September 3rd, 2010
SUBJECT: Enhance data collection, flow, and analysis to leverage ERP and kiosk technologies
As you asked, I have examined the impact of the new order-entry kiosk and Enterprise Resource Planning (ERP) system on the McDonald’s franchise experience and identified the changes which most effectively leverage these technologies. Collect more real-time data, implement analytics software, and increase communication with your suppliers, and you will be able to make significantly better-informed decisions at the franchise level and respond to customer’s demands with greater speed. McDonald’s understands the value of listening to customers. This technology allows you to do so better than ever, but you will have to modify current practices to extract its full potential. The proposed process improvements optimize the McDonald’s activity system within the fit of your competitive position.
McDonald’s strength is speed and convenience
McDonalds’ continued success has rested on the force of its commitment to providing value to its customers though speed and convenience. That much has not changed from the opening of the first restaurant in 1940, to today: McDonald’s is the world’s largest burger fast food restaurant chain in the world for a reason. Customers want speed; McDonald’s employed the Speedee Service System, which puts an emphasis on cutting the time between when an order is made and served. Customers want convenience; not only are there over 31,000 McDonald’s restaurants around the world, but they are located in visible, easily-accessible sites, including food courts, airports, and Walmarts. Customers want value; McDonald’s was, for a long time, the only major burger chain with a Dollar Menu. McDonald’s is able to answer the needs of its customers because it listens, but also because it aligns the entire activity system toward that goal. The McDonald’s team describes your foundation as the “three legged stool” – a fitting description of the joint effort of suppliers, franchisees, and corporate staff to serve the customers.
Reinforce your core strengths through new technology
Implemented with proper planning and consideration, new technologies can monumentally boost a company’s competitive advantage. Unfortunately, McDonalds’ reluctance to embrace technological advances has hobbled its capability to deal with growth. As the customer base grows larger and more diverse, it becomes increasingly difficult to identify and react to all of the changes in customer demand quickly enough to capture value. The ERP and order-entry kiosk initiatives are vital to maintaining McDonald’s competitive advantage over your rivals and realizing your full growth potential.
Collect more data in real-time
When a customer orders at a kiosk, send all the order information to an in-house total franchise database (TFD). Currently, McDonald’s franchises only record inventory levels. By far the most important piece of data – sales – is not being collected. Effective strategic decisions at the franchise level cannot be effective without more relevant information. In addition, managers should record in the database when they run a special promotion. These new data flows are shown moving from the order entry and promotion creation systems into the TFD in Exhibit 2. The greatest benefit of an ERP system is to connect previously isolated systems and generate information flow. This information is critical to evaluating the success of the promotions, providing the managers with feedback, and helping them craft more successful promotions in the future.
Use analytics software to inform your decisions
Install powerful analytics software to digest the data in the TFD, synthesize it into easy-to-read reports, and distribute it to the appropriate processes, as is illustrated in Exhibit 2. The more data collected, the harder it is for a manager to pick out important patterns...
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