Principles of Management

Kingdom of Saudi Arabia Ministry of Education Saudi Electronic University

المملكة العربية السعودية وزارة التعليم الجامعة السعودية الإلكترونية

College of Administrative and Financial Sciences

Assignment 2

Introduction to Operations Management (MGT 311)

Due Date: 11/11/2023 @ 23:59

Course Name:	Student’s Name:
Course Code: MGT 311	Student’s ID Number:
Semester: First	CRN:
Academic Year: 2023-24-1st

For Instructor’s Use only

Instructor’s Name: Dr Ganesh Dash
Students’ Grade: Marks Obtained/ Out of 10	Level of Marks: High/Middle/Low

General Instructions – PLEASE READ THEM CAREFULLY

· The Assignment must be submitted on Blackboard ( WORD format only) via allocated folder.

· Assignments submitted through email will not be accepted.

· Students are advised to make their work clear and well presented, marks may be reduced for poor presentation. This includes filling your information on the cover page.

· Students must mention question number clearly in their answer.

· Late submission will NOT be accepted.

· Avoid plagiarism, the work should be in your own words, copying from students or other resources without proper referencing will result in ZERO marks. No exceptions.

· All answered must be typed using Times New Roman (size 12, double-spaced) font. No pictures containing text will be accepted and will be considered plagiarism).

· Submissions without this cover page will NOT be accepted.

Learning Outcomes:

· Understand fundamental supply chain management concepts.

· Apply knowledge to evaluate and manage an effective supply chain.

· Understand the foundational role of logistics as it relates to transportation and warehousing.

· How to align the management of a supply chain with corporate goals and strategies.

Go through the given case scenario

 

Choose an organization operating in any part of the globe (preferably a super market, hyper market chain (or) a fast-food industry or an electronics equipment manufacturer/distributor, automobile manufacturer or automotive parts or retail products / services.

 

The organization that you choose should either manufacture or market or distribute some products / services.   The competition in these businesses majorly depends upon price, quality, timely delivery and service (which are core aspects of Supply Chain Management). Hence there is immense pressure on all the organizations in these businesses to keep the four aspects mentioned to their supreme best.

 

As these businesses are the most emerged industries in the recent past, the supply chain has seen huge transformations. These businesses are getting to the maturing stage and so as the transformations in the supply chain management of these business become more and more competitive, the customer gets only the best products / service.

 

Note:  In case your chosen organization is operating in many countries and deals with many products, it is enough you consider the operations in any one country and indicate some materials that are part of the business and select 2 or 3 materials out of them for providing answers to the questions given below.

 

Students can make use of graphs, tables, illustrations, maps, pictures, images to add clarity to your answers.

 

1. Examine and evaluate your chosen organization’s Supply Chain, describe its basic working, strategy used by them, key drivers for achieving an integrated supply chain. What is the SCM model used? (2MM)

 

2. Go through the typical Working of the chosen Organization’s logistics process, Is there a role for reverse logistics for your chosen organization’s products / services ? If there is a role, explain the process that is applicable. (2MM)

 

3. Analyse and understand the different modes of transportation employed by your chosen organization. Indicate whether the current arrangements are effective. Suggest improvements for making the transportation sustainable and new modes of transportation. (2MM)

 

4. What is the Warehouse design used by the chosen organization and provide your idea on the appropriate warehouse design that will be suitable for the future. Justify your choice with proper reason. (2MM)

 

5. Given the nature of the products that you have selected for your chosen organization, what is the type of Inventory management control that your chosen organization should adopt? Give reasons. (2MM)

Note:

· You must include at least 5 references.

· Format your references using APA style.

· Each answer must not be less than 300 words

Answers

Qn1:

The organization that has been chosen for this assignment is McDonald’s that Deals with fast foods.

Supply Chain Overview

McDonald’s operates a highly efficient and complex supply chain that has been essential to its success. This supply chain ensures that the organization delivers fast food across the United Kingdom through its network of restaurants. The supply chain majorly deals in sourcing raw materials for their products, food production, transportation, distribution, and inventory management.

Basic working of the supply chain

Sourcing of raw materials. Materials that are sourced by McDonald’s include chicken, potatoes, and dairy from multiple suppliers.

Manufacturing. Food products in McDonald’s are strictly manufactured in regard to safety standards and quality. Manufacturing is achieved through approved suppliers and large central facilities.

Distribution. Once the products have been manufactured, they are distributed to regional distribution centres. These products are further distributed to individual restaurants. Individual restaurants are required to place orders based on their local demands. However, they occasionally receive deliveries in a bid to maintain a fresh inventory.

Supply Chain Strategy

McDonald’s focuses on reliability and consistency. As a result, the organization uses a " System First" approach. Such approach aims at providing the same menu globally (Liu et al., 2022). Thus, a highly standardized supply chain strategy. Furthermore, the Just-in -time inventory management that has been adopted by McDonald’s ensures a constant supply that efficiently meets the customer's demands.

McDonald’s has also been adopting vendor relationships. Such strong relationships with their vendors ensures that quality and consistency is maintained. Global sourcing further leverages global suppliers.

Key drivers for an Integrated Supply Chain for McDonald’s include quality control, cost efficiency, customer satisfaction, and franchise support (Kavyasri & Vaijayanthi, 2022).

SCM MODEL

McDonald's majorly follows a "Push-Pull" supply chain model. In this case, products are pushed to restaurants by centralized manufacturing facilities. On the other hand, inventory is pulled by restaurant level demand in regard to fresh foods, actual sales, and minimal wastes.

Qn2:

Reverse logistics is a cumbersome process that has been neglected by many companies. However, growing market pressures such as customer expectations and online retail has revived this process. Therefore, in order to stay competitive and profitable, companies must innovate on this area while still adapting to shifting market trends. Additionally, current and future growth in market dynamics such as high customer returns means that there is need for companies to re-use and re-cycle their products.

McDonald’s , just like any other fast food organization, still implements a reverse logistic. The common reverse logistics that is significant in McDonald’s is in context to waste management and recycling. The primary role of reverse logistics is to handle the wastes which are produced throughout the manufacturing process. The process is applied as follows:

1. Waste collection

Waste bins are grouped into different categories in each restaurant. Waste in such restaurants are grouped into the general, recyclable, and organic Waste. Employees and several Waste management companies corporate to ensure that Waste is separated into the above groups.

2. Waste Sorting.

After Waste has been collected, materials that can be recycled such as plastics, paper, and cardboard are sorted from the general waste. On the other hand, organic Waste such as food remains are left to decompose.

3. Recycling and Disposal

After sorting, the collected materials are transported to recycling facilities. These materials are then processed into new products. After decomposition, the food remains are converted to bioenergy production.

4. Compliance and Environmental Initiatives

Just like in any other country, there are several Waste regulations that McDonald’s adheres to. The company further participates in environmental initiatives such as promoting recycling and eco-friendly packaging (Ferine & Ilham, 2023).

5. Sustainability Programs.

McDonald’s also strives to engage in sustainability programs. These programs aim at reducing waste generation, minimize the environmental impacts, and increasing the recycling rates.

Basically, the reverse logistics is vital in ensuring that McDonald’s environmental footprint is minimized.

Qn3:

McDonald’s employs various modes of transport in the supply chain to facilitate the timely movement of its products and raw materials across several restaurants. The effectiveness of these transport systems vary by region. The transport systems are also subject to specific and continuous improvement efforts. Specifically, this section will analyze McDonald’s modes of transport and also highlight any potential new modes and sustainability improvements.

McDonald’s Transportation Modes

Trucking. Trucking is one of the most successful transportation modes that has been adopted by McDonald’s for several years. The company relies on trucking to distribute supplies, finished products, and raw materials.

Rail Transportation. McDonald’s has also been using rail transportation across the United Kingdom to transport bulk products such as beverage syrup and potatoes.

Air Freight: Mac Donald's has also been employing air freight to transport certain condiments and rapid deliveries.

Effectiveness of the transport Modes.

The effectiveness of the transportation modes can be assessed based on delivery reliability, cost efficiency, and environmental impact. The company mainly focuses on adopting a means of transport that ensures a steady supply of products. Therefore, all the transport modes adopted by the company are efficient.

Although the current modes of transport that have been adopted by McDonald’s are reliable, there is still room for improvement in regard to environmental impact and sustainability. This is because the fast-food industry is facing an immense pressure to lower their environmental footprints.

In relation to sustainability improvement, the company can transition to electric vehicles. Investing in electric vehicles will lower the reliance on fossil fuels and emissions. McDonald’s should also adopt route optimization. Such optimization can be achieved by implementing a logistic software to minimize fuel consumption, optimize delivery routes, and minimize emissions. Finally, McDonald’s should implement eco-friendly packaging. Eco-friendly packaging can be achieved through use of biodegradable packaging which reduces waste thus lowering the cost of transporting the waste materials. New transport modes that can be suggested for McDonald’s include use of drones, hydrogen powered vehicles, and collaborative transportation.

Qn4:

A warehouse plays a critical part in the supply chain. It bridges the gap between production goods and their consumption by allowing products to be securely held, packed and distributed to the final consumers. Basically, a warehouse facilitates the entire supply chain. It ensures that every fulfilment stage is done in a correct manner and products reach the final consumers on time.

McDonald's uses a centralized distribution warehouse. In this type of model, there are centralized distribution centres which receive supplies from vendors and then distribute them to various restaurants. Such a centralized warehouse ensures that there is an efficient control in form of consistency, quality, and inventory. In future, the company would adopt an appropriate warehouse that would leverage technologies such as robotics and automation. Automation in this case will reduce labour costs and increase efficiency. Automated warehouse will handle tasks such as loading, packing, and order picking in a more efficient manner. On the other hand, robotics will improve precision. Precision in this case can ensure that inventory management is enhanced, therefore, there will always be right stocks in the warehouse. The company's future warehouse should also incorporate data driven insights. Such insights will involve use of Artificial Intelligence and robotics for inventory optimization and make strategic decisions by predicting demand. Such insights will further help McDonald’s to quickly respond to the ever changing customer preferences and market trends.

McDonald’s will also have to design a future warehouse with sustainability in mind. Sustainability will ensure that a warehouse that is environmental friendly and aligns with the growing demand is developed. Such warehouse can incorporate aspects such as green building materials and energy- efficient systems. Finally, McDonald’s should incorporate an on demand supply chain on its future warehouse. Such warehouse will be able to support last mile delivery and quick order fulfilment which meets speed, convenience, and customer expectations (Setiawan & Ellitan, 2023). When these elements are incorporated in the future warehouse, McDonald’s will be able to reduce costs, align with changing market and customer trends, stay competitive, and improve service quality.

Qn5:

Inventory controls entails the process that manages an organization's warehouse inventories. Through this process, products are managed from the time they are ordered, stored, moved, up to the time they reach their final disposal.

McDonald’s serves a wide range of customers. It also deals with a wide range of perishable products. Therefore, a combination of Just-in-Time and Demand Forecasting inventory would be appropriate for a number of reasons. Foremost, McDonald’s should adopt Just-in-time inventory to minimize food waste as this type of Inventory minimizes the risks of food waste and spoilage by reducing excess inventory. This is sustainable for the company since it mostly deals with products that have a short shelf life. Just-in-Time inventory also guarantees freshness. Over time, McDonald’s has been characterized with quality and freshness. When this type of inventory is adopted, it will ensure that product's ingredients are used immediately after delivery thus maintaining product's quality.

Every company wants to get rid of excess inventory. To achieve this objective, adopting a Just-in-Time inventory will guarantee saving on costs since it will significantly reduce carrying costs that are attributed to excess inventories. Another form of inventory that can be adopted by McDonald’s is demand forecasting. As a result of the fluctuating nature of customer demands, the company should focus on new and advanced forecast techniques for several reasons. Foremost, demand forecasting will promote customer satisfaction. In this regard, an accurate demand forecast will ensure that vital products are always stocked thus preventing any form of shortage (Qiu, 2022). By doing so, customers will always remain satisfied. For years, McDonald’s has been dealing with a variety of products that require blending and mixing based on regions and locations. Demand forecasting ensures that this requirement is achieved based on local factors and historical data. When these two types of inventories are combined, product’s quality and freshness will be maintained. Additionally, customer demands will accurately be met thus, enhancing customer satisfaction and achieving cost efficiency.

References

Ferine, K. F., Nofal, A., & Ilham, R. N. (2023). Working Capital Activities of Multinational Companies at McDonald's Company.  International Journal of Economics, Management and Accounting (IJEMA),  1(1), 15-20.

Kavyasri, S. J., & Vaijayanthi, P. (2022). Mcdonald's Entry into India.  Issue 2 Int'l JL Mgmt. & Human.,  5, 1346.

Liu, R., Sun, Y., & Wang, J. (2022, March). Influential Factors of Sales Revenue in the Fast-Food Industry. In  2022 7th International Conference on Financial Innovation and Economic Development (ICFIED 2022) (pp. 2832-2838). Atlantis Press.

Qiu, C. (2022, December). Research on the Business Model & Advertisement of McDonald’s. In  2022 2nd International Conference on Economic Development and Business Culture (ICEDBC 2022) (pp. 417-421). Atlantis Press.

Setiawan, V. N., & Ellitan, L. (2023). Supply Chain Management and Supply Chain Performace: The Case of Mcdonald’s.  ULIL ALBAB: Jurnal Ilmiah Multidisiplin,  2(3), 1255-1269.