Operations Management

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We observed Qdoba\'s operations and made recommendations for improvement.

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Operations Management

  1. 1. OM 725: Adding Value through Operations and Technology TEAM 1 Jeremy Blanchard Cesar Calvo Medina Dong Sun Chang Evan daSilva Jiten Goyal Shannon Rohan
  2. 2. Company Overview Main Figures RESTAURANTS 1,457 EMPLOYEES 42,700 REVENUE $2,539M INCOME $119M
  3. 3. Qdoba at the Prudential Center COMPETITIVE ENVIRONMENT Plenty of options available, reducing client tolerance for waits
  4. 4. Qdoba at the Prudential Mall Layout LOOK & FEEL RESTAURANT Tables and services shared with other competitors
  5. 5. Qdoba at the Prudential Center “Fast Casual” Restaurant Customers Food Selection Factors Restaurant Selection Factors Health Quality 20% 27% Taste 27% Freshness 26% Office workers, local shoppers, retail store staff
  6. 6. Methodology 1st Field Observation 02/27/2009 • Observation of the process identifying the different tasks and procedures • Time measurement of the different tasks in two different batches, one for the peak time and one for the non-peak 2nd Field Observation 04/03/2009 • Verify observation analysis to see if reality confirms our data analysis • Confirm the feasibility of the recommendations
  7. 7. General Project Workflow Queue Add Sauce Steam Add Basic Roll up the and Extra Tortilla Ingredients Burrito Choices Order No No Take Collect a Away? Payment Drink? Yes Yes Prepare Prepare Bag Drink
  8. 8. Project Workflow Non-Peak Times Queue Work station 1 Add Sauce Steam Add Basic Roll up the and extra Tortilla Ingredients Burrito Choices 38‘’ Order No No Take Collect Work station 2 a Away? Payment Drink? Yes Yes Prepare Prepare Bag Drink 41 ‘’
  9. 9. Analysis of Cycle Time Non-Peak Period Task Max Min Average Customers Capacity Capacity Time* Time* Time * per Hour Per Hour Utilization Steam Tortilla -> Add Basic Ingredients -> Add sauce and extra 77 28 38 64 95 67% choices ->Roll up Burrito Beverage, Bagging & Payment 111 6 41 64 88 73% Collection *Times in seconds
  10. 10. Analysis of Non-Peak Through-put Time 9 8 Avg: 3 min 59 sec Min: 1 min 39 sec 7 Max: 9 min 50 sec 6 Frequency 5 4 3 2 1 0 <=50 50- 100- 150- 200- 250- 300- 350- 400- 450- 500- 550- 600- >650 100 150 200 250 300 350 400 450 500 550 600 650 Seconds 80% of the clients served in less than 6’ 57”
  11. 11. Analysis of Non-Peak Wait Time 8 Avg: 1 min 46 sec 7 Min: 1 sec 6 Max: 5 min 3 sec 5 4 3 2 1 0 <=0 0- 25 25- 50- 75- 100- 125- 150- 175- 200- 225- 250- 275- >300 50 75 100 125 150 175 200 225 250 275 300 Seconds 80% of the clients wait in line less than in 3’ 34”
  12. 12. Observation During the Non-Peak Period • Some customers were indecisive and talked to the workers • Waiting line was almost empty • Each food prep worker completed one entire prep process • Worker stocked ingredients, cleaned work station, and took breaks • Manager greeted every customer with a smile while performing his tasks
  13. 13. Project Workflow Peak Times Queue Work station 1 Work station 2 Work station 3 Work station 4 Add Sauce Steam Add Basic Roll up the and Extra Tortilla Ingredients Burrito Choices 15” 14 ‘’ 9‘’ 16 ‘’ Order No No Take Collect Work station 5 a away? Payment Drink? Yes Yes Prepare Prepare Bag Drink 35 ‘’
  14. 14. Analysis of Cycle Time Peak Period Task Max Min Average Customers Capacity Capacity Time* Time* Time * per Hour Per Hour Utilization Steam Tortilla 83 3 15 179 240 74.5% Add Basic Ingredients 40 4 14 179 257 69.6% Add Sauce and Extra choices 43 3 9 179 400 45% Roll up Burrito 29 9 16 179 225 79.5% Beverage & Bagging/Payment 85 5 35 179 154** 116% Collection *Times in seconds ** Capacity calculated taking into account 1.5 workers, to include the times when the manager helps with the drinks.
  15. 15. Analysis of Peak Through-put Time 40 35 Avg: 8 min 3 sec Min: 3 min 16 sec 30 Max: 11 min 39 sec 25 Frequency 20 15 10 5 0 <=50 50- 100- 150- 200- 250- 300- 350- 400- 450- 500- 550- 600- >650 100 150 200 250 300 350 400 450 500 550 600 650 Seconds 80% of the clients served in less than 9’ 59”
  16. 16. 2 4 6 8 10 12 14 0 <=0 0- 25 25- 50 Min: 8 sec 50- 75 75- 100 Avg: 4 min 5 sec Max: 8 min 39 sec 100- 125 125- 150 150- 175 175- 200 200- 225 225- 250 250- 275 Seconds 275- 300 300- 325 Analysis of Peak Wait Time 325- 350 350- 375 375- 400 400- 425 425- 450 80% of the clients wait in line less than in 5’ 44” 450- 475 475- 500 >500
  17. 17. Observation During the Peak Period • Workers did not chat with each other besides calling orders and remained at their work stations • Line is full most of the time. Potential customers were deterred by the long line • Manager tried to help the bottle neck by preparing soda (from the soda fountain) • Number of food prep workers increased from 1 to 4 • Workers completed orders in assembly line fashion
  18. 18. Recommendations Reduce Cycle Time • Add soda-fountains right next to registers Shift Demand • Offer coupons to encourage non-peak orders • Implement online ordering system Make wait more enjoyable • Offer free tortilla chips to customers in line
  19. 19. Reduce Cycle Time: Moving Soda Fountain New Lay Out Goal To increase the capacity of the bottleneck Impacts • Lower cycle time at the registers • Shorter lines • More clients
  20. 20. Shifting demand: Coupons Coupons Goal To shift demand from peak time to non-peak Impacts 50 cents OFF • Higher CU at non-peak ** Order between 10.00 • Additional customers a.m. and 12.00 p.m.
  21. 21. Shifting demand: Online Order Service Internet Order Goal Shift and increase demand Impacts • Higher income • Increased loyalty • Leverage corporate capabilities
  22. 22. Make waiting enjoyable: Free Tortilla Chips Free Samples Goal Improve quality of service by making the wait during peak times more enjoyable Impacts • Higher service quality • Increased loyalty • Non material increase in cost
  23. 23. Impact of recommendations INCOME STATEMENT ($000) Soda Discounts Internet Free Tortilla Current 1,801 1,888 1,857 1,904 1,809 Revenues (602) (631) (620) (636) (604) COGS (668) (669) (668) (712) (669) OPERATING COST (216) (216) (216) (216) (216) Rental (60) (61) (60) (60) (60) Other operating Cost (392) (392) (392) (436) (392) Salaries 531 588 569 557 536 Operating Margin
  24. 24. Impact of Recommendations Operating Profit ($000) 657 5 26 38 57 531 +24% Current Soda Fountain Discount Internet Free Torilla Total
  25. 25. Priority of Recommendations Implementation Priority List 1 Soda Fountain 2 Free Tortilla Chips 3 Discount Coupons 4 Internet Ordering
  26. 26. Thank you for your attention - Q&A

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