Day 27 in MIT Sloan Fellows Class 2023, Introduction to Operation management 1 -McDonalds and Burger King
Introduction to operation management
This course provides concepts, techniques, and tools to design, analyze and improve core strategic and operational capabilities. It covers broad industries and applications.
Provides concepts, techniques, and tools to design, analyze, and improve the firm's core strategic and operational capabilities.
Product value and Resources
Before diving into the detailed process, a professor recommended considering product value and resources. All the operations are about how to allocate the resources to deliver values.
Product
- What do you sell? (Added Value)
- Why come to you? (Value Positioning)
Resources/Capabilities
- Financial Resources
- Management Structure
- HR
- Technology
- Sales/MKT channels
- Supply chain
- Distribution
Mcdonald's and Burger King values
Both are in the fast food chain industry but have slightly different value propositions.
Fast-food Value
- Consistent
- Cheap
- High Availability
McDonald proposition
- Fast
- Standardization
Burger King
- Customization
How to evaluate operation?
We can define each process throughput in the image above.
λ is how frequently we receive the request. In terminology, it is called "input rate."
μ is how many requests each process can complete. It is called "capacity."
The following input should be a lower value of either λ or μ.
Then, we define ρ=λ/μ、how much capacity we use for input.
Differences in their operations
There is a vast difference in operation flow structure. McDonald's adopts a more straightforward way because its operation is not designed for customization. So after the order, the cooking process proceeded right away.
However, BK's process focuses on customization, so there is a stock function(S.table means steam table) before assembling burgers or sandwiches. In this process, employees need to work in multiple operations.
These differences describe the value propositions of each hamburger chain.
Operations make "business" performance.
As you can see in ρ, McDonald's and BK have different capacity utilization rates. BK leveraged more resources, so BK is good? No. Delivery time is different, and 70% utilization(peak time) is still high because demand is volatile and variant.
With a more straightforward operation flow, Mcdonald's can achieve significant propositions in the industry.
Also, both chains are in the "fast-food" sector. Then, McDonald's value, "speed," would not be weakened by anyone outside the industry; however, Burger King's value of "speed" and "value=customization" would be weakened by any small hamburger shops.
