JFC Case Study

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
Jollibees Service Design.........................................................................................................16
Process Design................................................................................................................................ 17
Four Process Strategies..............................................................................................................17

Table of Contents
Process focus........................................................................................................................... 17
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

Table of Contents
Layout Decisions...........................................................................................................................28
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

Table of Contents
Keiretsu networks......................................................................................................................43
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 Jollibees 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

Table of Contents
Food Safety............................................................................................................................. 61
Operations Audits and Audit Scores..........................................................................................61

Background of the Company
BACKGROUND OF THE COMPANY
JOLLIBEE FOODS CORPORATION

BACKGROUND
A
dominant
leader
in
Philippines,
market
the
Jollibee enjoys the lions 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.
1

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
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 brands 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 Jollibees 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.
2

Great tasting products

and quality systems.
Jollibees 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 lions 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.

Values, Mission, Vision
Values
Great tasting products

and quality systems.
Customer Focus, Excellence,

Respect
the
Jollibees
growthfor
is due
to its
Individual, Teamwork Spirit
of Family
and Fun,
delicious
menu line-up
like its
superior-tasting
Humility to Listen and Learn,
HonestyChickenjoy,
and
mouth-watering
Yumburger
and
Integrity, Frugality
Champ hamburger, and

deliciously satisfying Jollibee
Spaghetti-ably complemented
To serve great tasting
with creative marketing
food, bringing the joy
of and efficient
programs,
eating to everyone manufacturing and logistics
facilities. It is made possible by
well-trained teams that work in a
Vision
culture of integrity and humility,
We are the best tasting QSR...
fun and family-like. Every
The most endearing brand
Jollibee outlet welcomes
customers with a clean and warm
that has ever been
in-store environment and friendly
We will lead in product taste
and efficient service.
Mission
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.
1. It is characterized by its fast food cuisine and nominal table service.
4

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 companys 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.

SWOT Analysis
Strengths
Weaknesses
a. Jollibee was a regional industry leader

that had experienced professionals as chief
executives of the organization.
a. Lacked more effective marketing skills as

growth revenues decreased.
b. Proven past performance made dealings

with prospective partners easier.
c. Wide variety of products offered in
diverse markets.
b. Lack on in-depth planning and research

in the expansion to foreign markets.
c. Poor co-ordination between the national
and international units.
Opportunities
Threats
a. The promising nature of international

markets and also the available potential due
to the migration of Filipinos in certain
countries.
a. Competition from both international

companies and other local eateries.
b. Being an agricultural country, full

integration in sourcing raw materials could
be done.
c. For international markets, locating
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.
b. Political instability in the country

threatened JFC as it could hamper the
opportunities to convince international
investors and country leaders to allow a JFC
entry in their country.
c. Driving Forces
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.

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
consumers.
As Jollibee entered international markets, it faced new
challenges. The fast food industry is highly competitive
price wars and marketing innovations are seen frequently.
rivalry is also centred on the key success factors of the
industry, which are good food, good, service and
reasonable pricing. Rivals are somewhat equal in
capabilities and opportunities, thus making the
competition stiffer. Internationally well-established
players like KFC and McDonalds had high brand values
Jollibee found difficult to compete with. The threat of
substitute products is considerable. Local street food and
end restaurants form two ends of a range of substitutes.
Potential entrants face entry barriers that will hinder them
entering the industry. These are the inability to gain access
technology and specialized know-how, brand preference
Jollibee
was able
to attain a
competitiv
e
advantage
in
Philippines
and
The
that
highfrom
to
and
7

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
and franchise fees has been increasing rapidly for the period
under study. The total number of stores increased 65% to
205 from the end of 1993 to the end of 1996. By 1996, sales
had increased to 8.57 billion which translates to a market
share of more than 50% among all hamburger fast food
chains. Total assets increased over 230% in the same period.
Moreover, operating income increased about 114% while net
income increased over 100% during the same period. These
increases are dramatic. Significantly Inventory decreased
from about 11.5% in 1992 to just 7.5% in 96. This implies that
less of the current assets were tied up inventory. During the
same period the trade accounts receivables has increased
from 8.4% in 1992 to 12.7% in 1996. Jollibee was able to
compensate for this increase by corresponding increase in
sales and hence this need not be a cause of concern.
On the other hand, all is not well with the financials of
Jollibee. There was 28.9 million pesos of long-term debt
outstanding at the end of year 1996. Cost of sales has
increased each year with an increase of about 46% from the
end of 95 to the end of 96. But during this same period, total
sales only increased about 28.7%. This escalation in the cost
of sales must be brought under control
Accounts payable and accrued expenses increased by about
156% from 94 to 96. In addition, earnings per share
decreased 19% to 0.68 pesos per share from 94 to 96.
Jollibee has debt and some financial instability; however, it
is not something they can't overcome. They have 24 stores in
foreign countries, which account for roughly $9 million in
sales. This is an encouraging sign as far as Jollibee is
concerned and they will be able to pay off their debts and
loans.
One thing they should

consider doing is slowing
down expansion. Jollibee
should consider opening a
store and giving it time to
grow and turn a profit
before it finances the
opening of a new store.
Opening new stores requires a
lot of financing. They must
study markets to determine a
location,
buy
furniture,
purchase kitchen appliances,
and train new managers and
employees. Opening multiple
stores at the same time will hurt
the bottom line and will
increase
debt.
It
took
McDonald's 20 years for their
international operations to
account for 50% of total sales.
Also, they must reduce cost of
sales. During the period under
study the cost of sales has
increased at a faster pace than
the sales increase, which is not
acceptable.
The company has good internal
financial resources but a certain
code should be maintained in
the relationship with the
franchisee. Also, the allocation
of the financial resources needs
8

to be done wisely and judiciously. This is where there has to

be collaboration between the marketing and finance
department. The feasibility (financial) of opening up a new
store needs to be studied before

going ahead with the decision.
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.

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.

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
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)

Product Design
Product Development
Quality Function Development (QFD) a process for determining customer requirements
(customer wants) and translating them into the attributes (the hows) 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

Identify how the goods/service will satisfy
customer wants
Relate customer wants with product hows.
Identify relationships between the firms
hows
Develop importance ratings

Evaluate competing products
Determine
the
desirable
technical
attributes, your performance, and the
competitors performance against these
attributes.
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.
Computer aided design (CAD) and Computer Aided Manufacturing (CAM). CAD is the
use of computers to interactively design products and prepare engineering

Product Design
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, theres a formal structure.
Theres 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 its 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.

Product Design
Internal Development Strategy
Enhancements. This is the use of organizations 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.
6.
7. Service Design
8. Aside from tangible products, services in banking, finance, insurance, transportation and
communications are also designed to meet unique customers specifications.
9. 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

Product Design
processes can be designed to optimize interaction between firms and their customers. It
analyses process chain or the sequence of steps that accomplish an activity.
10. Through analysing the process chain, we will know the process inefficiencies and the
ways to solve it. Some of these solutions are:
1.
2.
3.
4.
5.
Limit the options

Delay customization
Modularization
Automation
Moment of truth or the moment that exemplifies, enhances, or detracts from the
customers expectations.
11.
Jollibees Service Design
12. Jollibee just not make and sell their food but also provide quality services.
13. High customer interaction happens in the counter. First line employees both serve and
make collections in this area. Customers 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.
14. 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.
15. Jollibees 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.
16. 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.

Process Design
17.
PROCESS DESIGN
18. Four Process Strategies

19. 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.
20. Every organization will have one of the four process strategies:
21.
Process focus
22. 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.
23. Advantages of this strategy includes:
Greater product flexibility

More general purpose equipment
Lower initial capital investment
25.
24. Disadvantages, on the other hand,

includes:
High variable cost per unit

More highly trained personnel
More difficult production planning
Repetitive focus
26. This falls between the product and process focus. The repetitive process is a productoriented 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.
27. 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)
28.
Product focus
29. 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.
30. Advantages:
31. Disadvantages:
Lower variable cost per unit

Lower but more specialized labor
skills
Easier production planning and
control
Higher equipment utilization
32.
33.
Lower product flexibility

More specialized equipment
Higher capital investment

Process Design
34.
35.
Mass Customization Focus
36. Rapid low-cost production that caters to constantly changing unique customer desires.
This strategy is very hard to achieve.
37. Production Technology
38. The following help enhance the production of both manufacturing and service industries:
39. Machine Technology. This uses
computer numerical control (CNC)
which is machinery with its own
computer and memory.
40. AISs
&
RFID.
Automatic
Identification System is a system for
transforming data into electronic
form, for example, bar codes. Radio
Frequency Identification is a
wireless system in which integrated
circuits with antennas send radio
waves.
41. Robots. These are flexible machines
with the ability to hold, move, or
grab items. It functions through
electronic impulses that activate
motors and switches.
42. Automated Storage and Retrieval
Systems
(ASRSs).
These
are
computer-controlled
warehouses
that provide for the automatic
placement of parts into and from
designated places in a warehouse.
43. Process Control. It is the use of

information technology to control a
physical process.
44. Automated Guided Vehicles (AGVs).
These are electronically guided and
controlled cart used to move
materials.
45. Flexible Manufacturing Systems
(FMSs). These are systems that use
electronic signals from a centralized
computer to automate production
and material flow.
46. Vision Systems. These are systems
that use video cameras and
computer technology in inspection
roles.
47. Computer-Integrated Manufacturing
(CIM). This is a manufacturing
system in which CAD, FMS,
inventory control, warehousing, and
shipping are integrated.
48. 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.

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 valueadded 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.

Process Design
Process Design of Jollibee

Jollibee has a commissary system which includes production lines for the following:
Frozen Patty Line

Sauce Line
Meat Processing Line
Pie-Line
Dry Blending Line

Bakery Line
Marination Line
Shanghai Line
Meat
and
Vegetable
Preparation Line
The following are some of the process flow of Jollibees 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 Jollibees
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
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

Process Design
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
The pasta is cooked ahead and then reheated when the orders are placed.
Sauces are pre-made.
Burger
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
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, Jollibees 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 premade food bundles to serve its customers faster.

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.

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 governmentalas well as culturalobstacles 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.

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.
Thats why, Jollibee locates itself near its competitors like McDonalds, 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
Jollibees total supply chain process.

Location Decisions
Zenith Foods Corporation, Laguna
It is located in Carmelray Industrial Park 1, Canlubang, Calamba, Laguna.
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 Jollibees 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

Location Decisions
influence the overall 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. Its an approach where the main inputs that it considers are the
following:
Markets
Volume of goods shipped
Shipping costs
This method is beneficial because its (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

Location Decisions
determine which one has lower

production/distribution network.
total
costs
in
terms
of
the
entire
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
FACTOR RATING
RATING
Energy Availability 30%
60
18
80
24
Labor Availability
20%
80
16
80
16
Transportation Cost 20%
90
18
90
18
Supplies
70
Infrastructure Cost 10%
70
60
Taxes and Regulations
10%
70
70
Total 100% 370
450
78
10%
80
74
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.

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 firms 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 openplan.
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:

Layout Decisions
Creates community and builds camaraderie
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.

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

Layout Decisions
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:
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-inprocess 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

Layout Decisions
Increased equipment and machinery utilization
Reduced investment in machinery and equipment
While its disadvantages are:
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 lions share of the local market that is more than all the other multinational
brands combined. The company has also embarked on an aggressive international

Layout Decisions
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).
(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 didnt just invest in its kitchen for the efficiency of their production. Their
stores 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.
Jollibees Layout strategy evidently conforms to its mission providing every customer
with a clean and warm in-store environment and friendly and efficient service.

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-theHouse management. For the effectiveness of the operations and to meet the customers
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

Human Resources
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
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

Human Resources
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 restaurants 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 reengineering 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 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

Human Resources
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 Organizations 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.
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

Human Resources
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.

Human Resources
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 organizations 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 redesigns 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.

Human Resources
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

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
chains 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, 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 others 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.
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 highquality 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
Jollibees 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
Asias 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 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 commissarys 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.

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 firms 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 businesss 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 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 businesss 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.

INVENTORY MANAGEMENT
Inventory management can help to

optimize customers satisfaction,
supplier capability, and production
scheduling.
Poor
inventory
management will cause insufficient
raw materials for daily operations.
This may happen during the peak
hours where people go out to seek for
express lunch and dinner. If the raw
material is in short supply, they
cannot prepare enough ingredients
for every dish that the customer
order.
There is no modern and automatic

machine that can ease the daily
operations. For example, they still
Role of Inventory
need the staff to clean up and wash

all the cutlery manually. If the
restaurant is full of customers,
especially during peak hours, they
will have inadequate staff to serve
the customer (e.g. taking orders,
cleaning the table and helping in
preparing food). Thus, they need
machine and equipment in order to
minimize their jobs and to leverage
their service. Other than that, a
limited
number
of
kitchen
equipment results in insufficient
time for the chefs to prepare food.
Consequently, inefficiency in food
preparation can delay the serving
time.
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.
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 entre; and
using purchasing reports from vendors or software systems to determine the number
of cases purchased of each item.

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 weeks 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 32F and 40F, temperatures near 32F 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
in mind that holding temperatures refer to the temperature of the food, not the air temperature
of the cooler. Cooler air temperatures should be 2F 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.
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 cant 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 dont 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.
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 highquality 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 Jollibees 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
Asias 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 Jollibees 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.
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 commissarys "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.
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.

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 equipments or systems 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
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)

+
[(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 Jollibees 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:
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 Jollibees 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
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 customersnot in the shop for service.
Trained staff will work at hours that are convenient to your operation and with a nomess, 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.
Jollibees 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
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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Jollibee Foods Corporation

Jollibee Foods Corporation

Jollibee Foods Corporation

Jollibee Foods Corporation

Jollibee Foods Corporation

Jollibee Foods Corporation

BACKGROUND OF THE COMPANY

JOLLIBEE FOODS CORPORATION

Jollibee enjoys the lions share

Jollibee Foods Corporation

A company that values family.

Aside from promoting a family oriented work environment,

Jollibee Foods Corporation

Great tasting products

Widest store network in

Jollibee Foods Corporation

Values, Mission, Vision

Great tasting products

Customer Focus, Excellence,

Champ hamburger, and

Jollibee Foods Corporation

Jollibee Foods Corporation

a. Jollibee was a regional industry leader

a. Lacked more effective marketing skills as

b. Proven past performance made dealings

b. Lack on in-depth planning and research

a. The promising nature of international

a. Competition from both international

b. Being an agricultural country, full

b. Political instability in the country

d. For the local market, an increase in the

Jollibee Foods Corporation

Competitive and Cooperative strategies

Analysis of Tony Kitchner's Strategy

Jollibee Foods Corporation

customer loyalty, capital requirements, economies of scale, and strategically situated

Financial Management Perspective

One thing they should

Jollibee Foods Corporation

to be done wisely and judiciously. This is where there has to

store needs to be studied before

Operations Management Perspective

Jollibee Foods Corporation

Product Life Cycle

Jollibee Foods Corporation

Jollibee Product Life Cycle

1993 - 2000 Growth Stage

2001 - Present Maturity Phase

Jollibee Foods Corporation

Identify customers wants

Develop importance ratings

Organizing for product development

The traditional U.S. approach. An approach wherein the organization is subdivided

Assign a product manager to champion the product through the product

Modular design. A design in which parts or components of a product are subdivided

Jollibee Foods Corporation

Virtual Reality Technology. This is a visual form of communication in which images

How Jollibee products are designed?

According to Mr. Tony Tan Caktiong

How Jollibee products are made?

(Fries were fried under 175 C for 2-3 minutes)

(A standard weight for fries depending on customer order)

Product Development Continuum