6 Sigma Project: Mcdonalds Franchise

McDonalds Franchise

6 Sigma Project Project number 1 Wednesday December 18, 2009

TABLE OF CONTENTS

Introduction

2

Quality Management

4

General Layout

5

Prepared by Matala Touir

Observations

19

Process Improvement

19

Follow up

20

Conclusion

21

Gohar Fahd Simon Guienguere

Ford 

McDonald’s Corporation 2111 McDonald's Dr Oak Brook, IL 60523 1-800-244-6227 E-mail: [email protected]

MCDONALDS FRANCHISE I am Lovin’ it!

 We’re on the web  www.mcdonalds.com

Despite this furious competi competi‐‐ tion in 2003, McDonald’s served an average of 47 million customers a day. In 2008, the company’s average increased to 58 million customers a day, an increase of about 25 per per‐‐ cent in just five years. With this huge number of customer served a day McDonald's like any other company focus on satisfying their customer by providing good food and ser‐ vice. McDonald's also targets business customers as a part of  their core business. Business customers may stop during the workday and can count on fast service, and consistently good food. Therefore, customers

Introduction McDonald's Corporation is the largest fast-food operator in the World and was originally formed in 1955 after Ray Kroc pitched the idea of opening up several restaurants based on the original owned by Dick and Mac McDonald. Today, McDonald's operates more than 32,000 restaurants in over 118 countries at year-end 2008 and have one of the world's most widely known brand names. McDonald's sales hit $57 billion company-wide and over $25 billion in the United States in 2008 (McDonald Annual Report of 2008). McDonald’s, the long-time leader in the fast-food wars, faced a crossroads in the early 1990s. Domestically, sales and revenues were flattening as competitors encroached on its domain. In addition to its traditional rivals—Burger King, Wendy’s, and Taco Bell—the firm encountered new challenges. Sonic and Rally’s competed using a back-to-basics approach of quickly serving up burgers, just burgers, for time-pressed consumers. On the higher end, Olive Garden and Chili’s had become potent competitors in the quick service field, taking dollars away from McDonald’s, which was firmly entrenched in the fast-food arena and hadn’t done anything with its dinner menus to accommodate families looking for a more upscale dining experience. waiting time (before got served) is one of  of the the most im‐ portant factors that McDonald’s focused on lately in this fast pace era. A field samples collected from two of  of the the busiest restaurant in the region. The data was col‐ lected based on the time when the customer orders the food until the time the customer get the food on hands. The waiting time in the queue before order‐ ing the food was not considered because of  of its its wide variability. The waiting time of  of sixty sixty cus‐ tomers were measured by one operator (to eliminate the Gage variability).

During this Six Sigma project study, one project methodology followed. This methodology in‐ spired by Deming’s Plan‐Do‐ Check‐Act Cycle. Which, com‐ prising five phases each, bear the acronyms DMAIC (Wikipedia, 2009) DMAIC is used for projects aimed at improving an existing business process.

DMAIC The DMAIC project methodology has five phases: •

Define high‐level project goals and the current process.

•

Measure key aspects of the current process and collect relevant

data. •

 Analyze the data to verify cause‐and‐effect relationships.

Determine what the relationships are, and attempt to ensure that all factors have been considered. •

 “Within the individual phases of a DMAIC project, Six Sigma utilizes many established qualitymanagement tools that are also used outside of Six Sigma.” 

Improve or optimize the process based upon data analysis using

techniques like Design of experiments. •

Control to ensure

that any deviations from

target

corrected

are

before

they result in de‐ fects. Set up pilot runs to establish process capability, move on to pro‐ duction, control

set

up

mecha‐

nisms and continu‐

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Quality Management Tools and Methods used in Six Sigma. Within the individual phases of a DMAIC project, Six Sigma utilizes many established quality-management tools that are also used outside of Six Sigma. The following table shows an overview of the main methods used or can be used (depend on the data collected).

•

•

Regression analysis

•

Root cause analysis

•

Run charts

•

Stratification

•

Thought process map

 Analysis of variance

•

Business Process Mapping

•

Catapult exercise on variability

•

Cause & effects diagram

•

Chi-square test of independence and fits

•

Control Chart

•

Correlation

•

Cost-benefit analysis

•

CTQ tree

•

•

Quantitative marketing research through use of Enterprise Feedback  Failure mode and effects analysis (FMEA)

•

General linear model

•

Histograms

•

Quality Function Deployment (QFD)

Page 4

•

Pareto chart

•

Process capability 6 SIGMA PROJECT

PROJECT NUMBER 1

Page 5

General Layout of Six Sigma Define Quality Function Deployment Cost of Quality Trend Analysis Causeand-Effect Diagrams Process Maps. Measure Scatterplots Exploratory Plots Time Sequence Plots Gage Studies for Variables and Attributes Sample Size Determination Analyze One Variable Analysis Capability Analysis for  Variables

Capability Analysis for Attributes Multivariate Capability  Analysis Distribution Fitting Two Sample Comparisons Multiple Sample Comparisons I m p r o v e Regression  Analysis for Measurement Data Regression Analysis for Attribute Data Life Data Regression Analysis of Variance Design of Experiments Screening, Response Surface, and Mixture Designs

D-Optimal Designs Inner and Outer Arrays Designs for Categorical Variables Multiple Response Optimization. Control Phase II Control Charts Multivariate Control Charts Acceptance Sampling Classification Methods

“DMAIC

stands for Define, Measure, Analyze, Improve, and Control.”

Sample Data used in this Study

Obs. #

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Table 1:

Waiting Time

Waiting Time

Waiting Time

(in minutes)

(in minutes)

(in minutes)

Restau-

2 2.5 1.5 2 2 4.5 2.5 3 3.5 2.5 3 2 2.5 4 4.5 3 2.5 2.5 2 3

Restau-

5 2 2.3 3 2 3 4 4.5 4 2.5 2.5 2 2 2.5 3 3.5 2.5 2 3 2.5

Restau-

Obs. #

21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40

3.5 4.5 4.5 3 2 2.5 2 3 2.5 2.5 3 3 2 2.5 2.5 4 3.5 3 3 2.5

Restau-

3 2 2.5 3 4 4.5 3 3.5 6.5 2.5 3 3 4.5 2.5 3 2 3 2.5 3 2

Obs. #

41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60

Restau-

Restaurant

2.5 2 3.5 4 2.5 2 3 2.5 2.5 4 3 2 2.5 3 3 2.5 3.5 3 3 2.5

Sample data used for this study (from two restaurants; location A and B)

2.5 2 3 4.5 3 2 2.5 3 2 2 3 2.5 2 2.5 2 2.5 3 2 2.5 2

PROJECT NUMBER 1

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Cause & Effect Diagram

Man Machines Mate ri als Fishbone Of McDonalds Waiting Tim e Measurements

Machines

Man

Old vs New Food Temperature

Lack of Training Wear

Cause Unknown Quality

Slow-food Cooking

Taste

No Instruction Time Of  Cooking

Cleaning Process

Employees number

Task vs Multi-tasks

Qualified

Improve McDonalds Waiting Time Customer Profile

Not Busy

Location

Busy

Self  Services

Time to prepare Special Orders

Not Optimized

Controled Process

Environment

Coffee Quality

Meat Quality

Random

Fresh Food

Pre-cooked Food

Methods

Special Orders compexity Drinks Quality

Materials

Figur e 1: Cause and Effect Diagram for McDonalds Serving Time Improvement.

Cause and Effect Diagram is a diagram that shows the causes of a certain event. Common uses of the C&E diagram are product design and quality defect prevention, to identify potential fac‐ tors causing an overall effect. Each cause or reason for imperfection is a source of variation. Causes are usually grouped into major categories to identify these sources of variation. The C&E Diagram is used to understand the relationship between KPIVs and KPOVs. It can help initiate experimental investigations. The KPIVs are inputs to vary and record, the KPOV is a re‐ sponse to measure. These experiments, natural or DOE, can be analyzed. The C&E diagram also provides the initial input to the process FMEA. Whenever, a KPOV drifts out of specifica‐ tion that is an "Effect". When that happens, the C&E diagram should have listed whatever the "Cause" was, as a KPIV going out of specification. Current and planned Ford hybrid electric vehicles:

Also, the C&E matrix is used initially in the Define stage to prioritize the issues to focus on. What businesses are looking for are the Pareto issues ‐ where 20% of effort will give 80% of the gain. This is a Strategic Planning adaptation of the C&E diagram ‐ helping organizations identify the aspects of their plan that are most critical to its overall effectiveness. This was used to com‐ pare customer requirements with process steps, and identify if the process aligned with cus‐ tomer requirements. The outputs from the C&E diagram are then fed into a process FEMA (Effect Analysis) to help assess what might go wrong with the critical aspects of the plan. •

2004– Ford Escape

Hybrid

•

2006– Mercury Mariner

•

2008– Ford Fusion/ 

Mercury Milan

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FMEA Study Potential Failure Modes (process defects)

Potential Failure Effects (KPOVs)

 S  E  V 

Potential Causes of Failure (KPIVs)

 O  C   C 

Customer enter the restaurant

long waiting time

Bad service

4

Bad service

4

Cashier Available

long waiting time

Bad service

4

Bad service

4

Wait to place Order

longer than expected

Custer leave

5

Bad service

4

Place Order

longer than expected

Bad service

4

Bad service

4

Special drink in the Order?

take long time require one employee to do it.

Take loner time to prepare

6

Employee prepare special item

take long time require one employee to do it.

Take loner time to prepare

5

Self service drink

Customer not able to serve him self

Frustrated customers

3

Meal is ready

Took longer time

Customer wait

Not hot and tasteless

Customer served

Took longer time

Process Function (Step)

D  E  T 

R  P  N 

4

64

4

64

4

100

Inspection

4

64

4

Inspection

5

120

4

Inspection

4

80

Do not know how.

2

self service

3

18

6

long waiting time

5

Self service

4

120

4

long waiting time

4

Self service

3

48

4

long waiting time

2

Self service

2

16

Current Process Controls

Start

Frustrated customers Less people will drink Coffee Frustrated customers

Not enough employees to do this order in time. Not enough employees to do this order in time.

End (Customer leave)

Table 2: FMEA table

 According to the FMEA table the strongest point of the process are 1) the Meal is ready (took more than 5 minutes waiting), 2) the order contain special items (special drink; ice cream, McCafee, Mocha, Expresso, etc…), 3) waiting time to place the order and finally the employee taking too much time preparing special order (items). Special items require extra work and should be made fresh and most of the time you have one employee take care of  one order at the time. The weakest point of the process are the customer self service drink and when the customer served in less than 4 minutes.  According the table 2 the strongest points of the process Figure 2 and Figure 3 show McDonald’s Service Process chart and Service Blueprint respectively.

Inspection Inspection Inspection

Start

Customer enter the Restaurant

Cashier available?

No

Wait to place order

Yes

Place order

Yes

Payment

Yes

No

Special drink in the order?

Yes

Employee prepare special item Yes

Self service drink

Meal is ready?

Yes

Customer served

End

No

Customer wait

Figur e 2: McDonald’s Service Process Chart

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6 SIGMA PROJECT

PROJECT NUMBER 1

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Figur e 3: McDonald’s Service Blueprint

Paret o Chart of Process f uncti on Of McDonlad's Ser vi ng Time 100

700 600

80

500       N       P       R

400

60

300

40

200

20

100 0

   t   e  r   a    t   e  r    ?   e  r   e  r   e  r    l  e    ?   n    i   y   d   d   d   d   a   d    h    b   r    t   e  a   e  O  r   e  o  r    l  O  r   a    l  a    t  a  u   e  O  r   e  r  w   O   r    i  a   A  v   r  e  s    l  a  c   o  m    h    l  a  c   e  c    l   i  s   n   t   a   p    P   u  s   t    i    t  o   p    h   e    i  e  r    t   s    h    k     M  e    i  n   C    t   a  r  e   a  s   e  r    i   r   a   C    t    D    l    W   r  e  p   e  n    i  a   c   p   r   e   e   m   e  e   S  p   y   o    t    l  o   p   u  s   C   m    E

Process function

RPN Percent Cum %

Figur e 4: Pareto Chart

120 120 100 80 64 64 64 48 34 17.3 17.3 14.4 11.5 9.2 9.2 9.2 6.9 4.9 17.3 34.6 49.0 60.5 69.7 79.0 88.2 95.1 100.0

0

      t      n      e      c      r      e       P

 After examining the output from the Pareto Chart the following recommendation has been made: We have to focus on resolving the issue of number of order per customer (family order) and the existing of special items. The special items must be prepared fresh and can’t be prepared in advance. Therefore, McDonald’s employee must prepare each order separate and as consequence the serving time increases from an average waiting time of  3 minutes to more than 5 minutes. •

We have to identify where human error can cause mistakes or slowness to occur, especially in processes that rely on the worker’s attention, skill or experience. •

We have to establish a standard to inspect the special drink preparation, storage, and employee speed and quality of order in order to reduce the risk of have customer waiting too long for their Expresso or Mocha to be ready. •

 A continuous process improvement and self inspection could eliminate a lot of risk in the process too.

Remarks about t he main process The process of McDonald’s serving customer is relatively inadequate during the busy time. The process indicates that customers who have special order or order for more than one person is delayed for more than 5 minutes per serving. Therefore, the issue must be addressed in order to remedy the outcome. The cause of the waiting time greater than five (5) minutes could be caused by one or more factors that were presented in the C&E diagram. We have to establish a new process to understand the relationship between KPIVs and KPOVs and inspect the KPIVs in order to have the appropriate KPOVs. The inspection process can help initiate experimental investigations to find the root cause of the waiting more than five minutes. A good way is to use the elimination process in order to find out where are the major KPIVs that cause this variation if  the customer’s waiting time. Since the KPOV “waiting time” is a response that easy to measure. Follow up action is to make sure the McDonald’s employees are aware and well informed about the best practice of making of serving customers in a timely manner. Also, educate people about the importance of the 6M factors in the process of serving fast food and making special drinks. For restaurant location that is not busy the customer’s wait time is relatively too small (less than 2 minutes). A waiting time less than two (2) minutes is not good for the business because this is an indication that the hamburger meat is already cooked and for longer time and it is ready in advance on top of the griller to be served. The disadvantage of having the meat on the griller for long time jeopardizes the taste of the hamburger and hurt the company reputation. Page 10

6 SIGMA PROJECT

PROJECT NUMBER 1

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The ideal McDonald’s customer’s waiting time is between 2.5 minutes to 4 minutes where the freshness of the food won’t be sacrificed for the fast service. Follow‐up items: • • • • •

• • • •

Keep the freshness of the food in mind. Add more grillers if necessary Successive inspection is done at the next step of the process by the next worker. Self ‐inspection means workers check their own work immediately after doing it. Source inspection checks, before the process step takes place, that conditions a correct. Often it’s automatic and keeps the process from proceeding until conditions are right. Cross training for McDonald’s employees. For larger order (family order) must have two employees to reduce the waiting time. Must treat larger order as individual order in order to reduce the waiting time Pay attention to order that have special drink like (Ice cream, McCafe, Mocha, Expresso, and so on….) because, this kind of drink require expertise to prepare them and time.

Descriptive Statistics: Restaurant A Total Variable Restaurant A

Count

N

CumN

Percent

Mean

60

60

60

100

2.8417

SE Mean 0.0932

TrMean 2.8056

Sum of Variable Restaurant A

StDev 0.7219

Variance

CoefVar

Sum

Squares

Minimum

Q1

0.5211

25.40

170.5000

515.2500

1.5000

2.5000

N for Variable

Median

Q3

Maximum

IQR

Mode

Mode

Restaurant A

2.5000

3.0000

4.5000

0.5000

2.5

19

Variable Restaurant A

MSSD 0.3792

Skewness 0.76

Kurtosis 0.12

Histogram (w it h Normal Curve) of McDonald's Locati on A 20

M ean StDev N

2. 842 0.7219 60

15     y     c     n     e     u     q     e     r      F

10

5

0

1.6

2.4 3.2 McDonald' s Locat ion A

4.0

Figur e 3: Histogram (with Normal Curve) of McDonald’s Location A 

Probabili ty Plot of McDonald's Location A Normal - 95% CI 99.9

Mean S tD ev N AD P-Value

99 95 90      t     n     e     c     r     e      P

2.842 0. 7219 60 2.269 US L P P M T o ta l

Exp. B/W P erformance

1 66 66 .6 7 0.00 1 66 66 .6 7

P P M < LS L PPM > USL P P M T o ta l

1 38 95 4. 50 1 62 65 .3 3 1 55 21 9. 83

2.4

3.2

0.58 0. 39 0. 77 0. 39 *

4.0

Exp. Ov erall Performance P P M < LS L PPM > USL P P M T o ta l

1 21 82 1. 09 1 08 02 .7 9 1 32 62 3. 88

Figure 12: Capability plot of McDonald’s Location A  Betw een/ Withi n Capabili ty of McDonald's Location B LSL

USL

Process Data LS L 2 T arget * USL 4.5 S a mple M e an 2. 85 5 S ample N 60 StDev (Between) 0.803413 S t D ev ( Wit hin ) 0 S tD ev (B /W) 0. 80 3413 StDev(Ov erall) 0.899421

B/W Overall B/W C apability Cp 0.52 CPL 0. 35 CPU 0. 68 Cpk 0. 35 O v erall C apability Pp PPL PPU P pk C pm

1 O bserv ed Performance P PM < LS L 0.00 P P M > U S L 3 33 33 .3 3 P P M T o ta l 3 33 33 .3 3

2

Exp. B/W P erformance P P M < LS L 1 43 61 6. 87 PPM > USL 2 03 03 .8 0 P P M T o ta l 1 63 92 0. 67

3

4

Exp. Ov erall Performance P P M < LS L 1 70 90 0. 72 PPM > USL 3 37 03 .1 8 P P M T o ta l 2 04 60 3. 90

Figur e 13: Capability plot of McDonald’s Location B

5

6

0.46 0. 32 0. 61 0. 32 *

PROJECT NUMBER 1

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OBSERVATIONS The menu at McDonald's typically consists of hamburgers, chicken sandwiches, salads, drinks, shakes, and a recent influx of healthier alternatives. McDonald's also is widely known for their breakfast menu, which consists of sandwiches, pancakes, French toast, hash browns, breakfast, Coffee, and a large variety of drinks. During the phase of collecting data an assignable cause observed during the food serving. Most customer’s in both restaurant who had a waiting time more than the USL=4.5 minutes they had an item that is considered special order (e.g.: McCafe, Mocha, Espresso, Ice cream, or Smoothed milk) or a combined order for more than one person. In addition the highest waiting time observed in location B was 6.5 minutes. The reason for this long waiting was due to the fact that this order was for a family of 5 kids and three adults. Also, we observed that most of 

PROCESS IMPROVEMENT 1. Add more burger cooking space (larger stoves). 2. Add more frying containers for the French fries 3. Add more workers to prepare each order; do not wait until more collect 4 to 5 order to deliver them to the waiting customer. 4. Separate the process of food preparation. 5. Add more cashier 6. Have the manager present in the store all the time. 7. Have the cashiers after taking orders help in preparing the special drinks (items). 8. Cross training of the employees (train the cook to be able to do different functions in the process). 9. Train the drive thru employees to be able to help in different functions when it is necessary in the busy time. 10. Design a service for family orders.

“ Have the manager present in t he st ore all t he time”

Follow Up and Suggest ions Since McDonald's appeals to such a wide audience, it must constantly re-evaluate its menu depending on feedback and market research. In addition, McDonald's process is tacking in consideration its growth and therefore, reducing the serving time (wait time of customers) is one of its major priorities for years to come. McDonald’s is facing a huge challenge of their food quality by competitors (Wendy and Burger King). The tradeoff between the food taste and the time of serving is far from over. Another ma jor target of McDonald's marketing is to teens. Teens find the value menu especially appealing and McDonald's markets their restaurants as a cool place to meet with their friends and to work. Thus, preparing a cool place for family to enjoy their meal is important too. McDonalds should deal with family order with more emphasis. For example, after the family order is submitted the kids should get something to get busy (e.i: chocolate bar, Kandy bar, foaming Kandy, etc…) while waiting for their Hamburger and French fries to be ready. McDonalds is putting more emphasis on the drive thru order. The waiting time for the drive thru order is less than 2 minutes (the time customer places the order to the time receives the order) which is extremely very good.

Serving t im e ri sk  After examining the collected data two major problems observed. 1) Food served in less than 2 minutes and 2) food served after more than 5 minutes waiting time. Serving a meal in less than 2 minutes jeopardize the taste of the hamburger, thus, the only explanation of this fast delivery is that the hamburger is already cooked (for longer time) and waiting on top of the stove to be served. In the opposite if the customers wait for more than 5 minutes is not acceptable in the fast food business where food must be served in timely matter. The ideal McDonald’s customer’s waiting time is between 2.5 minutes to 4 minutes where the freshness of  the food won’t be sacrificed for the fast service. In fact, having in mind the risk associated with serving fast-food, the Company’s internal food serving process should be designed to provide reasonable assurance regarding the reliability and efficiency of food serving and preparation. The company should establish a process control over its food preparation process and enforce policies and procedures that: 1. Help employees and management to maintain a certain degree of knowledge of  the company philosophy and priority (reasonable detail that fairly reflect the position of the company). 2. Provide reasonable assurance that food is served in timely manner (even for large order). This requires management involvement in the process.

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6 SIGMA PROJECT

PROJECT NUMBER 1

4. Provide reasonable assurance regarding prevention or timely detection of process mal functioning that might harm the company assets. 5. Provide efficient internal controls which assess the effectiveness of the process, including the possibility of human error and the circumvention or overriding of controls. 6. Provide a mechanism to reduce the variability of the process across multiple locations. 7. Establish a measurement criteria to test continuously evaluate the process functionality and effectiveness.

Conclusion Despite McDonald's is well known for their maximum customer focus. McDonald’s faces some difficult challenges. Key to its future success will be maintaining its core strengths—an unwavering focus on quality and consistency—while carefully experimenting with new options. These innovative initiatives could include a brilliant idea to make the waiting time of their customers an enjoyable time (life experience). In addition, McDonalds should have a separate brand name company responsible for maintaining McDonald’s compliance with safety, quality, environment, and customer’s satisfaction. A  brand new branch will improve the company image and will reduce the company risk  toward loosing ground for competitors. The company also could look into i mproving their service toward family orders (large orders).

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PROJECT NUMBER 1

References [1] http://www.mcdonalds.com/ [2] www.analist.nl/reports /mcdonalds-2008 .pdf  [3] http://en.wikipedia.org/wiki/McDonald%27s [4] www.encyclopedia.com/doc/1G1-71707946.html [5] https://news.fidelity.com/news/news.jhtml? cat=MarketBeat&articleid=200911130921MRKTWTCHWSJ_MRKB_30C04424-C2D4-D422D354-B056E088919D&IMG=N [6] http://mcchronicles.blogspot.com/2008/07/wall-street-manhattan-mcdonalds.html [7] http://blogs.barrons.com/stockstowatchtoday/2009/11/09/mcdonalds-us-sales-stall/

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PROJECT NUMBER 1

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