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Stock Management Just in Time and Lean Production

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Stock Management Just in Time and Lean Production
Discuss the critical elements of an effective and efficient stock control system for a continuous flow production line and how these elements can contribute to the profitability of McDonald’s business
By Chan Tsunglin

Introduction
Business activities involves purchasing raw materials, semi-finished goods and components, changing them into finished goods or combined with services, and selling them to the customers. Before customers purchasing these finished goods and services, they are all hold by companies and are regarded as stocks. Companies are always trying to control their stock according to the market demand and the holding opportunity costs in order to generate highest profit for them.

McDonald’s is one of the most popular chain restaurant businesses. By continuously serving customers, it can almost be regarded as a flow production factory. It builds its customer royalty by offering fast, fresh, quality food. Moreover, because it starts offering more food selections, its stock level has raised to a higher level. Therefore, to maintain their service efficiency, stock management has become one of the major challenges for McDonald’s. This essay provides analyses and evaluations of stock management concepts McDonald’s applied and discusses how they benefits to McDonald’s.

Stock management
Which level of stock should be maintained is always a big issue. Too little stock level may cause business activities stop. Business might not be able to cope with unexpected demand from market because there are not enough finished goods can be sold. Producing process may be delayed because there are no raw materials to be assembled, resulting revenue lost and numerous resources wasting such as human resources and time. By owning a low stock level, companies always need to re-order small quantity from supplier and therefore the relationship and ability of supplier is essential. (Womack, James P. and Jones, Daniel T., 2003)

On the contrary, holding a high volume

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