Wednesday, 29 May 2013

McDonalds & Subway

McDonalds is a very common fast food in our market place, even my 3 years old son have a preference when it comes to fast food. But, what preference does a 3 years old know about these giant's operational model.
McDonald operational model is a Make-to-Stock, while Subway is a Make-to-Order. What distinguishes these models is the scale of economies in production and the variety or customisation required in the demanded quantities.

McDonald's sandwich wait for the customer, rapid fulfilment, short flow time for the customer. The Subway sandwich is freshly prepared with all the varieties the customer demanded for, variety and customisation produced exactly in the quantity demanded.

Although McDonald's model is a Make-to Stock, minimum inventory exists. A 'buffer or suffer' is a common inventory term used to accommodate scale of economies in production, buffer against demand and buffer between several internal steps. 

Management decisions to accommodate seasonal inventory and pipeline inventory is driven by seasonal variation in demand and constant capacity.

Hey, my 3 years old is right. McDonalds have an efficient operation model, that serves the customer fast food from a simple menu and cater for children satisfaction in the colourful kid's meal box and a cheap toy too.

In the eyes of my 3 years old that is good value.

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