Question

(Related to Solved Problem 1.1 on page 7) For many years, McDonald's used frozen beef patties to make its hamburgers. It recently began market testing how consumers in the United States would respond to hamburgers made of fresh beef that had never been frozen. In early 2017 , McDonald's expanded the market test from only 55 restaurants to more than 300 . The switch to fresh, neverfrozen beef patties would be a huge undertaking involving "how [the beef] is transported to the restaurants, how it is stored when it arrives and how much it affects employees' process of making burgers." If you were a manager at McDonald's, how would you go about analyzing whether to switch to fresh, never-frozen beef patties? In your answer, consider whether your decision would have to be all or nothing-all fresh, never-frozen beef patties in all McDonald's hamburgers- and whether you would have to switch in all McDonald's locations around the world (in 119 countries) or just in certain countries.

Short answer

The process should start by identifying important factors and evaluating the current process. Alternatives should be analyzed, and then a pilot project should be conducted. The data collected from the pilot test should then be analyzed with a decision and plan implemented based on the results.

Step-by-step solution

Identify Criteria for Decision Making

First start with identifying the important factors that should impact this decision. These factors could include cost, logistics, quality, employee training, customer preferences, health regulations, and potential increase in profits.

Evaluate the Current Process

Investigate the current process of using frozen beef patties, including sourcing, storing, transporting, and training employees. Also evaluate the customer satisfaction with the current product.

Research and Analyze Alternatives

Research possible solutions and alternatives to make the transition smoother. This could include gradual implementation, regional testing, and seeking out best practices from other companies who have done something similar.

Conduct a Pilot Project

Before making any big decisions, it could be beneficial to conduct a pilot project in a selected region or handful of stores. During this project, collect as much data as possible about customer reactions, employee satisfaction and the cost-effectiveness of the change.

Gather Data and Evaluate

After the pilot, gather all data and feedback and evaluate it carefully. A thorough analysis will assure that the decision is based on facts and not on assumptions.

Make a Decision and Implement

Based on all prior analyses, now the final decision can be made on whether to switch to fresh, non-frozen beef patties or not. If the decision is made to switch, implement the plan globally or locally depending on the initial analyses.

Key concepts

Logistics Management

The handling and transportation of materials in a business significantly impacts the overall decision-making process. When considering switching to fresh beef, logistic management becomes crucial.
Logistics management involves the planning and execution of the transportation and storage of goods between origin and consumption points. For McDonald's, managing the logistics of fresh beef involves:

• Understanding transportation needs such as maintaining a certain temperature to ensure quality.
• Efficient storage solutions once the beef reaches the restaurant to keep it fresh.
• Evaluating the current infrastructure to determine if modifications are necessary to accommodate fresh products.

Changing from frozen to fresh beef patties can require significant changes in warehousing and delivery management. Restaurants may need to install new refrigeration units, or adapt existing ones to handle fresh products. Decision making here focuses on cost-effectiveness, ensuring that these logistics changes do not impact meal preparation time negatively.

Customer Satisfaction Analysis

Understanding customer preferences is key when considering product changes. Customer satisfaction analysis helps businesses tailor their products and services to meet customer needs.
With the switch to fresh beef, this analysis involves:

• Gathering feedback through surveys or social media to evaluate customer responses to the taste and quality of new patties.
• Analyzing sales data from regions where tests are conducted to gauge customer purchasing behavior.
• Comparing satisfaction levels before and after the introduction of fresh patties.

Effective customer satisfaction analysis can help in identifying whether the change aligns with consumer expectations, leading to increased brand loyalty and sales. This ensures that McDonald's is making informed decisions based on real customer experiences rather than assumptions.

Cost-Benefit Analysis

Evaluating the financial implications of a significant change like moving to fresh beef is essential. A cost-benefit analysis helps businesses weigh the financial pros and cons.
Key components of performing a thorough cost-benefit analysis include:

• Identifying direct and indirect costs such as new logistics infrastructure, employee training, and marketing.
• Quantifying benefits like increased customer satisfaction, sales growth, and potential for higher prices.
• Calculating the break-even point to understand how long it will take for the benefits to offset the costs.

It's important to ensure that the potential increase in customer satisfaction and profitability justifies the investment. By concluding the analysis, decision-makers can determine if the switch is financially viable for the company’s continued success.

Pilot Project Implementation

Before any major change, conducting a pilot project can provide valuable insights and data. A pilot project involves testing the change on a smaller scale before a full-scale rollout.
Steps to effectively implement a pilot project include:

• Choosing a strategic location or set of locations where the impact can be monitored closely.
• Establishing clear objectives such as evaluating customer response, logistical challenges, and operation adjustments.
• Collecting comprehensive data concerning sales impact, customer feedback, and employee adaptation to new processes.

Pilot projects allow for fine-tuning based on real-world results without the risk of affecting the entire organization negatively. This approach helps identify potential issues and areas for improvement, thereby increasing the likelihood of a smooth transition should the decision be made to go fully with fresh beef.