Subway– Operations Management Analysis

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The Subway sandwich chain is the largest restaurant operation in the world, as determined by the number of locations. Subway has been gaining on other fast-food restaurants such as McDonald’s for years. It’s smaller format costs less to open and operate than other chain restaurants and lets it squeeze into heavily trafficked locations places such as McDonald’s might bypass. In its clarity, simplicity, and achievability, the Subway restaurants have one of the best mission statements in the U. S. restaurant industry.

The Subway mission statement is to “delight every customer so they want to tell their friends—with great value through fresh, delicious, made-to-order sandwiches, and an exceptional experience. ” Rarely are mission statements this forthright. Subway restaurants also have a larger vision, which is to “be the number one Quick Service Restaurant (QSR) franchise in the world, while delivering fresh, delicious sandwiches and an exceptional experience. Subway is, after all, a franchise operation, and has in all, nearly 34,000 restaurants throughout the world.

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Even though Subway has been international for some time now, franchisees and employees still strive to achieve the company’s mission. They also strive to make the Subway vision a reality, further defined by the Subway core values of family, teamwork, and opportunity. Another key part of the Subway vision is innovation. Innovation has been one of the keys to Subway’s success. In 2008, the chain scored a huge hit with its introduction of the “$5 foot-long. ” Incorporating Subways into a lot of Walmart’s was also a very successful idea for Subway.

New ideas are also essential to the workings of the company’s supply chain and use of operations management. Subway restaurants are best known for their commitment to providing fresh ingredients and healthier food alternatives to customers. Behind the scenes they have been working diligently to improve the sustainability of their products, as well as their operations. When you walk into a Subway, you may notice that the store runs like a well-oiled machine. This is no accident. It is a carefully crafted concept that is laid out for all Subway franchise owners, managers, and employees.

Because the store runs like a well-oiled machine, during heavy volume times they apply one-piece flow—using a team instead of individuals. Team members will assemble parts of the sandwich passing it from one to another along the serving line. Each person performs a specified task in a specific sequence. The sandwich area is laid out in the form of an assembly line from taking your order to paying for your order. There are signs with pictures along the assembly process to support the customer’s order.

All of the ingredients used to make the sandwich is displayed on the line through clear, viewing panels. This concept is an element of a visual factory. Subway is a great example of this. I feel that Subway shows one of the best examples of forecasting, and many other food companies should follow suit. The process of predicting the future, underlines the basis of all business decisions at Subway mostly to do with personnel, production, and most importantly, inventory. It is vital to make sure that you have the upcoming inventory absolutely matched as close as possible to demand.

The forecast for demand can lead to the price on the menu, depending on how many customers like a certain sandwich or even new products that may come in with new, seasonal promotions. The price of certain items on the menu may be due to new items, favorite items, or just simply a change in the economy. The actual demand for a sandwich has to be used, as well as a forecast of store sales around us in the same region. We have to be able to place a predicted demand on the data that we do know.

The trick is to not place the price higher than your competitor and not necessarily lower either, as this may lead to lower or no revenue. If a business cannot lead with product differentiation, then they do have to lead with price—ideally the “right” price. In addition to price being a major part of Subway’s business, keeping track of inventory is also very imperative. While the sandwich is made just in time, the materials to make all of the sandwiches have been prepared beforehand. Due to the need for freshness and longer cycle times, the bread is baked, cheese is sliced, and vegetables are cut prior to the store opening.

The raw materials are stored at the point of use in bins throughout the assembly line. They are placed in the order in which the sandwich is prepared—creating a standard, while also mistake proofing the preparation sequence. The amount of the vegetables prepared and the location in the line is based on the popularity of the produce. For example, lettuce and tomatoes will be found closest to the team member in multiple large size bins, while the hot peppers and olives will be in smaller bins further away. Subway uses a First-in, First-Out inventory system for various reasons.

As the team member is preparing the sandwich, they may use the last item in the bin. If that happens, the employee would turn around to the cooler behind them to replace the bin. They would then slide the bins behind closer to the front and place the newest bins behind the others. This technique means the customer would be getting the freshest produce while not spoiling the inventory. Managers have to do an inventory count at our store every Tuesday night. This is done to see what is needed or what was used more.

It is important for our store to be fully stocked at all times. For instance, if we run out of spinach and there are still two days until our truck shipment comes, then this is a problem. Luckily, the Cedar Falls/Waterloo area has around ten Subway stores, so we can always get items from other stores if need be. Other small towns are not always so lucky. The importance of inventory also applies to meat products, vegetables, cheese, sauces, new supplies, and containers. Subway always stresses the freshness of their ingredients.

In fact, it is one of their biggest marketing campaigns. They advertise how all of their sandwiches never use greasy foods or fried foods. Each sandwich is made right there in front of you, and the way you want it. Along with the freshness of the food, brings a challenge for Subway. This challenge that Subway addresses is that the meat, bread, and other ingredients that go into their sandwiches are highly perishable. They often require temperature-controlled transportation. The Cedar Falls/Waterloo Subways rely on Sysco as the distributor of their products.

Both store and distributor know that because of the perishability of the items, speed is of the essence. Inventory is documented through its computers. Subway relies on its IT equipment for proper and efficient communication between stores, as well as documentation and recording of their resources. We have a dependable IT network that maximizes uptime of the equipment. With registers and point-of-sale systems at every location, Subways in the Cedar Valley and essentially all over, rely on their system to fix a machine that may crash or malfunction within a matter of minutes.

Downtime of a register or POS system generally means lost revenue, so the efficiency of their computer/network is critical. Subways across the nation have partnered with Coordinated Business Systems to receive their ProActive Managed IT Services, which provides continuous 24/7 monitoring of critical systems and prompt response from local technicians, as well as customer service representatives. The IT system at Subway provides a place to store stable historical data as well as a check list for previous entries of boxes we have sold before.

This includes all of the information that we use monthly, weekly, and the data can even be brought up for multiple years back. It helps with the forecasting that I mentioned earlier. The forecasting approach is very much like the quantitative approach using existing products and current technology. Stored data is used to make the right decision in regards to inventory, so that we are not wasting products, nor are we running out. Forecasting is not only a big part of every Subway store—it defines what gets done every day, to ensure that there are little to no problems.

Even forecasting how many employees to work a certain day is a big deal. If we know that Sundays are typically slower than Saturdays, then we may schedule one to two less people. Forecasting is used daily through analyzing business revenue patterns and trend projections Monday through Sunday. Subway is efficient to run, in general. The clean and friendly atmosphere and people to people interaction while getting lunch at Subway brings many customers to their stores. The third selling point is the efficiency of running a Subway.

The clean and friendly atmosphere and people to people touch to getting lunch at a Subway brings customers to their stores in droves. What new franchise owner would not want that kind of customer base? In fact, we are on a journey to make our restaurants and operations as environmentally and socially responsible as possible and to help improve the health of the planet at the same time. While the sandwich is made just in time the materials to make all the sandwiches have been prepared before hand.

Due to the need for freshness and longer cycle times the bread is baked, cheese is sliced, and vegetables are cut prior to the store opening. The raw materials are stored at the point of use in bins in the assembly line. They are placed in the order in which the sandwich is prepared creating a standard while mistake proofing the preparation sequence. The amount of the vegetables prepared and the location in the line is based on the popularity of the produce. For example, lettuce and tomatoes will be found closest to the team member in multiple large size ins while the hot peppers and olives will be in smaller bins further away. Some of the inventory is kited for accuracy and efficiency like the meat. This allows Subway to produce the same size sandwich every time for a 12 inch or 6 inch sandwich in every restaurant. The kit also helps control inventory by knowing how much is consumed for each sandwich enabling a simple replenishment scheme. Customers in Australia and Chicago claimed Subway for its famous “foot-long” being only 11 inches. The company initially explained that this was due to unconsitent operation of its chain (carrying, heating, delivery).

But then, after being sued for intentially producing shorter product for profit purpose, Subway is now claiming that “SUBWAY FOOTLONG’ is a registered trademark as a descriptive name for the sub sold in Subway Restaurants and not intended to be a measurement of length” In 2004, Subway added the option to have sandwiches toasted in large part due to competition from Quizno’s, a new, but quickly growing sandwich chain. http://www. supplychainbrain. com/content/industry-verticals/food-beverage/single-article-page/article/ipc-streamlines-the-supply-chain-for-the-subway-restaurant-chain/

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Subway– Operations Management Analysis. (2016, Oct 30). Retrieved from

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