Topics: Lead time, Supply and demand, Hamburger Pages: 1 (296 words) Published: April 30, 2013
This higher quality customer serv ice is subject to McDonald's ability to actually produce faster. Without this ability , McDonald's ordering costs would be sky -high because the costs associated with ordering would be the loss of customers tired of ordering fast food that really isn't fast. Second, JIT allows McDonald's to adapt to demand a little bit better. Seemingly , lower inv entory lev els would cause McDonald's bigger problems in a higher demand because they wouldn't hav e their safety stock. Howev er, because they can produce burgers in a record time, they don't hav e to worry about their pre-made burger inv entories running out in the middle of an ex ceptionally busy shift. Wal-Mart accomplishes this by demanding it, Dell by working with suppliers, and McDonald's by standardizing production. In order to accomplish the tasks of shortening lead times and reducing their v ariances, a considerable amount of work needs to be done with suppliers/internal operations. For some firms this is worth the trouble, for others, it is not. Conclusiv ely , there are two major parts to JIT inv entory operations: lowering the ratio between ordering costs and holding costs and shortening lead times. What results is a firm with such high holding costs that ordering v ery small batches v ery frequently is the most profitable solution Companies in the fast food industries need to realize that finding waste can be a challenging task. It is therefore, essential for various tools to be used in analyzing the information environment and the physical product. One of the most useful tools is referred to as process activity mapping. The major role of this tool is to identify productivity opportunities and lead time for both information flows and physical product flows (Lai, 200
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