1) The new process by McDonald’s helps to deliver fresher hamburgers to its customers. Unlike the old make-to-stock process, where hamburgers were prepared before customers placed orders, the new process allows hamburgers to be assembled after the order is placed. The key elements of the new system are the use of technology for storing ingredients and the response time of 15 seconds. Despite the improvement in hamburger freshness achieved with the new process, McDonald’s hamburgers are still not the freshest. Wendy’s is using a slower process, in which hamburger is cooked from raw ingredients after the order is placed. This enables product customization and helps to achieve superior quality and freshness.
2) Process flow structures are diagrams that represent basic elements of a process that are organized according to the sequence of their execution. Process flow structures are usually split into job shop, batch shop, assembly line and continuous flow depending on the flexibility of the processes’ sequence. USPS is generally using batch shop process. Most of the main handled by the company follows a highly standardized sorting process that is largely automated. However, for mail that is not standard and requires manual processing follows a separate path. In this way the company can achieve high level of customer service and delivery reliability as well as lower handling costs.
3) Work-in-process inventory can improve process efficiency as it lowers the possibility of bottlenecks. In this way it is possible to reduce or to eliminate idle time as well as to ensure more continuous process flow. However, high work-in-process inventory can also have a negative effect on efficiency. Firstly, large inventory is costly to produce and to store. It ties-up capital and leads to suboptimal allocation of storage and working space. Furthermore, work-in-process inventory requires continuous monitoring of quality as over time it may perish or get damaged, which is wasteful and reduces transparency in the system. Therefore, a balance should be achieved between process stability and stock minimization.
4.) Break-even analysis helps to determine the volume of a product/service to produce in order to cover fixed production costs. Production level beyond the break-even point should generate profits for the company. Production cost is usually comprised of a fixed and a variable components. While variable costs are directly correlated with the volume produced, fixed costs are independent of the volume. Therefore, the higher the level of production, the less unit fixed costs become. At the break-even point the sum of fixed and variable costs is equal to the price of the product, hence profitability is 0. This logic suggests that higher volumes will lower unit fixed costs and increase revenues.
5) The fact that people tend to remember events as snap shots and not movies suggests that services should be developed with special emphasis on key elements and moments. Therefore, it is important to ensure that the most significant moments of service delivery leave a strong and a positive impression in customers’ minds. Thus, no matter what the overall experience was, the end of the process should leave the strongest and the most positive feeling. Moreover, an improvement along the process will be preferred. For example, a surprise discount at the end of a meal will compensate for some waiting time and will leave customers satisfied with the overall service.
