Subway’s operations management involves 10 critical decisions focused on the foodservice business and its franchisees. The productivity of franchise locations determines the company’s revenues and profitability. Operations management approaches are applied to enable franchisees to maximize their business performance and contribute to Subway’s corporate performance. This factor relates to the company’s continuing strategic efforts to enhance franchisee performance while growing the quick-service restaurant chain through new locations in markets around the world. Effectiveness in managing corporate and franchisee operations equates to efficiency and productivity for reaching Subway’s mission and vision, and for fulfilling the company’s business purpose.
An underlying objective of the 10 critical decisions of operations management is to ensure operating conditions that make the foodservice business effective, efficient, productive, and competitive. The Five Forces analysis of Subway indicates aggressive competition in a saturated market. The company’s competitors include McDonald’s, Burger King, and Wendy’s, as well as coffeehouses, like Starbucks. Subway’s operations management leads to effective and efficient operations that match industry best practices for competitive advantage in the global market.
Subway’s Operations Management: 10 Critical Decision Areas
1. Goods and services in Subway’s operations management are about consistent service, food, and drinks provided to consumers. To maintain competitive advantages in foodservice markets, the company invests in new product development or improvements that satisfy market demand and consumer preferences. Also, Subway’s standards for processes in rendering service are applied for productivity and customer experience at franchise locations. This critical decision of operations management reflects Subway’s competitive strategy and growth strategies, which require cost minimization and product development to differentiate the submarine sandwich business from competing firms.
2. Quality management at Subway involves a high degree of standardization applied throughout the international network of franchise locations. Operations management specifications for quality are developed at the corporate level and implemented in all areas of the organization and its franchise network. Many of these standards are disseminated through training and certification programs available from the University of Subway, which is the company’s online platform for human resource support for franchisees. These standards ensure consistency in productivity and output quality at restaurants and the company’s offices, while accounting for market demand and consumer preferences and expectations. Effectiveness in this critical decision area of operations management supports the brand, which is a competitive advantage identified in the SWOT analysis of Subway. Thus, this critical decision of operations management contributes to competitiveness in the international foodservice market.
3. Process and capacity design supports production goals, including Subway’s productivity goals for franchisees around the world. The company’s operations management strategy for its process and capacity design is two-tiered: corporate process and capacity design for managing the company and its support system for franchisees, and process and capacity design with considerable flexibility for franchisees’ local operations. Subway’s operations management strategy maintains process and capacity at franchise locations through standardized procedures that maximize efficiency and minimize errors in food production and preparation.
4. Location in Subway’s operations management involves strategies for restaurants to maximize foot traffic, which is a factor in sales and revenues. The company’s location strategy for facilities, such as hubs and offices, is also based on geographical proximity to restaurants and target markets. Subway’s marketing mix (4Ps) involves places and a distribution strategy that depend on this critical decision of operations management. For example, the productivity of kiosks and other locations depends on the overall operations management strategy applied in selecting the best locations for growing the restaurant chain.
5. Layout design and strategy aim for the efficient movement of resources to maximize productivity in Subway’s workplaces, including store operations. For this critical decision of operations management, the company applies industry best practices for restaurant operations. For example, Subway restaurant layouts are designed to optimize the movement of workers for efficient and productive food preparation.
6. Human resources and job design in Subway’s operations management focus on the continuous development and enhancement of the company’s employees and franchisees’ employees. Training programs and measures for employee satisfaction are implemented for this critical decision of operations management. For example, the University of Subway provides training and certification for franchisees and supports human resource development for the fast-food restaurant chain. The departments and divisions in Subway’s business structure (company structure) facilitate the achievement of goals in this critical decision area of operations management. Operations managers also support solutions that facilitate the dissemination of ideas for strengthening Subway’s company culture (corporate culture), which influences productivity, job satisfaction, and human resource turnover.
7. Supply chain management has the objective of developing an adequate supply chain that supports Subway’s strategies, including strategies for growth and expansion. For a diverse and reliable supply chain, the foodservice company’s operations management maintains an extensive network of suppliers in local and regional markets. For example, vegetable suppliers in local markets are included in this operations management strategy for a stable supply and to ensure product freshness and quality. The technological and ecological trends shown in the PESTLE/PESTEL analysis of Subway are supply chain factors influencing this critical decision of operations management.
8. Inventory management at Subway focuses on inventory control that accounts for food and ingredient supply disruptions and fluctuations in the availability of materials used for food production and preparation. Operations management aims for adequate and reliable inventory levels to maximize productivity in restaurant operations. Franchisees also have their own strategies and operations management practices that determine inventory control at their respective Subway restaurant locations.
9. Scheduling involves setting the right processes and resources at the right time to ensure the stability of Subway’s operations. The company has a hybrid model for this critical decision of operations management, involving information technology for real-time monitoring and scheduling of some processes, such as in the supply chain, as well as manual scheduling where restaurant managers set schedules for workers and their teams.
10. Maintenance at Subway is concerned with the stability and reliability of business processes and resources used for food and beverage production, preparation, and serving. This critical decision of operations management involves the company’s franchisees and suppliers. For example, Subway provides training programs and other supporting measures to franchisees to maintain the productivity and reliability of their restaurant operations. In this area of operations management, proper maintenance of the foodservice business organization and its franchise network optimizes efficiency and performance that supports Subway’s sustainability and related goals for CSR, ESG, and stakeholder management.
Productivity at Subway
Subway’s operations management aims for high productivity in corporate processes and franchise operations. Productivity metrics are focused on foodservice operations, although corporate offices use other metrics pertaining to business functions, like human resource management and information technology. The following metrics apply to operations management for Subway’s productivity:
- Revenue per square foot – Restaurant productivity
- Orders fulfilled per day – Restaurant productivity
- New locations per year – Franchising system productivity
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- Subway – Careers.
- Subway – History.
- Subway – Quality and Food Safety.
- Subway – Responsible Sourcing.
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