Critical Factors

One of the most critical aspects of the operations done by Dairy Queen is trying to accomplish a balance between cost and quality, while flexibility and on-time delivery come after quality as a priority. Management’s first concern is to keep costs low by effective inventory and labor management. It is crucial that the organization not only keeps proper inventory levels, but also constantly evaluates its suppliers’ prices to ensure waste is kept to a minimum and they are paying the best possible prices. Management must also make optimum use of its labor such as cutting hours during a slow season. Mr. Condit is constantly trying to see what is the minimum number of employees that can be working at one time while not sacrificing customer satisfaction. Maintaining a cost effective strategy for inventory and labor is crucial to keep a profitable business. The balance between cost and quality is further demonstrated in how Dairy Queen handles the production of some of its products. Some of the products are actually made in-store rather than being ordered. This method is not only less expensive it also ensures a higher quality product. Again, management’s main concern is keeping costs down to increase the profit margin, but not at the expense of product quality.

The main operational issues for the current year included maintaining a constant, efficient flow of inventory and making sure the cost of inventory is kept as minimal as possible. Management is concerned about this main operational issue because he is ordering inventory at least once a week. Since most goods that are ordered can be considered perishable, he has to make sure he does not order too much because it will be thrown out, which is a waste of money. If he does not order enough, then he risks running out of a certain product, which could cause customers to be unhappy.