Taco Bell Case Study

Workshop Case Study greaser price Design, Layout & Process Choice Design for vicissitude In 1999, three out of every four Mexican fast-food meals purchased in the United States were made from integrity guild Taco Bell. However, this market dominance may never have come about unless the company had not transformed its operations throughout the 1980s. In the early 1980s, Taco Bell was typical of this kind. It was fundamentally a job shop operation. Nearly all food production was carried out on billet foodstuffs were prepared from their raw state food items such as ground beef for tacos were cooked for a plosive consonant of several hours in vats guacamole and other sauces were made-up beans were washed, cleaned and cooked Once these items were ready for sale, they were then assembled in response to a customer order. This meant that wait time at the cash register was 105 seconds on average, an even long-play during peak periods. This type of operations led to a number of manag ement challenges. Staff had to be schedule and organised in shifts so that they mainly prepared food items and cleaned the unit during slack periods, whilst they assembled orders and served customers during busy times.It was estimated that the eating place jitney spent an hour each day working on his crew schedule in order to match labour supply as closely as possible to potential demand, and thereby meet the companys cost targets. Food cost control was also a priority, which meant that a great deal of time and effort went into ensuring no menu item was prepared in to a fault small or too large a quantity. But the complexity of this operation, lead to quite entire variations in food quality, both within single units and between units in the chain. This was not helped by unlikeness in the quality of raw materials, which were ainly sourced locally. The emphasis on in-house food production meant that that the ratio of kitchen to dining put was 7030. Moreoer, the main assembly lin e where food items were made to order ran parallel to the service counter, so that employees on the line were facing away from the customers. At that time, Taco Bell did not have a drive-through window, even though 50 per cent of competitors gross revenue were from this source. Beginning in 1983, the CEO of Taco Bell, sewer Martin, made a number of major changes to the physical layout.The food assembly line was reconfigured to have deuce shorter lines at right wing angles to the service counter. This alter product flow and make betterd customers perception of the operation. The introduction of electronic point-of-sale not only improved order taking and cash handling, just now also provided improved data on which food forecasting could be made. Other changes included adding new menu items increase the average size of new units from 1600 up to 2000 square feet adding drive-through windows the upgrading the decor and uniforms of staff. However, external pressures meant that Martin also had to adopt a new operations process. By the mid-1980s, the US fast-food market had matured and competition was fierce. Previously performance was judged on growth, which could be achieved by opening new units. In the mature market-place, market share became much more significant. Labour shortages also meant an increase in labour costs, up by 18 per cent for the industry, but by 50 per cent for Taco Bell due to its relatively larger, skilled workforce.Whereas chains with burger or chicken concepts could offset this increase by taking advantage of falling food costs, Taco Bells food cost remained at around 30 per cent of sales. So by 1989, Taco Bell was a relatively small player in the market being squeezed by wage increase costs. In a series of initiatives, the operation was transformed. K-minus was a project that turned the kitchen into just a thawing and assembly unit. Nearly all food preparation (chopping, slicing and mixing of vegetables and meat) and cooking was elimi nated.Beef, chicken and beans arrived in pre-cooked bags, lettuce was pre-shredded, hard tortillas pre-fried and guacamole delivered in cartridges. This changed the ratio of back-of-house to front-of-house to 3070, reduce staffing levels in each unit and increased the usable capacity of each unit. The SOS (speed of service) initiative was intentional to respond to market research that showed customers wanted their food fast. Recipes were adapted and a heated staging area developed so that 60 per cent of the menu items, representing over 80 per cent of sales volume, were pre-wrapped ready for sale.This reduced (Total Automation of Company Operations TACO) was an IT project designed to computerise in-store operations and network each unit to headquarters. TACO provided each manager with daily reports on 46 key performance measures, assisted with production and labour scheduling and aided inventory control. This reduced the time eatery managers spent on paperwork by up to 16 hours a week. These process changes and the investment funds in technology were also accompanied by changes in human resource management. The restaurant managers job was now very different from what it had been due to K-minus, SOS and TACO.Taco Bell recognised that managers should now center on much more on front-of-house and on the customer. The management structure within each unit was thereof changed along with job descriptions and remuneration packages. Much more pay was performance related, so that top managers could profit $80, 000 a year, a huge increase on previous salary scales. Selection criteria for the new restaurant managers were also adapted to reflect the new style of operation. Between 1984 and 1994, Taco Bell doubled its sales and tripled its profits. Despite this, competition remained tough.With the right processes in place, Martin could now look to other ways in which to improve operational performance. So, in the mid-1990s the focus switched from technology to huma n resources, with the growth of team-managed units and the development of the learning plaque within Taco. (Source Brown, Lamming, Bessant & Jones, Strategic Operations Management, 2nd edn. Elsevier, 2005) line of works Clearly from the Taco Bell case, managing the process transformation is an hugely important challenge for operations managers in both service and manufacturing settings.Success does not come about stringently by having the correctly designed layout, process and technology. Other skills and tacit knowledge also come into play. Task 1 Critically evaluate how strategic operational initiatives such as K-minus, SOS and TACO struck the right balance of addressing the hard & soft operational problems Taco faced and delivering customer pleasure. Task 2 ever-changing the transformational process (i. e. to the layout, product and process control) has a direct correlation to improving customer service and satisfaction? Discuss.