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
Process focus........................................................................................................................... 17

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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
Layout Decisions...........................................................................................................................28

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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
Keiretsu networks......................................................................................................................43

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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
Food Safety............................................................................................................................. 61

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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 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.

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.

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

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Background of the Company

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.

Great tasting products and

quality systems.
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Background of the Company

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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 Great tasting products and
quality systems.
Jollibee’s growth is due to its
delicious menu
Jollibeeline-up
Foods–Corporation
like its
superior-tasting Chickenjoy,
Background of the Company
mouth-watering Yumburger and
Champ hamburger, and
deliciously satisfying Jollibee
Values, Mission, Vision Spaghetti-ably complemented with
creative marketing programs, and
efficient manufacturing and
Values logistics facilities. It is made
Customer Focus, Excellence, Respect for the Individual, possible by well-trained teams that
Teamwork Spirit of Family and Fun, Humility to Listen work in a culture of integrity and
and Learn, Honesty and Integrity, Frugality humility, fun and family-like.
Every Jollibee outlet welcomes
Mission customers with a clean and warm
To serve great tasting food, in-store environment and friendly
and efficient service.
bringing the joy of eating to
everyone
Vision
We are the best tasting QSR...
The most endearing brand…
that has ever been…
We will lead in product taste 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.

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Background of the Company

1. It is characterized by its fast food cuisine and nominal table service.

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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Background of the Company

SWOT Analysis
Strengths Weaknesses
a. Jollibee was a regional industry leader a. Lacked more effective marketing skills as
that had experienced professionals as chief growth revenues decreased.
executives of the organization.
b. Lack on in-depth planning and research
b. Proven past performance made dealings in the expansion to foreign markets.
with prospective partners easier.
c. Poor co-ordination between the national
c. Wide variety of products offered in and international units.
diverse markets.

Opportunities Threats
a. The promising nature of international a. Competition from both international
markets and also the available potential due companies and other local eateries.
to the migration of Filipinos in certain
b. Political instability in the country
countries.
threatened JFC as it could hamper the
b. Being an agricultural country, full opportunities to convince international
integration in sourcing raw materials could investors and country leaders to allow a JFC
be done. entry in their country.
c. For international markets, locating c. Driving Forces
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.
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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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 Jollibee was
consumers.
As Jollibee entered international markets, it faced new
able to attain
challenges. The fast food industry is highly competitive a competitive and
price wars and marketing innovations are seen
frequently. The rivalry is also centred on the key success advantage in
factors of the industry, which are good food, good, service and
reasonable pricing. Rivals are somewhat equal in Philippines…
capabilities and opportunities, thus making the
competition stiffer. Internationally well-established
players like KFC and McDonalds had high brand values that
Jollibee found difficult to compete with. The threat of
substitute products is considerable. Local street food and
high-end restaurants form two ends of a range of

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Background of the Company

substitutes. Potential entrants face entry barriers that will hinder them from entering the
industry. These are the inability to gain access to technology and specialized know-how, brand
preference and 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 concerned and they will be able
and franchise fees has been increasing rapidly for the period to pay off their debts and loans.
under study. The total number of stores increased 65% to
One thing they should consider
205 from the end of 1993 to the end of 1996. By 1996, sales
doing is slowing down expansion.
had increased to 8.57 billion which translates to a market
Jollibee should consider opening a
share of more than 50% among all hamburger fast food
store and giving it time to grow
chains. Total assets increased over 230% in the same period.
and turn a profit before it finances
Moreover, operating income increased about 114% while net
the opening of a new store.
income increased over 100% during the same period. These
increases are dramatic. Significantly Inventory decreased Opening new stores requires a
from about 11.5% in 1992 to just 7.5% in 96. This implies that lot of financing. They must
less of the current assets were tied up inventory. During the study markets to determine a
same period the trade accounts receivables has increased location, buy furniture,
from 8.4% in 1992 to 12.7% in 1996. Jollibee was able to purchase kitchen appliances,
compensate for this increase by corresponding increase in and train new managers and
sales and hence this need not be a cause of concern. employees. Opening multiple
stores at the same time will hurt
On the other hand, all is not well with the financials of
the bottom line and will
Jollibee. There was 28.9 million pesos of long-term debt
increase debt. It took
outstanding at the end of year 1996. Cost of sales has
McDonald's 20 years for their
increased each year with an increase of about 46% from the
international operations to
end of 95 to the end of 96. But during this same period, total
account for 50% of total sales.
sales only increased about 28.7%. This escalation in the cost
Also, they must reduce cost of
of sales must be brought under control
sales. During the period under
Accounts payable and accrued expenses increased by about study the cost of sales has
156% from 94 to 96. In addition, earnings per share increased at a faster pace than
decreased 19% to 0.68 pesos per share from 94 to 96. the sales increase, which is not
Jollibee has debt and some financial instability; however, it acceptable.
is not something they can't overcome. They have 24 stores in
The company has good internal
foreign countries, which account for roughly $9 million in
financial resources but a certain
sales. This is an encouraging sign as far as Jollibee is
code should be maintained in
the relationship with the

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Background of the Company

franchisee. Also, the allocation of the financial resources store needs to be studied before
needs to be done wisely and judiciously. This is where there going ahead with the decision.
has to be collaboration between the marketing and finance
department. The feasibility (financial) of opening up a new

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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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.

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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)

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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 · Develop importance ratings
· Identify how the goods/service will satisfy · Evaluate competing products
customer wants · Determine the desirable technical
· Relate customer wants with product attributes, your performance, and the
how’s. competitor’s performance against these
· Identify relationships between the firm’s attributes.
how’s

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
The use of teams such as product development teams, design for manufacturability teams, and
value engineering teams.
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:
Robust design. A design that can be produced to requirements even with unfavourable
conditions in the production process.
Modular design. A design in which parts or components of a product are subdivided into
modules that are easily interchanged or replaced.

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Product Design

Computer aided design (CAD) and Computer Aided Manufacturing (CAM). CAD is the use of
computers to interactively design products and prepare engineering 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
Value Analysis. A review of successful products that takes place during the production process.
Sustainability and Life Cycle Assessment. This is use to evaluate product options.
After developing the product, next question would be, when will we produce the product? This
move is known as ‘transition to production’.

How Jollibee products are designed?

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."

How Jollibee products are made?

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.
(Fries were fried under 175 C for 2-3 minutes)
(A standard weight for fries depending on customer order)
(After products are made, they are stored on a heated landing pad until they are served to
customer)

Product Development Continuum

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.

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 Jollibee Foods Corporation
Product Design

Internal Development Strategy

Enhancements. This is the use of organization’s existing product strengths for innovations. It
may be a change in size, weight, or features.
Migrations. This is the use of advantage of a product to another product.
New internally developed products.

External Development Strategy

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.
Joint Venture. The process of establishing joint ownership to pursue new products or markets.
Alliances. This is a way of having cooperative agreements that allow firms to remain
independent, but pursue strategies consistent with their individual missions.

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

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.

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.

Service Design
Aside from tangible products, services in banking, finance, insurance, transportation and
communications are also designed to meet unique customers’ specifications.
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 processes can be

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Product Design

designed to optimize interaction between firms and their customers. It analyses process chain or
the sequence of steps that accomplish an activity.
Through analysing the process chain, we will know the process inefficiencies and the ways to
solve it. Some of these solutions are:
1. Limit the options
2. Delay customization
3. Modularization
4. Automation
5. Moment of truth or the moment that exemplifies, enhances, or detracts from the
customer’s expectations.

Jollibee’s Service Design

Jollibee just not make and sell their food but also provide quality services.
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.
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.
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.
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.

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Process Design

PROCESS DESIGN

Four Process Strategies

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.
Every organization will have one of the four process strategies:

Process focus
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.
Advantages of this strategy includes: Disadvantages, on the other hand, includes:
· Greater product flexibility · High variable cost per unit
· More general purpose equipment · More highly trained personnel
· Lower initial capital investment · More difficult production planning

Repetitive focus
This falls between the product and process focus. The repetitive process is a product-oriented
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.
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)

Product focus
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.
Advantages: Disadvantages:
· Lower variable cost per unit · Lower product flexibility
· Lower but more specialized labor · More specialized equipment
skills · Higher capital investment
· Easier production planning and
control
· Higher equipment utilization

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Process Design

Mass Customization Focus

Rapid low-cost production that caters to constantly changing unique customer desires. This
strategy is very hard to achieve.

Production Technology
The following help enhance the production of both manufacturing and service industries:
Machine Technology. This uses computer placement of parts into and from designated
numerical control (CNC) which is places in a warehouse.
machinery with its own computer and
Process Control. It is the use of information
memory.
technology to control a physical process.
AISs & RFID. Automatic Identification
Automated Guided Vehicles (AGVs). These
System is a system for transforming data
are electronically guided and controlled cart
into electronic form, for example, bar codes.
used to move materials.
Radio Frequency Identification is a wireless
system in which integrated circuits with Flexible Manufacturing Systems (FMSs).
antennas send radio waves. These are systems that use electronic signals
from a centralized computer to automate
Robots. These are flexible machines with
production and material flow.
the ability to hold, move, or grab items. It
functions through electronic impulses that Vision Systems. These are systems that use
activate motors and switches. video cameras and computer technology in
inspection roles.
Automated Storage and Retrieval Systems
(ASRSs). These are computer-controlled Computer-Integrated Manufacturing (CIM).
warehouses that provide for the automatic This is a manufacturing system in which
CAD, FMS, inventory control, warehousing,
and shipping are integrated.

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.

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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 value-
added 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.

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Process Design

Process Design of Jollibee

Jollibee has a commissary system which includes production lines for the following:
· Frozen Patty Line · Dry Blending Line · Meat and Vegetable
· Sauce Line · Bakery Line Preparation Line
· Meat Processing Line · Marination Line
· Pie-Line · Shanghai 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

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Process Design

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
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 pre-made food bundles to serve its customers faster.

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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.

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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.

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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.

Zenith Foods Corporation, Laguna

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

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Location Decisions

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 influence the overall

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Location Decisions

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 determine which one has lower total costs in terms of the entire production/distribution
network.

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Location Decisions

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 RATING FACTOR RATING
Energy Availability 30% 60 18 80 24
Labor Availability 20% 80 16 80 16
Transportation Cost 20% 90 18 90 18
Supplies 10% 80 8 70 7
Infrastructure Cost 10% 70 7 60 6
Taxes and Regulations 10% 70 7 70 7
Total 100% 370 74 450 78

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.

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 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 open-plan.
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:
Creates community and builds camaraderie

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 Jollibee Foods Corporation
Layout Decisions

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
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:
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.
Convey the mission of the store by carefully selecting the position of the lead-off department.
Some of the types of retail layout are:

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 Jollibee Foods Corporation
Layout Decisions

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

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:

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 Jollibee Foods Corporation
Layout Decisions

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-in-process
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
Increased equipment and machinery utilization
Reduced investment in machinery and equipment
While its disadvantages are:

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 Jollibee Foods Corporation
Layout Decisions

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 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).

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Layout Decisions

(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.

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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-the-House 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

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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

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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 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
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 re-engineering
transforms an organization in ways that directly affect performance.
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%.
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.
Producing vision statements which define where the organization is going, to provide a clear
picture of the desired future position.
Build these into a clear business strategy thereby deriving the project objectives.
Defining behaviours that will enable the organization to achieve its' aims.
Producing key performance measures to track progress.
Relating efficiency improvements to the culture of the organization
Identifying initiatives that will improve performance.

Job Redesign
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

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

Job Redesign Process

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

Analysing Job-related Information

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.

Altering the Job Elements

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.

Reformation of Job Description and Specification

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.

Reshuffling the Job-related Tasks and Duties

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.

Advantages of Job Redesigning

Enhances the Quality of Work-Life
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.

Increases Organization’s and Employees’ Productivity

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

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

Creates a Right Person-Job Fit

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.
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.

Six Sigma
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).

Balance between centralization and decentralization of power

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.

Reforming Organisation Structure

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)
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.

Unique features and advantages of the MBO Process

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.

Important features and advantages of MBO

Motivation
Involving employees in the whole process of goal setting and increasing employee
empowerment. This increases employee job satisfaction and commitment.
Better communication and coordination
Frequent reviews and interactions between superiors and subordinates helps to maintain
harmonious relationships within the organization and also to solve many problems.
Clarity of goals
Subordinates tend to have a higher commitment to objectives they set for themselves than those
imposed on them by another person.
Managers can ensure that objectives of the subordinates are linked to the organization's
objectives.

Total Quality Management or TQM

An integrative philosophy of management for continuously improving the quality of products
and processes.
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.
Considering the practices of TQM as discussed in six empirical studies; Cua, McKone, and
Schroeder (2001) identified the nine common TQM practices as:
cross-functional product design
process management
supplier quality management

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customer involvement
information and feedback
committed leadership
strategic planning
cross-functional training
employee involvement

Appropriate Method for the Company

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

Job Redesign Approaches

Motivational Approach
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.

Mechanistic Approach
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
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.
Specialized to Enlarged Jobs
Job enlargement = same-level activities
Job rotation = moving from one job to another
Job enrichment = redesigning to experience more responsibility, achievement, growth and
recognition

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Supply Chain Management

SUPPLY CHAIN MANAGEMENT

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.
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:

Single sourcing
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.

Multi-sourcing
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.

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

Joint ventures
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,

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losses and costs associated with it. However, the venture is its own entity, separate and apart
from the participants' other business interests.

Keiretsu networks
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.
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.

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

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

Logistics
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.

Commissaries
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.
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.
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 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, and the USA. Various sauce

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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.
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.

Suppliers
The company has existing agreements with all suppliers.

Sourcing strategy used

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:
ADVANTAGES
It allows you to invest in assets that are highly specialized.
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.
It gives you more control over your business.
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.
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.
It requires lower costs of transaction.
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.
It offers more cost control.
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.
It ensures a high level of certainty when it comes to quality.
Since subsidiaries are employing a quality control system, it is more likely that they can produce
high-standard products.
It provides more competitive advantages.
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.
DISADVANTAGES
It can have capacity-balancing problems.
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.
It can bring about more difficulties.
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

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monopsony power. For example, tied pubs could charge higher prices to consumers, while
having less choices on beer.
It can result in decreased flexibility.
The main contributors to this problem are the upstream and downstream investments the
business is making.
It can create some barriers to market entry.
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.
It can cause confusion within the business.
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.
It requires a huge amount of money.
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.
It makes things more difficult.
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.
Although Jollibee uses vertical integration, it still acquires the service of suppliers for some of its
supply needs.

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INVENTORY MANAGEMENT
Inventory management can help to optimize example, they still need the staff to clean up
customer’s satisfaction, supplier capability, and wash all the cutlery manually. If the
and production scheduling. Poor inventory restaurant is full of customers, especially
management will cause insufficient raw during peak hours, they will have inadequate
materials for daily operations. This may staff to serve the customer (e.g. taking orders,
happen during the peak hours where people cleaning the table and helping in preparing
go out to seek for express lunch and dinner. If food). Thus, they need machine and
the raw material is in short supply, they equipment in order to minimize their jobs and
cannot prepare enough ingredients for every to leverage their service. Other than that, a
dish that the customer order. limited number of kitchen equipment results
in insufficient time for the chefs to prepare
There is no modern and automatic machine
food. Consequently, inefficiency in food
that can ease the daily operations. For
preparation can delay the serving time.

Role of Inventory
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
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.

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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.

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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

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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:

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.

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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.

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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 high-
quality 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.

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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.

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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.

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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

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Operational Maintenance

Total Productive 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)

+

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[(Probability of 2nd component working) × (Probability of needing second component)]

= Reliability of a component along with its backup
Maintenance Measures
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:

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1 Poor working conditions.

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

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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.

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.”

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• Trained staff will work at hours that are convenient to your operation and with a no-
mess, 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.
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

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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.
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.

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