  2. Stockout rate (Intermediary/distributor productivity)
  3. Timely delivery rate (McDonald’s delivery productivity)
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