JFC case study

Jollibee Foods Corporation Table of Contents

TABLE OF CONTENTS Background of the Company............................................................................................................1 Values, Mission, Vision................................................................................................................4 Values....................................................................................................................................... 4 Mission..................................................................................................................................... 4 Vision........................................................................................................................................ 4 Organizational Analysis...............................................................................................................5 Ethical Responsibility..................................................................................................................5 SWOT Analysis............................................................................................................................. 7 Strengths................................................................................................................................... 7 Weaknesses............................................................................................................................... 7 Opportunities........................................................................................................................... 7 Threats...................................................................................................................................... 7 Competitive and Cooperative strategies......................................................................................8 Analysis of Tony Kitchner's Strategy.......................................................................................8 Financial Management Perspective.........................................................................................9 Operations Management Perspective....................................................................................10 Product Design............................................................................................................................... 11 Product Life Cycle.......................................................................................................................11 Jollibee Product Life Cycle.....................................................................................................12 Product Development.................................................................................................................13 Organizing for product development.....................................................................................13 Product Development Continuum.............................................................................................14 Internal Development Strategy..............................................................................................15 External Development Strategy..............................................................................................15 Defining a Product..................................................................................................................15 Service Design......................................................................................................................... 15 Jollibee’s Service Design.........................................................................................................16 Process Design................................................................................................................................ 17 Four Process Strategies..............................................................................................................17

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Jollibee Foods Corporation Table of Contents

Process focus........................................................................................................................... 17 Repetitive focus.......................................................................................................................17 Product focus.......................................................................................................................... 17 Mass Customization Focus.....................................................................................................18 Production Technology..............................................................................................................18 Process Analysis and Design......................................................................................................18 Flow Diagrams........................................................................................................................18 Time-Function Mapping........................................................................................................18 Value-Stream Mapping...........................................................................................................19 Process Charts........................................................................................................................ 19 Service Blueprinting...............................................................................................................19 Process Design of Jollibee.........................................................................................................20 Service Design of Jollibee..........................................................................................................20 Counter...................................................................................................................................20 Preparation of Orders............................................................................................................20 Process Strategy Used................................................................................................................22 Location Decisions.........................................................................................................................23 Jollibee Outlets.......................................................................................................................... 23 Proximity to Markets..............................................................................................................24 Proximity to Competitors.......................................................................................................24 Proximity to Suppliers............................................................................................................24 Commissaries............................................................................................................................. 24 Zenith Foods Corporation, Laguna........................................................................................25 Zenith Foods Corporation, Cebu............................................................................................25 Pasig City Commissary...........................................................................................................25 International Expansion............................................................................................................25 Location Evaluation Method......................................................................................................25 Locational cost-profit-volume analysis..................................................................................26 Center of Gravity Method.......................................................................................................26 Factor-rating systems.............................................................................................................26 Linear Programming..............................................................................................................26

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Jollibee Foods Corporation Table of Contents

Layout Decisions...........................................................................................................................28 Types of Layout..........................................................................................................................28 Office Layout.......................................................................................................................... 28 Retail Layout.......................................................................................................................... 29 Warehouse Layout.................................................................................................................30 Fixed-Position Layout............................................................................................................30 Process-Oriented Layout........................................................................................................31 Work Cell Layout....................................................................................................................31 Repetitive and Product-Oriented Layout...............................................................................32 Human Resources......................................................................................................................... 34 Staffing Strategies......................................................................................................................34 Training and Development........................................................................................................35 Ergonomics................................................................................................................................ 35 Ethics.......................................................................................................................................... 35 Re-engineering...........................................................................................................................36 Job Redesign.............................................................................................................................. 36 Job Redesign Process.............................................................................................................37 Advantages of Job Redesigning..............................................................................................37 Six Sigma.................................................................................................................................... 38 Balance between centralization and decentralization of power............................................38 Reforming Organisation Structure........................................................................................38 Management-by-Objective (MBO)............................................................................................39 Unique features and advantages of the MBO Process...........................................................39 Total Quality Management or TQM...........................................................................................39 Appropriate Method for the Company......................................................................................40 Job Redesign Approaches......................................................................................................40 Supply Chain Management...........................................................................................................42 Single sourcing........................................................................................................................... 42 Multi-sourcing........................................................................................................................... 42 Insourcing.................................................................................................................................. 42 Joint ventures............................................................................................................................ 42

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Jollibee Foods Corporation Table of Contents

Keiretsu networks......................................................................................................................43 Vertical integration....................................................................................................................43 Supply Chain Management of Jollibee......................................................................................44 Logistics.................................................................................................................................. 44 Commissaries......................................................................................................................... 44 Suppliers................................................................................................................................. 45 Sourcing strategy used...........................................................................................................45 Inventory Management.................................................................................................................48 Role of Inventory.......................................................................................................................48 Customer Service....................................................................................................................... 49 Efficiency.................................................................................................................................... 49 Financial Management..............................................................................................................50 Managing Quantities.................................................................................................................50 Food Safety................................................................................................................................ 50 Sell-By..................................................................................................................................... 51 Best if Used by........................................................................................................................ 51 Use-by..................................................................................................................................... 51 Closed or Coded Dates............................................................................................................51 Inventory Management of Jollibee Food Corp..........................................................................52 The Jollibee Food Corp. Inventory Management Diagram...................................................54 Operational Maintennance............................................................................................................56 Implementing Preventive Maintenance....................................................................................56 Total Productive Maintenance...................................................................................................56 Reliability Measures...................................................................................................................57 Maintaining Jollibee’s Operation..............................................................................................58 Applying Preventive Maintenance.............................................................................................59 Preserving Water Quality.......................................................................................................59 Food Preparation Areas.........................................................................................................60 Ovens, Grills and Fryers.........................................................................................................60 Update POS Software.............................................................................................................60 Preventative Maintenance Program..........................................................................................60

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Jollibee Foods Corporation Table of Contents

Food Safety............................................................................................................................. 61 Operations Audits and Audit Scores..........................................................................................61

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Jollibee Foods Corporation Background of the Company

BACKGROUND OF THE COMPANY

JOLLIBEE FOODS CORPORATION BACKGROUND A dominant leader in Philippines,

market the

Jollibee enjoys the lion’s share of the local market that is more than all the other multinational brands combined. Jollibee is the largest fast food chain in the Philippines, operating a nationwide network of over 750 stores. The company has also embarked on an aggressive international expansion plan in the USA, Vietnam, Hong Kong, Saudi Arabia, Qatar and Brunei, firmly establishing itself as a growing international QSR player. 1

Jollibee Foods Corporation Background of the Company

A company that values family. Jollibee was founded by Tony Tan and his family with its humble beginnings as an Ice Cream Parlour which later grew into an emerging global brand. At the heart of its success is a family-oriented approach to personnel management, making Jollibee one of the most admired employers in the region with an Employer of the Year Award from the Personnel Management Association of the Philippines, Best Employer in the Philippines Award from Hewitt Associated and a Top 20 Employer in Asia citation from the Asian Wall Street Journal.

Aside from promoting a family oriented work environment, the brand’s values also reflect on their advertising and marketing. Jollibee knows their target audience very well: the traditional family and all communication materials focus on the importance of family values, making Jollibee the number one family fast food chain in the Philippines and a growing international QSR player.

A Well-Loved Brand. Customer satisfaction has always been key to Jollibee’s success. Never losing sight of its goals, Jollibee has grown to be one of the most recognized and highly preferred brands in the Philippines. Now the market leader among fast food chains in the Philippines, claiming a market share that totals to more than half of the entire industry. 2

Jollibee Foods Corporation Background of the Company

Great tasting products and quality systems. Jollibee’s growth is due to its delicious menu line-up – like its superior-tasting Chickenjoy, mouth-watering Yum burger and Champ hamburger, and deliciously satisfying Jollibee Spaghetti -ably complemented with creative marketing programs, and efficient manufacturing and logistics facilities. It is made possible by well-trained teams that work in a culture of integrity and humility, fun and family-like. Every Jollibee outlet welcomes customers with a clean and warm in-store environment and friendly and efficient service. And it is this tried and tested formula of delivering great-tasting food, adherence to world class operating standards and the universal appeal of the family values the brand represents that are driving the expansion of Jollibee both locally and in the overseas market.

Widest store network in the Philippines and an emerging global player. Jollibee is the largest fast food chain in the Philippines, operating a nationwide network of more than 750 stores. A dominant market leader in the Philippines, Jollibee enjoys the lion’s share of the local market that is more than all the other multinational brands combined. The company has also embarked on an aggressive international expansion plan, and currently has 80 stores outside the Philippines-USA (26), Vietnam (32), Brunei (11), Jeddah (7), Qatar, Hong Kong, and Kuwait (1 each), firmly establishing itself as a growing international QSR player.

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Jollibee Foods Corporation Background of the Company

Values, Mission, Vision

Values

Great tasting products and quality systems.

Customer Focus, Excellence, Respect the Jollibee’s growthfor is due to its Individual, Teamwork Spirit of Family and Fun, delicious menu line-up – like its superior-tasting Humility to Listen and Learn, HonestyChickenjoy, and mouth-watering Yumburger and Integrity, Frugality

Champ hamburger, and deliciously satisfying Jollibee Spaghetti-ably complemented To serve great tasting with creative marketing food, bringing the joy of and efficient programs, eating to everyone manufacturing and logistics facilities. It is made possible by well-trained teams that work in a Vision culture of integrity and humility, We are the best tasting QSR... fun and family-like. Every The most endearing brand… Jollibee outlet welcomes customers with a clean and warm that has ever been… in-store environment and friendly We will lead in product taste and efficient service.

Mission

at all times… We will provide FSC excellence in every encounter… Happiness in every moment… By year 2020, with over 4,000 stores worldwide, Jollibee is truly a GLOBAL BRAND. (and the Filipino will be admired worldwide) Organizational Analysis JFC was founded by Chinese-Filipino Mr. Tony Tan Caktiong (TTC) as the ice-cream parlour at Cubao City in 1975. Gradually, it grew up to a reasonably large fast food chain in Philippines. Further, JFC started scouting avenues for expansion internationally. Thus it opened its franchises in countries like U.S.A., Brunei, Hong Kong, Guam, Middle East, etc. A fast food restaurant or Rapid Service Eatery (RSE) has the following 3 characteristics. 1. It is characterized by its fast food cuisine and nominal table service. 4

Jollibee Foods Corporation Background of the Company

2. It offers limited menu, cooked in bulk in advance, kept hot, finished, packaged to order, and available to take-out, drive-thru, and dine-in. 3. It is usually a part of a chain or franchise operation, which supplies standardized ingredients and/or partially prepared foods and provisions to each restaurant through controlled supply channels. Ethical Responsibility Jollibee Foundation is the corporate social responsibility arm of the Jollibee Foods Corporation. It is a nonstock, non-profit organization certified under PCNC (Philippine Council for NGO Certification). Annually, the JFC Family (Jollibee, Chowking, Greenwich, Red Ribbon, Delifrance, Manong Pepe, Yonghe King and Hongzhuangyan) allocates 1% of its net profits to the Foundation to fund its work in all areas: from community and leadership development, to scholarships and feeding programs, even relief aid during disasters. As the corporation grew, so did its potential for reaching more people. With this realization, Jollibee Foundation was established in December 2004 to make giving back an organized corporate commitment. Its mission is to invest in people and help them succeed in the way Jollibee knows how. This meant taking the values, the system, the tools, and the years of experience that made Jollibee what it is today and sharing it with the people they most ascribe their successes to the everyday Filipino. Selected company’s current globalization and environmental sustainability policies In Global segment, products of global quality with local features and local soul at less than global prices are offered. In local segment, local products with local features at local prices are offered.

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Jollibee Foods Corporation Background of the Company

SWOT Analysis

Strengths

Weaknesses

a. Jollibee was a regional industry leader that had experienced professionals as chief executives of the organization.

a. Lacked more effective marketing skills as growth revenues decreased.

b. Proven past performance made dealings with prospective partners easier. c. Wide variety of products offered in diverse markets.

b. Lack on in-depth planning and research in the expansion to foreign markets. c. Poor co-ordination between the national and international units.

Opportunities

Threats

a. The promising nature of international markets and also the available potential due to the migration of Filipinos in certain countries.

a. Competition from both international companies and other local eateries.

b. Being an agricultural country, full integration in sourcing raw materials could be done. c. For international markets, locating commissaries in the same country through joint ventures could be a potential source of success for the company. Jollibee could facilitate the technology provision while the partner could formulate the appropriate modus operandi to sell in the foreign market.

b. Political instability in the country threatened JFC as it could hamper the opportunities to convince international investors and country leaders to allow a JFC entry in their country. c. Driving Forces

d. For the local market, an increase in the number of commissaries could easily reduce the transportation costs and the duration of shipments. This would allow the company to concentrate on the quality of products.

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Jollibee Foods Corporation Background of the Company

Competitive and Cooperative strategies

Analysis of Tony Kitchner's Strategy • First mover advantage - Jollibee was the first to enter the market. In 1994 Tony Kitchner was hired to head the International Division. He was successful over his three years. He was successful in creating wealth and increasing the presence in countries that had less or no competition. During his time the total number of stores increased 65% to 205 from the end of 1993 to the end of 1996. Moreover, the total sales increased over 94.5% over the same period these increases are dramatic. Very few companies can experience rapid growth like this. He always had the idea to be the first -mover into untapped markets as he believed that although you may incur losses in the initial years, which can be cross subsidized from Philippines operation, the company will be able to restrict the entry of its competitors. But these do not show the whole picture of his strategy implementation. There were instances of shutdown of stores due to mounting losses the chaotic strategy of investments unsupported by proper research failed costly for the company. His strategy of targeting expats had the risk of targeting a narrow segment. The lifestyle, tastes and preferences of the expats was also not considered during international expansion. Marketing Perspective Jollibee was able to attain a competitive advantage in Philippines by doing following things: • Jollibee was the first to enter the market. • Retaining tight control over operations management, which • Allowing it to price below its competitor. • Having the flexibility to cater to the tastes of its local consumers. As Jollibee entered international markets, it faced new challenges. The fast food industry is highly competitive price wars and marketing innovations are seen frequently. rivalry is also centred on the key success factors of the industry, which are good food, good, service and reasonable pricing. Rivals are somewhat equal in capabilities and opportunities, thus making the competition stiffer. Internationally well-established players like KFC and McDonalds had high brand values Jollibee found difficult to compete with. The threat of substitute products is considerable. Local street food and end restaurants form two ends of a range of substitutes. Potential entrants face entry barriers that will hinder them entering the industry. These are the inability to gain access technology and specialized know-how, brand preference

Jollibee was able to attain a competitiv e advantage in Philippines …

and The

that highfrom to and 7

Jollibee Foods Corporation Background of the Company

customer loyalty, capital requirements, economies of scale, and strategically situated distribution channels. Tony Kitchner was hired to build the global Jollibee brand with the dual goals of positioning Jollibee as an attractive partner, while generating resources for expansion. In order to become one of the top 10 fast food brands in the world. Kitchner implemented a two-part international strategy which comprised of targeting expats and planting the flag.

Financial Management Perspective Jollibee's sales, net income, operating income, and royalties and franchise fees has been increasing rapidly for the period under study. The total number of stores increased 65% to 205 from the end of 1993 to the end of 1996. By 1996, sales had increased to 8.57 billion which translates to a market share of more than 50% among all hamburger fast food chains. Total assets increased over 230% in the same period. Moreover, operating income increased about 114% while net income increased over 100% during the same period. These increases are dramatic. Significantly Inventory decreased from about 11.5% in 1992 to just 7.5% in 96. This implies that less of the current assets were tied up inventory. During the same period the trade accounts receivables has increased from 8.4% in 1992 to 12.7% in 1996. Jollibee was able to compensate for this increase by corresponding increase in sales and hence this need not be a cause of concern. On the other hand, all is not well with the financials of Jollibee. There was 28.9 million pesos of long-term debt outstanding at the end of year 1996. Cost of sales has increased each year with an increase of about 46% from the end of 95 to the end of 96. But during this same period, total sales only increased about 28.7%. This escalation in the cost of sales must be brought under control Accounts payable and accrued expenses increased by about 156% from 94 to 96. In addition, earnings per share decreased 19% to 0.68 pesos per share from 94 to 96. Jollibee has debt and some financial instability; however, it is not something they can't overcome. They have 24 stores in foreign countries, which account for roughly $9 million in sales. This is an encouraging sign as far as Jollibee is concerned and they will be able to pay off their debts and loans.

One thing they should consider doing is slowing down expansion. Jollibee should consider opening a store and giving it time to grow and turn a profit before it finances the opening of a new store. Opening new stores requires a lot of financing. They must study markets to determine a location, buy furniture, purchase kitchen appliances, and train new managers and employees. Opening multiple stores at the same time will hurt the bottom line and will increase debt. It took McDonald's 20 years for their international operations to account for 50% of total sales. Also, they must reduce cost of sales. During the period under study the cost of sales has increased at a faster pace than the sales increase, which is not acceptable. The company has good internal financial resources but a certain code should be maintained in the relationship with the franchisee. Also, the allocation of the financial resources needs 8

Jollibee Foods Corporation Background of the Company

to be done wisely and judiciously. This is where there has to be collaboration between the marketing and finance department. The feasibility (financial) of opening up a new

store needs to be studied before going ahead with the decision.

Operations Management Perspective From the very beginning Jollibee Foods Corporation had focused on delivering quality food and service at an affordable cost to the customers. This had been possible only due to excellent operational control. They enjoyed a dominant position in the fast food market in Philippines until McDonalds entered the market. To take on McDonalds, they focused on their main asset, their knowledge of taste and preferences of the local population. This strategy paid off initially but slowly McDonalds caught up. To maintain their market share and counter the growing popularity of McDonalds Big Mac sandwich they came up with their USP, a large hamburger named Champ which contained a wide hamburger patty as against Big Mac which had two small patties. Once Jollibee Food Corporation was well established in Philippines, TTC's decision to expand overseas was a good bet. But due to their inexperience and wrong choice of partners they suffered losses in their initial foreign ventures. In Singapore there were too many partners thus hindering smooth operation. In Taiwan there were disputes over management of local operations. In a franchise arrangement standardization of operations is the most essential factor. But in this case the local partner was objecting to the presence of company employees.

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Jollibee Foods Corporation Product Design

PRODUCT DESIGN Great products are the keys to success. To maximize the potential of success, many companies focus only on few products. However, most products have a limited and even predictable life cycle. This is the reason why companies constantly look for new product design, develop, and take to market. Despite of constant effort to introduce viable new products, many of it do not succeed. Products may often refer to tangible goods, it also refers to offerings by service organizations. The objective of product decision is to develop and implement a product strategy that meets the demand of the marketplace with a competitive advantage.

Product Life Cycle Products are born. They live and die. A product undergoes different phases from introduction, growth, maturity and lastly decline. It may be a matter of days, months or decades. In order for a product to be successful, product strategies must be based on its position in its life cycle. Introductory phase. Products in this stage are still being “fine-tuned” for the market. Unusual expenditures such as for research, product development, process modification and enhancement, and supplier development arises. Growth phase. Products in this stage has begun to stabilize, and effective forecasting of capacity requirements is necessary. Maturity phase. In this phase, products have its competitors. High volume, innovative production may be appropriate. Decline phase. Products in this phase is considered ‘dying’. Product line could be sold or their production is terminated.

Jollibee Foods Corporation Product Design

Jollibee Product Life Cycle 1978-1992 Introductory Phase Customers of Tony in Magnolia Ice Cream parlour suggested to add some hot snacks in the menu. The idea brought Tony to close the ice cream parlour and establish Jollibee which will serve hot hamburgers to customers. Later the menu expands to reach more market. 1979 - Jolly Spaghetti was introduced 1980 - Chickenjoy and French Fries 1982 - Palabok 1984 - Champ Hamburger 1985- Breakfast joys and Chunky Chicken Sandwich 1988 - Jolly Twirls 1990 - Jolly Hotdog and Peach Mango Pie 1991- Pancake and Jolly meals 1992 - Fruit flavoured ice creams At present, Jollibee still introduces new products like the ‘Sweet n’ Spicy Burger Steak’ however it is more of a competitive strategy against the ‘Italian Chicken Fillet’ of McDonalds.

1993 - 2000 Growth Stage During these years, product design begun to stabilize. Jollibee added capacity through adding more store around Philippines 1994 - 148 local stores 1995 - 168 local stores 1996 - 208 local stores 1998 - 300 local stores 2000 - 400 local stores

2001 - Present Maturity Phase Competitors like McDonalds and KFC also begun to establish popularity and demand in the Philippines. At the beginning of the new millennium, McDonalds market share slowly increases from 14% to 20%. However, Jollibee was able to secure additional market share of 10% from previous numbers (1992) of 50% (end of 2013)

Jollibee Foods Corporation Product Design

Product Development Quality Function Development (QFD) a process for determining customer requirements (customer “wants”) and translating them into the attributes (the “how’s”) that each area can understand and act on. QFD is used early in the design process to help determine what will satisfy the customer and where to deploy quality efforts. One of the QFD tools is the house of quality. It is used in defining the relationship between customer desires and product. To build a house of quality, we need to follow seven basic steps: · · · ·

Identify customers’ wants Identify how the goods/service will satisfy customer wants Relate customer wants with product how’s. Identify relationships between the firm’s how’s

· · ·

Develop importance ratings Evaluate competing products Determine the desirable technical attributes, your performance, and the competitor’s performance against these attributes.

·

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Organizing for product development

·

Product development are charged with the responsibility of moving from market requirements for a product to achieving a product success. This is usually composed of representative from marketing, purchasing, quality assurance, and often field service personnel. They need to ensure product success such as marketability, manufacturability and serviceability. They are organized in different ways such as:

·

The traditional U.S. approach. An approach wherein the organization is subdivided into distinct departments (e.g. R&D, Engineering, Manufacturing Engineering, and Product department)

·

Assign a product manager to “champion” the product through the product development system and related organizations

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The use of teams such as product development teams, design for manufacturability teams, and value engineering teams.

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The Japanese approach wherein they bypass the team issue by not subdividing organizations into different departments.

·

Aside from organizing teams, other considerations are also important to the design of a product. They are as follows:

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Robust design. A design that can be produced to requirements even with unfavourable conditions in the production process.

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Modular design. A design in which parts or components of a product are subdivided into modules that are easily interchanged or replaced.

·

Computer aided design (CAD) and Computer Aided Manufacturing (CAM). CAD is the use of computers to interactively design products and prepare engineering

Jollibee Foods Corporation Product Design

documentation. On the other hand, CAM refers to the use of specialized computer programs to direct and control manufacturing equipment. ·

Virtual Reality Technology. This is a visual form of communication in which images substitute for reality and typically allow the user to respond interactively

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Value Analysis. A review of successful products that takes place during the production process.

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Sustainability and Life Cycle Assessment. This is use to evaluate product options.

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After developing the product, next question would be, when will we produce the product? This move is known as ‘transition to production’.

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How Jollibee products are designed?

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According to Mr. Tony Tan Caktiong

·

"The family members would discuss what new products would like, and without much marketing we bring something out-like spaghetti. But now, there’s a formal structure. There’s a big Research and Development (R&D) department and a marketing department. The marketing gets inputs from customers and the products they like, and then communicate that to R&D. R&D then develops it. We have an internal taste panel that taste the food and comment on it, and when formulation is needed they do it. The next step is a customer panel test. We have the product taste-tested by customers, and if it’s okay, we test the product in a few stores. Before it was easy, but now it takes 3 to 6 months to roll out a new product. Another time-consuming process is training our people on how to prepare and serve the new product."

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How Jollibee products are made?

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Jollibee like other fast food chains use modular design in creating products. Branches cooks are trained to make products according to a standard recipe. Similar ingredients were also provided by the Jollibee corporation to ensure one quality.

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(Fries were fried under 175 C for 2-3 minutes)

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(A standard weight for fries depending on customer order)

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(After products are made, they are stored on a heated landing pad until they are served to customer)

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Product Development Continuum

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Often, the first company into production may have its product adopted for use in a variety of applications that will generate sales for years. It may become the “standard”. Competition based on time or developing product faster than the competitors is so important, a number of strategy is used.

Jollibee Foods Corporation Product Design

·

Internal Development Strategy

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Enhancements. This is the use of organization’s existing product strengths for innovations. It may be a change in size, weight, or features.

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Migrations. This is the use of advantage of a product to another product.

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New internally developed products.

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External Development Strategy

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Purchasing Technology by Acquiring a firm. This is the process of acquiring a firm who have already developed technology that fits the need of the firm.

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Joint Venture. The process of establishing joint ownership to pursue new products or markets.

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Alliances. This is a way of having cooperative agreements that allow firms to remain independent, but pursue strategies consistent with their individual missions.

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Defining a Product

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A good or service is defined in terms of its functions- that is what it is to do. The product is designed.

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Ways of defining a product.

1. Engineering Drawing. This the way of defining a product through a drawing. The dimensions, tolerances, materials, and finishes of a component is shown. 2. Bill of material. This is a list of hierarchy of components, their description, and the quantity of each required to make one unit of a product.

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Documents for Production

·

Some of these are:

1. Assembly Drawing. An exploded view of the product. 2. Assembly Chart. A graphic means of identifying how components flow into subassemblies and final products. 3. Route Sheet. A listing of the operations necessary to produce a component with the material specified in the bill of material. 4. Work order. An instruction to make a given quantity of a particular item. 5. Engineering Change Notice (ECN). A correction or modification of an engineering drawing or bill of material.

6. 7. Service Design 8. Aside from tangible products, services in banking, finance, insurance, transportation and communications are also designed to meet unique customers’ specifications. 9. A popular technique use is the Process-Chain-Network (PCN) Analysis. PCN is developed by Professor Scott Sampson. It is an analysis that focus on the ways in which

Jollibee Foods Corporation Product Design

processes can be designed to optimize interaction between firms and their customers. It analyses process chain or the sequence of steps that accomplish an activity. 10. Through analysing the process chain, we will know the process inefficiencies and the ways to solve it. Some of these solutions are: 1. 2. 3. 4. 5.

Limit the options Delay customization Modularization Automation Moment of truth or the moment that exemplifies, enhances, or detracts from the customer’s expectations.

11.

Jollibee’s Service Design

12. Jollibee just not make and sell their food but also provide quality services. 13. High customer interaction happens in the counter. First line employees both serve and make collections in this area. Customer’s order should be assembled at the fastest time possible (it usually takes one and half minute to two). Greeting the customer with a smile is must for every employee. 14. Jollibee also does survey to track customer satisfaction to its service and products. They ask customers to answer some questions regarding their customer experience by shading a scannable questionnaire. 15. Jollibee’s growth is due to its delicious menu line-up – like its superior-tasting Chickenjoy, mouth-watering Yumburger and Champ hamburger, and deliciously satisfying Jollibee Spaghetti -ably complemented with creative marketing programs, and efficient manufacturing and logistics facilities. It is made possible by well-trained teams that work in a culture of integrity and humility, fun and family-like. Every Jollibee outlet welcomes customers with a clean and warm in-store environment and friendly and efficient service. 16. And it is this tried and tested formula of delivering great-tasting food, adherence to world class operating standards and the universal appeal of the family values the brand represents that are driving the expansion of Jollibee both locally and in the overseas market.

Jollibee Foods Corporation Process Design

17.

PROCESS DESIGN

18. Four Process Strategies 19. A process or transformation strategy is an organization's approach to transform resources into goods and services. These goods or services are organized around a specific activity or process. 20. Every organization will have one of the four process strategies:

21.

Process focus

22. The process focuses on low volume; high variety products are also called job shop. These facilities are process focus in terms of equipment, layout, and supervision. 23. Advantages of this strategy includes: · · ·

Greater product flexibility More general purpose equipment Lower initial capital investment

25.

24. Disadvantages, on the other hand, includes: · · ·

High variable cost per unit More highly trained personnel More difficult production planning

Repetitive focus

26. This falls between the product and process focus. The repetitive process is a productoriented production process that uses modules. Modules are parts or components of a product previously manufactured or prepared, often in a continuous process. Fast-food firms are an example of repetitive process using modules. 27. Considerations in using this method includes: · More structured than process focused · Less structured than product focused. Enables quasi-customization · Using modules (it enjoys economic advantage of continuous process, and custom advantage of low-volume, high-variety model)

28.

Product focus

29. Product focus, are high volume, low variety processes; also called continuous processes. Products such as light bulbs, rolls of paper, beer, and bolts are examples of product process. This type of facility requires a high fixed cost, but low costs. The reward is high facility utilization. 30. Advantages:

31. Disadvantages:

· ·

· · ·

· ·

Lower variable cost per unit Lower but more specialized labor skills Easier production planning and control Higher equipment utilization

32. 33.

Lower product flexibility More specialized equipment Higher capital investment

Jollibee Foods Corporation Process Design

34. ·

35.

Mass Customization Focus

36. Rapid low-cost production that caters to constantly changing unique customer desires. This strategy is very hard to achieve. 37. Production Technology 38. The following help enhance the production of both manufacturing and service industries: 39. Machine Technology. This uses computer numerical control (CNC) which is machinery with its own computer and memory. 40. AISs & RFID. Automatic Identification System is a system for transforming data into electronic form, for example, bar codes. Radio Frequency Identification is a wireless system in which integrated circuits with antennas send radio waves. 41. Robots. These are flexible machines with the ability to hold, move, or grab items. It functions through electronic impulses that activate motors and switches. 42. Automated Storage and Retrieval Systems (ASRSs). These are computer-controlled warehouses that provide for the automatic placement of parts into and from designated places in a warehouse.

43. Process Control. It is the use of information technology to control a physical process. 44. Automated Guided Vehicles (AGVs). These are electronically guided and controlled cart used to move materials. 45. Flexible Manufacturing Systems (FMSs). These are systems that use electronic signals from a centralized computer to automate production and material flow. 46. Vision Systems. These are systems that use video cameras and computer technology in inspection roles. 47. Computer-Integrated Manufacturing (CIM). This is a manufacturing system in which CAD, FMS, inventory control, warehousing, and shipping are integrated.

48. Process Analysis and Design Process Analysis and Design is a systematic approach to improve our understanding of the business processes of an organization to assist in the realization of tangible benefits such as cost reduction, process efficiency, and effective human resource allocation.

Flow Diagrams Flow Diagrams are a schematic or drawing of the movement of material, product, or people. These are quick ways to view the big picture and try to make sense of the entire system.

Jollibee Foods Corporation Process Design

Time-Function Mapping Time-Function Mapping is a process in a flow diagram with time added on the horizontal axis. This tool is also called process mapping. The nodes indicate the activities and the arrows indicate the flow direction, with time on the horizontal axis. This type of analysis allows users to identify and eliminate waste such as extra steps, duplication, and delay. Time-function mapping adds some rigor and time element

Value-Stream Mapping Value-Stream Mapping (VSM) is a variation of time-function mapping; however, value-stream mapping takes an expanded look at where value is added (and not added) in the entire production process, including the supply chain. The idea is to start with the customer and understand the production process, but value-stream mapping extends the analysis back to suppliers. Value-stream mapping extends beyond the immediate organization to consumer and suppliers.

Process Charts Process Charts use symbols, time, and distance to provide an objective and structured way to analyse and record the activities that make up a process. These charts allow focusing on valueadded activities. Process charts are designed to provide a much more detailed view of the process, adding items such as value-added time, delay, distance, storage, and so forth.

Service Blueprinting Service Blueprinting is a tool used in manufacturing products with a high service content. This process focuses on the consumer and the provider's interaction with the consumer. Each process analysis tool has its strengths and variations. Service blueprinting is designed to help us focus on the customer interaction part of the process.

Jollibee Foods Corporation Process Design

Process Design of Jollibee Jollibee has a commissary system which includes production lines for the following: · · · ·

Frozen Patty Line Sauce Line Meat Processing Line Pie-Line

· · · ·

Dry Blending Line Bakery Line Marination Line Shanghai Line

· Meat and Vegetable Preparation Line

· ·

The following are some of the process flow of Jollibee’s production line:

· ·

Service Design of Jollibee

·

Service design is a form of conceptual design that involves the activity of planning and organizing people, infrastructure, communication and material components of a service in order to improve its quality and the interaction between the service provider and its customers. Service design may function as a way to inform changes to an existing service or create a new service entirely. The purpose of service design methodologies is to establish best practices for designing services according to both the needs of customers and the competencies and capabilities of service providers.

·

In order for a business to gain competitive advantage through service design, it must develop a service that is user-centered and holistic, meaning the users/customers are the top priority and the service itself must be satisfactory. For example, since Jollibee’s target market is the Filipino families, the foods that it serves have a kick of the Filipino tradition. Sweet Jolly Spaghetti, crispy and juicy fried chicken, palabok, halo-halo sundae and the adobo flakes burger.

·

Counter

·

(Maximum of 90 seconds)

·

Greeting the customer

·

Receiving and placing of orders

·

Process payment

·

Preparation of Orders

·

(Maximum of 1 minute)

·

Jollibee employed short-order cooks, who specialized in making food that didn't require a lot of preparation time.

·

It has different stations to maximize time

·

A very large grill where one person could cook lots of burgers simultaneously

·

A dressing station where people added the same condiments to every burger

Jollibee Foods Corporation Process Design

·

A fryer where one person made French fries

·

A soda fountain and milkshake machine for desserts and beverages, etc.

· ·

Here is some information about the food preparation of Jollibee.

·

Fries

·

Cooking time: 3 minutes

·

It is cooked even before the order is placed.

·

The fry person ensures that there are enough cooked fries for the customers

·

Spaghetti and Palabok

·

Cooking time: 7 minutes

·

The pasta is cooked ahead and then reheated when the orders are placed.

·

Sauces are pre-made.

·

Burger

·

Cooking time: 6 minutes

·

Burger patties are pre-cooked.

·

Buns are heated and the burger is assembled only when the orders are placed.

·

Same process goes with the burger steak.

·

Chicken

·

Cooking time: 12 minutes

·

Different cuts of chicken are breaded.

·

Cooked even before the orders are placed.

·

After the orders are prepared, receipts are given to the customers together with a jolly “thank you”.

·

Since Jollibee is a fast-food chain, food must be served quickly. In this part, the help of modules comes in. modules are set of standardized parts that can be used to construct a more complex structure. For example, Jollibee’s burger patty can be considered a module. If you put it between buns and add some dressing, you will have a Yumburger. If you top it off with gravy, you will have burger steak. And so on. Also Jollibee premade food bundles to serve its customers faster.

·

Jollibee Foods Corporation Process Design

·

Process Strategy Used · Jollibee uses repetitive focus. This strategy allows services to be designed as standard modular entities. Modular flexibility lets the customers buy meals on a unit-and-match (modular) basis. For example, a variety of burger products is being offered and listed in the menu such as patties, cheeseburger, etc. Thus each food in the menu provides a variety of specifications. · In addition, a service blueprint is used to provide guidance on how a service will be provided, In Jollibee, every move must be in accordance to the specific job assigned to employees. The service document contains the procedures on how the check-out clerk may entertain its customers, the polite words that he will execute to them, the proper ways how the waiter do its jobs, procedures for janitors in cleaning the table as the customers left. This ensures that the right service is being provided to customers.

·

By using this strategy, Jollibee was able to obtain the cost advantage of the product-focused model.

Jollibee Foods Corporation Location Decisions

·

LOCATION DECISIONS

·

Being in the right location is a key ingredient in business success. If a company selects the appropriate location, it may have adequate access to customers, workers, transportation, materials, and so on. Location plays a significant role in a company's profit and overall success. A location strategy is a plan for obtaining the best possible location for a company by identifying company needs and objectives, and searching for locations with offerings that are compatible with these needs and objectives. Generally, this means the firm will attempt to maximize opportunity while minimizing costs and risks.

·

There are many factors that affect location decisions some of them are:

·

Logistics. Logistics evaluation is the appraisal of the transportation options and costs for the prospective manufacturing and warehousing facilities.

·

Labor. Labor analysis determines whether prospective locations can meet a company's labour needs given its short-term and long-term goals.

·

Community and site. Community and site evaluation involves examining whether a company and a prospective community and site will be compatible in the long-term.

·

Trade zones. Companies may want to consider the benefits offered by free-trade zones, which are closed facilities monitored by customs services where goods can be brought without the usual customs requirements.

·

Political risk. Companies considering expanding into other countries must take political risk into consideration when developing a location strategy. Since some countries have unstable political environments, companies must be prepared for turmoil if they plan long-term operations in such countries.

·

Governmental regulation. Companies also may face government barriers and heavy restrictions and regulation if they intend to expand into other countries. Therefore, companies must examine governmental—as well as cultural—obstacles in other countries when developing location strategies.

·

Jollibee Outlets

·

Service businesses generally must maintain a number of sites to remain close to customers, the location selected should be close to the targeted segment of the market. The market can also influence the number of new locations, as well as their size and features.

·

A simple technique for determining service locations is to establish a set of minimum criteria for opening new outlets. These criteria should be developed so that the locations selected have strong chances of success. For example, a company could assess the potential of prospective locations based on primary criteria such as:

·

The population of the community should more than 50,000.

Jollibee Foods Corporation Location Decisions

·

The annual per capita income should be more than P250, 000.

·

Proximity to Markets

·

Since Jollibee is an entity that provides service. It is safe to say that its stores are located close to customers because it is one of the keys to increase sales and promote the business itself.

·

To illustrate the proximity of Jollibee to market, the picture above is the Jollibee Pasig Simbahan branch.

·

The table below will show us information about the place that surrounds it.

·

Given the information, we can conclude that the location of Jollibee-Pasig Simbahan can contribute to increase its sales due to the population or community that surrounds it.

·

Proximity to Competitors

·

Close proximity with competitors can ignite a head-to-head battle for competitive advantage. However, it's more likely that being near competitors can bring advantages to a business.

·

Many experts agree that the best place to locate a business is to be as close to your biggest competitor because your competitors chose their locations based on the ideal demographics of a particular area. In many cases, they've also devoted large portions of their advertising budget toward driving traffic to their locations. So, why spend the money when they've already spent it for you?

·

Of course, it's still a good idea to make your own evaluations of a particular property, even if your competitors seem to be thriving in the area. Staying ahead of the game in this regard will help your business grow should you decide.

·

That’s why, Jollibee locates itself near its competitors like McDonald’s, or either way because clustering also stimulates sales.

·

Jollibee and McDonald's in Lemery, Batangas. The distance between the two is 40 meters.

·

Proximity to Suppliers

·

Firms locate near their raw materials and suppliers because of perishability, transportation cost or bulk.

·

Some Jollibee stores which are far from suppliers located themselves in places where the means of transpiration are accessible in order to minimize transportation cost.

·

Commissaries

·

Jollibee has three commissary system sites: Santolan, Pasig City; Mandaue City, Cebu; and the central site in Canlubang, Laguna. The System, which operates 24/7, manages Jollibee’s total supply chain process.

Jollibee Foods Corporation Location Decisions

·

Zenith Foods Corporation, Laguna

·

It is located in Carmelray Industrial Park 1, Canlubang, Calamba, Laguna.

·

Zenith Foods Corporation, Cebu

·

It is located at G. Ouano St, Cabancalan, Mandaue City, Cebu. It is responsible for the supply of Jollibee outlets in Visayas and Mindanao. It is located near ports and airport. Its strategic location makes the transportation of goods easy resulting to the minimization of transportation cost.

·

Pasig City Commissary

·

It is located in Santolan, Pasig City.

·

The common denominator of Jollibee’s commissaries is their location. They are all situated in industrial zones. Industrial zone is a portion of a city that is zoned for industrial use (as opposed to residential or commercial use). Industrial zone may contain ports, warehouses, distribution centers, chemical plants, plastics manufacturers, airports, food and beverage processor etc.

·

Jollibee chose to place its three commissaries in industrial zones because these provide advantages such as:

·

Tax exemptions (No VAT for land acquisitions and other exemptions depending on the policy of the municipality)

·

Low water, natural gas, and telecommunication costs

·

Import and export documentation

·

Access to roads

·

International Expansion

·

Jollibee outlets outside the Philippines are located in country with large population of Filipinos like in United States, Taiwan, Singapore and Indonesia. Locating near the Filipino community gives them the advantage to increase sales. This is the most beneficial factor of the firm in the international scene. However, location is not the only thing that affects the success of the globalization of Jollibee there are cultural differences, laws, etc.

·

Location Evaluation Method

·

The place where the stores are to be located is based on the likings of the franchisee or based on the criteria formulated by the management. Commissaries, on the other hand, require the use of models because they involve deliveries and other tasks that are costly. There are four methods that can be used to solve location problems namely:

·

Locational cost-profit-volume analysis

·

a method of determining the volume of production where a company breaks even with costs and profits. This method takes into account both variable and fixed factors that

Jollibee Foods Corporation Location Decisions

influence the overall production costs. CPV uses a linear formula that recognizes total costs equal to fixed costs plus variable costs.

·

Center of Gravity Method

·

The center of gravity method is useful for identifying an individual location by considering existing locations, the distances between them, and the volume of products to be shipped. Companies use this method mostly for locating distribution warehouses. To use this technique, companies plot their existing locations on a grid with a coordinate system (the particular coordinate system used does not matter). The idea behind this technique is to identify the relative distances between locations. After the existing locations are placed on the grid, the center of gravity is determined by calculating the X and Y coordinates that would have the lowest transportation costs.

·

This seeks to compute geographic coordinates for a potential single new facility that will minimize costs. It’s an approach where the main inputs that it considers are the following:

·

Markets

·

Volume of goods shipped

·

Shipping costs

·

This method is beneficial because it’s (1) simple to compute, (2) considers existing facilities, (3) and minimizes costs.

·

Factor-rating systems

·

Factor-rating systems are among the most commonly used techniques for choosing a location, because they analyse diverse factors in an easily comprehensible manner. Factor-rating systems simply consist of a weighted list of the factors a company considers the most important and a range of values for each factor. A company can rate each site with a value from the range based on the costs and benefits offered by the alternative locations, and multiply this value by the appropriate weight. These numbers are then summed to get an overall "factor rating." Then a company can compare the overall ratings of alternative sites. This technique enables a company to choose a location systematically based on the best rating.

·

Linear Programming

·

Linear programming provides a method for evaluating the cost of prospective locations within a production/distribution network. This technique uses a matrix of production facilities and warehouses that shows the unit shipping costs from a manufacturing location designated by a variable, such as X, to prospective destinations, such as warehouses designated by other variables— E, F, and G —and the total number of goods the prospective manufacturer, X, could produce. Other prospective manufacturing locations and the same information for each are also included in the matrix. After computing the total costs for each prospective location, a company can

Jollibee Foods Corporation Location Decisions

determine which one has lower production/distribution network.

total

costs

in

terms

of

the

entire

· ·

The most applicable method for Jollibee commissaries is the factor rating method since it is the management that assigns subjective scores for each criterion. They can assign the weight depending on the importance of a certain criterion.

· ·

FACTOR

·

WEIGHT

Region 8

Region 7

RATING

FACTOR

RATING

FACTOR RATING

·

RATING

·

Energy Availability 30%

60

18

80

24

·

Labor Availability

20%

80

16

80

16

·

Transportation Cost 20%

90

18

90

18

·

Supplies

8

70

7

·

Infrastructure Cost 10%

70

7

60

6

·

Taxes and Regulations

10%

70

7

70

·

Total 100% 370

450

78

10%

80

74

7

· ·

For example, as shown in the table, Jollibee must choose to build its commissary in Region 7 since it got the highest factor rating.

·

Consequently, Jollibee may also use the transportation model to find the routes of deliveries that will cost them the least.

Jollibee Foods Corporation Layout Decisions

·

LAYOUT DECISIONS

· ·

Layout decisions is defined as the best placement of machines, offices and desks or service centers that could facilitate the flow of materials, people, and information with a specified area.

·

Layout decisions are strategic for it determines the long-run efficiency of operations. It must be aligned with other strategy relating to capacity, processes, flexibility and cost.

·

The objective of layout strategy is to develop an effective and efficient layout that will meet the firm’s competitive requirements.

· ·

In all cases, layout design must consider how to achieve the following:

·

Higher utilization of space, equipment, and people

·

Improved flow of information, materials, and people

·

Improved employee morale and safer working conditions

·

Improved customer/client interaction

·

Flexibility

· ·

Types of Layout

·

·

Office Layout

·

This type of layout requires the grouping of workers, their equipment and spaces to provide for comfort, safety, and movement of information. It places a great importance on the flow of information. There are two types of office layout: the cellular and openplan.

·

Allstate Insurance uses cellular office layout though it does not have separating walls but wide aisle separates each worker.

·

Microsoft offices were usually described as ‘town’ rather than headquarters. Its offices are designed not to just stimulate the creativeness of employees but also to encourage teamwork. However, Microsoft offices do not have fixed desks in other words it uses open-plan layout. They do have movable chairs and tables with touch screen computers. This also helps them to test the flexibility of their products.

·

Open Office Layout

·

Advantages:

Jollibee Foods Corporation Layout Decisions

·

Creates community and builds camaraderie

·

Stimulates creativity

·

Less furniture, less costs

·

Disadvantages:

·

Lack of privacy

·

Too much noise

·

Distractions from colleagues

·

Cell office Layout

·

Advantages:

·

Confidentiality between employees

·

Focus on each work

·

Distinct rankings and motivations

·

Little gossips

· ·

Disadvantages:

·

Consumes huge space

·

Ineffective communications due to walls or wide aisle

·

Equipment cannot be shared

·

Costlier than the open-plan office layout

·

Managers use relationship chart to analyse both electronic and conventional communication patterns, separation needs, and other conditions affecting employee effectiveness.

·

Retail Layout

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This is based on the idea that sales and profitability vary directly with customer exposure to products. It addresses flow, allocates space, and responds to customer behaviour

·

Five ideas that is helpful for determining the overall arrangement of many stores:

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Locate the high-draw items around the periphery of the store.

·

Use prominent locations for high-impulse and high-margin items.

·

Distribute what are known in the trade as “power items” to both sides of an aisle and disperse them.

·

Use end-aisle locations because they have a very high exposure rate.

Jollibee Foods Corporation Layout Decisions

·

Convey the mission of the store by carefully selecting the position of the lead-off department.

·

Some of the types of retail layout are:

·

Grid type

·

uses the length and width of the area to create clear aisle and facilitate self-service shopping. This is common to grocery stores.

·

Free flow pattern

·

uses a variety of fixtures to create a relaxed, unbalanced floor layout. It sacrifices selling space to create atmosphere. It also encourages browsing and unplanned purchases. This is common to high-end product stores.

·

This two types could be combined to suit to the style of products and shopping behaviour of customers.

·

The main objective of retail layout is to maximize profitability per square foot of floor space.

·

Aside from the retail layout of the store, the managers also take into consideration the servicescape or the physical surrounding of the store in which the service is delivered and hoe this affects not just the customers but also the employees. Elements such as: a). ambient condition, b). spatial layout and functionality and c). signs, symbols and artefacts are considered.

·

For example, is the Walgreens stores located in Chicago. It installed new linear fluorescent fixtures in its stores which resulted to more vivid and vibrant colours in the store. It also reduced the chain’s energy budget. The store also plays music to enlighten the mood of customers and employees.

·

Warehouse Layout

·

The objective of warehouse layout is to find the optimum trade-off between handling cost and costs associated with warehouse space. This design attempts to minimize total cost by addressing trade-offs between space and material handling.

·

Its advantages are:

·

Minimizes the resources spent on finding and moving material

·

Reduces the deterioration and damage to the material itself

·

While its disadvantage is it could be costly for it needs wide area and well-maintained tracking software.

·

Fixed-Position Layout

· ·

Jollibee Foods Corporation Layout Decisions

·

This addresses the layout requirements of stationary projects or the projects that remains in one place and workers and equipment come to that one work area. This is usually use in companies involved in shipbuilding and aircraft assembly.

·

The advantage of this type of layout are:

·

Material movement is reduced

·

Promotes pride and quality because an individual can complete the whole job

·

Highly flexible: can accommodate changes in product design, product mix and production volume

·

While its disadvantages are:

·

May result in increased space and greater work in process

·

Requires greater skill for personnel

·

Personnel and equipment movement is increased

·

Requires close control and coordination in production and personnel scheduling

·

Process-Oriented Layout

·

This layout deals with low-volume, high variety production in which like machines and equipment are grouped together. This is commonly seen in hospitals or clinics. A product or small order is produced by moving it from one department to another in the sequence required for that product.

·

A big advantage of process-oriented is its flexibility in equipment and Labor assignments. It is also good for handling the manufacture of parts in small batches and for the production of a wide variety of parts in different sizes or forms.

·

The disadvantage of process-oriented layout come from the general-purpose use of the equipment. The general-purpose equipment requires high labour skills and work-inprocess inventories are higher because of imbalances in the production process.

·

Work Cell Layout

·

This type of layout reorganizes people and machines that would ordinarily be dispersed in various departments into a group so that they can focus on making a single product or a group of related products

·

The advantages of work cells are:

·

Reduced work-in-process inventory

·

less floor space

·

Reduced raw material and finished goods inventories

·

Reduced direct labour cost

·

Heightened sense of employee participation

Jollibee Foods Corporation Layout Decisions

·

Increased equipment and machinery utilization

·

Reduced investment in machinery and equipment

·

While its disadvantages are:

·

Poorly balanced cells

·

Expanded training and scheduling of workers

·

Increased capital investment

·

A work balance chart is also valuable for evaluating the operation times in work cell.

·

Repetitive and Product-Oriented Layout

·

Repetitive production and continuous production use product layouts.

·

There are two types of a product-oriented layout are fabrication and assembly line. The fabrication line builds components on a series of machines while an assembly line puts the fabricated parts together at a series of workstations.

·

The objective of the product-oriented layout is to minimize imbalance in the fabrication or assembly line.

·

The main advantage of this layout are:

·

The low variable cost per unit usually associated with high volume, standardized products

·

Low material-handling costs

·

Reduced work-in-process inventories

·

Easier training and supervision

·

Rapid throughput

·

The disadvantages of this layout are:

·

The high volume required because of the large investment needed to establish the process

·

Work stoppage at any one point can tie up the whole operation

·

The process flexibility necessary for a variety of products and production rates can be a challenge

·

Fast food chains like Jollibee uses this type of layout (Repetitive and Product-Oriented Layout). Jollibee produces high-volume, and low variety of products like burgers, spaghetti, fries, and Chickenjoy.

·

Jollibee is the largest fast food chain in the Philippines, operating a nationwide network of more than 750 stores. A dominant market leader in the Philippines, Jollibee enjoys the lion’s share of the local market that is more than all the other multinational brands combined. The company has also embarked on an aggressive international

Jollibee Foods Corporation Layout Decisions

expansion plan, and currently has 80 stores outside the Philippines-USA (26), Vietnam (32), Brunei (11), Jeddah (7), Qatar, Hong Kong, and Kuwait (1 each), firmly establishing itself as a growing international QSR player. ·

A Jollibee chain serves food to hundreds of customers around the area each day. In order to meet these everyday demand, Jollibee invested in specialized equipment like deep fryers for fries and chickens (right) and the grilles for burger patties (left).

·

(How Jollibee products were made is further discussed in Product Design)

·

Finished products are then transferred to these heated pantries.

·

The first thing you see as you enter a Jollibee store is the counter. A wide space between the door and counter is provided to facilitate long lines of ordering customers.

·

Jollibee didn’t just invest in its kitchen for the efficiency of their production. Their store’s overall layout also facilitates the customer needs after serving the product in the counter. Jollibee provides comfy chairs for alone and group of customers who dine-in. Lighting, cool temperature, wall designs and music were also incorporated to give ambient conditions not just for customers but also the employees.

·

Jollibee also caters the need for food of travellers who mostly got stuck in traffic through their Drive-Thrus. Drive-Thrus make use of vacant area outside the store usually excess of parking space is converted into these making each space profitable.

·

Jollibee’s Layout strategy evidently conforms to its mission providing every customer with a clean and warm in-store environment and friendly and efficient service.

Jollibee Foods Corporation Human Resources

·

HUMAN RESOURCES

·

A business process is a collection of related, structured activities or tasks that produce a specific service or product (serve a particular goal) for a particular customer or customers. It often can be visualized with a flowchart as a sequence of activities with interleaving decision points or with a Process Matrix as a sequence of activities with relevance rules based on the data in the process.

·

Business processes must include up-to-date and accurate Information reports to ensure effective action. An example of this is the availability of purchase order status reports for supplier delivery follow-up as described in the section on effectiveness above. There are numerous examples of this in every possible business process.

·

Another example from production is the process of analysis of line rejections occurring on the shop floor. This process should include systematic periodical analysis of rejections by reason, and present the results in a suitable information report that pinpoints the major reasons, and trends in these reasons, for management to take corrective actions to control rejections and keep them within acceptable limits. Such a process of analysis and summarization of line rejection events is clearly superior to a process which merely inquire into each individual rejection as it occurs.

·

Business process owners and operatives should realize that process improvement often occurs with introduction of appropriate transaction, operational, highlight, exception or M.I.S. reports, provided these are consciously used for day-to-day or periodical decision-making. With this understanding would hopefully come the willingness to invest time and other resources in business process improvement by introduction of useful and relevant reporting systems.

·

Staffing Strategies

·

The human resource management of a restaurant needs to do Person-Job-Fit in selecting individuals who have relevant qualifications to fill in any job vacancies. Research has demonstrated that complete and unambiguous specification of required competencies reduces the influence of racial and gender stereotypes.

·

The Human Resource Department must have staffing strategies that emphasize on the characteristics of the employees, recruitment and selection process. In order to increase the level of customer satisfaction, it is very important for the Human Resource Department to hire employees who are proactive, have good communication skills and are alert. In addition to job specifications, HR Managers and supervisors use job descriptions to select employees and orient them to jobs. In a restaurant, there are two parts of management which are front-of-the-House management and back-of-theHouse management. For the effectiveness of the operations and to meet the customer’s satisfaction, restaurants need to have a proactive and efficient front-of-the-House and Back-of-the-House Management. This is because various components of restaurant service quality function differently in terms of improving satisfaction and behavioural

Jollibee Foods Corporation Human Resources

intensions. Front-of-the-House Management consists of supervisor, waiter or waitress, cashier and cleaners. Back-of-the-House Management consists of kitchen manager, head cook, head station cooks, and assistant cook and cleaners. Both of these managements must cooperate to ensure that they receive food and beverages on time without further delay. ·

Training and Development

·

Training and development are needed for all of the staff in a fast-food because it enhances the ability of employees to deliver a high quality service and to meet the needs of customers more effectively and in a friendly way. The skills can be developed and grown inside the employees who are important to meet the long term goals in embracing the customers’ needs through innovation, consistent quality product and excellent customer service.

·

For the non-managerial employees, Human Resource Department can use On the Job Training (OJT) method. OJT has the advantage of providing hands-on experience under normal working conditions and an opportunity for the supervisor and kitchen manager to build a good relationship with the new employees. It is the most effective means of facilitating learning in the workplace.

·

For the management development, headquarters must gather all the supervisors to have seminars and conferences to communicate ideas, policies or procedures, and discuss any issues related to the operations of other franchise. Supervisors can discuss the customer service complaints so that they can be improved. Training and development has to be evaluated to determine its effectiveness. Evaluation is needed to assess the extent to which training program improves learning, affects behaviour on the job and affects the performance of the employees. A competitive restaurant must develop their own benchmarking to measure its own service against other restaurants.

·

Ergonomics

·

Ergonomics is an important element in job design. It is the study of people at work and the practice of matching the features of products and jobs to human capabilities, preferences, and the limitations of those who are to perform job. Ergonomics focuses on ensuring that jobs are designed for safe and efficient work while improving the safety, comfort, and performance of users. The arrangement of the kitchen must be safe, comfortable and efficient to minimize the harmful effects of carelessness, negligence and other human fallibilities that slowdown the preparation of food and might contaminate the food and beverages. A safe, comfortable and efficient working environment is to boost employees’ performance while reducing injuries and errors.

·

Ethics

·

There are ethics that need to be observed by all staff for a safe and efficient working condition especially in the kitchen. The restaurant must be clean. Customers derive their perception of food quality from the tastiness of food, variety of the menu, variety of food, food presentations, serving size, safety, appeal, dietary acceptability, healthy

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options, food freshness, temperature and hygiene. The kitchen staff must wear the kitchen uniforms, wear hairnets to cover long hair and wash hands thoroughly after every activity. A good code of conduct can be written up and posted on notice boards and in staff areas to promote good ethical behaviour from staff. Staff can be made to practise good moral ethics through a good leadership and management policy that set the right examples, and stress the quality of the restaurant’s food and dining experience. Not only this, staff should be encouraged to remain vigilant and to report unethical cases in all food preparation processes. ·

Re-engineering

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Business process re-engineering (often referred to by the acronym BPR) is the main way in which organizations become more efficient and modernize. Business process reengineering transforms an organization in ways that directly affect performance.

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The two cornerstones of any organization are the people and the processes. If individuals are motivated and working hard, yet the business processes are cumbersome and non-essential activities remain, organizational performance will be poor. Business Process Re-engineering is the key to transforming how people work. What appear to be minor changes in processes can have dramatic effects on cash flow, service delivery and customer satisfaction. Even the act of documenting business processes alone will typically improve organizational efficiency by 10%.

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The best way to map and improve the organization's procedures is to take a top down approach, and not undertake a project in isolation. That means: Starting with mission statements that define the purpose of the organization and describe what sets it apart from others in its sector or industry.

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Producing vision statements which define where the organization is going, to provide a clear picture of the desired future position.

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Build these into a clear business strategy thereby deriving the project objectives.

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Defining behaviours that will enable the organization to achieve its' aims.

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Producing key performance measures to track progress.

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Relating efficiency improvements to the culture of the organization

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Identifying initiatives that will improve performance.

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Job Redesign

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Restructuring the elements including tasks, duties and responsibilities of a specific job in order to make it more encouraging and inspiring for the employees or workers is known as job redesigning. The process includes revising, analysing, altering, reforming and reshuffling the job-related content and dimensions to increase the variety of assignments and functions to motivate employees and make them feel as an important asset of the organization. The main objective of conducting job redesigning is to place

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the right person at the right job and get the maximum output while increasing their level of satisfaction.

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Job Redesign Process

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Revising the Job Content: Job redesigning process involves recollecting and revising job-related information to determine the inconsistency between person and the job.

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Analysing Job-related Information

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Once the job analyst is through with recollecting and revising the job content, analysing the discrepancies is the next step. It is done to determine the hindrances in performing job-related tasks and duties and investigate why an employee is not able to deliver the expected output.

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Altering the Job Elements

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The next step is to amend the job elements. It may include cut back on extra responsibilities or addition of more functions and a higher degree of accountability. The basic aim of altering the job content is to design a job in such a manner that encourages employees to work harder and perform better.

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Reformation of Job Description and Specification

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After altering the job elements, a job analyst needs to reform the job description and specification in order to make sure that the worker placed at a particular place is able to deliver what is expected of him.

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Reshuffling the Job-related Tasks and Duties

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Next is to reallocation of new or altered tasks and functions to employees. It may be done by rotating, enriching, enlarging and engineering the job. The idea is to motivate the performers while increasing their satisfaction level.

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Advantages of Job Redesigning

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Enhances the Quality of Work-Life

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Job redesigning motivates the employees and enhances the quality of their work life. It increases their on-the-job productivity and encourages them to perform better.

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Increases Organization’s and Employees’ Productivity

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Altering their job functions and duties makes employees much comfortable and adds to their satisfaction level. The unambiguous job responsibilities and tasks motivate them to work harder and give their best output. Not only this, it also results in increased productivity of an organization.

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Brings the Sense of Belongingness in Employees

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Redesigning job and allowing employees to do what they are good at creates a sense of belongingness in them towards the organization. It is an effective strategy to retain the

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talent in the organization and encouraging them to carry out their responsibilities in a better fashion.

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Creates a Right Person-Job Fit

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Job Redesigning plays an important role in creating a right person-job fit while harnessing the full potential of employees. It helps organization as well as employees in achieving their targets or goals.

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Therefore, the purpose of job redesigning is to identify the task significance and skill variety available in the organization and reallocating the job-related tasks and responsibilities according to the specific skills possessed by an employee.

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Six Sigma

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Six Sigma seeks to improve the quality of process outputs by identifying and removing the causes of defects (errors) and minimizing variability in manufacturing and business processes. It uses a set of quality management methods, including statistical methods, and creates a special infrastructure of people within the organization ("Black Belts", "Green Belts", etc.) who are experts in these methods. Each Six Sigma project carried out within an organization follows a defined sequence of steps and has quantified financial targets (cost reduction and/or profit increase). The term Six Sigma originated from terminology associated with manufacturing, specifically terms associated with statistical modelling of manufacturing processes. The maturity of a manufacturing process can be described by a sigma rating indicating its yield or the percentage of defect-free products it creates. A six sigma process is one in which 99.99966% of the products manufactured are statistically expected to be free of defects (3.4 defects per million).

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Balance between centralization and decentralization of power

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Jollibee should allow certain level of decentralization of power for its franchises in other countries for operating decisions related to product, marketing and human resource management. Also certain number of R&D centres could be opened in other countries to facilitate localization of some products. At the same time decisions regarding overall firm strategy, financial decisions and quality control must be taken care by headquarters in Philippines.

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Reforming Organisation Structure

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Jollibee should adopt an organisation structure which enables it to transfer its core competencies and global learning across the stores. Also it should support value creation activities in the value chain for more efficient operations. One of such kind of structure is flexible matrix structure which provides a common vision and culture. This structure will enable the cooperation and coordination among domestic and international operation units.

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·

Management-by-Objective (MBO)

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Management by objectives (MBO) is a process of defining objectives within an organization so that management and employees agree to the objectives and understand what they need to do in the organization in order to achieve them.

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Unique features and advantages of the MBO Process

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The principle behind Management by Objectives (MBO) is for employees to have a clear understanding of the roles and responsibilities expected of them. They can then understand how their activities relate to the achievement of the organization's goal. MBO also places importance on fulfilling the personal goals of each employee.

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Important features and advantages of MBO

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Motivation

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Involving employees in the whole process of goal setting and increasing employee empowerment. This increases employee job satisfaction and commitment.

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Better communication and coordination

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Frequent reviews and interactions between superiors and subordinates helps to maintain harmonious relationships within the organization and also to solve many problems.

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Clarity of goals

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Subordinates tend to have a higher commitment to objectives they set for themselves than those imposed on them by another person.

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Managers can ensure that objectives of the subordinates are linked to the organization's objectives.

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Total Quality Management or TQM

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An integrative philosophy of management for continuously improving the quality of products and processes.

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TQM functions on the premise that the quality of products and processes is the responsibility of everyone who is involved with the creation or consumption of the products or services offered by an organization. In other words, TQM requires the involvement of management, workforce, suppliers, and customers, in order to meet or exceed customer expectations.

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Considering the practices of TQM as discussed in six empirical studies; Cua, McKone, and Schroeder (2001) identified the nine common TQM practices as:

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cross-functional product design

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process management

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supplier quality management

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·

customer involvement

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information and feedback

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committed leadership

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strategic planning

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cross-functional training

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employee involvement

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Appropriate Method for the Company

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I choose Job redesign, as the most appropriate for the selected company to utilize in order to implement the recommended business policy.

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The goal of job design and job redesign is to create or reconstitute jobs or work roles in terms of work functions and worker capabilities that are both appealing to individuals and re in alignment with the organization’s strategy and vision. Job design involves the planning of the job including its contents, the methods of performing the job, and how it relates to other jobs in the organization. Job design and redesign’s goal is to connect the needs of the individuals performing various jobs with the productivity needs of the organization. An important aim for job design and redesign is to provide individuals with meaningful work that fits effectively into the flow of the organization. The goal of job design is simplifying, enriching, enlarging, or otherwise changing jobs to make the efforts of each employee fit together better with jobs performed by other workers. Redesigning one job can make the overall system work more efficiently methods would be most appropriate for the selected company to utilize in order to implement the recommended business policy.

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Job Redesign Approaches

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Motivational Approach

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Grounded in the earlier work on job enrichment, job enlargement and various characteristics of jobs, the motivational approach has primarily been developed within the domain and scope of organizational psychology. The motivational approach has generally searched for job design constructs that will be correlated with such primary outcomes variables as satisfaction, motivation, involvement, absenteeism, and job performance.

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Mechanistic Approach

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The mechanistic approach to job redesign has generally been on improving the efficiency with which jobs can be performed. Jobs that are constructed according to the mechanistic approach require less training and less expensive to staff. In essence the jobs are simplified and have lower levels of responsibility. With mental demands being lower, output quality may increase.

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·

Perceptual-Motor Approach

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The presumed benefits of the perceptual-motor approach include the increase in output quality and a predicted decrease in accident rates due to the emphasis on the reliability and safety of the job. The reduced mental demands of the job would also reduce employee stress and fatigue.

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Specialized to Enlarged Jobs

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Job enlargement = same-level activities

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Job rotation = moving from one job to another

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Job enrichment = redesigning to experience more responsibility, achievement, growth and recognition

Jollibee Foods Corporation Supply Chain Management

·

SUPPLY CHAIN MANAGEMENT

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Supply chain management (SCM) refers to the processes of creating and fulfilling demands for goods and services. It encompasses a trading partner community engaged in the common goal of satisfying end customers. The objective of supply chain management is to coordinate activities within the supply chain to maximize the supply chain’s competitive advantage and benefits to the ultimate consumer.

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Firms have different choices on how are they going to meet their supply needs. Some of the sourcing strategies that are used in supply chain management today include:

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Single sourcing

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A method whereby a purchased part is supplied by only one supplier. A JIT manufacturer will frequently have only one supplier for a purchased part so that close relationships can be established with a smaller number of suppliers. These close relationships (and mutual interdependence) foster high quality, reliability, short lead times, and cooperative action.

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Multi-sourcing

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Procurement of a good or service from more than one independent supplier. Companies may use it sometimes to induce healthy competition between the suppliers in order to achieve higher quality and lower price.

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Insourcing

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Insourcing is a business practice in which work that would otherwise have been contracted out is performed in house.

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Insourcing often involves bringing in specialists to fill temporary needs or training existing personnel to perform tasks that would otherwise have been outsourced. Insourcing can be viewed as outsourcing as seen from the opposite side. For example, a company based in Japan might open a plant in the United States for the purpose of employing American workers to manufacture Japanese products. From the Japanese perspective this is outsourcing, but from the American perspective it is insourcing. Nissan, a Japanese automobile manufacturer, has in fact done this.

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Joint ventures

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A joint venture (JV) is a business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task. This task can be a new project or any other business activity. In a joint venture (JV), each of the participants is responsible for profits, losses and costs associated with it. However, the venture is its own entity, separate and apart from the participants' other business interests.

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Keiretsu networks

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·

Keiretsu is a business network composed of manufacturers, supply chain partners, distributors and financiers who remain financially independent but work closely together to ensure each other’s success. In Japanese, the word keiretsu means “group.” In business, the word is often used as a synonym for partnership, alliance or extended enterprise.

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The formation of a keiretsu allows a manufacturer to establish stable, long-term partnerships, which in turn helps them to stay lean and focus on core business requirements. That same stability, however, can sometimes be a liability and prevent the manufacturer from responding quickly to changes in the economy, culture or technology. Keiretsu are organized around their own trading companies and banks. This allows each major keiretsu to be capable of controlling nearly every step of the economic chain in a variety of industrial, resource and service sectors.

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Vertical integration

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Vertical integration is a strategy where a company expands its business operations into different steps on the same production path, such as when a manufacturer owns its supplier and/or distributor. Vertical integration can help companies reduce costs and improve efficiencies by decreasing transportation expenses and reducing turnaround time, among other advantages. However, sometimes it is more effective for a company to rely on the established expertise and economies of scale of other vendors rather than trying to become vertically integrated.

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Vertical integration is the degree to which a firm owns its upstream suppliers and its downstream buyers. Contrary to horizontal integration, which is a consolidation of many firms that handle the same part of the production process, vertical integration is typified by one firm engaged in different parts of production (e.g., growing raw materials, manufacturing, transporting, marketing, and/or retailing).

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There are three varieties: backward (upstream) vertical integration, forward (downstream) vertical integration, and balanced (both upstream and downstream) vertical integration.

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A company exhibits backward vertical integration when it controls subsidiaries that produce some of the inputs used in the production of its products. For example, an automobile company may own a tire company, a glass company, and a metal company. Control of these three subsidiaries is intended to create a stable supply of inputs and ensure a consistent quality in their final product. It was the main business approach of Ford and other car companies in the 1920s, who all sought to minimize costs by integrating the production of cars and car parts, as exemplified in the Ford River Rouge Complex.

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A company tends toward forward vertical integration when it controls distribution centers and retailers where its products are sold.

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Supply Chain Management of Jollibee

Jollibee Foods Corporation Supply Chain Management

·

The Corporate Supply Chain provides manufacturing and logistics services to the various brands of JFC through Zenith Foods Corporation (“ZFC”) and JWS Logistics.

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Logistics

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JWS Logistics (JWSL) is part of Jollibee Worldwide Services, the regional operating headquarters of the Jollibee Group of companies. JWSL ensures the delivery of goods to the JFC stores on-time and in-full through its services which include supply planning, warehousing, distribution, and customer support and order management. It operates distribution centers in strategic locations to service the growing network of stores in the JFC system. The biggest distribution center which serves as a major hub for Metro Manila and South Luzon is located in a 5-hectare property in Barangay Marcelo Green, Paranaque City with over 20,000 combined pallet locations for both dry and cold storages. Like its manufacturing partner ZFC, JWSL is poised for expansion. A mix of company-owned and third party serviced logistics centers are being undertaken.

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Commissaries

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Thanks to the Jollibee Commissary System, ensuring the manufacture and distribution of safe and high- quality food in the most cost-efficient manner is made possible.

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ZFC, a wholly-owned subsidiary of JFC, serves as the major manufacturing arm of the Company. The major facility, located in Carmelray Industrial Park 1 in Canlubang has a combined capacity of about 400 metric tons of various products daily.

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There are three Commissary System sites: Santolan, Pasig City; Mandaue City, Cebu; and the central site in Canlubang, Laguna. The System, which operates 24/7, manages Jollibee’s total supply chain process.

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The Jollibee Pasig City commissary has production lines for breads and sauces, and is the distribution center for North Manila and North Luzon. In 1996, Jollibee opened the Vismin Foods Corporation (VFC) in Mandaue City, Cebu to service the Visayas and Mindanao areas. VFC has its own bread, pie, sauce, and frozen patty lines.

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The Laguna commissary is the biggest and most advanced in the country and among Asia’s best. Operated by Zenith Foods Corporation (ZFC), a full subsidiary of Jollibee, the newest commissary is on a 6-hectare property in the Carmelray Industrial Park. Aided by custom-made mechanized equipment, the production lines are for the marinated Chicken Joy, frozen patties and pies, breads, sauces, hotdogs and other meat products, and dry blended goods. ZFC can service over 800 Jollibee and Greenwich stores.

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The chicken marination line can produce as many as 150,000 pieces a day while about 480,000 hamburger patties a day is turned out by the frozen patty line. The breadline is designed to match the volume output of patties, i.e. also about 480,000 pieces a day. The pie-line can produce as much as 157,000 pocket pies in a 20-hour operating day. Currently, pies are exported to Jollibee stores in Hong Kong, Guam, Saipan, Brunei,

Jollibee Foods Corporation Supply Chain Management

and the USA. Various sauce products are processed in the ZFC sauce line including those for the Jollibee bestsellers, spaghetti and palabok. ·

A professionally staffed Technical Services Team supports the maintenance of an internationally accepted quality management system that further ensures the quality and safety of the commissary manufactured food products. High-calibre teams from Engineering, Human Resources, Information Management, Finance and Accounting likewise provide support to the Manufacturing and Logistics operations of the Commissary.

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In 1998, the frozen patty line in the Pasig commissary was awarded an ISO 9002 certification by the SGS (Societe’ Generale Surveillance) Yarsely, an international certification body. An ISO 9002 international certificate is a written assurance by a certification body that a company follows the requirements, specifications and guidelines set out by the International Organization for Standardization. 2004 is a banner year for Vismin Foods Corporation (VFC) who has been assessed and certified by the National Meat Inspection Commission of the Department of Agriculture, to have fully met the requirements and standards of Good Manufacturing Practice, reinforcing the commissary’s “AAA” accreditation granted by the same agency.

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Suppliers

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The company has existing agreements with all suppliers.

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Sourcing strategy used

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The sourcing strategy used by Jollibee is vertical integration. Jollibee commissaries and the JWS Logistics are wholly-owned. The following are the advantages and disadvantages of the sourcing strategy used by the company:

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ADVANTAGES

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It allows you to invest in assets that are highly specialized.

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Vertical integration can give you a great advantage over your competitors, allowing you to invest and develop the products that you are currently offering. By being able to acquire highly specialized assets, you will be able to differentiate your business from the rest of your industry, with a highly competitive advantage. As such, you can raise your share within the market and see increased profits.

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It gives you more control over your business.

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One great benefit that is sought by companies that are getting into vertical integration is more control over the value chain. When retailers decide to develop or acquire a manufacturing business, they would gain more control over the production aspect of their distribution processes. In the same manner, when manufacturing companies perform retailing or distribution, they would have more control over how they present their products and how much they would sell them on the market.

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It allows for positive differentiation.

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This business strategy can give an organization important access to more production inputs, process and retail channels, and distribution resources. Each of these elements can offer great opportunities to the company to distinguish itself from competition with the use of effective marketing tactics. For a retail business, it can adopt more quickly to the changing consumer needs by owning a production or manufacturing firm that can create its products. For manufacturers, they could sell through the web and take advantage of online advertising techniques to drive traffic to their sites and build market credibility.

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It requires lower costs of transaction.

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This can be realized through inter transactions that can be made between subsidiaries that typically have a central communication and management system that is inexpensive to employ.

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It offers more cost control.

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Typically, vertical integration can offer a significant ability to control costs in the distribution of products, particularly the traditional one, where every step in the movement of goods involves mark-ups, so the reseller can earn more profit. Through direct selling to end-buyers, manufacturers can get rid of the middleman, which means a step or more removed in the process along the way. A single entity that manages the distribution process will also have more ability to optimize the utilization of resources and avoid wasted costs. Not only these, but lower transportation costs will also be common.

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It ensures a high level of certainty when it comes to quality.

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Since subsidiaries are employing a quality control system, it is more likely that they can produce high-standard products.

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It provides more competitive advantages.

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Some businesses get into vertical integration with the sole purpose to increase their advantages over their competitors and block them from gaining access to important markets and scarce resources. For example, a retailer might purchase a manufacturing firm to gain access to resources, patents and proprietary technology that are only available in the firm’s local area. For manufacturers, they may enter retailing and distribution to get direct access to customers in a highly competitive market, before its competitors do.

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DISADVANTAGES

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It can have capacity-balancing problems.

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A good example of this situation is when a business needs to establish excess upstream capacity to ensure its downstream operations will get sufficient supply under any demand condition. This might even result in retaliation of the business’s former suppliers, potentially endangering its main production.

Jollibee Foods Corporation Supply Chain Management

·

It can bring about more difficulties.

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Take note that vertical mergers will have less economies of scale, as most of their production processes are at different levels. Moreover, there is still scope for monopoly power or even monopsony power. For example, tied pubs could charge higher prices to consumers, while having less choices on beer.

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It can result in decreased flexibility.

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The main contributors to this problem are the upstream and downstream investments the business is making.

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It can create some barriers to market entry.

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Manufacturing businesses that have control over access to crucial raw materials and components that are quite scarce due to vertical integration would often create some barriers to market entry. They have the ability to limit competition and would establish a strong position in the market to protect their customer base. However, they might face anti-trust regulators who think that they are influencing market concentration.

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It can cause confusion within the business.

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Retail and product development are distinct businesses, and doing both could require more work to be done. Also, a lot of entrepreneurs who are often trying to think of too many things would confuse, distract and harm their bottom line.

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It requires a huge amount of money.

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For a great vertical integration to happen, a company should have an extremely large amount of capital to invest. After all, they might have to purchase new facilities, hire a large number of new employees and control their new facilities, making this strategy nearly impossible for smaller companies to employ.

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It makes things more difficult.

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In addition to running your business’s retail front, which is not simple at all, you also have to learn to run a whole new sector of the corporate world, when you jump head first into things that are new to you, such as production. This can be a lot to handle and would become detrimental of the company.

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Although Jollibee uses vertical integration, it still acquires the service of suppliers for some of its supply needs.

Jollibee Foods Corporation Supply Chain Management

·

INVENTORY MANAGEMENT

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Inventory management can help to optimize customer’s satisfaction, supplier capability, and production scheduling. Poor inventory management will cause insufficient raw materials for daily operations. This may happen during the peak hours where people go out to seek for express lunch and dinner. If the raw material is in short supply, they cannot prepare enough ingredients for every dish that the customer order.

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There is no modern and automatic machine that can ease the daily operations. For example, they still

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Role of Inventory

need the staff to clean up and wash all the cutlery manually. If the restaurant is full of customers, especially during peak hours, they will have inadequate staff to serve the customer (e.g. taking orders, cleaning the table and helping in preparing food). Thus, they need machine and equipment in order to minimize their jobs and to leverage their service. Other than that, a limited number of kitchen equipment results in insufficient time for the chefs to prepare food. Consequently, inefficiency in food preparation can delay the serving time.

Management Food and supplies purchased, but not immediately used (inventories), often represent a significant portion of operational revenue. One classic method of controlling food cost is to maintain inventory levels high enough to ensure menu items can be produced in the right quantity, but low enough to not have excess product sitting in storage. This is called inventory control. Excess inventory can result in increased waste from foods that spoil, are pilfered, or simply wasted due to overproduction or obsolescence. When inventory is high, it is harder to keep track of what products are on hand, more storage space is required, money is tied up, and it is harder to control waste than when inventory is kept at low levels. This is true for both raw ingredients and finished products. The value of waste may be tracked on production records, or by maintaining a waste report. On the other hand, not producing enough of each menu item, whether due to lack of raw ingredients or inadequate forecasting, leads to customer disappointment and may violate program regulations. The goal is to have all choices available to students but not have excessive amounts leftover. Although the concept appears simple, it requires careful planning, standardized procedures, and monitoring to achieve desired results. In the past managers only needed to consider inventory control for their own facility in order to control costs. The age of supply chain management, however, has made school nutrition operators more aware of the cost of inventory across the supply chain and the effect it has on end costs. Producers, manufacturers, and distributors experience lower margins and waste

Jollibee Foods Corporation Supply Chain Management

when anticipated sales do not materialize resulting in excess inventories of product. This cost is passed along to the school district, which is why using predictable buying patterns will lower food costs to schools. Effective inventory management can achieve several goals. The first is preserving food quality. Receiving the right quantity of product shortly before products are served ensures freshness. Also, training employees to check product codes ensures that products meet specifications resulting in the expected quality. Other goals include: maintaining a high level of customer service, maximizing efficiency, managing finances, reducing the space and cost related to storage, limiting the loss in the case of recalls or disaster, controlling the quantities of food and supplies on-hand, and keeping foods safe. Customer Service One important aspect of good customer service is to have daily advertised menu items by controlling stock outs. Customers are disappointed when their favourite products run out and when acceptable substitutions are not available. Also, some customers have allergies or other dietary restrictions and their health depends on the right products being available. Substituting a peanut oil for vegetable oil may literally mean life or death for some customers. Good customer service also requires the delivery of product that is fresh. Although they may be safe to eat, serving products past their use-by date call into question the quality of all products. Serving leftovers resulting from inaccurate forecasting also erodes the perception of quality. Finally, offering a product mix with enough variety to maximize participation contributes to good customer service. However, it is also important to limit variety to those products that provide sufficient sales in order to maintain operational efficiency. Making small quantities of product increases labour and reduces efficiency. Efficiency Another aspect of inventory management is efficient product handling. The design of the facility, especially the location and arrangement of storage areas can affect the ease with which products are delivered to production areas, as well as the security of inventory. Designing inventory forms to match the layout of storage areas can reduce the time needed to count inventory. Examples of practices that can be used to increase efficiency include: · · · ·

reducing the number of items or stock keeping units (SKUs) that need to be ordered, handled, and stored resulting in decreased handling time; eliminating items with low volume; consolidating common types or styles of food such as using the same chicken patties for more than one entrée; and using purchasing reports from vendors or software systems to determine the number of cases purchased of each item.

Jollibee Foods Corporation Supply Chain Management

Financial Management One of the most important goals of inventory management is improved financial control. The financial goal of inventory management is to ensure that the maximum value is generated from food and supply investments. In addition to the actual cost of acquiring inventory, costs are associated with transporting and storing inventory. These costs are called carrying costs and may include storage rental, utilities, insurance, cost of shrinkage, cost of obsolescence, cost of wages and benefits for labour to move and count stock, and opportunity cost - how much more you could have earned if the money were spent elsewhere. Managing Quantities The correct quantity of inventory is the level at which sufficient product can be produced to meet customer demands – no more, no less. Some safety stock, a small cushion of inventory for unpredicted usage, is necessary to prevent sites from running out of food. For many products, this may mean setting a periodic automatic replacement (par) level or a reorder point. Par levels are usually set for items served daily such as milk, common ingredients used in multiple recipes (e.g., sugar, flour, spices), chemicals, and paper supplies. For entrees, fruits, vegetables, and bread products it is best to project serving quantities for the week’s menu. Common measures of inventory efficiency are the number of days of inventory on hand and turnover rate. The days of inventory on hand and turnover rate are calculated: Ending inventory ÷ average daily food cost = days of inventory on hand Number of serving days ÷ days of inventory on hand = turnover rate Food Safety Food safety is a critical consideration in inventory management. It is very important to protect food inventories from both unintentional and intentional contamination. Proper placement of product in storage areas can ensure that raw products do not cross-contaminate food that will receive no further cooking as well as prevent accidental contamination from chemicals. Standardized, (Hazard Analysis and Critical Control Points) HACCP-based receiving practices protect customers from products that have not been held at proper temperatures or have been damaged during transport. Proper storage practices ensure foods are kept safe and shelf life is maximized. Ideal storage temperatures vary based on the type of food. Although refrigerated foods should be held between 32°F and 40°F, temperatures near 32°F may freeze produce whereas this temperature may be ideal for meat and fish. Products requiring colder temperatures should be placed near the back of the cooler where temperatures are cooler. Thermometers should be placed both near the door and at the back of the cooler to adequately monitor proper holding temperatures. Keep in mind that holding temperatures refer to the temperature of the food, not the air temperature of the cooler. Cooler air temperatures should be 2°F below recommended product temperatures. Interpreting product dating and shelf life can be confusing. Four types of dates may be found on product packaging and each type has a different meaning:

Jollibee Foods Corporation Supply Chain Management

Sell-By “Sell-By “is the last date products should be displayed for sale. Although the product may still be safe, the quality starts to diminish once this date passes.

Best if Used by “Best If Used by (or Used Before)” is peak quality date. It does not mean the product is unsafe or unfit to eat beyond this date.

Use-by “Use-By” is the last date recommended by the manufacturer for consuming the product for best quality.

Closed or Coded Dates “Closed or coded dates” are packing numbers used by the manufacturer. These may be perpetual calendar dates with each day of the year given a consecutive number with January 1 coded as 001 or some variation of a date such as 20100615 representing June 15, 2010. It is not unusual for pack dates to be several months before schools receive the product due to harvest schedules. These dates are not intended to be interpreted as “Use by” dates; however, they are often needed for recalls.

Inventory Management of Jollibee Food Corp. Inventory management is extremely important in any industry and even more so in the food industry. With the items being perishable, the complexity of inventory management increases. Fast food restaurants face a tough challenge in deciding their inventory levels. If they stock too much, a lot of the items are going to go bad resulting in a loss. Similarly, if the under stock, all customers can’t be served and hence they will move to other restaurants. So these restaurants should be extremely careful in managing their inventories. Each fast food chains their own model to replenish their inventory. Typically items which are top sellers are replenished as and when the stock gets over and the other items are ordered periodically (every week, month, etc.). The restaurants have adopted new methods which take into consideration the consumption of items during specific times of the day and stock their inventories accordingly. The demand for food is really volatile as people don’t have the same food item every day. This makes it harder to forecast the demand. There are other challenges involved like quality, freshness and health concerns also to consider when stocking up. With menus being changed frequently the restaurants and suppliers face more challenges with inventory replenishment. Technology is being used increasingly to try and forecast the demand. Better data analysis tools are helping the fast food chains to forecast more accurately. With the industry growing at an alarming rate all the restaurants face tough competition and having an efficient inventory management system could make the difference between going out of business and becoming the leader in the industry. Chains like Jollibee, Subway, KFC and others are constantly improving their inventory management strategies to achieve the best performance. As an example.... Considering Jollibee, these are some of their suppliers.

Jollibee has to coordinate and manage all these and decide their inventory management strategy based on these items. It is absolutely necessary that all the items are stocked regularly as even a small delay in the supply of one item can lead to major problems. So they have to carefully plan their inventories to accommodate all factors. There are several other challenges with inventory management.

The Jollibee Commissary System ensures the manufacture and distribution of safe and highquality food in the most cost-efficient manner. There are three Commissary System sites: Santolan, Pasig City; Mandaue City, Cebu; and the central site in Canlubang, Laguna. The System, which operates 24/7, manages Jollibee’s total supply chain process. The Jollibee Pasig City commissary has production lines for breads and sauces, and is the distribution center for North Manila and North Luzon. In 1996, Jollibee opened the Vismin Foods Corporation (VFC) in Mandaue City, Cebu to service the Visayas and Mindanao areas VFC has its own bread, pie, sauce, and frozen patty lines.

The Laguna commissary is the biggest and most advanced in the country and among Asia’s best. Operated by Zenith Foods Corporation (ZFC), a full subsidiary of Jollibee, the newest commissary is on a 6-hectare property in the Carmelray Industrial Park. Aided by custom-made mechanized equipment, the production lines are for the marinated Chicken Joy, frozen patties and pies, breads, sauces, hotdogs and other meat products, and dry blended goods. ZFC can service over 800 Jollibee and Greenwich stores. The chicken marination line can produce as many as 150,000 pieces a day while about 480,000 hamburger patties a day is turned out by the frozen patty line. The breadline is designed to match the volume output of patties, i.e. also about480,000 pieces a day. The pie-line can produce as much as 157,000 pocket pies in a 20-hour operating day. Currently, pies are exported to Jollibee stores in Hong Kong, Guam, Saipan, Brunei, and the USA. Various sauce products are processed in the ZFC sauce line including those for the Jollibee bestsellers, spaghetti and palabok. A professionally staffed Technical Serviceteam supports the maintenance of an internationally accepted quality management system that further ensures the quality and safety of the commissary manufactured food products. High-calibre teams from Engineering, Human Resources, Information Management, Finance and Accounting likewise provide support to the Manufacturing and Logistics operations of the Commissary. Proof of Jollibee’s adherence to high quality standards is the various awards it garnered for the commissaries: in 1997, the commissary in Pasig earned the Outstanding Industrial Plant in the National Capital Region from the Laguna Lake Development Authority and the Most Improved Industry awarded by the Sagip Pasig Movement while Commissary Plant Engineer Romy P. Fernandez was awarded as one of the Top Ten Most Outstanding Pollution Control Officers of the Philippines. In 1998 also, the frozen patty line in the Pasig commissary was awarded an ISO 9002certification by the SGS (Societe' Generale Surveillance) Yarsely, an international certification body. 2004 is a banner year for Vismin Foods Corporation (VFC) who has been assessed and certified by the National Meat Inspection Commission of the Department of

Agriculture, to have fully met the requirements and standards of Good Manufacturing Practice, reinforcing the commissary’s "AAA" accreditation granted by the same agency.

The Jollibee Food Corp. Inventory Management Diagram It contains a process (shape) that represents the system to model, in this case, the "Food Ordering System". It also shows the participants who will interact with the system, called the external entities. In this example, Supplier, Kitchen, Manager and Customer are the entities who will interact with the system. In between the process and the external entities, there are data flow (connectors) that indicate the existence of information exchange between the entities and the system.

In between the process and the external entities, there are data flow (connectors) that indicate the existence of information exchange between the entities and the system.

Jollibee Foods Corporation Operational Maintenance

OPERATIONAL MAINTENNANCE Operational maintenance is the care and minor maintenance of equipment using procedures that do not require detailed technical knowledge of the equipment’s or system’s function and design. This category of operational maintenance normally consists of inspecting, cleaning, servicing, preserving, lubricating, and adjusting, as required. Such maintenance may also include minor parts replacement that does not require the person performing the work to have highly technical skills or to perform internal alignment. As the term implies, operational maintenance, is performed by the operator of the equipment. Its purpose is threefold: (1) to make the operator aware of the state of readiness of the equipment; (2) to reduce the delays that would occur if a qualified technician had to be called every time a simple adjustment were needed; and (3) to release technicians for more complicated work

Two types of maintenance  Preventive maintenance – routine inspection and servicing to keep facilities in good repair 

Breakdown maintenance – emergency or priority repairs on failed equipment

Implementing Preventive Maintenance Need to know when a system requires service or is likely to fail High initial failure rates are known as infant mortality Once a product settles in, MTBF generally follows a normal distribution Good reporting and record keeping can aid the decision on when preventive maintenance should be performed

Total Productive Maintenance

Jollibee Foods Corporation Operational Maintenance

It combines TQM with a strategic view of maintenance from process and equipment design to preventive maintenance. 

Designing machines that are reliable, easy to operate, and easy to maintain.

 Emphasizing total cost of ownership when purchasing machine, so that service and maintenance are included in the cost.  Developing preventive maintenance plans that utilize the best practices or operations, maintenance department, and depot service.  Training for autonomous maintenance so operators maintain their own machines and partner with maintenance personnel. Reliability Measures 1.

Improving Individual Components Rs = R1 x R2 x… x Rn Where R1 = reliability of component 1 R2 = reliability of component 2

Reliabilities are presented as probabilities. As the number of components in a series increases, the reliability of the whole system declines very quickly. FR (%) = (No. of failures ÷ No. of units tested) × 100% Measures the percentage of failures among the total number of products tested. FR (N) = No. of failures ÷ No. of unit hours of operation time Measures the number of failures during a period of time.

MTBF = 1 ÷ FR (N) Mean time between failures (MTBF) 2.

Providing Redundancy

Redundancy is provided to ensure that if the component fails, the system has recourse to another.

(Probability of 1st component working) + [(Probability of 2nd component working) × (Probability of needing second component)] = Reliability of a component along with its backup Maintenance Measures

Jollibee Foods Corporation Operational Maintenance

1.

Implementing Preventive Maintenance

Preventive maintenance implies that we can determine when a system needs service or will need repair. Therefore, to perform preventive maintenance, we must know when a system requires service or when it is likely to fail. 2.

Increasing Repair Capabilities

Enlarging or improving repair facilities can get the system back in operation faster. A good maintenance facility should have these 6 factors: 

Well-trained personnel



Adequate resources



Ability to establish a repair plan and priorities



Ability and authority to do material planning.



Ability to identify the cause of breakdowns.



Ability to design items to extend mean time between failures.

Maintaining Jollibee’s Operation Use of paper products and plastic wraps keeps labour costs down: pre-sliced cheese, packs of jellies and ketchup. Getting the customer to do the work. A limited menu restricted to items with a short preparation time would make fast service possible and would also be useful in streamlining operations.

1 utilization of time-saving equipment: microwave, post-mix beverage dispensers 2 utilization of labour-saving equipment: ware washers, automatic potato peelers and automatic coffee brewers 3 Utilization of self-service devices or methods to reduce labour overhead: vending machines, cafeteria systems, buffet tables The causes of a system not meeting its anticipated goal:

1 Poor working conditions. 2 Poor employer-employee relations. 3 Poor employee-employee relations. 4 Lack of teamwork.

Jollibee Foods Corporation Operational Maintenance

5 Snags in production. 6 Lack of adequate and simplified instructions. 7 Not enough equipment. 8 Poor safety procedures. 9 Poor sanitation procedures. 10 Unnecessary movement of materials. 11 Ineffective use of workspace and equipment. 12 Poor and ineffective communication. 13 Out of stock or inventory conditions, resulting in frequent menu changes. 14 Frequent breakdown of equipment, lack of preventive maintenance. 15 Equipment too complicated to operate. 16 Equipment controls are inaccessible or too difficult to manipulate. 17 Equipment poorly displayed or deployed.

Applying Preventive Maintenance In addition to that Jollibee’s fast food establishment requires nightly maintenance and cleaning to remain in top operating shape and to maintain safety. This is a preventive form of maintenance to combat the growth of bacteria and to ensure food service equipment doesn't break down. A restaurant or food service business with a bacterial outbreak poses a danger to both employees and customers who consume contaminated products.

Preserving Water Quality Water quality is essential to any food service establishment's food and drink offerings. Leaky seals and washers on pipes and drain fittings can cause corrosion, which encourages bacterial growth. Bacteria in a restaurant's water supply can cause illnesses from customers consuming food and drinks made using the contaminated water. For this reason, food service staff should clean all drains nightly and check the tightness of fittings connecting food service equipment to water sources. This helps prevent leaks by spotting potential problem areas before the first customer gets sick, opening the restaurant to a possible lawsuit.

Jollibee Foods Corporation Operational Maintenance

Food Preparation Areas The proper maintenance of food preparation areas is key in preventing food-borne illness in a food service establishment. Employees must thoroughly clean preparation areas after each use with a solution containing bleach and water to prevent the growth of bacteria. All food preparation tools, including knives and cutting boards, must receive the same cleaning treatment. This ensures bacteria can't build up on surfaces and contaminate ingredients.

Ovens, Grills and Fryers Grease, gas and oil leaks in ovens, grills and fryers can lead to significant damage of internal mechanical components. A thorough cleaning of these machines at the end of each evening can help kitchen staff keep equipment in top working condition and spot a potential leak as soon as it appears. Failing to properly clean these kitchen appliances can result in diminished performance and a potentially hazardous work condition, especially if a gas leak occurs; one errant spark and the whole restaurant could go up in flames.

Update POS Software A modern point-of-sale system functions in many ways like a desktop computer, including running a similar operating system and performing a variety of function simultaneously. A POS system's software might require periodic updates to stay within its manufacturer's operational parameters. A restaurant owner should contact the manufacturer's technical support line periodically to ensure the POS system in her establishment is working on the latest software update. This ensures optimal performance and reduces the chance of a breakdown in the middle of a workday. Preventative Maintenance Program JFC goal: •

To prevent the failure of equipment before it actually occurs.

• Designed to preserve and enhance equipment reliability by replacing worn components before they actually fail, keep your equipment running efficiently so when you hit the “peak season” your equipment is serving your customers—not “in the shop for service.” • Trained staff will work at hours that are convenient to your operation and with a nomess, no fuss policy keeping your operation running while an on-site PM is being conducted.

Food Safety Food safety increasingly has become the top priority and focus area of Jollibee Franchisee. Food safety has always been important throughout the restaurant industry. Recent changes to state and federal laws combined the increased public awareness to heighten the attention and importance of Food Safety. This is very important, and in the opinion of the management of Jollibee Corporation, this is as it should be.

Jollibee Foods Corporation Operational Maintenance

It is the duty and responsibility of the management to ensure that the food and beverages served daily in the fast food franchise to the customers to meet the highest standards possible and are free of any and all contamination. It is all the management job to ensure the necessary steps are taken for the ‘safety of food’ served to the customers. Jollibee’s Potentially Hazardous foods which may cause food borne illness: 1.

Raw Chicken

2.

Breaded. Spicy, Grilled Chicken

3.

Chicken Nugget

4.

Diced Tomatoes

5.

Raw and Grounded Beef

6.

Milk

7.

Raw Bacon

Jollibee Pest Control Guidelines: To maintain a pest-free restaurant the primary deterrents are outstanding sanitation standards, an exceptional maintenance program, employee training and observance of approved practices. •

Storage: STORE ALL ITEMS OFF THE FLOOR

•

Trash: Do not store trash by the rear door or the outside dumpster.

•

Doors: Keep the back door closed when not used.

•

Pest Entry Prevention: Ensure any holes in the building are sealed and cracks repaired

•

Inspections: Regular and recorded pest control inspections of the restaurant.

Operations Audits and Audit Scores The conducting and ensuing action taken from Operations Audits is highly recommended for all Jollibee location. As a policy and business practice, Jollibee Food Corporation conducts quarterly audits on all franchise which are owned and operated by the company; the ‘Company Stores’ This is also a standard practice conducted with all Jollibee stores owned and operated by franchisees, the ‘Franchised stores’. Under the franchise agreement, it is a corporate responsibility to provide operations support to the franchisees. The conducting of operational audit forms of this support in fulfilling this responsibility. These Operations Audits are very detailed and cover an assess every area of the restaurant under the standards established for Food Safety, Cleanliness, Customer Service and Employee and Customer Safety. Typically, this audits take up a full day to complete. Each and every area of the restaurant is assigned an audit score or rating by the evaluator and results are tabulated.

Jollibee Foods Corporation Operational Maintenance

The Operations Audits are then reviewed by the corporate operations consultant with the Restaurant Manager, in the case of the company stores, or the franchisee of record, in case of franchised restaurant locations or the designate of the franchisee of record such as the Restaurant Manager. During these reviews, areas of opportunity for improvement and corrective actions are identified. It is then the responsibility of the Restaurant Manager to ensure that the corrective action is complete and the audit points are complied with. Of note, the minimum score established by the corporation for the Cleanliness Section of the Operations Audit is 90%. If the stores do not meet this standard, generally a second audit is conducted in 30 days. At that point, if the stores still score below the 90 percent threshold, a third Operations Audit is conducted in another 30-day period. These audit and auditing process demonstrate the commitment of Jollibee Corporation and its employees to high standards of operation performance and the integrity and the protection of the brand as a whole. Compliance is expected throughout.